US automaker Ford Motor Co. will shutter one of its manufacturing plants in Canada in 2011, a move that will cut 1,400 jobs, the Canadian Auto Workers said Friday.
As part of a cost-reduction agreement between the company's US headquarters and the CAW, the plant in St. Thomas, Ontario, will close in the third quarter of 2011, the powerful union said in a statement.
Some 1,400 employees will be dismissed, CAW spokeswoman Shannon Devine told AFP. Canadian media put the number of jobs eliminated at 1,600.
As part of the tentative agreement the union said it obtained a commitment by the US automaker to keep at least 10 percent of its North American production in Canada.
"During the negotiations, Ford threatened that if we didn't come to an agreement, the company would begin shifting investment out of Canada," said Ken Lewenza, president of the CAW.
"In today's globalized economy where companies attempt to bypass community commitments, it's crucial that we don't allow this to happen."
The agreement, which expires in September 2012, is expected to be voted on and approved Sunday by the CAW's 7,000 Ford workers in Canada.
The St. Thomas plant produces the Ford Crown Victoria -- a model routinely chosen by US police forces and New York taxis -- as well as the Mercury Grand Marquis.
Although Ford did not accept bailout money from the US government like Chrysler and General Motors did, the CAW said Ford followed the pattern set out earlier in the year by its US rivals to cut significant portions of their Canada operations as part of restructuring.
Chrysler and GM both filed for bankruptcy and received billions of dollars in US government aid. Canada's government also pumped billions of dollars into the companies as part of packages to keep their auto manufacturing operations here afloat.
As part of the new deal, the CAW agreed to a reduction in holidays and a requirement for workers to contribute to the company's pension fund at the rate of one dollar for every hour worked, Devine said.
Ford for its part made new production and investment commitments in several manufacturing locations in Canada, including production of "at least two new-generation vehicles in the next product cycle" at its Oakville plant outside Toronto.
"This footprint commitment was an important achievement for the union," Lewenza said.
But Ford stood firm on closure of the St. Thomas plant.
"Nothing was harder... than coming to the realization that regardless of whatever suggestions the union came up with to save the St. Thomas facility, Ford would be closing the plant," said Mike Vince, chairman of the CAW-Ford bargaining committee and president of CAW Local 200.
Ford committed to funding and opening a center to assist workers unemployed after the plant closure.
Agencies
Showing posts with label Ford. Show all posts
Showing posts with label Ford. Show all posts
Saturday, October 31, 2009
Friday, September 25, 2009
Ford Motors on a hiring spree in India
Ford Motors has signed an agreement with the Tamil Nadu government for the $500-million expansion programme at its manufacturing facility at Maraimalai Nagar, a city suburb.
As part of its plan to expand its manufacturing facility in Chennai, car manufacturer Ford India has announced that it will hire 1,000 people. The expansion of the manufacturing unit will be completed by next year.
According to a company official, the company has already hired 400 people and the rest will be recruited by next year. On Thursday, the company signed an agreement with the Tamil Nadu government for the expansion by setting up new engine manufacturing units. As a part of its expansion plans, the company would double its vehicle production capacity to two lakh units per year. A new engine production unit with a capacity of 2.5 lakh is also being set up at a total invest cost of $500 million announced early last year.
The agreement was signed by Industries Secretary Farooqui on behalf of the government and Ford Managing Director Michael Boneham before Tamil Nadu Chief Minister M Karunanidhi and U.S. Ambassador Tim Roemer among other officials.
Agencies
As part of its plan to expand its manufacturing facility in Chennai, car manufacturer Ford India has announced that it will hire 1,000 people. The expansion of the manufacturing unit will be completed by next year.
According to a company official, the company has already hired 400 people and the rest will be recruited by next year. On Thursday, the company signed an agreement with the Tamil Nadu government for the expansion by setting up new engine manufacturing units. As a part of its expansion plans, the company would double its vehicle production capacity to two lakh units per year. A new engine production unit with a capacity of 2.5 lakh is also being set up at a total invest cost of $500 million announced early last year.
