North American Auto Industry Crisis news **Pontiac's Last Day (page 28)**
12-02-2008, 05:47 PM
#121
The sizzle in the Steak
Thread Starter
The 
was not for you...it was for AsianRage.
was not for you...it was for AsianRage.
12-02-2008, 10:15 PM
#123
Safety Car
Big 3
Big 3 Want More $$$ in BailOut
The price tag of a loan to the Detroit automakers could top $34B: GM is asking for up to $18B, Ford wants $9B and Chrysler, $7B.
NEW YORK (CNNMoney.com) -- Automakers submitted their turnaround plans to Congress Tuesday with the hopes of winning approval for a lucrative loan package they claim is necessary for their survival.
The plans included salary cuts for top executives, the sale of corporate jets by General Motors and Ford and the possible elimination of two GM brands - Pontiac and Saturn. But the Big Three are also now asking the government for as much as $34 billion instead of the $25 billion they originally wanted.
General Motors, the nation's largest automaker, said late Tuesday afternoon that it is seeking up to $12 billion to survive into 2010 and that it anticipates using $4 billion of that just this month in order to avoid bankruptcy.
But GM said it is also requesting an additional $6 billion line of credit to provide more funds should a severe market downturn persist.
Ford (F, Fortune 500) is asking for $9 billion. The company said it hopes that it will not need to use the federal loans though and that it should be able to return to profitability by 2011. But it said it would like to be able to have access to the funds as a backstop.
Chrysler LLC confirmed its previous request for a $7 billion loan that it made at Congressional hearings two weeks ago. So the automakers are asking for at least $28 billion and as much as $34 billion under the three plans.
The plans were submitted on the same day that the auto industry reported the worst U.S. sales in 26 years. Both U.S. and top overseas automakers all reported sales declines of more than 30% from year-ago sales, increasing the level of urgency for the beleaguered Big Three.
Sen. Carl Levin, D-Mich., a strong advocate of the bailout, said he is confident Congress will return next week to approve a loan package. He said he's not concerned about the higher price tag being requested and added that members of Congress wanted an honest accounting of how much might be needed in a worst case scenario.
Speaking at a press conference Tuesday afternoon, House Speaker Nancy Pelosi, D-Calif., also said that it was imperative that the automakers get immediate federal assistance.
"Bankruptcy is not an option. Everyone is disadvantaged by bankruptcy. It takes too long. What takes a year we can do in a few weeks. ... I don't think anyone wants to see bankruptcy," Pelosi said.
But Pelosi wouldn't commit to having Congress return next week to pass a Big Three bailout. She said if Congress does not return, the Treasury Department should use money available under the previous $700 billion Wall Street bailout to tide the automakers over until early next year.
It's not clear if the Treasury Department would do this since the Bush administration has endorsing the idea of aid for the automakers but opposes using the Wall Street bailout money to help them.
What's in the plans
As part of its plan, Ford announced that the salary of Ford CEO Alan Mulally would be cut to $1 a year if Ford (F, Fortune 500) actually borrowed money from the government.
General Motors (GM, Fortune 500) said that CEO Rick Wagoner also will accept a $1 salary. Chrysler LLC CEO Robert Nardelli is already being paid only $1 a year, according to the Chrysler plan.
Mulally had a base salary of $2 million and total compensation of $21.7 million last year, according to the company's filings. Wagoner received base pay of $1.6 million and total compensation of $14.4 million. Closely-held Chrysler does not disclose executive pay.
In an effort to cut costs, GM also suggested that two of its brands - Pontiac and Saturn - could essentially be dropped. GM said it would make Pontiac merely a niche product sold by other dealerships and explore alternatives for Saturn dealers. The company had previously announced it was looking at a possible sale of its Hummer brand.
GM also said it would seek additional changes in the labor contract with the United Auto Workers union to modify retiree health care plans and job guarantees the company cannot afford.
GM said it will cut approximately 21,000 to 31,000 jobs by 2012 to reduce its total workforce to between 65,000 to 75,000 employees. Wagoner said GM reviewed its plan with UAW, which approved the measure. "They know what sacrifices need to be made on both the hourly and salaried side of the ledger," he said.
Officials with the UAW were not immediately available for comment on GM's and Ford's plans. But some local union officials told CNN that national union leaders are planning to hold an emergency meeting in Detroit on Wednesday.
GM said it would also seek to renegotiate its outstanding debt with lenders and bondholders. The company had more than $30 billion in unsecured debt at the end of the third quarter. But GM said it expects to make all of the about $28 billion in payments it owes to suppliers.
