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GM, Chrysler race to meet restructuring deadline

GM, Chrysler race to meet restructuring deadline
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First Published: Tue, Feb 17 2009. 12 17 PM IST
Updated: Tue, Feb 17 2009. 12 17 PM IST
Detroit: General Motors and Chrysler struggled on Monday to win key concessions from their main union a day ahead of a deadline to present restructuring plans to the federal government.
GM spokeswoman Sherryl Childers-Arb said GM remains hopeful of reaching a deal with the United Auto Workers by the time GM turns the viability plan in to the US Treasury Department at the end of the business day Tuesday.
“We’re negotiating and we’re hopeful,” she said. “I am not going to speculate on whether we’ll have an agreement.”
Officials at Chrysler and the UAW declined to comment on the status of negotiations.
It was also unclear whether the automakers had managed to reach a deal with their creditors as required under the terms of a $13.4 billion bailout package provided by the federal government.
Union sources familiar the talks, however, said the automakers were making substantial demands and that something had to give before an agreement could be reached.
The package would eliminate previously negotiated productivity bonuses and cost-of living adjustments to wages, halve the amount of time the company would supplement unemployment pay following a layoff and require workers to use their vacation time during temporary plant closures.
GM spokesman Tom Wilkinson said he could not comment on the discussions with unsecured creditors.
Standard & Poor’s analyst Efraim Levy said he did not think GM will have completed negotiation with either the union or creditors by the time it submits the viability plan to the US Treasury.
The administration will analyze the restructuring plans over the next few weeks and work through them with the car giants.
The final plan will serve as a basis for the Treasury’s decision due by 31 March to call in or extend the loans.
The two companies were brought to the brink of bankruptcy last year as auto sales collapsed amid a credit crunch and widening recession.
Analysts forecast total auto sales will come in at between 10 million and 11 million units this year, which would be the industry’s worst performance since World War II after adjusting for population growth.
Ford insists it has sufficient cash reserves to survive the downturn without federal aid despite a $5.9 billion loss in the fourth quarter.
Chrysler says it needs an additional three billion dollars in loans beyond the four billion dollars approved in December, as well as concessions from creditors and the UAW.
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First Published: Tue, Feb 17 2009. 12 17 PM IST
More Topics: US | Bailout | Genral Motors | Ford | Chrysler |