The agreement was signed by Industries Secretary Farooqui on behalf of the government and Ford Managing Director Michael Boneham before Tamil Nadu Chief Minister M Karunanidhi and U.S. Ambassador Tim Roemer among other officials.
Agencies
Monday, April 13, 2009
Tech Mahindra bags Satyam Computers sale bid
IT services provider Tech Mahindra is the new owner of Satyam Computer Services. The company bid the highest at Rs 58 per share,
pipping rivals engineering firm Larsen & Toubro and billionaire investor Wilbur Ross to the post.
Engineering firm L&T bid at Rs 45.90 per Satyam share, Kiran Karnik, chairman of the govt constituted Satyam board told reporters.
Karnik also said that the Cognizant-Wilbur Ross combine had put in their bid at Rs 20/share for the fraud hit IT co.
Tech Mahindra will have to pay Rs 1,757 crore to buy a 31% stake in Satyam Computer Services. The IT co will have a market cap of Rs 5,666 crore on expanded equity. Tech Mahindra will have to pay a total of Rs 2890 crore for 51% stake in Satyam.
The acquisition will help the company, an arm of the Mahindra & Mahindra Group, to diversify into new areas instead of just depending on the telecom sector.
The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.
Satyam, which serves customers such as GE, GM and Ford will also help Tech Mahindra build a better portfolio of customers.
Satyam has a 46,600 strong work force, land assets of 450 crore, besides the order book position. Its liabilities include the legal liabilities arising out of the class action suits filed by shareholders in the US, besides any liability arising out of the tussle with UK based mobile payments services provider Upaid.
Agencies
pipping rivals engineering firm Larsen & Toubro and billionaire investor Wilbur Ross to the post.
Engineering firm L&T bid at Rs 45.90 per Satyam share, Kiran Karnik, chairman of the govt constituted Satyam board told reporters.
Karnik also said that the Cognizant-Wilbur Ross combine had put in their bid at Rs 20/share for the fraud hit IT co.
Tech Mahindra will have to pay Rs 1,757 crore to buy a 31% stake in Satyam Computer Services. The IT co will have a market cap of Rs 5,666 crore on expanded equity. Tech Mahindra will have to pay a total of Rs 2890 crore for 51% stake in Satyam.
The acquisition will help the company, an arm of the Mahindra & Mahindra Group, to diversify into new areas instead of just depending on the telecom sector.
The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.
Satyam, which serves customers such as GE, GM and Ford will also help Tech Mahindra build a better portfolio of customers.
Satyam has a 46,600 strong work force, land assets of 450 crore, besides the order book position. Its liabilities include the legal liabilities arising out of the class action suits filed by shareholders in the US, besides any liability arising out of the tussle with UK based mobile payments services provider Upaid.
Agencies
Thursday, February 12, 2009
Will General Motors layoff 10,000 salaried jobs?
General Motors Corp. said on Tuesday it will cut 10,000 salaried jobs, citing the need to restructure itself with a government deadline looming and amid some of the worst sales in the auto industry's history.
The Detroit-based automaker said it will reduce its total number of salaried workers to 63,000 from 73,000 this year. About 3,400 of GM's 29,500 salaried U.S. jobs are expected to be eliminated.
The company's statement said that the separations would be done through GM's severance plan, so there would be no buyout or early retirement packages as GM had offered in the past.
In its plan to Congress submitted late last year, GM said work force reductions would be necessary in order for it to be viable for the long term. Most of the cuts are expected to take place by May 1.
GM said the cuts will vary by global regions depending on staffing levels and market conditions.
In addition, GM said it will cut the pay of most of its salaried U.S. workers beginning May 1 and continuing at least through the end of the year at which time the pay cuts will be evaluated.
The pay of U.S. executive employees will be cut by 10 percent, while other salaried workers will see cuts of 3 percent to 7 percent, GM said.
