UK jobs under threat as GM prepares for bankruptcy

| April 8, 2009 | 0 Comments

According to a report in the Daily Mail, the world’s largest carmaker General Motors (GM) is preparing for bankruptcy.

While the company is hoping to win concessions from its creditors, the threat of going bust puts 5,000 jobs at risk at Vauxhall in Ellesmere Port, Cheshire and Luton as well as 60,000 supply jobs.

GM wants its creditors to agree to take an equity stake in the car firm in exchange for slashing the debt by around 65%. The carmaking giant currently owes approximately $28 billion to holders of its unsecured debt.

According to a source close to the company, a deadline of June 1 was given to GM by US President Barack Obama and the Treasury Department to reach deals or file for bankruptcy.

Last week, Mr Obama ordered Rick Wagoner, chief executive of GM, to resign.

Since Wagoner has led the car firm, its stock has fallen from more than $80 to just $3.62. The chief executive has so far resisted filing for bankruptcy protection stating that this would destroy what confidence was left among GM’s car dealers and consumers.

Over the last couple of weeks, the Obama administration has been drawing up plans to provide more financial assistance to GM and fellow car giant, Chrysler.

So far, the two car giants have received total bailouts of $17.4 billion (£14.4 billion) but both firms are requesting further aid to help keep them afloat.

Chrysler is asking for a further $5 billion, while GM is requesting a further $16.7 billion but the plans have met with criticism from Mr Obama, who branded the plans as “unrealistic.“

Both companies have plans to reduce headcount significantly since the global economic downturn has resulted in a slump in demand for big-ticket items, such as cars. This has affected carmakers worldwide with many cutting back on production and slashing jobs.

The news comes just a day after UK carmakers, Jaguar Land Rover and Nissan, received £720 million worth of funding, in return for investing in reducing vehicle emissions.

Tags: , , Chrysler, General Motors, GM

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