Crunch time looms for GM, Chrysler restructuring
United Auto Workers’ officials will gather on Tuesday to hear how many more U.S. factory jobs GM will cut as the embattled automaker enters what could be its last week outside bankruptcy.
Union officials representing 54,000 General Motors Corp workers are scheduled to meet in Detroit to prepare for a quick ratification vote on a cost-cutting labor deal negotiated last week. The union aims to complete those votes by Thursday.
Approval of the contract, which would change payment terms on $20 billion owed to a UAW trust fund, represents one of the hurdles for GM to clear before a June 1 deadline set by the Obama administration.
GM, which has received $19.4 billion in government funding since the beginning of the year, has been struggling to cut costs and reduce debts in order to continue to receive more government aid.
The company on Friday said it expected to need another $7.6 billion from the U.S. Treasury after June 1
Across the border in Canada, GM workers at plants in Ontario on Monday ratified concessions negotiated last week with a vote of 86 percent in favor.
“This has been a grueling restructuring process, and no one has felt that more than our members and retirees,” Canadian Auto Workers President Ken Lewenza said in a statement.
The new contract cuts GM’s hourly labor costs in Canada by almost 30 percent, including an earlier round of concessions cash advance.
Meanwhile, GM and the U.S. autos task force worked through the weekend on a restructuring expected to send the automaker into bankruptcy.
“We have routine and frequent contact with the task force,” GM spokesman Greg Martin said of the White House-appointed panel overseeing the overhaul of GM and bankrupt Chrysler.
GM faces a series of interim deadlines through this week. That includes a decision expected this week by the German government on the preferred bidder for GM’s Opel unit.
GM will also learn on Wednesday how much of its $27 billion in bond debt was tendered in exchange for shares. GM has set a target of slashing 90 percent of its bond debt, a goal analysts see as unreachable.
Wednesday’s bondholder deadline for GM coincides with an equally crucial turning point for its smaller rival Chrysler, which has been operating in bankruptcy since April 30.
Bankruptcy Judge Arthur Gonzalez could rule as early as Wednesday on whether Chrysler will be allowed to sell its most valuable assets to a new company that would be under the operational control of Italy’s Fiat SpA.
If that approval is granted, a deal to create a merged Chrysler-Fiat with the backing of the U.S. government could be closed by the middle of next month.
Filed under: economics by John