GM faces a Feb. 17 deadline to present to the government a plan showing it can become viable. The plan is required by the terms of $9.4 billion in low-interest government loans to the wounded automaker, which is seeking another $4 billion from the Treasury Department.
The automaker is negotiating with bondholders and the United Auto Workers union for concessions and it is planning to close several factories. To prove its viability, it must show an ability to repay the loans and prove "positive net present value."
Agencies
The Detroit-based automaker said it will reduce its total number of salaried workers to 63,000 from 73,000 this year. About 3,400 of GM's 29,500 salaried U.S. jobs are expected to be eliminated.
The company's statement said that the separations would be done through GM's severance plan, so there would be no buyout or early retirement packages as GM had offered in the past.
In its plan to Congress submitted late last year, GM said work force reductions would be necessary in order for it to be viable for the long term. Most of the cuts are expected to take place by May 1.
GM said the cuts will vary by global regions depending on staffing levels and market conditions.
In addition, GM said it will cut the pay of most of its salaried U.S. workers beginning May 1 and continuing at least through the end of the year at which time the pay cuts will be evaluated.
The pay of U.S. executive employees will be cut by 10 percent, while other salaried workers will see cuts of 3 percent to 7 percent, GM said.
GM faces a Feb. 17 deadline to present to the government a plan showing it can become viable. The plan is required by the terms of $9.4 billion in low-interest government loans to the wounded automaker, which is seeking another $4 billion from the Treasury Department.
The automaker is negotiating with bondholders and the United Auto Workers union for concessions and it is planning to close several factories. To prove its viability, it must show an ability to repay the loans and prove "positive net present value."
Agencies
Tuesday, February 10, 2009
GM to cut 10,00 salaried jobs
General Motors says it's cutting 10,000 salaried jobs, blaming the need to restructure the company amid the continued drop in new vehicle sales.
The Detroit-based automaker says it will reduce its total number of salaried workers to 63,000 from 73,000 this year. About 3,400 of GM's 29,500 salaried US jobs are expected to be eliminated.
The job cuts are part of the restructuring plan GM submitted to Congress late last year. Most of the cuts are expected to take place by May 1.
GM says the cuts will vary by global regions depending on staffing levels and market conditions.
GM also is cutting the pay of most of its salaried U.S. workers beginning May 1 and continuing at least through the end of the year.
Agencies
The Detroit-based automaker says it will reduce its total number of salaried workers to 63,000 from 73,000 this year. About 3,400 of GM's 29,500 salaried US jobs are expected to be eliminated.
The job cuts are part of the restructuring plan GM submitted to Congress late last year. Most of the cuts are expected to take place by May 1.
GM says the cuts will vary by global regions depending on staffing levels and market conditions.
GM also is cutting the pay of most of its salaried U.S. workers beginning May 1 and continuing at least through the end of the year.
Agencies
Has China overtakes US as largest auto market?
China overtook the United States as the largest auto market in the world in January, according to data published by Chinese state media on Tuesday.
A total of 735,000 automobiles were sold in China last month, state television said, citing Dong Yang, deputy director of the China Association of Automobile Manufacturers.
By contrast, 656,976 vehicles were sold last month in the United States, according to preliminary estimates issued last week by market research firm Autodata.
Agencies
A total of 735,000 automobiles were sold in China last month, state television said, citing Dong Yang, deputy director of the China Association of Automobile Manufacturers.
By contrast, 656,976 vehicles were sold last month in the United States, according to preliminary estimates issued last week by market research firm Autodata.
Agencies
Saturday, January 3, 2009
Will US Treasury mull Citi-style rescues to auto giants?
The US Treasury Department has given itself free rein in deciding the rescues of companies in the finance and auto sectors, according to two Treasury statements published this week.
The Treasury on Friday released guidelines for its Targeted Investment Program (TIP), part of emergency legislation enacted in early October to ease a credit crunch from the worst global financial meltdown since the Great Depression.
In the statement, the Treasury outlined the principles of the program under which it rescued ailing banking giant Citigroup on November 23.
