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The Honolulu Advertiser
Posted on: Wednesday, February 18, 2009

GM, Chrysler seeking $14 billion more

By Tom Krisher and Ken Thomas
Associated Press

Hawaii news photo - The Honolulu Advertiser

General Motors' restructuring plans include eliminating a total of 47,000 jobs and closing five more U.S. factories. Among those who could be affected are workers at this plant in Arlington, Texas.

ASSOCIATED PRESS FILE PHOTO | December 2008

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DETROIT — General Motors and Chrysler yesterday asked the government for an additional $14 billion in aid, a dramatic acknowledgment that conditions in the U.S. auto industry have grown significantly worse in just two months.

GM presented a survival plan that also calls for cutting a total of 47,000 jobs globally and closing five more U.S. factories. That represents the largest workforce reduction announced by a U.S. company in the economic downturn. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models.

Meanwhile, the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to labor contracts. Such concessions were also a condition of the government bailout.

GM said it could need up to $30 billion from the Treasury Department, up from a previous estimate of $18 billion. That includes $13.4 billion previously allocated and $9.1 billion in new loans. GM said it could run out of money by March without new funds.

GM's request includes a credit line of $7.5 billion to be used if the downturn in the auto industry is more pronounced than expected. But the automaker said it could be profitable in two years and fully repay its loans by 2017.

Chrysler LLC requested $5 billion in new loans on top of the $4 billion it received in December. The company had said it might need an extra $3 billion.

Both requests were part of restructuring plans the two automakers owed the government in exchange for earlier loans.

Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help.

GM and Chrysler plan to reduce the number of models they offer to car buyers. GM yesterday raised the possibility its Saturn brand could be phased out.

The restructuring plans must be vetted by the Obama administration's new autos task force. The administration views the U.S. steel industry as a case study for revamping the auto industry,

President Obama's top spokesman said aboard Air Force One yesterday that he wouldn't rule out bankruptcy for the Detroit automakers.

The GM job cuts include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of its current global workforce of 244,500. A total 26,000 of the cuts will come from outside the U.S. The cuts would take place by the end of this year.

The new plan has the U.S. workforce declining from about 92,000 hourly and salaried employees at year-end 2008 to 72,000 by 2012.

GM Chairman and CEO Rick Wagoner said the plan submitted yesterday is more aggressive than the one presented to the government on Dec. 2 because the global economy and auto sales have deteriorated in the time that has passed since then.