Two members of Detroit's Big Three automakers had big announcements today regarding their attempts to secure more federal bailout money.
GM confirmed several aspects of its massive restructuring process, and Chrysler released news of a tentative concession agreement with the United Auto Workers union and a ratification of its deal with the Canadian Auto Workers.
The announcements come at a time when the auto manufacturers are attempting to meet the demands of the US government in order to qualify for more federal assistance and stave off bankruptcy filings.The most recent steps that GM will take towards that end involve cutting 21,000 US factory jobs, eliminating the Pontiac brand, asking the government to take stock in the company in exchange for half the amount of its government debt, and offering a debt-for-equity swap to the company's bondholders.
The details of Chrysler's agreement with the UAW were not released, but the union did say that the deals were negotiated with Chrysler, Fiat Group SpA and the US government. This is encouraging news for Chrysler since it indicates that the Treasury Department has signed off on the cost cuts contained in the deal, and also shows that Fiat is serious about its offer to purchase a 20 percent stake in the company.
The federal deadline is looming, though, and many industry insiders doubt that GM and Chrysler can satisfy the government and get further federal bailout funds. GM has already begun "intense" and "earnest" preparations for an eventual bankruptcy filing.
Today's announcements, however, are sure to raise hopes that the struggling automakers can meet the government's deadline for reorganization and avoid a trip to bankruptcy court.