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White House questions viability of GM, Chrysler
(Agencies)
Updated: 2009-03-30 20:10 GM and Chrysler, which employ about 140,000 workers in the US, faced a Tuesday deadline to submit completed restructuring plans, but neither company was expected to finish its work. The White House's plan renders them, as well as a potential discussion about the companies' borrowed money, moot.
GM owes roughly $28 billion to bondholders. Chrysler owes about $7 billion in first- and second-term debt, mainly to banks. GM owes about $20 billion to its retiree health care trust, while Chrysler owes $10.6 billion.
In February, GM said it intended to cut 47,000 jobs around the globe, or almost 20 percent of its work force, close hundreds of dealerships and focus on four core brands -- Chevrolet, Cadillac, GMC and Buick. In an effort to bolster consumer confidence, Obama planned to announce government backing of warranties for GM and Chrysler vehicles. An administration official said there is no price tag yet associated with that promise. Obama's aides, aware of the outrage the White House faces if thousands more Americans lose their jobs, appointed a former deputy labor secretary, Ed Montgomery, to lead assistance efforts to cities and towns that depend on the auto industry. The move signaled the White House already was looking to a time when assembly plants may need to operate with far smaller staffs or shut down completely. Aides note that Obama inherited the auto mess from his predecessor, President George W. Bush. Under the terms of a loan agreement reached during the last administration, GM and Chrysler are pushing the United Auto Workers to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care. They also want labor costs from the union to be competitive with Japanese automakers with US operations. Little progress has been made between the companies and the union.
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