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Filed under: Government/Legal , GM , Earnings/Financials , UAW/Unions Ask for a little help from the government, and the next thing you know you're asking for the government to protect you from the very help it's giving you. General Motors is restructuring its debt load by offering equity shares instead of cash to debt holders, namely the government and the UAW. The UAW transaction concerns the VEBA health care fund in that GM wants to pay its obligation to the fund with shares. The issue is that this transaction is a debt-asset swap and comes with a distressed asset tax (DAT) of $7 billion. The DAT was codified in 1986 to prevent companies from buying money-losing companies just to avoid paying taxes. In GM's case, the debt-asset swap counts as corporate income, but GM can claim it's 2008 losses against that income, greatly reducing its tax bill. If the tax isn't waived, GM will need to immediately return $7 billion of the money it was just given. It is talking to the...
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Filed under: Government/Legal , GM , HUMMER , Saab , Saturn , Earnings/Financials Let's go ahead and get it out there: General Motors doesn't have a plan for Saab, Saturn, or HUMMER - it has a bunch of hopes, ideas and proposals. The best that GM can do with Saab is try to extricate the brand from its entangled web, which might make it more attractive to a buyer. That includes moving 9-3 and 9-5 production to Sweden and being "engaged with the Swedish government" on a plan for Saab's future. But GM has admitted that "Saab is not a U.S. strategy," and the code behind that statement is probably, "We get rid of or kill it." GM's focus is on Chevrolet, Cadillac, Buick and GMC, and Pontiac "will shrink substantially." The other brands appear to be waiting out their death row sentences on appeal. Saturn, like Saab, is so entrenched in GM that an outside buyer is a remarkably dim prospect. Saturn production is funded until 2012 (for now)...
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Filed under: Plants/Manufacturing , GM , Earnings/Financials , UAW/Unions The UAW idled Chrysler's jobs bank earlier this week, and as of February 2, the UAW and General Motors will shut down the job bank it also maintains for its workers. GM is paying the 1,600 workers currently in the system 85% of their on-the-job wages. As of February 3, they will receive a measure of supplemental pay from GM and can apply for unemployment, the total of which should come to 72% of their former pay. The move potentially leaves Ford's jobs bank as the only one left running, but Ford has yet to comment on its status. [Source: The Detroit News ] UAW agrees to suspend GM job banks on Feb 2 originally appeared on Autoblog on Wed, 28 Jan 2009 15:22:00 EST. Please see our terms for use of feeds . Read | Permalink | Email this | Comments
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Filed under: Plants/Manufacturing , GM , Earnings/Financials , UAW/Unions The UAW idled Chrysler's jobs bank earlier this week, and as of February 2, the UAW and General Motors will shut down the job bank it also maintains for its workers. GM is paying the 1,600 workers currently in the system 85% of their on-the-job wages. As of February 3, they will receive a measure of supplemental pay from GM and can apply for unemployment, the total of which should come to 72% of their former pay. The move potentially leaves Ford's jobs bank as the only one left running, but Ford has yet to comment on its status. [Source: The Detroit News ] UAW agrees to suspend GM job banks on Feb 2 originally appeared on Autoblog on Wed, 28 Jan 2009 15:22:00 EST. Please see our terms for use of feeds . Read | Permalink | Email this | Comments
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Filed under: Government/Legal , GM , Earnings/Financials Dealership rationalization was something General Motors was looking at well before the economy went pear-shaped. GM still has more than 6,300 dealerships in the U.S., and it is even more important now to start shedding some of that financial burden. That is why The General told dealers at the NADA conference that it plans to get rid of 1,600 dealerships by 2012. GM's initial viability plan to Congress proposed an eventual reduction to 4,000 dealerships. No one knows yet, though, how GM plans to do that. GM said it will explain the dealer elimination plan in the follow-up viability plan it submits to Congress on February 17. Said one GM dealer, "They basically said, 'We're looking for strong dealers, and if you're not a strong dealer, you better evaluate your options." GM did say that 400 dealers per year being shut isn't a firm number, simply a target. Nevertheless, dealers are none too happy. Some dealers...
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Filed under: Government/Legal , Plants/Manufacturing , Saturn , Earnings/Financials The good news: Saturns will remain in production until 2012 or 2013... at least. The bad news: the Saturns currently being produced might not get any new updates or engineering before then. That's the bitter and the sweet that GM revealed to Saturn dealers at the NADA conference. On the warm, fuzzy side of things, dealers are -- for the moment -- just happy to hear that Saturn isn't "going away in 30 days." While on the cold, dark side of reality it's clear that GM doesn't have much money, doesn't know how much it's ultimately going to get in loans, and can't fully fund all of its brands. That means that refreshing and re-engineering the current offerings might have to wait until the crystal ball is a little clearer. It also means that Saturn could still be killed, it simply won't happen for another three or four years. Saturn's general manager said the brand's...
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Filed under: Government/Legal , Chrysler, LLC. , Earnings/Financials , UAW/Unions The UAW jobs bank is a kind of employment limbo in which workers get paid a portion of their salary but don't work while they wait for their job to open up again. Last year, there were about 3,500 people in this so-called bank of jobs. It is the kind of benefit that can perplex an outsider, because someone can remain in the job bank for years and still get a wage from the company, plus supplemental pay from the company, plus unemployment benefits, plus insurance. That was the kind of thing that Congress zeroed in on when it created stipulations for granting GM and Chrysler $17.4 billion in bridge loans. The intent was to get domestic automaker costs in line with those of foreign automakers by not paying people who aren't actually working. Due to that, Chrysler's job bank will officially end on Monday, with workers still in the bank being moved to another quizzical state: "enhanced layoff."...
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Filed under: Government/Legal , GM , Earnings/Financials Cue the angels! General Motors reports that it has received the second installment of the $13.4 billion government loan that it was promised by former President Bush late last month. Sure, it may have arrived a few days late, leading GM's coffer-keepers to anxiously check their mailboxes every few minutes, but it showed up with time to spare before The General ran out of funds to pay the bills on March 31st. For those keeping track, GM's total draw from the bridge loan so far rings the taxpayers' registers to the tune of $9.4 billion, leaving $4B still to come at a later date. In order to keep the money, GM must go back to Congress by February 17th with a full progress report detailing how it is fairing in reducing its current $28 billion in debt. [Source: Automotive News - sub. req'd] Followup: GM receives second gov't loan installment of $5.4 billion originally appeared on Autoblog on Thu, 22 Jan 2009 15:28:00...
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