Under TIP, the Treasury said it would determine the eligibility of participants and the allocation of resources "on a case-by-case basis."
"Treasury may invest in any financial instrument, including debt, equity, or warrants, that the secretary of the Treasury determines to be a troubled asset, after consultation with the chairman of the board of governors of the Federal Reserve System and notice to Congress," the department said.
Among the criteria in determining a financial firm's eligibility is "whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets ... or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance."
Wednesday, the Treasury Department posted on its website a description of its Automotive Industry Financing Program, justifying after the fact its decision to lend a combined 13.4 billion dollars in TARP funds to embattled automakers General Motors and Chrysler to stave off their imminent collapse.
"The objective of this program is to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the real economy of the United States," it said.
Similar to its approach to the finance industry, the Treasury said it would determine eligibility of participants in the program on a case-by-case basis.
The Treasury announced on December 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.
Source: Agencies
The Treasury on Friday released guidelines for its Targeted Investment Program (TIP), part of emergency legislation enacted in early October to ease a credit crunch from the worst global financial meltdown since the Great Depression.
In the statement, the Treasury outlined the principles of the program under which it rescued ailing banking giant Citigroup on November 23.
Under TIP, the Treasury said it would determine the eligibility of participants and the allocation of resources "on a case-by-case basis."
"Treasury may invest in any financial instrument, including debt, equity, or warrants, that the secretary of the Treasury determines to be a troubled asset, after consultation with the chairman of the board of governors of the Federal Reserve System and notice to Congress," the department said.
Among the criteria in determining a financial firm's eligibility is "whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets ... or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance."
Wednesday, the Treasury Department posted on its website a description of its Automotive Industry Financing Program, justifying after the fact its decision to lend a combined 13.4 billion dollars in TARP funds to embattled automakers General Motors and Chrysler to stave off their imminent collapse.
"The objective of this program is to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the real economy of the United States," it said.
Similar to its approach to the finance industry, the Treasury said it would determine eligibility of participants in the program on a case-by-case basis.
The Treasury announced on December 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.
Source: Agencies
Thursday, January 1, 2009
General Motors gets first tranche of US loan
General Motors Corp received its first multibillion dollar loan installment from the US Treasury Department Wednesday night, right in time to avert a financial disaster in which the struggling automaker may have been unable to sustain operations and pay suppliers.
``Treasury today finalized the loan transaction for GM and funded the first tranche of $4 billion,'' said Treasury spokeswoman Brookly McLaughlin in a written statement. The funds are the first portion of $9.4 billion in low-cost loans that GM is expected to receive from the government.
The Detroit automaker had been working feverishly with Treasury officials to close on the first loan installment. The money will be available for GM to use almost immediately. The cash-strapped Detroit company plans to use the money for continuing its operations.
GM is obligated to a make a large payment to a major supplier in early January, but has declined to offer details on the amount of money it owes or to which supplier.
``We appreciate the Administration extending a financial bridge to GM at this critical time for the US auto industry,'' said GM in a written statement shortly after the Treasury announcement. ``We are committed to successfully executing the viability plan we submitted on December 2 and remain confident in the future of General Motors.''
The loans come from the $700 billion bank rescue plan, approved by Congress in September. President George W Bush said earlier this month that the ailing automakers could tap part of those funds in the form of low-interest loans.
GM is burning through approximately $33 million a day, based on spending $1 billion per month during the third quarter. That daily amount is likely lower for the fourth quarter as GM has reduced spending on operations, sponsorships, utilities and even office supplies.
GM previously said it might not make it through the end of the year before running out of cash without government aid.
Auburn Hills, Michigan-based Chrysler LLC is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money.
``We're working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near term funding needs,'' McLaughlin said.
Chrysler is nearing the minimum level of cash, $2.5 billion, it needs to operate. Chrysler is already fending off angry parts suppliers and other vendors demanding cash payments on delivery. It generally pays suppliers $7 billion every 45 days.
Chrysler issued a statement Wednesday night, updating the status of its talks with the Treasury.
