General Motors will cut 47,000 jobs and may need up to US$30 billion to survive, while Chrysler is shedding 3,000 jobs and three vehicle models, in U.S. restructuring plans that hint at similar action north of the border.
Both companies gave their plans to the U.S. Treasury Department on Tuesday after the markets closed.
GM, which has already received $13.4 billion in government loans, wants to borrow a further $16.6 billion. It says it would be able to start repaying the government in 2012 and would finish in 2017.
The company also plans to shut down five U.S. factories. The measures go much further than those included in an initial plan released on Dec. 2.
"Today's plan is significantly more aggressive because it has to be," GM chief executive Rick Wagoner told reporters. "In the 11 weeks since our initial plan was filed with Congress, the condition of the U.S. and global economies, as well as the auto industries, has significantly deteriorated."
Of the 47,000 job cuts, roughly 27,000 will be outside the U.S., although it's unclear how Canadian operations will be affected. The company employs 19,000 people in Canada, the majority of them working in Ontario.
A finalized plan must be given to the U.S. government by March 31.
Meanwhile, Chrysler said it will need $5 billion in government loans to survive. It had initially sought $3 billion, and has already received $4 billion in government loans.
Chrysler chairman and CEO Bob Nardelli said the job losses will not affect Canadian operations, but he expects proportionate cuts north of the border. Chrysler's Canadian unit has already reduced its workforce from 10,000 to 8,400, and it will submit its own restructuring plan to Canadian officials on Friday.
The three vehicle models the company plans to stop producing are the Dodge Aspen, Durango and Chrysler PT Cruiser, according to The New York Times.
Ford has said it can survive 2009 without government loans. However, the company said late Tuesday it had reached a deal with the United Auto Workers union to cut its labour costs, making them competitive with Japanese car companies.
GM and Chrysler have also reached tentative concessions with the UAW and debt holders, although more talks were expected on the issue of retiree health care.
"The changes will help these companies face the extraordinarily difficult economic climate in which they operate," UAW president Ron Gettelfinger said in a statement Tuesday afternoon.
Canadian Auto Workers union president Ken Lewenza told reporters early Tuesday evening he would start similar restructuring talks with the Canadian units of GM, Chrysler and Ford.
"Those negotiations would be aimed at ensuring that active labour costs at Canadian facilities of the three companies remain fully cost competitive with the companies' counterpart facilities in the United States, even as those operations are restructuring in coming months," he said.
Despite the well-documented challenges facing GM, Prime Minister Stephen Harper said Tuesday he's confident the automaker will not pull its operations out of Canada.
Harper said even if GM were to declare bankruptcy he doesn't think they'll shut down in Canada.
"Obviously there's a range of options and the restructuring itself will be extremely complex," Harper said following a transit infrastructure announcement in Toronto.
"I'm confident with ... Ontario coming to the table, with our share of funding, that we will maintain a strong industry in this country."
Still, he said there was still a possibility of job losses because "very tough decisions" will need to be made.
Bankruptcy?
Meanwhile, U.S. President Barack Obama has appointed a task force to oversee the restructuring efforts.
But some analysts are calling on Obama to let the companies fall into Chapter 11 bankruptcy.
BNN's Michael Kane said the move would keep creditors at bay.
"Bankruptcy protection is something that's designed to keep a company operating while it reorganizes," Kane said.
Kane said GM and Chrysler could also be forced into bankruptcy if they don't pay the government loans back.
In Canada, the auto industry is closely watching the negotiations south of the border.
The Canadian branches of GM and Chrysler must give the Canadian and Ontario governments similar briefings on Friday, to complete the framework of a combined $4 billion in loans from those governments.
The Canadian loans are contingent on Canada maintaining its proportionate share in future North American vehicle production.
With files from The Associated Press
