3rd UPDATE:GM, Chrysler Race To Finish Plans For Release Tuesday
February 17 2009 - 3:08PM
Dow Jones News
General Motors Corp. (GM) expects to submit a
government-mandated recovery plan at 5 p.m. EST on Tuesday,
although the report might not include critical concessions from the
company's labor unions and bond holders.
Chrysler LLC is working on a similar disclosure and expects to
release its plan around 5 p.m. EST as well.
The two auto makers, surviving on $17.4 billion in federal aid,
are required to submit detailed restructuring plans to the U.S.
Treasury on Tuesday as a condition of the loans.
GM shares were down 12.4%, or 31 cents, at $2.19. The auto
maker's stock has lost more than 90% of its value in the last
year.
At GM, overnight negotiations with the United Auto Workers
failed to produce a deal that would substantially cut labor costs,
sources familiar with the talks said. Bargaining continued
Tuesday.
The auto maker also is working to convince bond holders and
other creditors to accept terms that will reduce its substantial
debt.
GM said it will submit its restructuring plan regardless of
whether is succeeds in cutting deals with the union or
bondholders.
GM's plan, which sources say is 800 to 900 pages long, explains
how the auto maker can turn around operations that have lost more
than $70 billion since 2004. It is expected to detail plant
closings, plans to eliminate models and brands and to further
reduce structural costs.
UAW negotiations hinge on GM's efforts to change terms under
which it pays the union to assume responsibility for billions in
retiree medical costs.
The two sides made progress over the holiday weekend but were
still hammering out significant differences, according to people
familiar with the talks.
GM plans to roll out the plan publicly on its Web site at 5
p.m., followed by a news conference around 6:30 p.m. with Chief
Executive Officer Rick Wagoner and Chief Operating Officer Fritz
Henderson.
In an email to dealers, GM Sales Chief Mark LaNeve asked for
support and urged them to focus on selling cars and trucks.
"While a lot of our attention will be focused on the viability
plan update the next few days, we cannot lose focus on our
customers," he wrote.
Ford Motor Co. (F) didn't ask for federal government aid,
although the auto maker is likely to seek concessions in line with
what GM and Chrysler win.
A person familar with the matter said Ford has made "substantial
progress" with the UAW including, but not limited to, new work
rules. It was not expected that Ford would have a new agreement
with the UAW Tuesday night.
Ford shares recently fell 3.4% to $1.70.
Meantime, Canadian Auto Workers President Ken Lewenza plans to
speak about the restructuring plan at 7 p.m. EST Tuesday.
GM's Canadian operations are expected to shrink substantially
under GM's restructuring, according to people familiar with the
plan. A huge drop in sales of profitable trucks, a key product for
GM's Canadian factories, added to cost pressures in the
country.
GM, which employs about 12,000 people in Canada, earlier this
year declined to accept aid from the Canadian government, saying it
preferred to focus on restructuring over the long term.
Canadian Prime Minister Stephen Harper on Tuesday told reporters
he doesn't anticipate GM entirely pulling out of Canada, according
to Reuters.
"Obviously, there is a range of options. and the restructuring
itself will be quite complex," Reuters quoted Harper as saying. But
I'm confident that with Canada, with the partnership with Ontario
coming to the table with our share of funding that we'll maintain a
strong industry in this country."
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com.
(John Stoll and Matthew Dolan contributed to this report.)