Restructuring plan details released
Apr 30, 2009 - 12:14 PM
By Melissa Mancini
DETROIT -- General Motors is saying goodbye to Pontiac and up to 8,000 more U.S. jobs than it said it would cut in February.
The failing automaker released details of its new restructuring plan on April 29. It will bid adieu to Pontiac, a brand the company initially said it intended to keep as a niche brand, by the end of 2010.
It was a tough decision to make because the brand has considerable history, company president and CEO Fritz Henderson said.
"We only want to do this once," Mr. Henderson said in reference to massive restructuring.
This will leave GM with four brands: GMC, Cadillac, Chevrolet and Buick.
As part of the company's plan to restructure so it can be successful in tougher markets, the plan calls for U.S. hourly employment levels to be reduced from about 61,000 in 2008 to 40,000 in 2010 and about 38,000 starting in 2011. This is an additional reduction of 7,000 to 8,000 employees from the Feb. 17 plan.
GM plans to reduce the number of plants in the U.S. from 47 in 2008 to 31 by 2012. The new plan assumes a lower labour cost, from $7.6 billion in 2008 to $5 billion in 2010. The company said it will continue to work with the United Auto Workers to reach that target through modifications in the collective agreement.
There is no word on how labour cost reductions will affect Canadian operations.
The company also launched a bond exchange to improve its balance sheet. The offer is for approximately $27 billion of its unsecured public debt.
"If successful, the bond exchange would result in the conversion of a large majority of this debt to equity," a news release from the company said.
In addition, the plan outlines a nameplate reduction from 48 in 2008 to 34 in 2010. The number of U.S. dealers will also be cut from 6,246 in 2008 to 3,605 by the end of 2010.
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