Hard times ahead says Barack Obama as GM file for bankruptcy
- 00:03:20
- ITN
Hard times ahead says Barack Obama as GM file for bankruptcy
Car giant General Motors has filed for bankruptcy in the largest such move in US industrial history. It marks the end of an era for the 100-year-old automaker, which was once seen as a symbol of US economic might. The Chapter 11 filing is the third-largest in US history and the largest-ever manufacturing bankruptcy in the country. The plan is for a quick sale process that will pave the way for a new but much smaller GM to be formed under majority government control in as little as 60 to 90 days. President Barack Obama said the court's approval of the sale of Chrysler's assets to a group led by Italy's Fiat SpA will allow the automaker to emerge stronger from bankruptcy. He in a statement that the decision "paves the way for the new Chrysler to successfully emerge from bankruptcy as a new, stronger, more competitive company for the future." But it is a huge gamble for the Obama administration with more than $30 billion (£18.5bn) pumped into the carmaker as part of a plan that will eventually see the government own 60 per cent of a streamlined GM. GM plans to close 11 US facilities and idle another three plants but has not provided an updated target for job cuts. It had been looking to cut 21,000 factory jobs from the 54,000 United Auto Workers union workers it now employs. The firm employs 92,000 workers in the US. Officials involved in the planning for GM said the White House was a "reluctant investor" but had to prevent a liquidation that analysts say would have cost tens of thousands of jobs at a time of recession. "We want a quick, clean exit as soon as conditions permit," Treasury Secretary Timothy Geithner said. Analysts said that while there were large risks to the Obama administration's approach, it had at least succeeded in pulling GM back from the brink of collapse. "I think they have a much greater chance of emerging as a healthy company now than they did just six months ago," said Aaron Bragman, an analyst at IHS Global Insight.
ITN | June 1, 2009
