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GM cuts output, jets as US demands turnaround plans

(Agencies)
Updated: 2008-11-22 10:52

DETROIT/WASHINGTON -- Detroit automakers began work on turnaround plans demanded by Congress in return for $25 billion in aid as General Motors Corp said it would cut production more and give up two of its controversial corporate jets.

Leaders of the US automotive industry testify at a hearing held by the House Financial Services Committee on Capitol Hill in Washington November 19, 2008. From left are General Motors CEO Richard Wagoner, Chrysler Chairman and CEO Robert Nardelli and Ford president and CEO Alan Mulally. [Agencies]

Pushed to the brink of failure by a plunge in auto sales, GM said on Friday it would shut its truck plant in Oshawa, Ontario, Canada 1-1/2 months early and extend regularly scheduled down time at five North American plants to reduce production and keep inventory down.

GM, the top US automaker based on light vehicle sales, said it would return two of its leased jets after intense criticism this week over GM executives' deluxe arrangements for traveling to Washington to plead for a federal bailout. GM is still leasing three corporate jets.

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Congressional leaders agreed on Thursday to give Detroit automakers until next month to make their case for a rescue, but they demanded that GM, Chrysler LLC and Ford Motor Co show they have business plans that can keep them out of bankruptcy.

House Speaker Nancy Pelosi said she and Senate Majority Leader Harry Reid, leaders of the Democratic majority, were sending a letter to the chief executives of the Detroit Three detailing what the high-stakes turnaround plans need to show.

"This isn't to be life support for three months," Pelosi told reporters. "It's about viability for a long time to come."

The companies have said federal aid is the only alternative to bankruptcy and massive job losses.

The letter will demand that automakers provide by December 2 details of their financial positions, short term liquidity needs and explain how they will be viable long term.

They must also detail proposals for meeting massive health care and pension liabilities and increasing fuel efficiency requirements, as well as their sales assumptions.

Democratic leaders issued the ultimatum to Detroit after failing to persuade the White House and congressional Republicans to support using some of a $700 billion financial rescue plan for the auto industry.

Commerce Secretary Carlos Gutierrez said on Friday the Bush administration would not offer emergency federal assistant to the industry if it encounters severe problems in the next few weeks and Congress fails to extend it some help.

BAILOUT WINDOW CLOSING FAST

Analysts said GM, Ford and Chrysler must demonstrate that investors, creditors, management and the United Auto Workers union would share any sacrifices.

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