Business NEWS
GM to shed 21,000 jobs, phasing out Pontiac
By Amarendra Bhushan for CEOWORLD Magazine Updated:April 28, 2009
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General Motors Corp. plans to close more dealerships, shed its Pontiac brand and cut more jobs, as the struggling carmaker tries to avoid seeking bankruptcy protection.
The moves are part of a plan to reduce GM’s debt by £30bn ahead of the June 1 deadline set by President Obama to revamp its business.
GM must meet the restructuring deadline to gain the extra government loans it needs to avoid bankruptcy protection.
The US government has already injected £10.5bn into GM this year
The Pontiac brand, which includes the Grand Prix, Vibe and Solstice badges, is a strong seller across Canada, capturing about 4 per cent of the overall market.
The carmaker said it would cut 21,000 jobs, on top of the 10,000 job cuts announced in February, reducing its US workforce to 40,000.
“It’s not one of the brightest days in our 55-year history,” Mike Carmichael, general manager of City Buick Pontiac Cadillac, said in an interview.
GM — Pontiac’s struggling parent company — is surviving on $15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. In addition to laying off workers and closing Pontiac, the automaker’s restructuring plan includes asking the U.S. government to take company stock in exchange for half GM’s government debt. If the restructuring doesn’t satisfy the government, the company could go into bankruptcy protection.
The guys at Mike Haggerty’s Pontiac, Buick and GMC dealership in Oak Lawn already have fielded a few calls from Pontiac buyers wondering how the end of the line for Pontiac will affect them.
GM chief executive Fritz Henderson said the carmaker would file for bankruptcy protection if an offer to exchange bonds for company equity failed to cut $27 billion in bond debt by about 90 per cent or other changes faltered.
Analysts doubted the debt exchange offer would succeed, setting up GM to restructure in Chapter 11.
GM’s bondholder’s blasted the terms of its debt-exchange as a back-room deal designed to protect the interests of its major union the United Auto Workers, a group that campaigned for President Barack Obama in last year’s election.
Representatives of the bondholders said GM and the Obama administration were gambling on a risky and “legally questionable” strategy for a company that once ranked as an icon of American industrial and economic strength.
Pontiac brand to be phased out as part of GM’s more aggressive restructuring efforts
BACKGROUND
Since its inception in 1926, Pontiac has been known for delivering vehicles with both performance and value. Over the past several years, the brand has been closely associated first with GMC and then with Buick.
Statement attributable to Susan Docherty, GM North American Vice President, Buick-Pontiac-GMC:
“Anyone who has been associated with the Pontiac brand knows that this was a difficult decision. Pontiac has had a rich and storied history, but unfortunately, despite the efforts of all concerned, the brand has been unprofitable over the past several years. We had hoped in our February 17 Viability Plan to convert Pontiac to a niche brand within the Buick-Pontiac-GMC channel.
However, the Viability Plan as submitted was not acceptable. GM was further challenged to take more significant restructuring actions which would allow the company to be viable even in these unprecedented market conditions and in any future cyclical market downturns. These restructuring actions require further sacrifice by all stakeholders: GM employees, suppliers, investors and dealers.
As part of these renewed restructuring efforts, we spent considerable time formulating Pontiac portfolio scenarios that would allow the brand to be sustainable and profitable long term. Unfortunately after careful evaluation, none of these scenarios proved viable. Therefore, GM is announcing the phase out of the Pontiac brand by year end 2010. This action will allow General Motors to devote its limited capital and other resources to GM’s four core brands: Chevrolet, Cadillac, Buick and GMC.”
Q&A
Q: What happens to my Pontiac vehicle warranty?
A: Pontiac vehicle warranty coverage is unchanged.
Q: Where can Pontiac customers get their vehicles serviced, especially if they have
been visiting a Pontiac-only dealership?
A: Customer service is paramount. Customers can have their vehicles serviced at any Buick-Pontiac-GMC dealership.
Q. Will parts continue to be available for my Pontiac product?
A. Yes. Pontiac parts will continue to be available for the foreseeable future.
Q. Should I be worried about obtaining service for my Pontiac if my Pontiac dealer is
closing?
A. No. Eighty-five percent of the Buick-Pontiac-GMC sales are currently sold through Buick- Pontiac-GMC aligned dealers. There are about 1,600 Buick-Pontiac-GMC aligned dealerships throughout the United States. Our customer assistance center (US: 1-800-762-2737; Canada 1-800-263-3777; Mexico 01 800 466 08 08) will provide Pontiac
customers with the location of the closest Buick-Pontiac-GMC dealer in the event the selling dealer closes.
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