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mountain dew

Car Industry... GM Takes another hit

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DETROIT -(Dow Jones)- General Motors Corp. (GM) said Monday it will cut 21,000 hourly jobs and eliminate its Pontiac brand by the end of next year as part of a stepped-up restructuring plan.


The auto maker will also start an exchange offer for $27 billion of its unsecured public notes as the company looks to become viable, saying a successful exchange offer would allow it to stay out of bankruptcy court.


GM, which is surviving on federal loans, is racing to restructure by June 1 under close watch of the Obama administration.


"The objective here is not to just survive but to come up with an operating plan that will allow us to win," Chief Executive Fritz Henderson said Monday.


The U.S. Treasury will extend an additional $11.6 billion to GM, in addition to $15.4 billion in existing loans. The government will forgive half the debt in exchange for equity in a restructured GM.


Henderson said earlier this month the White House had demanded "faster, deeper" cost cutting. Under the latest viability plan, GM's fourth iteration, the company will idle one additional factory and look to eliminate 500 additional dealers.


Other reductions will come sooner than initially planned. GM said it expects to further reduce salaried employee headcount as well, but did not specify a number.


The company said it will focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC - as it looks to make fewer different models and focus on product development programs. Production of the Pontiac brand will end by next year.


"You have a strategy that wins or you have to stop," Henderson said. "We didn't have a strategy that allowed us to win with the Pontiac brand."


It will also restructure its U.S. dealer organization, reducing its U.S. dealer count by more than 40% by the end of next year, a reduction of 500 more dealers four years sooner than its earlier viability plan.


Under the exchange program, the company is offering to exchange 225 common shares for each $1,000 principal amount of outstanding notes. The stock closed Friday at $1.69 a share and shares were recently up 11% at $1.87 in premarket trading.


Today's bond exchange filing represents an important step in GM's effort to restructure its company, President Barack Obama's automotive task force said in a statement. The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. "We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the President's commitment to a strong, vibrant American auto industry," the statement said.


The exchange will commence only if 90% of bondholders agree to the terms. Under the plan, if GM fails to get adequate participation, it will file for bankruptcy protection.


The company added that negotiations regarding contract changes with the United Auto Workers union are still ongoing.


Chrysler LLC, which is also seeking more U.S. government aid, announced Sunday that it reached a tentative agreement with the UAW and won a ratification vote from the Canadian Auto Workers allowing the auto maker to cut hourly compensation by C$19 an hour.


Chrysler, the third largest U.S. auto maker, is also seeking concessions from its debt holders and must sign a merger deal with Italian auto maker Fiat SpA. All of these moves must be completed by April 30.



So after 84 years, no more Pontiac.


Not that it really changed anything but I really love the old GTO's was thinking of buying one at a time...


What company (or off-shoot brand of a company) do you think will go next?

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fraud, theft, waste, abuse, ...etc they need to be closely watched with our money by trustworthy people. and they most of all need to do their jobs from the beginning to keep their company viable and profitable.

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I think GM should be keep Chevrolet, GMC and Caddilac. General, industrial and luxury. Out of all the GM and Chrysler brands the one I'll miss most is Caddilac.

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why are their stocks up then?


investors deemed that the cuts and concessions made will make them more competitive and profitable in the future.

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investors deemed that the cuts and concessions made will make them more competitive and profitable in the future.


that makes sense.



sometimes i feel bad making money...

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i was actually kind of pleased when I heard that Pontiac was done. I've always hated that brand.








my mom bought me this car when i was 15,, never drove it off our property..

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