DETROIT – Chrysler LLC on Tuesday told the U.S. government it needs even more taxpayer money to survive. General Motors is expected to do the same. Acknowledging that industry conditions are worse than expected when it made the case in December for a government bailout, Chrysler requested an additional $5 billion in government loans. It originally said it would need $3 billion more. The company had previously received $4 billion from the Treasury Department.
General Motors Corp. is expected shortly to release the details of its own restructuring plan and follow that up with a news conference at 6:30 p.m. GM has received $13.4 billion in government loans – $4 billion of that on Tuesday.
To prove they can survive as viable companies, both Chrysler and GM need to sharply reduce costs. To that end, Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models. GM has previously outlined reductions to both its hourly and salaried work force and has said it plans to cut back to four vehicle brands from eight.
Both companies are required to reach concessions with the United Auto Workers union and debt holders. While no final deal was reached ahead of the government-imposed 5 p.m. deadline for the restructuring plans, GM was said to be close to an agreement on labor concessions and Chrysler said concessions have been fundamentally agreed upon. The progress in the GM talks was according to a person briefed on the negotiations who asked not to be named because GM’s plan hasn’t been submitted.
GM executives have said the company only has to show substantial progress by the deadline, with the whole plan finalized by March 31.
The plans still have to be vetted by Treasury and the new autos task force announced by the Obama administration Sunday night.
The news came on a day when President Barack Obama signed into law a massive economic recovery plan. Signs that the recession is deepening were more immediate for investors, however, and they dumped stocks and pushed oil prices sharply lower.
GM is likely to seek more money, at least up to the $18 billion that it requested from Congress in December under its worst-case scenario projections. That scenario has arrived with U.S. sales at a 26-year low and auto sales dropping in other parts of the world, a person briefed on GM’s plan said.
The plan will stick with GM’s public strategy of trying to remain viable and avoiding Chapter 11 bankruptcy protection, said the person, who spoke on condition of anonymity because the plan has not been finalized.
GM’s plan will discuss cost savings from labor concessions and additional plant closures, but the locations of those plants will not be revealed, another person briefed on the plan said Monday. The number of factories to be closed wasn’t available.