WASHINGTON — General Motors and Chrysler, two flagships of traditional American manufacturing, reported Tuesday that the decline of the U.S. economy has outpaced their bleakest expectations of just two months ago, forcing them to significantly boost their request for billions of dollars in government aid.
The companies said they plan to cut an additional 50,000 jobs worldwide, drop as many as six brands and shutter 14 plants in an attempt to survive one of the deepest recessions in decades.
Once-popular lines such as GM’s Hummer and Saturn will be spun off or, failing that, eliminated. Saab is up for sale. Chrysler will stop production of the PT Cruiser, Aspen and Durango by the end of the year.
“Today’s plan is significantly more aggressive because it has to be,” GM chief executive Rick Wagoner said.
The automakers Tuesday said they may need as much as $21.6 billion in additional loans — $5 billion for Chrysler and the rest for GM. The requests announced Tuesday come on top of $17.4 billion the companies received in recent months.
GM has just $9 billion in cash on hand, enough to last through March, and Chrysler has $2.4 billion. The companies have said that without additional aid, they could be forced to seek bankruptcy protection.
“We have continued to see an unprecedented decline in the automotive sector,” Chrysler CEO Robert Nardelli said in a conference call.
The Obama administration and leaders in Congress agreed to review the automakers’ requests, compelling officials to weigh the risks of making another huge investment in the industry against having one or two of the nation’s most important manufacturers go bankrupt.
Some members of Congress, however, are expressing skepticism about more aid for the automakers.
“In general, all of us in this country are becoming far more concerned about continual potential bailouts, continuing taxpayer money going into companies, going into institutions,” Sen. Bob Corker, R-Tenn., said, “and I think at some point we’re going to have to take some tough medicine.”
The latest requests came as the companies submitted to the U.S. government their plans for becoming viable, a requirement set by the Bush administration when it offered the first round of loans in December.
Those loan agreements will now be managed by the Obama administration, which is expected to take a different view of some of its terms.
Under the terms of the existing agreement, the companies were supposed to have presented signed agreements with the United Auto Workers union that would cover reductions in wages and benefits, as well as alterations to the fund for retiree health care.
GM and Chrysler each announced Tuesday that they have reached limited agreements with the UAW. But the companies and the union have not come to a final understanding on how the companies should meet their obligations — more than $20 billion worth — to provide retiree health care.
Automakers’ restructuring plans
FEDERAL LOANS
General Motors: $30 billion
• At least $2 billion by March
• $2.6 billion in April
• $4.5 billion to replace a revolving line of credit that expires in 2011
• $7.5 billion if the market remains depressed
Chrysler: $9 billion
• $5 billion in addition to $4 billion already received
LAYOFFS
General Motors: 47,000
Chrysler: 3,000
PRODUCTION
General Motors
• Would eliminate three brands, including Saturn, over the next four years
• A decision about how to dispose of Hummer would come by the end of the first quarter
• Would close 14 U.S. plants over the next three years
Chrysler
• Would eliminate three poor-selling models: the Dodge Durango and the Chrysler Aspen and PT Cruiser
• Would reduce production capacity by 100,000 units in 2009
• Plans 24 vehicle launches in the next two years, including an electric vehicle
Detroit Free Press, Associated Press