``We recognize the magnitude of the effort by the Treasury Department to complete these multiple financial arrangements quickly and sequentially,'' the company wrote in a press release. ``The discussions relating to Chrysler have been positive and productive, and we look forward to finalizing the details of our financial assistance in the immediate future.''
Dearborn, Michigan-based Ford Motor Co. said it does not intend to use government money to fund operations, as it is in a better financial position than its competitors. The Detroit automakers are trying to weather the biggest auto sales slump in more than 26 years.
Shares of GM fell 15.8 percent Wednesday, or 60 cents to $3.20, before the Treasury's announcement. Shares of Ford closed unchanged at $2.29.
Earlier this week, GM's financial arm, GMAC Financial Services, received $5 billion in aid from the Treasury Department. In addition, the Treasury said it would lend up to $1 billion to GM so that the automaker would be able to buy more equity from GMAC. Those purchases are expected to raise more capital for GMAC, and separate from the $4 billion received from the Treasury Wednesday.
Source: Agencies
``Treasury today finalized the loan transaction for GM and funded the first tranche of $4 billion,'' said Treasury spokeswoman Brookly McLaughlin in a written statement. The funds are the first portion of $9.4 billion in low-cost loans that GM is expected to receive from the government.
The Detroit automaker had been working feverishly with Treasury officials to close on the first loan installment. The money will be available for GM to use almost immediately. The cash-strapped Detroit company plans to use the money for continuing its operations.
GM is obligated to a make a large payment to a major supplier in early January, but has declined to offer details on the amount of money it owes or to which supplier.
``We appreciate the Administration extending a financial bridge to GM at this critical time for the US auto industry,'' said GM in a written statement shortly after the Treasury announcement. ``We are committed to successfully executing the viability plan we submitted on December 2 and remain confident in the future of General Motors.''
The loans come from the $700 billion bank rescue plan, approved by Congress in September. President George W Bush said earlier this month that the ailing automakers could tap part of those funds in the form of low-interest loans.
GM is burning through approximately $33 million a day, based on spending $1 billion per month during the third quarter. That daily amount is likely lower for the fourth quarter as GM has reduced spending on operations, sponsorships, utilities and even office supplies.
GM previously said it might not make it through the end of the year before running out of cash without government aid.
Auburn Hills, Michigan-based Chrysler LLC is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money.
``We're working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near term funding needs,'' McLaughlin said.
Chrysler is nearing the minimum level of cash, $2.5 billion, it needs to operate. Chrysler is already fending off angry parts suppliers and other vendors demanding cash payments on delivery. It generally pays suppliers $7 billion every 45 days.
Chrysler issued a statement Wednesday night, updating the status of its talks with the Treasury.
``We recognize the magnitude of the effort by the Treasury Department to complete these multiple financial arrangements quickly and sequentially,'' the company wrote in a press release. ``The discussions relating to Chrysler have been positive and productive, and we look forward to finalizing the details of our financial assistance in the immediate future.''
Dearborn, Michigan-based Ford Motor Co. said it does not intend to use government money to fund operations, as it is in a better financial position than its competitors. The Detroit automakers are trying to weather the biggest auto sales slump in more than 26 years.
Shares of GM fell 15.8 percent Wednesday, or 60 cents to $3.20, before the Treasury's announcement. Shares of Ford closed unchanged at $2.29.
Earlier this week, GM's financial arm, GMAC Financial Services, received $5 billion in aid from the Treasury Department. In addition, the Treasury said it would lend up to $1 billion to GM so that the automaker would be able to buy more equity from GMAC. Those purchases are expected to raise more capital for GMAC, and separate from the $4 billion received from the Treasury Wednesday.
Source: Agencies
Wednesday, December 31, 2008
GM cuts financing costs; GMAC expands lending
General Motors Corp and its financing affiliate GMAC on Tuesday announced programs to make it easier for car and truck buyers to get financing, a day after GMAC agreed to sell the government a $5 billion stake.
Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250.
The move is a bid to capitalize on GMAC's separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher.
Many analysts consider borrowers with credit scores of 620 or lower to be "subprime." Dealer wholesale financing is unchanged, GMAC said.
GMAC is owned by GM and private equity firm Cerberus Capital Management LP [CBS.UL].
The changes may help bolster sales at GM, the nation's largest automaker, following a 41 percent plunge in November.
GMAC has traditionally provided the bulk of financing for GM's retail customers and the floorplan financing that dealers rely on to carry car and truck inventory.
Mark LaNeve, GM's sales and marketing chief, said the lower financing costs will encourage customers to "get back into the game."
Source: Agencies
Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250.
The move is a bid to capitalize on GMAC's separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher.
Many analysts consider borrowers with credit scores of 620 or lower to be "subprime." Dealer wholesale financing is unchanged, GMAC said.
GMAC is owned by GM and private equity firm Cerberus Capital Management LP [CBS.UL].
The changes may help bolster sales at GM, the nation's largest automaker, following a 41 percent plunge in November.
GMAC has traditionally provided the bulk of financing for GM's retail customers and the floorplan financing that dealers rely on to carry car and truck inventory.
Mark LaNeve, GM's sales and marketing chief, said the lower financing costs will encourage customers to "get back into the game."
Source: Agencies
Saturday, December 20, 2008
Finally bailout approved: Automakers to get $17.4 bn
Citing danger to the national economy, the Bush administration approved an emergency bailout of the US auto industry on Friday, offering $17.4 billion in rescue loans in exchange for concessions from the deeply troubled carmakers and their workers.
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.
President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.
One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.
Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.
Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies.
If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult.
"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."
He said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.
And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks. If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.
Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.
In addition, the automakers would be required to agree to limits on executive pay and eliminate some perks such as corporate jets.
Paulson said that with the help for the carmakers, the government will have allocated the first half of the largest government bailout program in history.
He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have the resources to address a significant market crisis if one should occur before Congress approves the use of the second half of the rescue fund.
Paulson said he would discuss the process with congressional leaders and Obama's transition team "in the near future.
Source: Agencies
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.
President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.
One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.
Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.
Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies.
If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult.
"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."
He said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.
And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks. If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.
Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.
In addition, the automakers would be required to agree to limits on executive pay and eliminate some perks such as corporate jets.
Paulson said that with the help for the carmakers, the government will have allocated the first half of the largest government bailout program in history.
He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have the resources to address a significant market crisis if one should occur before Congress approves the use of the second half of the rescue fund.
Paulson said he would discuss the process with congressional leaders and Obama's transition team "in the near future.
Source: Agencies
Saturday, December 13, 2008
General Motors calls on UK Govt to rescue it
General Motors, which employs 5,500 people around the UK, is in talks with the British government to secure cash to allow it to continue operating in what the car maker admits are "critical" conditions.
A report in The Telegraph says that the talks follow a decision by the US Congress to vote down a 14 billion dollar loan package to support the American automotive industry on Friday.
The future of British workers at GM plants in Luton and on Merseyside is unclear, as does that of up to a further 5,500 people employed by parts suppliers.
The Gordon Brown Government is likely to take a cautious approach to requests to bail out the UK car industry. It is thought more likely to consider offering bridging loans.
GM said it was "very disappointed" with the US loan package's failure, but continued to "look at options to restructure and stabilize the business in this exceptionally difficult economic period." It claimed to be operating "as usual".
The car maker, which owns brands including Vauxhall, Saab and Opel, said it was in talks with unions and European governments in countries where it has big operations to "provide liquidity for sustaining operations".
Underlining the urgency of the situation, GM said it would seek liquidity "while the US team pursues its options".
GM is also in talks with the German government, where it has Opel production facilities, in a bid to secure a credit guarantee.
The Swedish government yesterday announced a 28 billion Kronor support package to help the car industry. The plan offers credit guarantees, emergency loans and research funds to companies from Volvo to Saab.
