A deafening roar went up from the crowd gathered at General Motors’ assembly plant in Fairfax, Kansas, but it wasn’t in response to a new product. GM chairman and CEO Ed Whitacre publicly announced that the automaker had repaid the remainder of its government loans.
“I’m pleased to announce that as of today, GM has repaid the loans in full,” Whitacre said, before his voice was drowned out by raucous cheers from Fairfax employees. “We deeply appreciate the assistance given to us by American and Canadian tax payers, and we’re well on our way to making GM a company we can be proud of once again.”
GM received nearly $8 billion in fiscal aid from the American, Canadian, and Ontario governments. Although these loans weren’t due until 2015, Whitacre had been making a push to repay the loans as soon as possible. When appointed as CEO in December 2009, Whitacre pledged the company would have the balance paid off by June 2010.
GM made its first payment that same month, sending the U.S. Treasury nearly $1 billion, while paying the Canadian governments $192 million. An identical payment was made in March, dropping GM’s collective loan debt to $5.8 billion. By paying the remainder back today, GM is roughly 5 years ahead of the original loan schedule, and two months ahead of Whitacre’s original timeframe.
Although the loans are repaid, the U.S. government still owns 60.1 percent of the automaker’s equity. It’s expected that once GM offers an initial public offering, the government will shed its share of the company over several years, recouping most of — if not more than– its original investment.
Whitacre also used today’s conference to announce the company’s investment to produce the next-generation Chevrolet Malibu. Roughly $136 million will be spent to upgrade the Fairfax plant for the new midsize sedan, due to launch in 2012. Fairfax will remain the primary assembly plant for the car, but GM is investing another $120 million to add capacity to its Hamtramck, Michigan plant — the same factory that will ultimately build the Chevrolet Volt — to help cope with surges in demand.
Given the Malibu’s production records, that decision may prove to be more prescient than presumptuous. As GM is revamping its plant in Orion Township, Michigan, to build the next-generation Aveo, Fairfax is the only assembly plant building the Malibu. Currently, the plant is running three shifts on overtime, and supply levels for the Chevy sedan are at 53 days — below the industry “goal” of 60.