01 June 2009 18:51 [Source: ICIS news]
(Adds details throughout)
HOUSTON (ICIS news)--Car giant General Motors (GM) filed for Chapter 11 bankruptcy protection, calling the US government-led plan to restructure to 100 year-old company a "defining moment", the US company said on Monday.
The move represents the third largest bankruptcy in ?xml:namespace>
“Today marks a defining moment in the history of GM,” company CEO Fritz Henderson said in a press conference. “Our preference was to create a new GM through other paths, but what was and is most important is to get to the destination and get there fast.
“When we exit the process and the new GM comes forward, you’ll see an emphasis on products, customers and reinventing technology,” he added. “It will be a very different approach that addresses these problems in a new way.”
None of the company’s operations in Europe,
The Obama administration on Sunday said it would pump in another $30bn (€21bn) - on top of the previous $20bn - and take a 60% stake in the automaker to stop it from being broken up.
It was reported that the United Auto Workers (UAW) union would take 17.5% in shares and the governments of
On Monday, President Obama emphasised the government’s continuing commitment to supporting the ailing domestic automotives sector, a crucial end market for many plastics and chemicals.
He described the
“Our goal is to get GM on its feet, take a hands-off approach and get out quickly,” Obama said.
“The key now [for GM] is to get out of bankruptcy as quickly as possible,” said John McEleney, chairman of the National Automobile Dealers Association (NADA).
Obama said that Chrysler, which filed for bankruptcy protection on 30 April, would likely exit bankruptcy status within the next few days. But GM is expected to remain under bankruptcy protection longer because it is a larger and more complex company, Obama said.
GM also announced numerous plant and dealership closures on Monday as part of its restructuring plan, which includes more than 20,000 job cuts by the end of 2010.
The company said it would close six manufacturing plants in 2009, seven more in 2010, and another in 2011. Also, three service and parts distributions centres will be closed at the end of 2009.
That would mean even less demand for the chemicals and derivatives that go into auto manufacturing, and could place fresh pressure on an already financially fragile parts supply chain.
Within chemicals, some plastics resins makers said on Monday that
“It’s already been baked into our plans,” one acrylonitrile-butadiene-styrene (ABS) supplier said. “Automotive in general has already been down, so everyone’s adjusted accordingly.”
Likewise, polyurethane (PU) foam producers said their market had already adjusted as well.
“It will probably be business as usual because the drop in demand has already occurred,” a PU producer said. “If you look back at automobile sales in the
“NADA does not agree with mass cuts in the dealer network,” McEleney said. “By cutting its dealers, GM is cutting its own customer base. In addition, fewer dealerships mean less convenience and less competition and more unemployment.
“Therefore, drastic closures of dealerships on the scale that GM announced are bad for the economy, bad for GM and bad for the consumer,” he added.
GM filed for bankruptcy at the US Bankruptcy Court in the Southern District of New York.
($1 = €0.71)
Additional reporting by Mark Watts, Ben Lefebvre and Leela Landress
To discuss issues facing the chemical industry go to ICIS connect
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|