With bankruptcy looming, a new GM begins to emerge
May 31, 2009
DETROIT: With an almost certain bankruptcy filing days away, General Motors is beginning its reinvention, planning to retool one factory to make its smallest vehicles ever in the US and rid itself of the biggest.
As GM’s board began two days of meetings on Friday to make a final decision on the company’s fate, its main union overwhelmingly approved dramatic labour cost cuts. Germany’s finance minister said a plan was approved for Canadian auto parts maker Magna International Inc to rescue GM’s European Opel unit. And a deal to sell GM’s rugged but inefficient Hummer brand also appeared on the horizon.
The moves provided more clues about what a restructured GM might look like ahead of the expected bankruptcy filing on Monday. Taxpayers will eventually own nearly three-quarters of a leaner GM, with a total government commitment of nearly $50 billion.
GM has yet to confirm it will seek bankruptcy protection but scheduled a news conference for Monday in New York.
With the government’s backing and nearly $20 billion in US loans so far, the company has made more dramatic changes in just a few days than it has in decades.
ìIt’s been coming to a head for a very long time,î said Aaron Bragman, an analyst for the consulting firm IHS Global Insight.
ìBut in just the past few months we’ve really seen steps being taken to completely and dramatically change the face of American auto manufacturing.î
GM said it plans to reopen a shuttered US factory to build subcompact cars. The retooled factory would be able to build 160,000 cars a year and create 1,200 jobs, offsetting some of the 21,000 that will be lost when GM closes 14 factories by the end of next year.
As GM’s board began two days of meetings on Friday to make a final decision on the company’s fate, its main union overwhelmingly approved dramatic labour cost cuts. Germany’s finance minister said a plan was approved for Canadian auto parts maker Magna International Inc to rescue GM’s European Opel unit. And a deal to sell GM’s rugged but inefficient Hummer brand also appeared on the horizon.
The moves provided more clues about what a restructured GM might look like ahead of the expected bankruptcy filing on Monday. Taxpayers will eventually own nearly three-quarters of a leaner GM, with a total government commitment of nearly $50 billion.
GM has yet to confirm it will seek bankruptcy protection but scheduled a news conference for Monday in New York.
With the government’s backing and nearly $20 billion in US loans so far, the company has made more dramatic changes in just a few days than it has in decades.
ìIt’s been coming to a head for a very long time,î said Aaron Bragman, an analyst for the consulting firm IHS Global Insight.
ìBut in just the past few months we’ve really seen steps being taken to completely and dramatically change the face of American auto manufacturing.î
GM said it plans to reopen a shuttered US factory to build subcompact cars. The retooled factory would be able to build 160,000 cars a year and create 1,200 jobs, offsetting some of the 21,000 that will be lost when GM closes 14 factories by the end of next year.
