GM is scrambling to pinch pennies to assure its liquidity throughout 2009. The company has announced it will raise 230 million US dollars by selling its remaining stake in Suzuki Motor. It also said it will be delaying incentives payments to dealer by two
GM is scrambling to pinch pennies at every turn. Yesterday GM announced it will sell its remaining shares in Suzuki Motor for 230 million US dollars. Now, it has announced a series of cost saving measures to shore up its bottom line.
GM will delay incentives payments to its network of 6,500 dealers for about two weeks. The company did not say how much this measure would save them.
GM also said it will save about 500 million US dollars per year due to a re-negotiated labor agreement with the UAW in 2007. The agreement allows for outsourcing of certain non-core services such as janitorial work.
But the biggest savings from the new labor contract will not come until 2010. Those savings derive mostly from a relief to its burdening retiree costs when a trust established by the UAW will take over hourly health care benefits for former employees. GM will save about 4 billion dollars annually in health care costs due to the measure.
But GM says 2010 is too late to save the company and that it needs a loan right now to assure its liquidity throughout 2009.
Democratic Congressional leaders are still trying to push for a 25 billion dollar bailout (in the form of loan guarantees) but the Bush administration remains skeptical about providing money to the failing automakers.
President-elect Obama is in favor of the bailout. But he does not take office until January 20th, 2009. GM says it might be too late for them by then.