"This is part of an urgent request for federal funding to create 'a new GM' - a lean and fully competitive company," said Wagoner in a conference call. "Taking these tough actions will help us weather the current economic stresses, and will position the new GM to be profitable."
Chrysler, which was sold by German automaker Daimler a year ago to the U.S. private equity group Cerberus Capital, said it remains focused on "developing partnerships, strategic alliances or consolidations" as part of its long-term plans.
The company said it believes it could save between $3.5 billion and $9 billion a year from cost savings tied to a merger. In November, GM said that it had halted discussions about a possible combination with Chrysler to focus on its own turnaround efforts.
Chrysler's Nardelli said in a presentation to the company's senior management that he realizes that the $7 billion bridge loan represents a "significant amount of public money." But he added that it is "the least costly alternative considering depth of the economic crisis and the options we face."
More hybrids...no more corporate jets
In its plan, all three automakers also made commitments to speed up the introduction of hybrid and electric vehicles. Ford also pledged to reverse the decades-long trend of losing money on the production of small cars in the United States.
Ford said it would increase the production of smaller vehicles such as the Ford Focus to more than 1 million a year and reduce the complexity of the car's parts in order to reduce costs.
Ford and GM also announced plans to get rid of corporate jets. Mulally, Wagoner and Nardelli were all roundly criticized at a House hearing last month when they admitted they had each flown their corporate jets to Washington to ask for help.
Ford said it will sell its five corporate jets. GM said it plans to sell four of its seven jets and is exploring plans to transfer leases on the other three to another operator. Chrysler spokesman Ed Garsten says Chrysler does not own any private aircraft but instead leases them on an as needed basis.
Mulally and Wagoner will be driving to Washington in hybrid vehicles made by their companies when they return to Capitol Hill later this week to make their case for loans. Nardelli is also driving a hybrid to Washington.
Return to profitability in next few years
Ford said that, as a result of its turnaround plan, it believes its core North American auto operations will be breakeven or profitable in 2011 on a pre-tax basis. The company had previously set a goal of returning those operations to profitability next year but dropped that target in May without giving a new one.
Ford also said it expects industrywide sales of 12.5 million vehicles in 2009, 14.5 million vehicles in 2010 and 15.5 million vehicles in 2011. By way of comparison, U.S. auto sales averaged close to 17 million a year from 1998 through 2006.
But GM and Chrysler submitted plans with far more conservative sales forecasts.
GM said once its restructuring plans are complete, it thinks it can be profitable even if sales only return to between 12.5 and 13 million vehicles a year. In the press call, GM president Fritz Henderson said the company's restructuring plan will make GM fully competitive with Japanese automaker Toyota by 2012.
Chrysler is forecasting a return to profitability with industrywide sales of 13.7 million in 2011 and 2012.
The price tag of a loan to the Detroit automakers could top $34B: GM is asking for up to $18B, Ford wants $9B and Chrysler, $7B.
NEW YORK (CNNMoney.com) -- Automakers submitted their turnaround plans to Congress Tuesday with the hopes of winning approval for a lucrative loan package they claim is necessary for their survival.
The plans included salary cuts for top executives, the sale of corporate jets by General Motors and Ford and the possible elimination of two GM brands - Pontiac and Saturn. But the Big Three are also now asking the government for as much as $34 billion instead of the $25 billion they originally wanted.
General Motors, the nation's largest automaker, said late Tuesday afternoon that it is seeking up to $12 billion to survive into 2010 and that it anticipates using $4 billion of that just this month in order to avoid bankruptcy.
But GM said it is also requesting an additional $6 billion line of credit to provide more funds should a severe market downturn persist.
Ford (F, Fortune 500) is asking for $9 billion. The company said it hopes that it will not need to use the federal loans though and that it should be able to return to profitability by 2011. But it said it would like to be able to have access to the funds as a backstop.
Chrysler LLC confirmed its previous request for a $7 billion loan that it made at Congressional hearings two weeks ago. So the automakers are asking for at least $28 billion and as much as $34 billion under the three plans.
The plans were submitted on the same day that the auto industry reported the worst U.S. sales in 26 years. Both U.S. and top overseas automakers all reported sales declines of more than 30% from year-ago sales, increasing the level of urgency for the beleaguered Big Three.
Sen. Carl Levin, D-Mich., a strong advocate of the bailout, said he is confident Congress will return next week to approve a loan package. He said he's not concerned about the higher price tag being requested and added that members of Congress wanted an honest accounting of how much might be needed in a worst case scenario.
Speaking at a press conference Tuesday afternoon, House Speaker Nancy Pelosi, D-Calif., also said that it was imperative that the automakers get immediate federal assistance.
