Late last year, the red-faced execs at General Motors admitted it could not survive the first quarter without another federal bailout of cash - US$2 billion to be precise (AUS$3.058 billion).
However, the company's head honcho Rick Wagoner told the US auto industry task force yesterday that it no longer needed the additional dosh, citing 'company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February' for the sudden bank balance improvement.
In February, GM's viability plan pointed at a bailout of US$17 billion, and several billion was needed immediately just to get past the next month. Shared in the company immediately rose as a result of market confidence, and the positive PR from refusing the life raft will surely be passed on to their auto sales.
However, the 'responsible' cost cutting comes at a price, with GM losing its performance models and its performing staff at a rapid rate to stave off bankruptcy.
OFFICIAL PRESS RELEASE
GM Statement Regarding the Ratification of the CAW Agreement and Update on Cash position
Attributable to Ray G. Young, GM executive vice president and chief financial officer
As GM Canada announced last night, the members of the Canadian Auto Workers (CAW) union have ratified a new competitive agreement with GM Canada (GMCL), which is vital to the continued transformation of the Canadian operations. The agreement between GMCL and the CAW will quickly reduce costs in Canada by significantly closing the competitive gap with U.S. transplant automakers on active employee labor costs and substantially reducing GMCL's legacy costs by introducing cash contributions for health benefits, increasing employee health care cost sharing, freezing pension benefits and removing hourly pension cost of living adjustments.
In addition, GMCL and the CAW will work together with the Canadian government to explore the possibilities of adopting a similar approach to the GM UAW VEBA in the U.S. GM is also continuing its negotiations with the Canadian and Ontario governments for support for the Canadian operations during this unprecedented industry downturn.
In the U.S., GM has also indicated they have advised the Presidential Task Force on The Auto Industry that the $2 billion of funding previously requested for March would not be needed at this time. This development reflects the acceleration of GM's company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February. GM will remain in regular contact with the Presidential Task Force on the Auto Industry on the status of GM's restructuring actions, its liquidity position, timing of future funding requests, and other relevant topics of mutual concern.
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