Things may be reaching the grim breaking point:
General Motors Corp [GM-N], nearing a Tuesday [Feb. 17] deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.
“One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company,” the newspaper said. “The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”
Citing “people familiar with the matter,” the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.
GM declined to comment, the story said…
Talks between the United Auto Workers and General Motors Corp aimed at cutting costs and debt at the struggling automaker have broken down over union concerns about retiree healthcare, a person briefed on the talks said on Saturday [Feb. 14].
A parallel set of talks between Chrysler LLC and the UAW over similar concessions were continuing over the weekend but little progress had been made in the past week, a person briefed on those negotiations said…
I do think GM Oshawa may well be for the chop. Whatever plan goes to the US government before President Obama’s Feb. 19 visit to Ottawa, I can’t see him making any serious effort to help save US automakers’ Canadian plants if the companies suggest closing them. The poor prime minister will certainly get blasted (undeservedly in my view–what realistically can Canada do?) by the opposition and our pundits.
Product, product, product–what are Americans going to buy if sales stay at around 10 million for some four years?
Chrysler, for its part, looks pretty close to a goner to me. With Fiat taking a major share it won’t be a major player much longer; and I can’t see much future for most of the models it assembles in Ontario. Ominously, Nissan is putting a hold on previously-agreed plans to cooperate with Chrysler.