'GM's Plan For 2009'

GM's Plan For 2009

By Lens Flare at 07/16/08 16:03

This early, GM (General Motors have already laid out plans that may help them out of the pit. For the first quarter of the year, GM loss about 36% of their sales and the signs of good sales is still not appearing.

However, they have devised plans on how to boost their sales when 2009 comes. I guess they are the only ones who can help themselves especially now that President George W. Bush have already turned down the idea of giving American car makers a bail out.

“Should the government bail out private enterprise? The answer is no, it shouldn’t,” said the US President. About the issue of the increasing price of oil, he also gave his remarks. “People can figure out whether they need to drive more or less; they can balance their own checkbooks.”

Obviously, GM cannot expect any help from the Bush administration and would need to resolve their own problem without aid from the government. Having said that, rumors of GM selling their Hummer line is getting loud. And perhaps, that is the next thing that will happen in the coming weeks. And they have to execute the following plans they prepared for 2009.

Operating Actions

• GM won’t increase R&D spending as planned. Instead, spending will remain at 2006/2007 levels.
• A major part of the reductions is related to the delay of the next generation large pickup and SUV program, as well as V8 engine development and associated capacity.
• Powertrain spending will be increased to support development of alternative propulsion, fuel economy technologies, and small displacement engines.
• Further plant closures and layoffs are possible. GM will be sitting down with plant leaders and unions soon.
• GM will reduce salaried workers through normal attrition, early retirements, and mutual separation programs.
• There will be no new base compensation increases for salaried employees for the remainder of 2008 and 2009.
• There will be no cash bonuses for the company’s executive group in 2008. For top executives, this means a reduction of 75 to 84 percent in compensation.
• Health care coverage for U.S. salaried retirees over 65 will be eliminated, effective January 1st. Affected retirees and surviving spouses will receive a pension increase from GM’s over funded U.S. salaried plan.
• GM’s board decided to suspend future dividends on common stock, effective immediately.
• $2 billion savings related to reduction of raw material, work-in-progress and finished goods inventory levels as well as lean inventory practices at parts warehouses.
• GM will defer approximately $1.7 billion of payments that had been scheduled to be made to the UAW VEBA fund.

Asset Sales and Financing

• GM expects to raise $2 to $4 billion from asset sales. GM reiterated it is considering a sale of the Hummer brand and “continuing to focus on profit improvement initiatives across all remaining GM brands.”
• GM is targeting at least $2-3 billion of financing. The company says its $20 billion in assets would warrant even more financing, but sufficient liquidity can be achieved through those amounts.

(details from leftlanenews)

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