General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.
GM CEO Whitacre will formally announce the loan paybacks on April 21 at the company's Fairfax Assembly Plant in Kansas City, Kansas, where he will also announce that GM is investing $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 $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.
The U.S. government payments, made on April 20, 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 April 21.
GM hopes to repay the remaining $45.3 billion to the U.S. government and $8.1 billion to Canada, money it received in exchange for large stakes in the company. The U.S. government now owns 61 percent of the company and Canada owns roughly 12%. 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. "We believe we can best thank the citizens of the U.S. and Canada by making sure that their investments are hard at work every day, building high quality, fuel-efficient vehicles."
The factory investments in Kansas and Michigan will not create any new jobs, but will preserve jobs at both plants. The Kansas plant, which employs 3,869 workers, also builds the midsize Buick LaCrosse luxury sedan. The Detroit-Hamtramck plant, which has 1,048 employees, now builds the Cadillac DTS and Buick Lucerne large sedans and is gearing up to make the Chevrolet Volt rechargeable electric car.
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 U.S. through buyouts, early retirement offers and layoffs. The company now employs about 40,000 hourly workers in the U.S.
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