GM needs $15bn to ride out slowdown, Wagoner warns

Facing a disastrous slump in sales of its flashy gas guzzling pick-up trucks and sport-utility vehicles, the world's biggest car manufacturer, General Motors, said yesterday that it needs to raise $15bn (£7.5bn) by 2009 if it is to weather the storm ahead.

It is the second major revamp which GM has announced in six weeks.

Denying reports that the company was nearing insolvency, Dan Flores, a spokesman, said: "Bankruptcy protection is not an option that GM is considering."

The rescue plan outlined by GM's chief executive, Rick Wagoner, involves selling $2bn in assets worldwide, slashing the costs of full-time workers 20 per cent, ending the quarterly shareholder dividend, and closing more production lines for trucks in order to fund a turnaround for another two years. GM also plans to borrow up to $3bn to help pay for the restructuring.

GM has been burning through $3bn in cash a quarter, rapidly reducing its $24bn cash stockpile. Analysts were unanimous in the view that the company needs to act quickly to avoid being driven into bankruptcy by a liquidity crisis.

Nothing is safe, it seems, in this company. GM is famous for featherbedding former employees, long after they have gone into retirement. Mr Wagoner said the car maker will end its healthcare cover for retirees at age 65, speed up early retirement, and freeze base pay rates for employees through 2009.

GM has 32,000 administrative employees in the US, which is down from 45,000 in 2000. It has already sacked more than 40,000 employees on hourly wages since 2006.

Mr Wagoner is also spreading the pain to company executives by ending discretionary cash bonuses.

"These are tough but necessary actions," Mr Wagoner said, "and these, along with current cash and available credit lines, will provide us with ample liquidity through 2009, even under conservative US industry sales assumptions."

The news initially sent GM shares to a new low of $8.85, but they recovered to close up nearly 5 per cent at $9.38. The stock was worth more than $40 a share last October.

Last month, Mr Wagoner said he was closing four truck manufacturing plants in the US. Salaried workers who escaped those cuts are now imperilled.

In the first half of 2008, the company's sales collapsed 16 per cent (overall industry sales were down 10 per cent), with GM's truck sales declining by 17.9 per cent.

GM is not alone in its financial woes. Ford began sacking workers recently to cut 15 per cent of its administrative workforce costs by 1 August. Ford has also mothballed manufacturing plants and delayed the introduction of its famously inefficient F-150 pick-up in the face of high petrol prices.

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
ebooksAn unforgettable anthology of contemporary reportage
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments