General Motors, the fallen icon of American industrial might, has filed for Chapter 11 bankruptcy protection as part of an Obama administration plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
A person familiar with the General Motors plan says the automaker will permanently close nine more plants and idle three others to trim production and labor costs under bankruptcy protection. Assembly plants in Pontiac, Michigan, and Wilmington, Delaware, will close this year, while plants in Spring Hill, Tennessee, and Orion, Michigan, will shut down production but 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 confirms the 2,500 employees there have been told the plant will be idled. Powertrain plants in Livonia, Flint and Ypsilanti Township, Michigan, will close next year, along with plants in Parma, Ohio, and Fredericksburg, Virginia. Stamping plants in Indianapolis and Mansfield, Ohio, also will close. A stamping plant in Pontiac, Michigan, will remain on standby. GM says it will also close service and parts warehouses in Boston, Jacksonville, Florida, and Columbus, Ohio, by the end of this year.
Jim Janke, with Tommy Vaughn Ford, is chairman of the Texas Auto Dealers Association.
"Gonna try to get through the bankruptcy in 60 to 90 days. You know, I had dinner with the president of Ford Motor Company last week, and he says 'you know, we come to work everyday and we're in uncharted territory.' And this, I'm sure for the General Motors people, they go to work everyday and they're in uncharted territory, also because this is all brand new to all the car manufacturers, what's going on today. It's all history."
General Motors CEO Fritz Henderson says the new GM will be a leaner and quicker company that's more focused on its customers and its products. Henderson spoke at a news conference in New York after GM filed for bankruptcy protection. President Barack Obama says it is part of a "viable achievable plan" that will give the company "a chance to rise again." Henderson says the new GM will be built from the strongest parts of its business, including its best brands and best products. The company plans to focus on four core brands — Chevrolet, Buick, Cadillac and GMC — and get rid of four others — Pontiac, Saturn, Hummer and Saab.
President Barack Obama is defending the government's intervention in the auto industry, saying the collapse of two large U.S. automakers would have been devastating for the economy and American workers. Obama said his policies will help storied companies in America's industrial history survive after restructuring and bankruptcy. He said his administration had no choice but to intervene, putting the government in "the unwelcome position" of having a financial stake in the companies. Obama said that GM's move into bankruptcy proceedings will actually improve its situation, calling the move a "viable, achievable plan." He said the new plan will allow GM to start growing for the first time in three years.
President Obama says a court's decision to approve the sale of Chrysler's assets has given the automaker "a new lease on life." A judge approved the sale of most of Chrysler's assets to Italy's Fiat on Sunday. In a statement, the president said the deal will allow Chrysler to "successfully emerge from bankruptcy as a new, stronger, more competitive company for the future." Chrysler filed for bankruptcy in April. The sale to fiat means the company could be out of bankruptcy within the government's 30 to 60 day time frame.
Top executives from General Motors and Chrysler will appear before a Senate committee Wednesday to address concerns about hundreds of dealership closings as the two automakers work through government-led bankruptcies. GM CEO Fritz Henderson and Chrysler President Jim Press will appear before the Senate Commerce Committee chaired by Democratic Senator Jay Rockefeller of West Virginia, who has questioned the large-scale closing of dealerships. Chrysler has announced plans to close about a quarter of its 3,200 U.S. dealerships by June 9th. GM plans to drop about 20 per cent of its dealers by late next year. The lawmakers will also hear from dealers affected by the changes.
The Dow Jones industrial average is adding Travelers Companies and Cisco Systems, dropping Citigroup and General Motors. The announcement of the changes to the 30 stocks that make up the best-known barometer of Wall Street comes as GM enters bankruptcy protection, a move that was widely expected. Dow Jones said in a statement that Travelers, the property and casualty insurer and one-time division of Citigroup, would replace its former parent. Cisco, which makes computer networking gear, is filling the role left by GM after 83 years as part of the Dow. The changes take effect June 8th.
Frugal consumers have trimmed spending in April — although by less than expected — as rising unemployment kept pocketbooks in check. The government said consumer spending dropped 0.1 per cent in April. Economists were expecting a 0.2 per cent reduction. It marked the second straight month that consumers cut spending. Americans' incomes — the fuel for future spending — has jumped 0.5 per cent, following two straight months of declines. The improvement is due to tax cuts and benefit payments flowing from President Barack Obama's stimulus package. Wages and salaries, however, were flat in April. The growth in incomes surprised economists. They had been forecasting a 0.2 per cent decline.
A trade group's report on the manufacturing sector shows contraction slowed in the U.S. in May and is performing better than analysts had expected alongside similar reports from Asia and Europe. The Tempe, Arizona-based Institute for Supply Management says its index on manufacturing came in at 42.8 — its highest level since September —compared with 40.1 in March. A reading below 50 still indicates contraction. Analysts polled by Thomson Reuters had expected the index to read 42 for May. The data from ism, a trade group of purchasing executives, comes on top of reports indicating an easing in the manufacturing crunch in China, Great Britain and the Euro Zone.
Construction spending has risen 0.8 per cent in April, defying economists' forecasts for a decline. The government said the unexpected gain — the most since August — marked the second straight month that builders boosted spending on construction projects around the country. Economists were bracing for a 1.2 per cent drop in construction spending for April. In an encouraging note, private builders increased spending on housing projects by 0.7 per cent, contributing to the overall improvement in April. It marked the first time since August that private home builders boosted such spending.
The price of gasoline has jumped 19 cents a gallon during the past two weeks, but remains well below prices from a year ago. That's according to the national Lundberg survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price of regular gasoline nationwide was $2.49 a gallon Friday, when the survey was completed. That's up 54 cents from 10 weeks ago, with most of the rise occurring during May. The average price for a gallon of mid-grade was $2.62. Premium was at $2.73. Tucson had the country's lowest price — $2.22 for a gallon of regular. The highest was in Chicago, at $2.76. The lowest price in California was $2.65 a gallon in Fresno and Bakersfield, and the highest was $2.72 in San Francisco.
Lawmakers in the House and Senate approved a measure Sunday adding backpacks and school supplies to the annual August sales tax holiday weekend. Texas families are already used to getting a back-to-school break on their children's clothing during the tax-free weekend. The tax break applies to backpacks and supplies that cost less than $100.
The Texas House and Senate have approved a bill that would help some Texas universities become major research centers. The final version of the proposal approved last night also includes $150 million in bonds for the hurricane-ravaged University of Texas Medical School at Galveston. Hurricane Ike ripped through the island campus on September 13th, putting the school's trauma center and more than half the hospital's beds out of commission. The heart of the bill creates funding pools and incentives for emerging research universities to advance to nationally recognized tier one schools. Supporters say Texas is behind other large states like California, which has nine. Texas has three.
The Supreme Court has decided to take on an appeal that could decide whether someone can get a patent for a complex business idea. The high court decided to hear an appeal from Bernard Bilski and Rand Warsaw, who attempted to patent a method for managing weather-related risk having to do with trading in commodities. The U.S. Court of Appeals for the federal circuit had upheld the government's rejection of their patent application. The case is Bilski v. Doll, 08-964.
Treasury Secretary Timothy Geithner says the U.S. financial system is in much better shape these days and there is more stability in the overall economy. Geithner told reporters traveling with him Beijing that there are a number of signs the U.S. economy is beginning to stabilize. The U.S. has been mired in its longest recession since World War II. But Geithner said much more needs to be done--both in the U.S. and elsewhere--to make a sustainable recovery possible. On his first visit to China as Treasury Secretary, Geithner said the Obama administration is committed to forging a new relationship with China after trade disputes with the U.S. over the past decade. Those fights have reflected record U.S. trade deficits with China. U.S. critics of China's economic policies say they have contributed to the loss of millions of American manufacturing jobs. China is America's biggest creditor, holding $768 billion in Treasury securities.
Mexico's central bank says money sent home by Mexicans living abroad plunged in April by more than 18 per cent compared to the same period last year--the biggest monthly fall on record. The bank says remittances fell to $1.7 billion in April 2009 compared to $2.1 billion in April 2008. The bank says that the recession has hurt migrants in the United States, while fewer Mexicans are heading north because of a lack of jobs and beefed up border security.
U.S. customs agents are cutting cross-border commuters a little slack on the first day of stricter identification requirements for Americans re-entering the country. The change only affects U.S. citizens who until now could re-enter the country with a plethora of identification types. Now a passport, passport card or special secure driver's license are among a handful of accepted IDs. But Mauro Guerra received a day's grace. The 27-year-old U.S. citizen commutes daily from his Reynosa, Mexico, home to his job at a McAllen auto parts store. He says he hasn't had time to get a passport but got through the same way he always has: with a birth certificate and photo ID. Vehicle and pedestrian traffic moved smoothly at two U.S. international border crossings Monday.
Kurds in northern Iraq have begun officially exporting oil to international markets for the first time, despite disagreements with the central government. Oil from the Taq Taq field in the semiautonomous Kurdish region was being exported by pipeline to the Turkish port of Ceyhan at a starting rate of about 40,000 barrels per day. Kurdish spokesman Khalid Saleh said at an inauguration ceremony that levels are expected to reach 250,000 barrels per day by the middle of next year. The Kurds and the central government in Iraq are in dispute over how to manage the country's oil resources. But they have reached a deal letting the Kurds ship oil through the northern pipeline, with revenues deposited in a central government-controlled bank account.
Nigeria's main militant group says it hopes to release within hours a British hostage seized nearly nine months ago in the country's restive southern oil region. The Movement for the Emancipation of the Niger Delta said in an e-mail that it hoped to release Matthew Maguire shortly in honor of the captive's birthday. Maguire was among 27 oil workers kidnapped by militants when their vessel was hijacked in early September. All other hostages taken in that incident have been released. The British High Commission in Nigeria couldn't immediately be reached for comment.
A Dallas-area uranium mining company said it will ask a federal appeals court to review an April decision that a proposed uranium mine site in western New Mexico is on American Indian land. Lewisville-based Uranium Resource says in a news release it will ask the 10th U.S. Circuit Court of Appeals in Denver for an "en banc review" of the decision that sided with the Environmental Protection Agency. Such a review would bring the case before the entire 10th Circuit Court. A three-judge panel denied a petition from URI subsidiary Hydro Resources, which challenged an EPA ruling that the site near Church Rock where it hoped to develop uranium mines was on Indian country. The ruling makes it harder for Hydro Resources to get the necessary groundwater injection permits.