Volvo is owned by Ford, which faces similar problems as does GM and Chrsyler.
According to The Telegraph, the Spanish region of Aragon, where GM has an Opel plant, has offered its own 200 million Euros credit guarantee.
Source; Agencies
A report in The Telegraph says that the talks follow a decision by the US Congress to vote down a 14 billion dollar loan package to support the American automotive industry on Friday.
The future of British workers at GM plants in Luton and on Merseyside is unclear, as does that of up to a further 5,500 people employed by parts suppliers.
The Gordon Brown Government is likely to take a cautious approach to requests to bail out the UK car industry. It is thought more likely to consider offering bridging loans.
GM said it was "very disappointed" with the US loan package's failure, but continued to "look at options to restructure and stabilize the business in this exceptionally difficult economic period." It claimed to be operating "as usual".
The car maker, which owns brands including Vauxhall, Saab and Opel, said it was in talks with unions and European governments in countries where it has big operations to "provide liquidity for sustaining operations".
Underlining the urgency of the situation, GM said it would seek liquidity "while the US team pursues its options".
GM is also in talks with the German government, where it has Opel production facilities, in a bid to secure a credit guarantee.
The Swedish government yesterday announced a 28 billion Kronor support package to help the car industry. The plan offers credit guarantees, emergency loans and research funds to companies from Volvo to Saab.
Volvo is owned by Ford, which faces similar problems as does GM and Chrsyler.
According to The Telegraph, the Spanish region of Aragon, where GM has an Opel plant, has offered its own 200 million Euros credit guarantee.
Source; Agencies
Tuesday, December 9, 2008
General Motors India to hire 500 people
Even as companies are giving pink slips to employees as a result of the global meltdown, GM India is increasing its employee strength from the present 4,000 to 4,500 by 2009, a top official of the company said.
"We will be increasing the number of our employees from 4,000 to 4,500 by 2009," GM India Vice-President P Balendran told mediapersons here.
"The 500 include 300 for the car plant in Talegaon, 200 for the powertrain facility, also in Talegaon, and the engineering centre in Bangalore", he said.
On slashing prices, Balendran said the firm, which had been offering discounts ranging from Rs 2,000 to Rs 50,000, besides a discount of Rs 3,000 to Rs 5,000 to government and PSU employees during the festival season, would continue them (discounts) till the end of this month.
However, the firm is planning a price hike of 2-3 per cent in January 2009, he said. The market, Balendran said, was sluggish and the usual sales growth during the festive season, which used to be in the range of 25-30 per cent, had come down to 5-7 per cent this season.
"The main reason for the sluggishness is there is no liquidity in the market. Eighty-five per cent of GM's vehicles are financed, of which 70 per cent are by private banks," he said.
On the Talegaon plant, Balendran said, "The capacity of the plant, which commenced operations in September 2008, can go up from 1.40 lakh units now to 3 lakh units."
Source: Agencies
"We will be increasing the number of our employees from 4,000 to 4,500 by 2009," GM India Vice-President P Balendran told mediapersons here.
"The 500 include 300 for the car plant in Talegaon, 200 for the powertrain facility, also in Talegaon, and the engineering centre in Bangalore", he said.
On slashing prices, Balendran said the firm, which had been offering discounts ranging from Rs 2,000 to Rs 50,000, besides a discount of Rs 3,000 to Rs 5,000 to government and PSU employees during the festival season, would continue them (discounts) till the end of this month.
However, the firm is planning a price hike of 2-3 per cent in January 2009, he said. The market, Balendran said, was sluggish and the usual sales growth during the festive season, which used to be in the range of 25-30 per cent, had come down to 5-7 per cent this season.
"The main reason for the sluggishness is there is no liquidity in the market. Eighty-five per cent of GM's vehicles are financed, of which 70 per cent are by private banks," he said.
On the Talegaon plant, Balendran said, "The capacity of the plant, which commenced operations in September 2008, can go up from 1.40 lakh units now to 3 lakh units."
Source: Agencies
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