GM Slashes Jobs, Phases Out Pontiac and Saturn
The United States Department of Treasury on Friday said it lent an additional $2 billion to General Motors Corp. to help the company operate until June 1, the deadline for submitting a new restructuring plan. The news of the loan came two days after GM announced it "won't be making a June 1 payment of $1 billion" as part of its restructuring. Instead, the automaker will be offering to exchange bondholder's debt for equity. This morning, GM announced it it intends to offer $27.2 billion in common stock to its debt holders, equaling 225 shares of common stock to each $1,000 of debt. The company set a deadline for debt holders to respond by May 26.

The restructuring effort also includes the phasing out of GM's Pontiac brand and the cutting of 21,000 factory jobs by next year, Detroit News reports. "In total, GM is cutting more than 7,000 additional jobs than what it announced on Feb. 17, 500 additional dealers and closing another plant — or 16 of its 47 U.S. manufacturing plants by 2012 — and 13 of those plants by the end of the next year; GM hasn't named any of those plants yet."

GM plans to idle most of its plants for about two months this summer, one of the longest production hiatus in recent decades, the Wall Street Journal notes (subscription required). The plant closures would begin next month and would temporarily reduce the pay for as many as 55,000 autoworkers nationwide.

Lastly, the automaker plans to build the last Saturn vehicles this year — two years earlier than planned. However, the Saturn brand may survive if GM can sell it to another automaker or investor. "If a sale of Saturn does not occur, we intend to phase out the Saturn brand by the end of 2009," GM said in its government filing today.

Chrysler Reaches Tentative Deal with UAW
Chrysler LLC has reached a tentative agreement with the United Auto Workers (UAW) union to cut the company's labor costs, but neither the UAW or Chrysler released details of the plan, the New York Times reports. The UAW deal was struck shortly after the company reached an agreement with the Canadian Auto Workers union, which cut pay and benefits for an estimated savings of $240 million per year for Chrysler.

A similar agreement for cutting the UAW's contracts and reducing the amount of money Chrysler must pay into a new health fund for retirees was reached over the weekend. The union plans to have its 26,000 Chrysler workers vote on the deal by Wednesday. According to Chrysler, the agreement satisfied the requirements laid out by the Obama administration for the company to form an alliance with Fiat by April 30. The government said early last week that it would give Chrysler another $500 million while it came up with restructuring plans, but it has yet to provide any new money. Chrysler is due to submit restructuring proposals by May 1.

Additionally, the banks on Friday "softened their stance in the negotiations, offering to trim the $6.9 billion that Chrysler owes them down to $3.75 billion," the Wall Street Journal says (subscription required). The company has until May 1 to hammer out a debt-reduction deal with banks and other lenders.

Still, even with the agreement, Chrysler is expected to seek Chapter 11 protection, which could come as soon as next week. "The Treasury has an agreement in principle with the UAW union, whose members' pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing," CNN Money adds.

Ford Denies Needing a Bailout
Ford Motor Co. said it "likely wouldn't need a government bailout in reporting a smaller-than-expected loss for the first quarter," the Wall Street Journal reports (subscription required). Chief Executive Alan Mulally said "we do not expect to require a bridge loan from the U.S. government" despite losing $1.4 billion in the first quarter. Through March, Ford's U.S. sales were down 42 percent. Although better than GM's or Chrysler's sales, it is still below industry average.

Ford, whose last annual profit came in 2005, "will 'meet or beat' a goal to be 'break even or better' in 2011," Bloomberg News reports Mulally as having told analysts. Ford "emphasized a different benchmark [on Friday] for measuring improvement in cash consumption, saying automotive operations had used $7.2 billion in the fourth quarter." The "manufacturing and engineering savings accounted for the largest piece of Ford's first-quarter cost reductions. The cuts included $300 million from advertising and $300 million in pension expense. First-quarter vehicle sales also involved more higher-priced autos, buoying results."

