By Chris Isidore, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- General Motors and Chrysler LLC said Tuesday they could need an additional $21.6 billion in federal loans between them because of worsening demand for their cars and trucks.
The two firms, in documents submitted to the Treasury Department, also detailed plans to cut 50,000 jobs worldwide by the end of the year. GM said it plans to close five more plants in the next few years and confirmed it will drop some of its weaker brands.
When all is said and done,GM (GM, Fortune 500) said that by 2011 it could need a total of $30 billion, which includes the $13.4 billion in Treasury loans it has already received. In the near term, GM will most certainly need $9.1 billion in additional loans and could require another $7.5 billion in the next two years if auto sales don't improve.
Chrysler said it now needs a total of $9 billion, up from the $4 billion Treasury loan it received in December. Chrysler said it will need that money by March 31.
GM also accelerated its job cut plans, saying that it would eliminate 47,000 jobs over the course of 2009. The company said it would cut about 20,000 jobs in the United States, or about 22% of its remaining U.S. staff.
Previously, GM called for U.S. job cuts of between 20,000 to 30,000 workers, but it had stretched out those reductions through 2012.
The company said it plans to close five additional U.S. plants by 2012 --in addition to the 12 planned closings announced in December. Executives would not identify the plants that would be closed.
"Our plan is significantly more aggressive because it has to be," said GM Chairman Rick Wagoner.
Experts said that the request for additional dollars are not a surprise, given how bad auto sales have been since the December plea for help.
"The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com. "No automaker is viable under the current market conditions, and so far the spending package appears to spread money too thin to actually make much of a difference in any one area."
Some economists argued that the problems detailed in the plans show that GM and Chrysler are already failed companies.
"When consumers refuse to buy your product, that's the economy telling you you're bankrupt," said Rich Yamarone, director of research at Argus Research. "
But Yamarone said it may make sense to give them the money they need, even if it's good money after bad, because the battered U.S. economy can't weather the halt of operations at GM and Chrysler right now.
GM added it plans to phase out the Saturn brand by the middle of 2011 if it is unable to sell or spin-off the brand. GM is also looking to sell its Saab brand, and will look for help from the Swedish government to support Saab until a buyer is found.
Chrysler said it plans to cut about 3,000 jobs, or 6% of its workforce, and reduce capacity by another 100,000 vehicles this year as it tries to adjust to reduced demand. It also said it has won the concessions from the United Auto Workers union and its creditors that were demanded under terms of the loan from the Treasury Department.
The companies had a deadline of Tuesday to update the government on the status of their turnaround plans. The new plans highlighted a worsening forecast for sales, and more job cuts at the companies in the coming months.
A newly-appointed auto panel will review both plans and determine by March 31 if GM and Chrysler can be viable in the long run. Specifically, the Treasury Department is looking for details about the progress of negotiations with creditors and the UAW.
White House spokesman Robert Gibbs issued a statement late Tuesday saying that the panel would be reviewing the plans and that "We appreciate the effort that these companies and their stakeholders have made."
The automakers' request for a $34 billion federal bailout in December fell short when Senate Republicans blocked passage of the request. The Democratic majorities in both houses of Congress have grown since then.
While both plans are more than 100 pages each, they have only limited details about the latest deals reached with the United Auto Workers union to shed costs, as well as about GM's efforts to shed much of its unsecured debt, as required under the terms of its existing loans.
GM is struggling under a $35 billion mountain of unsecured debt. It hopes to shed about two-thirds of that debt with a swap of debt for equity with its bond holders.
But the company was not able to reach a deal with the bond holders by Tuesday's deadline, although it did include a letter from their committee's financial and legal advisers saying that they are "prepared to recommend that the committee approve and support the bond exchange" proposed by GM.
If the federal panel looking at the plans rules either company is not viable, it could recall the outstanding loans, a move that would likely force them into bankruptcy. In a statement, Chrysler chairman Robert Nardelli said he believes additional federal help is the best course for both Chrysler and the battered U.S. economy.
"We believe the requested working capital loan is the least-costly alternative and will help provide an important stimulus to the U.S. economy and deliver positive results for American taxpayers," said Nardelli in the statement.
To that end, the companies also submitted an analysis of what would happen if it filed for bankruptcy. In a reorganization scenario, GM said it might need up to $100 billion in additional federal loans to finance their operations during a two-year reorganization. Chrysler said it would need up to $20 billion to $25 billion.
If it was forced to liquidate, Chrysler estimated there would be a loss of 2 million to 3 million jobs, resulting in a $150 billion reduction in federal tax revenue over three years.
Nardelli added that a Chrysler bankruptcy would have a "cataclysmic" impact on the auto parts supplier industry, which would affect operations and production at all automakers.
But Ford said it would not to have to tap the line of credit unless conditions in the auto market and economy deteriorated more than expected.
Since then, demand for cars and trucks has gone from bad to worse, with January sales falling to their lowest level in 26 years. The automakers and industry experts have also slashed sales forecasts for 2009 and beyond.
Chrysler has been among the hardest hit in the industry though. Sales plunged 54% from year-earlier levels in December and January, and the company left most of its 12 North American assembly plants idled throughout January due to weak demand and excess inventory.
In addition to the job and production cuts, the company pledged to further lower costs by eliminating a manufacturing shift and discontinuing three models.
"We fully understand the need to adapt to significantly reduced annual U.S. sales," said Nardelli in Chrysler's statement.
The company now expects industrywide U.S. sales this year of only 10.1 million vehicles, which would be a 40-year low. It believes sales from 2010 through 2012 will average only 10.8 million a year.
GM's U.S. sales forecast for 2009 is close to Chrysler's estimate - around 10.5 million cars and light trucks. But it is far more optimistic about a rebound in sales from 2010-2012.
Separately, UAW president Ron Gettelfinger said in a statement Tuesday that the union had "reached tentative understandings with Chrysler, Ford and General Motors on modifications to the 2007 national agreements."Gettelfinger said "the changes will help these companies face the extraordinarily difficult economic climate in which they operate." But he declined to disclose specific terms of the tentative agreement and said that discussions were continuing.