"Bankruptcy is not an option. Everyone is disadvantaged by bankruptcy. It takes too long. What takes a year we can do in a few weeks. ... I don't think anyone wants to see bankruptcy," Pelosi said.
But Pelosi wouldn't commit to having Congress return next week to pass a Big Three bailout. She said if Congress does not return, the Treasury Department should use money available under the previous $700 billion Wall Street bailout to tide the automakers over until early next year.
It's not clear if the Treasury Department would do this since the Bush administration has endorsing the idea of aid for the automakers but opposes using the Wall Street bailout money to help them.
What's in the plans
As part of its plan, Ford announced that the salary of Ford CEO Alan Mulally would be cut to $1 a year if Ford (F, Fortune 500) actually borrowed money from the government.
General Motors (GM, Fortune 500) said that CEO Rick Wagoner also will accept a $1 salary. Chrysler LLC CEO Robert Nardelli is already being paid only $1 a year, according to the Chrysler plan.
Mulally had a base salary of $2 million and total compensation of $21.7 million last year, according to the company's filings. Wagoner received base pay of $1.6 million and total compensation of $14.4 million. Closely-held Chrysler does not disclose executive pay.
In an effort to cut costs, GM also suggested that two of its brands - Pontiac and Saturn - could essentially be dropped. GM said it would make Pontiac merely a niche product sold by other dealerships and explore alternatives for Saturn dealers. The company had previously announced it was looking at a possible sale of its Hummer brand.
GM also said it would seek additional changes in the labor contract with the United Auto Workers union to modify retiree health care plans and job guarantees the company cannot afford.
GM said it will cut approximately 21,000 to 31,000 jobs by 2012 to reduce its total workforce to between 65,000 to 75,000 employees. Wagoner said GM reviewed its plan with UAW, which approved the measure. "They know what sacrifices need to be made on both the hourly and salaried side of the ledger," he said.
Officials with the UAW were not immediately available for comment on GM's and Ford's plans. But some local union officials told CNN that national union leaders are planning to hold an emergency meeting in Detroit on Wednesday.
GM said it would also seek to renegotiate its outstanding debt with lenders and bondholders. The company had more than $30 billion in unsecured debt at the end of the third quarter. But GM said it expects to make all of the about $28 billion in payments it owes to suppliers.
"This is part of an urgent request for federal funding to create 'a new GM' - a lean and fully competitive company," said Wagoner in a conference call. "Taking these tough actions will help us weather the current economic stresses, and will position the new GM to be profitable."
Chrysler, which was sold by German automaker Daimler a year ago to the U.S. private equity group Cerberus Capital, said it remains focused on "developing partnerships, strategic alliances or consolidations" as part of its long-term plans.
The company said it believes it could save between $3.5 billion and $9 billion a year from cost savings tied to a merger. In November, GM said that it had halted discussions about a possible combination with Chrysler to focus on its own turnaround efforts.
Chrysler's Nardelli said in a presentation to the company's senior management that he realizes that the $7 billion bridge loan represents a "significant amount of public money." But he added that it is "the least costly alternative considering depth of the economic crisis and the options we face."
More hybrids...no more corporate jets
In its plan, all three automakers also made commitments to speed up the introduction of hybrid and electric vehicles. Ford also pledged to reverse the decades-long trend of losing money on the production of small cars in the United States.
Ford said it would increase the production of smaller vehicles such as the Ford Focus to more than 1 million a year and reduce the complexity of the car's parts in order to reduce costs.
Ford and GM also announced plans to get rid of corporate jets. Mulally, Wagoner and Nardelli were all roundly criticized at a House hearing last month when they admitted they had each flown their corporate jets to Washington to ask for help.
Ford said it will sell its five corporate jets. GM said it plans to sell four of its seven jets and is exploring plans to transfer leases on the other three to another operator. Chrysler spokesman Ed Garsten says Chrysler does not own any private aircraft but instead leases them on an as needed basis.
Mulally and Wagoner will be driving to Washington in hybrid vehicles made by their companies when they return to Capitol Hill later this week to make their case for loans. Nardelli is also driving a hybrid to Washington.
Return to profitability in next few years
Ford said that, as a result of its turnaround plan, it believes its core North American auto operations will be breakeven or profitable in 2011 on a pre-tax basis. The company had previously set a goal of returning those operations to profitability next year but dropped that target in May without giving a new one.
Ford also said it expects industrywide sales of 12.5 million vehicles in 2009, 14.5 million vehicles in 2010 and 15.5 million vehicles in 2011. By way of comparison, U.S. auto sales averaged close to 17 million a year from 1998 through 2006.
