General Motors is set to cut 47,000 jobs and plans to seek up to $30 billion aid and this move by GM is just another testament to how bad the future of General Motors look. It is also part of the plan of General Motors to idle five more US factories. All these moves are part of General Motors’ massive restructuring plan. The carmaker is the recipient of the $13.4 billion in federal loans and it plans to seek another $16.6 billion the moment the economic fails to get back on track. In a news report, it added that General Motors can achieve its profitability in two years time and can fully repay its loans by 2017. The company’s plan was submitted to the Obama administration for review. General Motors is also working to win concessions form United Auto Workers and the bond holders of the company in order to effectively re-size the company. The UAW also had talks with Chrysler LLC and Ford Motor Co. and said that it had reached a tentative deal on contract changes. Still based on reports, there are still discussions on how the companies will fund the union-run trust funds that will take the companies’ healthcare obligations for the retireees for next year. General Motors’ brand will be down to four last December- Chevy, Buick, Cadillac and GMC. And GMC is considering the sales of Hummer.
According to some reports, Nissan may forecast a loss to as much as 1 billion USD. Based on the report, the announcement of that loss may happen this Monday when Nissan announces the third quarter earnings. The figures will reflect the slump that is happening in auto sales right now and this is also a reflection of the impact of the stronger yen. It is not just Nissan who has this problem. As reported too, rival Toyota Motors Corporation will be handed its first operating loss since World War. Nissan is Japan’s third largest automaker. The supposed ‘loss’ of Nissan is actually based on the survey conducted among analysts.
The latest news on Nissan is that the company is now also lining up for help. The company is now also seeking a federal efficiency loan in the US and this is the only Japanese car maker to do so. To be exact, Nissan is seeking the federal loan under the US program for the fuel-efficient automobiles and the company is competing with General Motors Corporation, Ford Motors and Tesla. The source of funds will be the Energy Department and loans will be taken out from the $25 billion fund. These will be the source of the low cost loans which can be given to succesful applicants in one or two months. The rules for the low cost loans has been finalized last November and the department got 75 applications for projects and the overall project cost $38 billion. Of the 75, only 25 were considered as substantially complete.
The Democrats in Congress are taking notice. They want to support the ailing US auto industry, and they want to provide more aid to the ailing sector which is bleeding in cash and jobs. The push was made by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid thru a letter that was sent to Treasury Secretary Henry Paulson. On the letter, the two lawmakers pushed for the expansion of the $700 billion bailout to include car companies. In the letter they said;
A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector’s work force. The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force.
This should be a welcome development for the automotive industry if the move will push thru.