DETROIT — Fear of more plant closings and other cuts that are likely to cost thousands of jobs is spreading through General Motors Corp. and Chrysler LLC as the companies approach a Feb. 17 deadline to show the government they can be viable.
Both companies' plans are presumed to include concessions from bondholders and the United Auto Workers. GM's plan will include shuttering additional factories as well as cuts in jobs and salaried pay, according to people familiar with the plans.
GM and Chrysler must prove to the government that they are able to repay the federal loans keeping the companies afloat during the worst U.S. auto sales climate in 26 years. GM has received $9.4 billion and expects to get $4 billion more, while Chrysler has received $4 billion and is hoping to get an additional $3 billion.
That means the automakers will have to make substantial cost cuts. The companies are required to show the government they can achieve "positive net present value," which means that the present value of a company's expected net cash flows exceeds the initial investment in the company.
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White-collar workers might not get buyouts or early retirement offers as they have in the past, and pay cuts could go beyond 5 percent, according to the people, who spoke on condition of anonymity because workers have yet to be notified.
GM workers across the country are dreading Feb. 17, the date that some of the plan's details could become public. Many realize that GM has announced the closing of four pickup and SUV plants during the past year, but the company hasn't shut down a corresponding number of engine, transmission and parts stamping factories that feed the assembly lines.
GM Vice Chairman Bob Lutz, in an interview on Monday, wouldn't give details but conceded that GM will have to get smaller in the United States before it can grow again.
"It's going to be a smaller company in the U.S.," he said, adding that GM will grow in other parts of the world such as China.