GM to cut 21,000 jobs AND kill Pontiac

[Car Freak]

Saturn, Hummer and Saab also in trouble.

 

General Motors (GM) is to cut 21,000 US jobs this year and phase out its Pontiac brand, as it aims to meet a 1 June deadline to revamp its business.

 

GM has to complete its restructuring by then to gain the government loans it needs to avoid bankruptcy protection.

 

After shedding Pontiac by the end of 2010, GM will focus on its Chevrolet, Cadillac, Buick and GMC brands.

 

The firm also said it hoped to halve its debts by persuading bondholders to swap $27bn (£19bn) of bonds for shares.

 

The loss of 21,000 blue-collar jobs includes an additional 7,000 to 8,000 employees from a plan submitted to the government on 17 February.

 

The cuts mean that its American workforce will be reduced from 61,000 to 40,000.

 

GM also wants the government to swap half its current loans for a 50% stake.

 

The government has so far given GM $15.4bn in loans.

 

Shares in General Motors rose 21%, or 35 cents, to $2.04.

 

Nostalgia

 

GM's chief executive Fritz Henderson said the decision to eliminate Pontiac had been tough because of the 83-year-old brand's heritage.

 

The brand was known for models including the Firebird and the Trans Am.

 

And its GTO model was the inspiration behind songs by the Beach Boys and Ronny and the Daytonas.

 

But Mr Henderson said GM had just not been able to make Pontiac work.

 

"We didn't think we had the resources to get this done from a product perspective," he said.

 

Falling sales

 

GM said it also wanted its main union, the United Auto Workers, to accept shares in the firm in exchange for cancelling 50% of the $20bn the firm must pay into a union-run healthcare trust.

 

GM also said it would reduce the number of its US dealerships by 42% from 6,246 in 2008 to 3,605 by the end of 2010.

 

"This reduction in US dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets," GM said in a statement.

 

After all the proposed changes, existing GM shareholders would own only 1% of the firm.

 

'New path'

 

Like US rivals Ford and Chrysler, GM has seen sales fall sharply in its core home market in recent years, a decline that has intensified as the recession has continued.

 

The White House's car industry taskforce said it welcomed GM's latest announcements, but added that the government had yet to make a decision regarding the carmaker's proposal that it exchange half the current loans for a 50% stake in the firm.

 

"The interim plan that GM laid out in this filing reflects the work GM has done since 30 March to chart a new path to financial viability," it said in a statement.

 

"We will continue to work with GM's management as it refines and finalises this plan and with all of GM's stakeholders to help GM restructure consistent with the president's commitment to a strong, vibrant American auto industry."

 

http://news.bbc.co.uk/2/hi/business/8021029.stm

 

http://money.cnn.com/2009/04/27/autos/pontiac_obit/index.htm

 

 

I can't believe they'd do this to Pontiac... It's a brand with just so much history and heritage, particularly during the '60s Muscle car era. Gosh GM is desperate, eh? :(

[Shy Guy]

Well its too bad that Pontiac will die, why not kill some brand that doesn't have so much history like Saturn or something, I guess Pontiac will join Plymouth now :(

[KoenigseggBG]

Pontiac dead...:cry: Damn, I loved their sport sedans and sport trucks. Plus, the GTO was a legend. :)

[Baltoman]

No more Aztek then YAY. Oh wait... those GTOs *cries*

[t.]

Oh wait... those GTOs *cries*

It lives on as a Holden and Vauxhall so it's not dead.

[gingervette]

Just as the Solstice and G8 begin to sell like hotcakes, this happens. I don't see why they killed Pontiac instead of GMC, but whatever. This is a decision that they will regret.

[Pherelas]

Only one that I would be sorry to see go would be Saab to be honest, then again not into american cars.

[Immelmann]

I hate American cars, so I don't even need to say anything, you all know what this really means to me. :p

[kalniel]

I'm sure they'll keep the brand name to ressurrect if they survive this period. But they are in MASSIVE financial trouble, and even this drastic action is possibly too little, too late.

 

I'm just glad Opel has been spun off - they made very useful cars.

[Shy Guy]

It lives on as a Holden and Vauxhall so it's not dead.

 

GTO production was stopped in '06 I think anyways

[gingervette]

I believe teh best move for GM right now is to file for bankrupcy. I didn't think so at first, but the new deal the government has tried to con them in to involves GM giving half (exactly 50%) of their profit to the government once they become profitable again.

 

I don't believe it's worth it. If they file bankrupcy, then the unions will be gone(which is what has got GM in the shape their in), it will help with their debt, and they can have a fresh start with new managment.