But GM and Chrysler submitted plans with far more conservative sales forecasts.
GM said once its restructuring plans are complete, it thinks it can be profitable even if sales only return to between 12.5 and 13 million vehicles a year. In the press call, GM president Fritz Henderson said the company's restructuring plan will make GM fully competitive with Japanese automaker Toyota by 2012.
Chrysler is forecasting a return to profitability with industrywide sales of 13.7 million in 2011 and 2012.
12-02-2008, 10:50 PM
#124
Senior Moderator
From Worldcarfans...
GM has submitted its restructuring plans to the US Congress and has made a summary publicly available on its press site.
GM has not committed to outright eliminating any brands like Saturn or Pontiac - something many analysts say it must do in order to survive. It has said it will "focus" on "four core brands" - Chevrolet, Cadillac, GMC and Buick.
But GM is claiming that it is looking for a buyer for Saab and has put the Hummer brand up for sale. Pontiac will be shrunk to a few niche products and GM is "exploring alternatives" for the Saturn brand - hinting that the brand may just be axed.
GM, like Ford, has also said it will accelerate the development of greener cars and highlighted the Chevy Volt, which can go 40 miles solely on electric power and is scheduled to go into production in 2010, as one of the models it is staking its future on.
The company will also cut costs by reducing production and its work force and working with the UAW to revise labor agreements and get further concessions on compensation from its workers.
GM says it needs 12 billion US dollars to see it through 2009, based on a domestic market of 12 million vehicle sales in the US. The company claims it will need an additional 6 billion if market conditions are worse than that and sales fall to around 10.5 million.
According to the plan, GM will pay back the loans in 2012 and will be profitable after restructuring, predicated on a US market of 12 to 13 million vehicles. The US market over the last several years has hovered at around 17 million units, but vehicle sales have fallen off precipitously over the last year. GM's domestic sales fell 45 percent in October over the same month last year. For November, they were down more than 41 percent.
But it remains to be seen whether this plan will be enough for GM to secure any federal funds. Some lawmakers in the US are skeptical of an auto industry bailout and question whether GM or the other Big 3 are really willing to do what it takes to become competitive businesses again. "Throwing good money after bad" has become one of the most frequently utilized expressions on Capitol Hill these days.
GM has not committed to outright eliminating any brands like Saturn or Pontiac - something many analysts say it must do in order to survive. It has said it will "focus" on "four core brands" - Chevrolet, Cadillac, GMC and Buick.
But GM is claiming that it is looking for a buyer for Saab and has put the Hummer brand up for sale. Pontiac will be shrunk to a few niche products and GM is "exploring alternatives" for the Saturn brand - hinting that the brand may just be axed.
GM, like Ford, has also said it will accelerate the development of greener cars and highlighted the Chevy Volt, which can go 40 miles solely on electric power and is scheduled to go into production in 2010, as one of the models it is staking its future on.
The company will also cut costs by reducing production and its work force and working with the UAW to revise labor agreements and get further concessions on compensation from its workers.
GM says it needs 12 billion US dollars to see it through 2009, based on a domestic market of 12 million vehicle sales in the US. The company claims it will need an additional 6 billion if market conditions are worse than that and sales fall to around 10.5 million.
According to the plan, GM will pay back the loans in 2012 and will be profitable after restructuring, predicated on a US market of 12 to 13 million vehicles. The US market over the last several years has hovered at around 17 million units, but vehicle sales have fallen off precipitously over the last year. GM's domestic sales fell 45 percent in October over the same month last year. For November, they were down more than 41 percent.
But it remains to be seen whether this plan will be enough for GM to secure any federal funds. Some lawmakers in the US are skeptical of an auto industry bailout and question whether GM or the other Big 3 are really willing to do what it takes to become competitive businesses again. "Throwing good money after bad" has become one of the most frequently utilized expressions on Capitol Hill these days.
12-02-2008, 11:48 PM
#127
The sizzle in the Steak
Thread Starter
Buick is very big in China....GM is not going to kill Buick...the future market in China is too great.
12-03-2008, 12:07 AM
#128
Is this the same GM that said the following in July:
http://www.nytimes.com/2008/07/11/bu...1&ref=business
With Wagoner still around, GM is forever doomed.
I think we’ve been pretty clear on this for a while — we don’t have any plans to eliminate any more brands.......Our focus on all of our brands is what we can do to make them more profitable, to take advantage of the products we have and, in some cases, how we want to evolve the product portfolio into this current world,” he said.
With Wagoner still around, GM is forever doomed.
