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GM, Chrysler to submit survival plans today

DETROIT — General Motors will file what is expected to be the largest restructuring plan of its 100-year history today and is pressing the United Automobile Workers to help cut GM's vast bills for retiree health care.

The restructuring plan is a step it must take to justify its use of a $13.4 billion loan package from the federal government.

The plan will outline in considerable detail, over as many as 900 pages, how GM will further cut its work force, shutter more factories in North America and reduce its lineup of brands from eight to just four, according to executives familiar with its contents. The remaining core brands will be Chevrolet, Cadillac, GMC and Buick.

But GM's plan to shrink its way to profitability will not mean much without an agreement with the UAW. On Monday, GM pressed union leaders in a meeting in Detroit for a deal on funding what was the centerpiece of the 2007 UAW contract — a perpetual, GM-funded trust to cover health care costs of hundreds of thousands of retired hourly workers and their surviving spouses.

Both sides were hopeful that either an agreement, or at least significant progress, might be achieved by the time GM submits its plan, according to three people familiar with the substance of the negotiations.

Talks are also continuing between the UAW and Ford and Chrysler, but primarily at GM, where the question of how a company that lost more than $20 billion last year can afford $5 billion a year in medical bills.

GM's future obligations for retiree health care are estimated at $47 billion, and by next year it is required by its contract to contribute more than $10 billion to the trust set up in 2007.

The company, which nearly ran out of money before receiving the first $9.4 billion of its $13.4 billion in late December, is pressing the UAW to accept stock for as much as 50 percent of its next contribution to the trust, according to two people familiar with the discussions.

In its overall plan, GM needs to show President Obama's new Cabinet-level task force that it can substantially reduce costs and make a convincing case about its long-term viability by a March 31 deadline.

The company has already extended buyout offers to its entire U.S. unionized work force to reduce their ranks by another 20,000 jobs. It has also announced a 14 percent reduction in salaried workers around the world, leaving many of its white-collar workers in Detroit with limited prospects.

The plan will also likely include revisions in executive compensation and targets for cutting dealers and brands such as Saturn and Pontiac.

Details of the plan have been closely guarded. GM's board of directors met Monday to review its contents, which won't be finalized possibly until today, according to one GM official who spoke to the New York Times and asked not to be identified because of confidentiality agreements.

Chrysler was also said to be in the final stages on Monday of completing its plan, which will include further cuts in its manufacturing operations in the United States and more details on its strategy to rebuild its product lineup with a network of foreign alliances.

White House spokesman Robert Gibbs said Monday that the Obama administration is "anxious" to see the plans, but shared no timetable on when the president's task force will comment.

The president on Monday designated Treasury Secretary Timothy Geithner and Lawrence Summers, the chairman of the National Economic Council, to oversee the task force on the auto industry. The move surprised executives at GM and Chrysler, who were expecting the appointment of a "car czar" who would play an active part in negotiations between GM and Chrysler and their unions and lenders.

GM, Chrysler to submit survival plans today 02/16/09 [Last modified: Monday, February 16, 2009 11:37pm]
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