Tuesday, February 17, 2009
Detroit Free Press
WASHINGTON — It may take at least six weeks to know whether the detailed survival plans that General Motors Corp. and Chrysler LLC will submit today to the Obama administration represent a new beginning or a last gasp.
GM and Chrysler were expecting to keep talking to the UAW and creditors for both companies up to the last minute before submitting the plans required under their combined $17.4 billion in federal loans. Some movement was reported Monday in negotiations with the union.
The companies’ plans are expected to detail thousands of job cuts, fresh plant closings and other measures aimed at surviving the worst market in decades.
Neither firm will embrace bankruptcy as a solution, despite pressure from outside experts and some members of Congress. GM appears likely to join Chrysler in asking for additional money to withstand a U.S. recession with no end in sight.
The plans will be submitted to President Barack Obama’s task force on the auto industry, headed by Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers. White House spokesman Robert Gibbs said the administration was anxious to begin reviewing the plans.
“We have to ensure that the cars of tomorrow are built here by Americans, for Americans,” he said, adding that the team would reflect “both the concerns of investors and bond holders, but also the livelihoods of tens of thousands of auto workers in the Midwest who need to have a seat at the table, as well.”
Spokespeople for both companies said they would submit plans by the deadline.
Under terms of the $13.4 billion in loans to General Motors and $4 billion loan to Chrysler, the companies must submit detailed plans today showing how they will make themselves viable, pay back the loans and meet fuel economy rules through 2014.
The loans also set targets for cuts from the UAW and bondholders, including cutting debt by two-thirds and reducing worker pay and benefits to levels competitive with foreign-owned U.S. factories. While the UAW is required to submit an outline of the cuts it’s agreed to, bondholders have until March 31 to consider whether to exchange their debt for stock.