General Motors Co. is delaying work on new vehicle models and is cutting pay for its executives as part of efforts to conserve cash amid the coronavirus or Covid-19 pandemic. The automotive giant also extended the shutdown of North American plants indefinitely.
Multiple reports cited an internal memo that salaried workforce will have 20 percent of pay deferred starting April 1. GM’s senior management team will take pay cuts of as much as 10 percent and defer 20 percent of their cash compensation. The deferred money would be repaid through the fourth quarter of this year or first quarter of 2021.
The company will also put 6,500 employees on leave with 75 percent of their pay until production resumes. They are in manufacturing or engineers, who are not able to work remotely due to the plant closures.
GM will delay some vehicles under development, while certain models that are close to launch will go on sale later this year as planned. These include Chevrolet Tahoe, GMC Yukon and Cadillac Escalade large SUVs.
The company reportedly said, “GM’s business and its balance sheet was very strong before the Covid-19 outbreak and the steps we are taking now will help ensure that we can regain our momentum as quickly as possible after this crisis is over.”
GM on Tuesday said it intends to draw down about $16 billion from its revolving credit facilities as a proactive measure to increase its cash position and preserve financial flexibility due to the current market uncertainty.
Citing the ongoing troubled market situation, the company also had suspended its fiscal 2020 outlook.
Last week, the Big 3 Detroit automakers,GM, Ford Motor, and Fiat Chrysler Automobiles, had decided to shut down all North American plants for the two weeks until March 30.
Ford Motor now plans to restart production at select plants in North America as early as April 6. The company also announced various actions to save cash, including temporary cut in the salaries of hundreds of executives.
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