Posted by: David Welch on March 12, 2009
Here’s a little public relations maneuver for you. General Motors said today that the company won’t need $2 billion in credit this month from the Treasury Department. GM says that it has cut corners, wrung out costs and otherwise thrifted its way to saving $2 billion. The company retrofitted an old building to house a new engine plant to save bucks. It has also cut back marketing during the NCAA Final Four to pinch a few more pennies.
But GM still wants access to as much as $30 billion in government loans. That is the same amount the company said it would need when management submitted its restructuring plan to the Treasury Department on Feb. 17. In other words, $30 billion minus $2 billion is still $30 billion in government loans. So while the savings may be real, GM still must borrow heavily to stay out of bankruptcy. That’s why this is a P.R. play. Give the company its due for continuing to slash costs. But the story line remains the same for now. GM is on life support.