The Los Angeles Times Up To Speed blog notes that, while continually declining the need for a bailout, "Ford believes that Washington could offer it a bit of help." Chairman Bill Ford Jr. argued that "the administration should create incentives to spur auto sales and enact a gasoline tax that would encourage people to buy more efficient vehicles." He cites a cash-for-clunkers program, coupled with a federal tax that would maintain gas prices above a certain level, would help the U.S. auto industry survive the economic downturn.

Toyota Stays Top Seller
Despite suffering from a 26.7 percent drop in sales, Toyota Motor said Thursday it had sold about 1.76 million vehicles worldwide in the first quarter of 2009 — staying ahead of Volkswagen to be the top-selling automaker for 2009. Last year, Toyota ended GM's 77-year reign as No. 1 in the world. Toyota kept its lead over Volkswagen, Europe's biggest carmaker, which reported global sales of 1.35 million vehicles in the first quarter, down 15.7 percent from 2008.

Still, Toyota was not immune to the current economic crisis. The company's global production plunged 45 percent in the first quarter of 2009. Due to the slump, the company decided to slash summer bonuses for its 8,900 managers by an average 60 percent from a year earlier. The automaker has separately agreed with its labor union to cut annual summer bonuses for its 63,000 members by 10 percent to 20 percent for this fiscal year. Moreover, Toyota's executive board members will not receive bonuses for the current fiscal year.

U.S. Economic Decay Easing, EU Facing Deeper Recession
Following encouraging signals from the latest Federal Reserve's Beige Book report, The Conference Board's latest index of leading economic indicators pointed to a contraction that has been less intense over the past few months. The business research firm's index "remains on a general downtrend that began in July 2007, with widespread weaknesses among its components. However, its rate of decline has moderated somewhat this year."

Leading economic indicators declined 0.3 percent in March, 0.2 percent in February and 0.2 percent in January. Treasury Secretary Tim Geithner echoed these findings on Friday, saying that "the pace of deterioration in economic activity and global trade has lessened. But it is too early to say risks have receded."

The European economy, on the other hand, is expected to face a deeper recession and a slower recovery than the rest of the world. The EU economy is set to contract 4 percent this year, the International Monetary Fund (IMF) forecasts. Along with that dismal news, the U.K. released a budget that includes the biggest jump in national debt since World War II. Meanwhile, Germany's economy slid 3.3 percent in the first quarter after contracting 2.1 percent in the last quarter of 2008. According to IMF figures, "European banks' losses from the global financial crisis are now projected to overtake U.S. banks' losses."

Stricter Reporting Rules for Facilities Releasing Toxic Materials
The Environmental Protection Agency (EPA) reinstated stricter reporting requirements for industrial and federal facilities that release toxic substances that threaten human health and the environment. The final rule reinstates Toxics Release Inventory (TRI) reporting requirements that were replaced by the TRI Burden Reduction Rule in December 2006. These changes will apply to all TRI reports due July 1, 2009.

"People have a right to information that might affect their health and the health of their children — and EPA has a responsibility to provide it," EPA Administrator Lisa P. Jackson said. "Restoring the TRI reporting requirements assures transparency and provides a crucial tool for safeguarding human health and the environment in our communities."

L.A. Ports Losing Ships to Northwest Rivals
"Next month, shipping giant AP Moeller-Maersk will make a move that would have been unlikely a decade ago. A line of 6,000-container ships that now goes to Southern California will dock in Seattle instead," the Wall Street Journal reports (subscription required). For years, the Los Angeles "container harbor and its adjacent port in Long Beach had a stranglehold on U.S. imports, serving as the point of entry for goods headed as far as Chicago and Miami. Together, the two handle four out of 10 containers that come to the U.S." But container volume at L.A. "was down 6 percent in 2008 and fell 32 percent in February from a year earlier. The hub of roughly 42,000 jobs is preparing for possible midyear budget cuts, and many longshoremen are working part-time."

This drop in volume "comes just as ports from Portland, Ore., to British Columbia are rolling out new infrastructure in a bid to grab more of the container business," the Journal continues. "Some offer quicker transport times from Asia, or fewer environmental restrictions on trucks — pitches that are increasingly compelling in the global trade slowdown." Regulations such as tougher environmental restrictions have made the port more fuel efficient but may have made the port more vulnerable to losing market share due to added costs.