General Motors Corp. said yesterday that it would sell most of its stake in Japanese automaker Suzuki Motor Corp. to raise $2 billion in cash while it accelerates efforts to reduce its U.S. hourly work force through buyouts.
GM is in talks with the United Auto Workers about offering thousands of workers early retirement to reduce the ranks of its hourly workers from about 105,000 in the United States.
At the same time, GM is negotiating with Delphi Corp. to take back some workers from the bankrupt supplier, which GM spun off in 1999, and avert a costly strike.
"This plays into their negotiations with the UAW," said Erich Merkle, senior analyst at industry consultant IRN Inc. of Grand Rapids, Mich. "GM is probably going to make an attempt to do some early buyouts and reduce the size of its work force. They will need a substantial amount of cash to do that."
GM lost $8.6 billion last year and plans to eliminate 30,000 union jobs by 2008, mainly through retirement, as part of a restructuring announced in the fall.
Accelerating retirement among GM workers could create openings for Delphi employees. Delphi is looking to cut U.S. jobs, and its unions have threatened to strike if Delphi voids their contracts in bankruptcy court. Delphi has set a deadline of March 30 to reach a deal with its unions. If no deal is reached, it will file March 31 to void the contracts.
GM spokeswoman Gina Proia said the Suzuki sale "doesn't have any direct connection to those discussions. It allows us to strengthen our liquidity to help us develop new products and finance our restructuring."
From the sale, GM said it would book a $550 million to $750 million profit in the first quarter. GM will reduce its stake in Suzuki to 3 percent from 20.4 percent, but continue to collaborate with the Japanese automaker on fuel cells and hybrid technology.
The GM-Suzuki alliance dates to 1981, and Suzuki has since supplied several small cars and sport utility vehicles to GM.
Suzuki's role diminished after GM bought the remnants of bankrupt Korean manufacturer Daewoo Motor Co. in 2001 and formed GM Daewoo Automotive & Technology Co. That unit produces the Chevrolet Aveo and is in charge of developing GM's small cars globally.
"At this point, it doesn't seem like Suzuki can give General Motors anything that Daewoo can't," Merkle said.
GM has retreated from its other alliances in recent years, reducing its stake in Isuzu Motors Ltd. to 7.9 percent from 49 percent and bailing out of a failed venture with Fiat that cost more than $4 billion. Last year, GM sold its 20 percent interest in Fuji Heavy Industries, maker of Subaru automobiles, for about $800 million.
GM has nearly $20 billion in cash, but Merrill Lynch analyst John Murphy said in a research note that the sales of Fuji and Suzuki assets "are indicative of a company in trouble, attempting to head off a near-term liquidity crunch."
Murphy speculated that GM's decision to sell shares in Suzuki was prompted by the recent appointment of Jerome York to GM's board. York is an adviser to billionaire investor Kirk Kerkorian, who holds a 9.9 stake in GM, and in January called for the automaker to build cash reserves to finance the restructuring.
The Suzuki sale was announced the day GM's board held its monthly meeting, but the company made no announcement concerning the possible sale of a majority interest in GMAC, its finance unit.
Rick Popely writes for the Chicago Tribune.