GMAC restructuring will shed 930 jobs from financing branch

Two days ago we told you about Cerberus head Stephen Feinberg's rather sanguine thoughts on Chrysler. Cerberus' other big auto investment, GMAC, is having a few issues of its own. Last year GMAC's auto lending division posted a profit of $1.77 billion, but losses in the mortgage loan division turned that into a $2.33 billion for the entire company. So, GMAC is doing what companies often do in these situations: positioning itself "with a more competitive cost structure and greater operational flexibility for future growth." Which is done by firing people, shutting down offices, and consolidating what's left over.

From 20 North American offices, the company will trim down to five regional centers in the U.S. and Canada, and get rid of 930 workers, representing 15-percent of the workforce. After GM takes the charge for restructuring, the move will provide $175 million in savings.

And as with Chrysler, Cerberus isn't sweating the current state of things. Feinberg, in that letter to investors, said of GMAC, "The good news is that we bought GMAC cheaply enough so that even with all the bad news in the mortgage market and credit markets, we are still in reasonable shape with our overall investment. However, if the credit markets continue to decline and we find ourselves in a prolonged environment of capital market shutdown, GMAC could run into substantial difficulty." Still, doomsday appears to be a ways off: GMAC expects to be profitable again in 2008.

[Source: Yahoo!]