General Motors announced today that it's taking a pass on $2 billion in loans that were previously requested last year for the month of March. The automaker cites "company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February" as the reasons for why it's withdrawing the request for money. GM advised the President's Task Force on the Auto Industry of the development this week and revealed the news today at the bottom of a press release containing its statement on the Canadian Auto Workers union ratifying a new contract with concessions. The low key announcement is strange considering the good light in which the automaker will likely be cast for not taking money from the government that isn't needed. Ford, which was the only domestic automaker not to request government aid, has been enjoying that spot light for months.

We're not sure exactly how this affects GM's overall request for government aid, as the automaker revealed to the Treasury Department in its Viability Plan submitted on February 17th that it may need up to $16.6 billion more from the federal government in addition to the $13.4 billion that's already been approved. Though GM's decision to forego $2 billion for the month of March doesn't necessarily signal that the company is healthy and ready to go it alone, its demonstration of successful cost cutting and responsible spending will likely help ensure that the rest of the aid it requested is more easily approved.

[Source: General Motors]


GM Statement Regarding the Ratification of the CAW Agreement and Update on Cash position

Attributable to Ray G. Young, GM executive vice president and chief financial officer

As GM Canada announced last night, the members of the Canadian Auto Workers (CAW) union have ratified a new competitive agreement with GM Canada (GMCL), which is vital to the continued transformation of the Canadian operations. The agreement between GMCL and the CAW will quickly reduce costs in Canada by significantly closing the competitive gap with U.S. transplant automakers on active employee labor costs and substantially reducing GMCL's legacy costs by introducing cash contributions for health benefits, increasing employee health care cost sharing, freezing pension benefits and removing hourly pension cost of living adjustments.

In addition, GMCL and the CAW will work together with the Canadian government to explore the possibilities of adopting a similar approach to the GM UAW VEBA in the U.S. GM is also continuing its negotiations with the Canadian and Ontario governments for support for the Canadian operations during this unprecedented industry downturn.

In the U.S., GM has also indicated they have advised the Presidential Task Force on The Auto Industry that the $2 billion of funding previously requested for March would not be needed at this time. This development reflects the acceleration of GM's company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February. GM will remain in regular contact with the Presidential Task Force on the Auto Industry on the status of GM's restructuring actions, its liquidity position, timing of future funding requests, and other relevant topics of mutual concern.

Share This Photo X