DETROIT -
NEW YORK - General Motors Corp. filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the U.S. government.
GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has US$172.81 billion in debt and $82.29 billion in assets.
The fallen icon of American industrial might will rely on US$30 billion of additional financial assistance from the Treasury Department as it reorganizes. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.
A person familiar with General Motors' plans told The Associated Press that the automaker will permanently close nine more plants and idle three others to trim production and labour costs under bankruptcy protection.
In Canada, the company has already shut down its Oshawa, Ont. truck plant, affecting 2,600 workers, and will close a transmission factory in Windsor next year, with the loss of another 1,400 jobs.
The GM bankruptcy is expected to ripple through the auto parts industry on both sides of the border as companies reel from the loss or orders and unpaid bills by GM.
In Canada, No. 2 parts giant Linamar Corp. (TSX:LNR) said it has limited exposure to GM on both the receivables and sales volume side, with less than $2.8 million in GM debt owed that's older than 20 days.
"We are of course disappointed that GM was unable to successfully negotiate with stakeholders a satisfactory solution to allow them to avoid Chapter 11, however, we feel that we are in a strong position to weather the situation given steps we have taken over the past months to minimize our exposure", said Linda Hasenfratz, CEO of the Guelph, Ont. company, which has 9,000 employees around the world.
In the United States, assembly plants in Pontiac, Mich., and Wilmington, Del. will also close this year, while plants in Spring Hill, Tenn., and Orion, Mich., will shut down production but remain on standby.
Powertrain plants in Livonia, Flint and Ypsilanti Township, Mich. will close next year, along with plants in Parma, Ohio, and Fredericksburg, Va.
Stamping plants in Indianapolis and Mansfield, Ohio, also will close. A stamping plant in Pontiac, Mich., will remain on standby.
The person spoke on condition of anonymity because the plans have not been made public.
A union spokesman at the GM plant in Spring Hill confirmed the 2,500 employees there have been told the plant will be idled.
Meanwhile, the president of the Canadian Auto Workers Union said Monday he expects some Canadian plants to suspend production while the U.S.-based parent company files for bankruptcy protection.
CAW president Ken Lewenza told The Canadian Press he is cautiously optimistic that GM's Canadian unit may be able to avoid seeking creditor protection, but concedes it is still a possibility.
"I . . . would be incredibly surprised if we don't lose some production as a result of the Chapter 11 in the United States," he said in a telephone interview. "If it doesn't, that means (GM's Canadian unit) did their homework much more detailed than one could anticipate."
He wouldn't speculate which Canadian plants might be idled.
