General Motors Co (GM) has repaid the US$8.1 billion in loans it got from the US and Canadian governments, a move its CEO says is a sign the automaker is on the road to recovery.
GM CEO Ed Whitacre was due to formally announce the loan paybacks yesterday at the company’s Fairfax Assembly Plant in Kansas City, Kansas, where he will also announce that GM is investing US$257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.
GM got a total of US$52 billion from the US government and US$9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The US considered as a loan US$6.7 billion of the aid, while the Canadian governments held US$1.4 billion in loans.
The US government payments, made on Tuesday, came five years ahead of schedule, and Whitacre said they are a sign that the automaker is on its way toward reducing government ownership of the company. The payments on the Canadian loans were also made on Tuesday.
GM still owes US$45.3 billion to the US and US$8.1 billion to Canada, money it received in exchange for large stakes in the company. The US government now owns 61 percent of the company and Canada owns roughly 12 percent. GM plans to repay both with a public stock offering, perhaps later this year.
“Nobody was happy that GM needed government loans — not the governments, not the taxpayers and, quite frankly, not the company,” Whitacre wrote in an op-ed article that appeared on the Wall Street Journal’s Web site on Tuesday night. “We believe we can best thank the citizens of the US and Canada by making sure that their investments are hard at work every day, building high quality, fuel-efficient vehicles.”
During the financial crisis that led to GM filing for bankruptcy protection last year, the automaker closed 14 factories and shed more than 65,000 blue-collar jobs in the US through buyouts, early retirement offers and layoffs. The company now employs about 40,000 hourly workers in the US.