Spring Hill GM workers on standby
Monday, June 1, 2009, 8:15am CDT | Modified: Monday, June 1, 2009, 3:52pm
Spring Hill GM workers on standby
Nashville Business Journal
General Motors Corp.
workers in Spring Hill will go on standby until November, as the once-mighty automaker enters bankruptcy.
GM filed for Chapter 11 bankruptcy this morning in U.S. Bankruptcy Court in Manhattan, the largest-ever U.S. manufacturing bankruptcy. The bankruptcy, which is expected to go quickly, now effectively gives taxpayers 60 percent ownership of the company.
Monday’s Chapter 11 filing by the 101-year-old company — once the world’s biggest automaker — is among the largest in U.S. history. Chapter 11, which allows the company to operate while protected from its creditors, pushes GM into a fast-track bankruptcy and provides $30 billion of additional taxpayer funds to restructure itself.
General Motors CEO Fritz Henderson said in a prepared statement that GM was being reinvented and that the company is ready for the job at hand.
"The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business," he said. "We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business."
The bankruptcy follows months of speculation that GM would have to restructure through the courts, despite desperate attempts by management to avoid the move. As it turned out, though, the bankruptcy filing was the only way GM could get its hands on the government money it needs to survive. In its filing, GM listed $82.3 billion in assets and $172.8 billion in debts.
The automaker’s top creditors listed in the filing include Nashville-based Bridgestone Corp. The company also owes the tiremaker $4.4 million.
The U.S. government has already injected $20 billion into GM, and will provide another $30 billion to keep the company going as it works through bankruptcy. The investment will buy the government a 72.5 percent stake.
That will give government officials more power to name members of the GM board. Officials have said they don’t want to get involved in the daily operations of the company.
The GM plan as detailed by U.S. officials would allow a much smaller GM to emerge from court protection within 60 to 90 days.
GM also plans to close 11 U.S. facilities by the end of 2010, and will idle another three plants, including the plant in Spring Hill, which employs more than 3,000 people.
The Spring Hill plant will stop production but remain on standby until November, the company said. The plant reopened in October 2008 after a 12-month, $1 billion refurbishment and modernization to produce the Chevrolet Traverse crossover vehicle and parts for other GM cars and trucks.
"I fear that Spring Hill’s families are now paying for Washington’s folly. The uncertainty they are facing today could have been avoided," Tennessee Congresswoman Marsha Blackburn said in a statement released Monday. "Late last year, I joined my colleagues in recommending a structured bankruptcy for General Motors and Chrysler. The bailout alternative that was pursued has failed. What we are left with is the near complete nationalization of what was once our nation’s flagship industry, mountains of federal debt, families uncertain about their future now that the Spring Hill plant sits idle, and the parts suppliers and small businesses who depended on Spring Hill facing tough choices."
The plants slated to close include two assembly plants, Pontiac, Mich. (October 2009), and Wilmington, Del. (July 2009), and three stamping plants, Grand Rapids, Mich. (June 2009), Indianapolis, Ind. (December 2011), and Mansfield, Ohio (June 2010).
Powertrain facilities in Livonia, Flint and Ypsilanti, as well as Parma, Ohio, and Fredericksburg, Va., are also on the closure list.
GM plans to sell or close such brands as Saturn, Saab, Hummer and Pontiac, and will shed 2,600 dealerships.
The automaker has not provided an updated target for job cuts but was looking to eliminate 21,000 U.S. factory jobs from the 54,000 United Auto Workers union members it now employs.
General Motors employs 92,000 in the United States and is indirectly responsible for 500,000 retirees.
The U.S. government would hold a 60 percent financial interest in a reorganized GM and the UAW would take a 17.5 percent stake. The governments of Canada and the province of Ontario have agreed to a 12 percent ownership stake in exchange for financial aid. GM bondholders would get 10 percent.