A healthcare agreement struck between Ford Motor and the United Auto Workers would not work for General Motors, GM's chief executive said today.
“It probably works for Ford. It does not work for us,” Rick Wagoner said, without elaborating why. “So we need to do something different. We're working with the UAW on how we might do that.”
As part of the $17.4 billion bailout extended to the two companies in December, GM and Chrysler are required to bring wages and benefits of US factory workers in line with those at Toyota Motor Corp and other Japanese automakers.
GM and Chrysler have reached tentative agreements on some issues, but have not released details.
Unlike Ford, the two have yet to settle on a plan for restructuring a retiree healthcare trust in which the companies would offer a sizable amount of stock or equivalents to reduce their cash contributions.
Mr Wagoner also told a meeting of newspaper reporters and editors that suppliers could see some help soon and restructuring without bankruptcy was still the best option for GM, which faces a March 31st deadline to prove to US government that it can be viable and worthy of more bailout funds.
Wagoner again dismissed the idea of a court restructuring where concessions and other provisions are worked out up front, saying it was unproven for the industry and too risky overall.
He said GM's research continues to show that consumers would not buy cars from a bankrupt automaker.
"It could work and it might not work, and if it doesn't work, it could mean a long period of bankruptcy, which I believe would result in the liquidation of the company," Wagoner told the meeting, sponsored by the Christian Science Monitor.
“It makes sense from everybody's perspective that we have to do this outside of court,” Wagoner said.
He also expressed hope that GM and its bondholders could work out their differences on concessions without “government engagement.”
Bondholders have balked at a proposal to reduce by two-thirds the roughly $27 billion they are owed through an exchange of new equity in a recapitalized company. Bondholders call that proposal unfair compared to payout terms being offered to the UAW and for remaining GM debt.
The Obama administration task force weighing a bailout request of more than $16 billion from GM and a $5 billion from Chrysler LLC would prefer an out-of-court restructuring, its lead adviser said this week.
On suppliers who have asked for billions in government help to survive, Wagoner said their problems are getting “more precarious” and that the task force is “well informed” on the matter.
“Hopefully, some help is on the way soon because I think it's getting pretty drastic for the suppliers,” Wagoner said.
Reuters