Too Soon to Say How Cuts Will Affect Arlington GM Plant

But it's unlikely bondholders will go for troubled automaker's massive restructuring plan

View Comments ()
|
Email
|
Print

    NEWSLETTERS

    KXAS
    General Motors Corp. will cut 21,000 U.S. factory jobs by next year, but the company says its too soon to say how it will affect the Arlington plant will be affected.

    General Motors Corp. will cut 21,000 factory jobs in the United States by next year, but it was not immediately clear how the reductions would affect the automaker's Arlington plant.

    The company announced Monday a massive restructuring plan that would phase out the iconic Pontiac brand, swap debt for GM stock and reduce the number of U.S. factories.

    In a statement, Wendi Sabo, spokeswoman for the company's Arlington facility, said "significant" work" still needs to be done on labor costs, manpower and VEBA, the union-run trust that will take over retiree health care expenses starting next year.

    "It would be premature to announce specifics to cease operations at our plants until this work is complete," Sabo said.

    GM said it will reduce the total number of its assembly, stamping and powertrain plants to 34 by the end of next year. It will close three more plants by the end of 2012. The company had 47 plants at the end of 2008.

    About 2,300 hourly workers are employed at GM's Arlington assembly plant, which churns out the GMC Denali, the GMC Yukon, the Chevrolet Tahoe and the Cadillac Escalade during two shifts.

    GM said Monday it would speed up six factory closings that were announced in February, although it did not identify the locations. The company will shed 21,000 factory jobs in the United States by the end of 2010.

    Additional salaried jobs cuts also are coming, beyond the 3,400 in the U.S. completed last week.

    CEO Fritz Henderson said there would be three more factory closures in 2010 beyond the six that were previously planned. He expects to identify them by publicly in May.

    The company will inform employees of any cutbacks before making public announcements, Sabo said.

    The automaker also plans to cut back on the number of Canadian employees.

    GM also said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.

    But the new plan may not keep the company from bankruptcy. Henderson said Monday GM will have to file bankruptcy if creditors and bondholders don't go for the bond swap.

    Henderson called it a "tough task" -- and analysts say it's unlikely to happen.

    Brian A. Johnson of Barclay's Capital said the offer was not valuable to succeed, the New York Times reported.

    And Kip Penniman Jr., an analyst with KDP Investment Advisors Inc., predicted the exchange offer would fail.

    The plan depends on 90 percent of bondholders exchanging their debt, and "there is no chance that GM will get anywhere near that participation rate," he said in a research note.

    And later Monday, a committee representing large creditors called the offer "a blatant disregard of fairness" that was not "reasonable nor adequate," the Detroit Free Press reported.

    According to the Detroit Free Press, GM said it might divide into two companies in the event of a bankruptcy: a "new" GM formed and controlled by the U.S. Treasury that would have the company's desirable assets and a company composed of unwanted assets for liquidation.