GM Declares Bankruptcy
This morning, GM released the following short, simple, and depressing message:
“The General Motors Board of Directors authorized the filing of a chapter 11 case with regret that this path proved necessary despite the best efforts of so many. Today marks a new beginning for General Motors. A court-supervised process and transfer of assets will enable a New GM to emerge as a stronger, healthier, more focused and nimbler company with a determination not to just survive but to excel. The Board concluded that the proposed transformation will maximize the value of the enterprise, and the return to the many stakeholders who have been involved with GM over the years.
We are appreciative of the support from the U.S. Treasury, the President’s Task Force on Autos, the UAW and its members, salaried employees and retirees, concurring bondholders, and very importantly, the American taxpayers. The Board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world. The Board stands behind the people of GM in embracing this unique opportunity to create value and a new company that will design, engineer, build and market the best cars and trucks in world.”
Subsequently, they’ve released dozens of messages and releases outlining future plans, and even President Obama has weighed in with a message outlining GM’s restructuring. North of the 49th parallel, GM has released the following statement regarding the effect of GM’s American operational collapse on Canadian customers:
“General Motors of Canada Limited announced today that its comprehensive restructuring plan has been approved by the Canadian and Ontario Governments. The agreements reached with key stakeholders will enable the company to complete its restructuring efforts without the need for court-supervision. The filing by General Motors in the United States is not expected to affect GM Canada’s operations.
From this restructuring will emerge a new GM Canada which will be cost-competitive and innovative and will continue to put customers first. It will remain one of Canada’s leading auto marketers and manufacturers. It will focus on Chevrolet, Buick, GMC and Cadillac, continue to invest in green, energy-saving technologies and will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure.
“GM Canada’s restructuring has been challenging and has required sacrifices by all of our stakeholders including our employees, retirees, the CAW, our dealers and others. We are confident that these sacrifices will lead to positive results. We appreciate the support of the Governments of Canada and Ontario that will enable us to complete our restructuring and allow for a more competitive, stronger new GM Canada,” said Arturo Elias, President, GM Canada. “Our customers can confidently continue to purchase new vehicles and obtain service and take full advantage of GM’s leading warranty coverage throughout this process. The new GM Canada will be even more focused on our customers.”
The comprehensive restructuring plan approved by the Governments of Ontario, Canada and the U.S., recognizes the high level of GM Canada’s integration in GM’s North American operations. The integrated North American Plan combines assistance from all three governments to ensure GM Canada will continue as one of Canada’s leading vehicle manufacturers with the associated benefits of capital investment and direct employment, and indirect employment through the supply chain and dealer network.
Consistent with the principle of proportional support for proportional production, the Governments of Canada and Ontario will invest $C10.6 billion in General Motors. As a result of this investment in both GM Canada and its parent company, the Governments of Canada and Ontario will receive a significant equity position in the new GM and secure the following benefits for Canada:
- The launch of 5 new vehicles, including new hybrid vehicle production, at GM Canada assembly plants in Oshawa and Ingersoll, maintaining GM Canada’s standing as one of Canada’s largest vehicle manufacturers with 16% share of GM’s North American vehicle assembly.
- The introduction of flexible transmission production with the launch of manufacturing of the fuel-efficient 6 speed front-wheel-drive transmission at GM Canada’s St. Catharines facility.
- Ongoing significant production of V6 and V8 engines will be maintained at St. Catharines Powertrain.
- GMCL plans to make substantial capital investments over the next seven years in Canadian facilities and contemplates no further GM Canada plant closures at this time, reflecting restructuring actions already announced.
- With the recently concluded agreement with the CAW, GM Canada’s labour costs will be competitive with Toyota Canada.
- GM plans to invest almost $C1 billion over the next seven years in green research, development and innovation focusing on energy diversification, fuel economy improvements and vehicle electrification, through its Oshawa-based Engineering Centre. Canadian suppliers and universities will be critical partners in this research and innovation.
- Secures pensions for GM Canada retirees by improving funding levels over time in the salaried and hourly pension plans and establishes a “Health Care Trust” for hourly retiree health care benefits.
- The customers’ needs will be better served through GM Canada’s consolidated dealer network with the broadest geographic coverage across Canada of any automaker.
While our parent, General Motors Corporation, has announced it will complete its restructuring through the use of a court-supervised process in the U.S., GM Canada will complete its restructuring without the use of a court-supervised process. We do not expect GM Canada’s operations to be impacted by the U.S. filing.
