GM Reveals Last Contingency Plan to Avoid Bankruptcy
Struggling carmaker General Motors Corp. (GM) on Monday revealed its final restructuring plans that include massive workforce reduction which can affect more than 21,000 employees and possible government takeover on its majority of stock.
With these contingency plans, the company expects to keep its finances afloat amid weak demand and record-low sales in decades.
Carmaker giant General Motors Corp. (GM) on Monday revealed its final restructuring plans including massive workforce reduction which can affect more than 21,000 employees and possible government takeover on its majority of stock. With these contingency plans, the company expects to keep its finances afloat amid weak demand and record-low sales in decades.
Massive layoff is expected to take place next year in line with GM’s cost-cutting measures which are required by the federal government in exchange for its financial aid.
In a conference, GM chief executive Fritz Henderson revealed their plans to offer United Auto Worker (UAW) 50 percent of the stock, apart from the initial proposal to allow the federal government to takeover majority of GM’s stock. If this will succeed, the government and worker’s health care trust will account for nearly 90 percent of the carmaker’s stock share.
Meanwhile, the administration has not yet decided if the proposed takeover is a viable business move that can lift the ailing finances of the car manufacturer which has experienced slumping sales for the past few months due to global recession.
In exchange of providing $15.4 billion bailout package to GM, the government said the carmaker should be able to restructure its business, adopt cost-cutting measure and contingency plans, and meet other concessions before June 1. If GM will fail to do such requirements, it will be forced to file bankruptcy protection which is more expensive to solve.
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