Oshawa, Ontario – General Motors of Canada has delivered a restructuring plan to the federal and Ontario governments, asking for their support to complete the plan. The company said that despite further North American market deteroriation, the restructuring plan will achieve long-term viability and enable GM Canada to repay Canadian taxpayers.
The plan has three key components: implementation of further “self-help” cost reduction acts and a new contract manufacturer business model; to obtain the Canadian Auto Workers Union’s (CAW) agreement to achieve legacy cost reductions and align active worker wage and benefit levels to benchmark levels; and complete Canadian and Ontario government support agreements for sufficient financing to sustain operations and restructure the company’s balance sheet to address unsustainable legacy costs.
GM outlined highlights of the plan, which it said:
– maintains GM Canada’s share of Canada/U.S. production, which is expected to range between 17 and 20 per cent between 2009 and 2014
– embraces the federal and Ontario governments’ principles for proportional production/proportional support vis-a-vis GM in the U.S.
– requires agreements with the Canadian and Ontario governments and the CAW to be completed in March 2009
– enables the launch of five new vehicles in Oshawa and Ingersoll, Ontario, including new hybrid vehicle production; new flexible transmission production in St. Catharines, Ontario; and significant advanced environmental research and development for next-generation electric car systems, with suppliers and universities in Canada
– adopts more conservative market assumptions
– retains GM Canada customers, dealer network and new vehicle lineup as the company’s top strength and priority, with no contemplation of further GM Canada plant closures at this time
– includes shared sacrifices, such as a 10 per cent reduction in executive salaries, and reduced benefit and pay for salaried workers, along with secured pensions for GM Canada retirees and the establishment of a “VEBA-like” structure for health care benefits
– is fully consistent with GM’s loan conditions with the U.S. viability plan, and meets viability requirements by establishing GM Canada as a sustainable, stand-alone enterprise