Detroit - Billions of dollars in government loans already handed out to prop up General Motors and Chrysler won't be enough. The companies, which have received $17.4bn so far, filed plans with the government more than doubling that request to a staggering total of $39bn.
The requests, made in government-required restructuring plans filed on Tuesday, were accompanied by plans for thousands more job cuts, slashing of models and brands, union concessions and the prospect of even further expense cuts.
In a dramatic acknowledgment that conditions in the US auto industry have grown significantly worse in just two months, GM alone said it would cut 47 000 jobs globally by the end of the year - 19% of its work force. It also said it would close five more US factories, although it did not identify them.
Chrysler said it will cut 3 000 more jobs and stop producing three vehicle models.
The grim reports came as the United Auto Workers union said it had reached a tentative agreement with GM, Chrysler and Ford on contract changes. Concessions with the union and debt-holders were a condition of the government bailout.
GM said it could need up to $30bn from the Treasury Department, up from a previous estimate of $18bn. That includes $13.4bn the company has already received. The world's largest automaker said it could run out of money by March without new funds and needs $2bn next month and another $2.6bn in April.
"We have a lot of work to do," General Motors chairperson and chief executive Rick Wagoner said. "We're still going at this with a great sense of urgency."
Huge costs to taxpayers
GM's request includes a credit line of $7.5bn to be used if the downturn is more pronounced than expected. But the automaker claimed it could be profitable in two years and repay its loans by 2017.
The requests pale in comparison to what it might cost taxpayers if GM or Chrysler go bankrupt, said Aaron Bragman, auto industry analyst for the consulting firm IHS Global Insight in Troy, Michigan.
"These are not small, insignificant organisations," he said. "These are the lifeblood of American manufacturing."
The company looked into three bankruptcy scenarios, all of which would cost the government more than $30bn, GM chief operating officer Fritz Henderson said. The worst scenario would cost $100bn because GM's revenue would severely drop, he said.
Although little is known about whether people would buy cars from a bankrupt automaker, some research "suggests that sales fall off a cliff," Henderson said.
Chrysler requested $5bn in new loans on top of the $4bn it received in December. That's $2bn more than expected.
Both requests were part of restructuring plans the two automakers owed the government in exchange for earlier loans.
Treasury Secretary Timothy Geithner, who will lead an Obama administration task force reviewing the plans, said his team would meet "later this week to analyse the companies' plans and to solicit the full range of input from across the administration."
GM job cuts
Dearborn, Michigan-based Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help.
GM and Chrysler plan to reduce the number of models they offer. GM raised the possibility its Saturn brand could be phased out and said its Swedish-based Saab unit could file bankruptcy this month.
The restructuring plans must be vetted by the Obama administration's new autos team. President Barack Obama's top spokesperson told reporters aboard Air Force One on Tuesday that he would not rule out bankruptcy for the Detroit automakers.
The GM job cuts include 10 000 salaried and 37 000 blue-collar positions, amounting to 19% of its current global work force of 244 500. Jobs outside the US account for 26 000 of the reductions.
The cuts would take place by the end of this year, and more would follow: The new plan has the US work force declining from about 92 000 hourly and salaried employees at year-end 2008 to 72 000 by 2012.
Wagoner said the new plan was "significantly more aggressive" than the one presented to the government on December 2 because the global economy and auto sales had deteriorated swiftly.
Chrysler had 54 007 employees at the end of 2008, so Tuesday's cuts would equal about 6% of its work force.
Auburn Hills, Michigan-based Chrysler said it now projects that automakers will sell 10.1 million vehicles in the US this year, the lowest level in four decades.
'Unprecedented decline in the automotive sector'
"We have continued to see an unprecedented decline in the automotive sector," Chrysler chief executive Bob Nardelli said.
Chrysler will eliminate the Dodge Aspen, Durango and Chrysler PT Cruiser, company president Jim Press said. The Aspen and Durango, both large sport utility vehicles, have sold poorly while the PT Cruiser, released to much fanfare in 2000 due to its retro look, has also slumped in sales.
Detroit-based GM said it plans to sell or spin-off its Saturn brand. If those attempts are unsuccessful, GM will phase it out by 2011. GM is discussing the sale of its Hummer division and could complete the talks by March.
The automaker has also sought buyers for its Saab unit. Selling or eliminating those brands would leave GM to focus on Chevrolet, Cadillac, GMC and Buick, with Pontiac reduced to one or two models.
GM would also reduce the number of vehicle models, dropping the nameplates from 48 in 2008 to 36 by 2012, four fewer models than in the December plan. All of GM's major US vehicle launches from 2009 to 2014 would be high-mileage cars and crossovers.
Details were unveiled the same day Obama signed into law a massive economic recovery plan. Signs that the recession was deepening were more immediate for investors, however, and they dumped stocks and pushed oil prices sharply lower.
Union agreement
The UAW said discussions were continuing regarding the union-run trust fund that will take on retiree health care expenses starting next year.
Terms of the union deal were not announced, but they were expected to eliminate the jobs bank in which laid-off workers get most of their pay, as well as changes that make the companies' labour costs competitive with their Japanese counterparts that have US factories.
"The changes will help these companies face the extraordinarily difficult economic climate in which they operate," UAW President Ron Gettelfinger said in a statement.
GM chief financial Officer Ray Young said the company hopes to exchange two-thirds of its roughly $28bn in unsecured bond debt by the end of March. Bondholders, he said, signed a letter saying that they were making progress with the company.
GM bondholders said in a statement it was "premature to comment on any specific terms" in the plan. They said they couldn't "make an accurate or conclusive assessment of the company's long-term viability without specific details of the tentative agreement" between GM and the UAW.
House Speaker Nancy Pelosi said she was hopeful the plans would help lead to the "transformation of our domestic automobile industry into a viable, technologically advanced, and globally competitive manufacturing force."
- AP