UPDATE: GM Seeks Cda's Aid To Cover Pension, Retiree Costs
21 Februar 2009 - 12:12AM
Dow Jones News
In its latest bid for aid from governments around the world,
General Motors Corp. (GM) on Friday asked the Canadian government
for help in covering fast-growing retiree costs.
GM didn't specify how much money it needs. But the auto maker
asked the government and Canadian Auto Workers union to help offset
the cost of the country's ballooning population of retired auto
workers.
The company is looking to the government to help cover pension
obligations and the union to take over responsibility for retiree
medical costs, as the United Auto Workers did in the U.S.
In exchange, the auto maker said it would continue to build cars
and trucks in Canada.
In its request, GM called the restructuring plan "achievable and
transformative."
"Despite further North American market deterioration, the
restructuring Plan will achieve long-term viability and enable [GM
Canada] to repay Canadian taxpayers," the company said.
GM's future in Canada has become uncertain as money-saving labor
deals in the U.S. and the weak American dollar reduced Canada's
competitive edge on labor costs. The profitability of Canada's
operations also have taken a hit as sales of large trucks built
there plummeted.
At a news conference, Tony Clement, Canada's Minister of
Industry, said GM indicated it's looking for a loan in the range of
C$6-C$7 billion, while Chrysler is still looking at a loan of about
C$1 billion.
"We're looking at fully-repayable loans," he said. "We expect
the money to come back."
He said that he's encouraged after a preliminary view of the
plans detailed by the troubled automakers, and noted that he was
"especially" encouraged by GM's pledge to launch new vehicles in
Canada and not to close any more plants.
Because Chrysler is forming a single action plan for all of
North America, Clement said he'll need to see "more specifics"
before any money flows to Chrysler.
The willingness of the Canadian Auto Workers to negotiate was
another reason to be encouraged, he said, as in times like this
everyone has to be involved in the restructuring process.
Although job losses can't be avoided because the auto industry
is shrinking, the point of the Canadian government providing the
loans is to save the industry and protect Canada's share, he said,
adding that "bailing out pension plans" isn't on the government's
agenda.
GM in December turned down $3 billion in loans offered by
Canada, instead opting to focus on ways to reduce long-term
structural costs.
GM's pension fund faces a shortfall in Canada, where retirees
outnumber active workers three-to-one, a disparity that will grow
since GM is closing factories and reducing its salaried work force
in the country.
The auto maker avoided bankruptcy last year after the U.S.
government extend $13.4 billion in loans.
Continually sinking sales, however, threaten to push GM back to
brink of bankruptcy. The auto maker on Tuesday asked for another
$16.6 billion in U.S. aid and said it needs at least $6 billion
from other nations.
Without more cash, the auto maker said it could run out of money
by March.
In Canada, GM aims to cut the pay and benefits of salaried
workers while getting the Canadian Auto Workers to agree to
concessions. Under the plan, GM says it will launch five new
vehicles in Oshawa, Ont., and Ingersoll, Ont., including new hybrid
vehicles.
Chrysler LLC is also expected to present plans for its Canadian
operations Friday.
At a press conference regarding receipt of the restructuring
plan, Ontario Minister of Economic Development Michael Bryant
wouldn't comment on the provincial government's plans with respect
to GM Canada's pension shortfall, noting that this issue and others
are still subject to negotiation. But he said he was "encouraged"
by the plan.
GM employs about 12,000 people in Canada, though its presence
there is shrinking. The auto maker plans to close a truck plant in
Oshawa, Ont., this spring and a Windsor, Ont., transmission plant
next year.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com.
(Andy Georgiades in Toronto contributed to this article.)