12-03-2008, 02:15 AM
#129
Race Director
12-03-2008, 02:27 AM
#130
Race Director
^^ As I've been saying for some time now - anything promissed by any maker could be cancelled any day. Chrysler will be lucky to be around in 2011, never mind any of these models.
12-03-2008, 07:10 AM
#131
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they already made their plan clear....
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12-03-2008, 07:56 AM
#132
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12-03-2008, 07:59 AM
#133
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Is this the same GM that said the following in July:
http://www.nytimes.com/2008/07/11/bu...1&ref=business
With Wagoner still around, GM is forever doomed.
http://www.nytimes.com/2008/07/11/bu...1&ref=business
With Wagoner still around, GM is forever doomed.
12-03-2008, 08:36 AM
#134
That's all talk... and it's all changed. The report GM gave Congress says it's focusing on it's four "core brands." It says that Chevy, Caddy, Buick, and GMC account for 83% of GM's NA sales. Pontiac will shrink to a niche brand with only few models that only "compliement" Buick and GMC, not compete with it. Saab and Hummer will be sold. Saturn will be folded.
The article I posted shows that Wagoner has NO foresight, and never will. Why should we believe this guy has any clue of what he is doing?
12-03-2008, 09:25 AM
#135
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I'm no fan of Wagoner, so I have no inclination to argue for this guy. The difference between what's GM (as a company) said then and what they presented to congress in it's report is that this is the end of the line for GM. This is the end, as for as playing games, and playing with the press... if they don't this this money they will collapse. They're vulnerable, and so they had to bear it all in the report. That's why there's no reason not believe everything that's in the report. Also, the content makes sense anyway, and is pretty drastic. GM will essentially shrink it's NA operations from 8 to 4 (not counting Pontiac's new niche two or three model role). Because such a move is so dramatic (and obviously necessary) leads me to believe it's what's going to happen, whether it's coming out of Wagoner's mouth, Lutz's mouth, or anyone else at GM... simply because that's how it has to be.
12-03-2008, 09:38 AM
#137
I agree it has to be done. But, because they didn't start this process months/years ago shows arrogance and lack of foresight. This is the end of line for them because of the poor decision making. Somebody thought shedding brands months ago was an idea--GM didn't. What's to say that the "end of line" won't come again in ten years and we have to go through this again? Keeping the same folks in charge, will ensure that happens.
12-03-2008, 09:53 AM
#139
What your problem is?
Survival of the fittest. I say let all three manufacturers take it on the freakin' chin. They should have learned their lesson during the 70's with the oil embargo. That is when we first saw these two small companies called Toyota and Honda kill the Big Three's market share. The price of oil goes down and these fool go back to making big v8's.
There estimates of how many jobs are effected by the automotive industry is grossly exaggerated. At most 3 million U.S. citizens will be effected, of that 2/3 can find work again when smaller outfits (like Hyundai, Daewoo, Chery, etc.) or when bigger and more streamlined firms (like Honda, Toyota, Nissan, etc.) pick up the manufacturing facilities these out of touch automotive firms leave behind.
Look at them now, they are spending more money on cars like Mustang, Camaro, Challenger, and Charger, all big engine vehicles that the average consumer doesn't want or need. To turn these companies around, they need to:
1. Fire the dumb ass unions and find cheaper labor (and it can be found in the U.S. Toyota and Honda use non union workers and costs are a fraction of what it is for the Big Three.
2. Figure out how to make their european vehicles safe for American use. Ford's new European Focus is a very good car, they need to make it so it passes U.S. standards. Opel is a GM company that is inventive and efficient, bring it over and stop rebadging it a Saturn or Pontiac.
3. Stop keeping competing with yourself. GM is notorious for this shit. It has cars under Buick, Saturn, Chevy, Pontiac that are essentially the same. If Cadillac and Buick are your luxury brands then don't offer similar cars in other parts of the company. Don't allow GMC to sell Chevy trucks. No one is going to pay the premium for a shitty little name tag. Consumers are getting wiser and the car companies are still acting like we are dumb.
4. Take a style lesson from foreign competitors. See what is making the Camry, Accord, and civic sell and try to emulate. And if you do emulate, try not to price the crap out the vehicle. No one is going to buy a ~$30k plus Ford 500, when a similar equipped Camry can be had for ~$25k.
These are just my points and opinion, but it is a fact that the morons that run these companies have a lot to learn about their own industry.
There estimates of how many jobs are effected by the automotive industry is grossly exaggerated. At most 3 million U.S. citizens will be effected, of that 2/3 can find work again when smaller outfits (like Hyundai, Daewoo, Chery, etc.) or when bigger and more streamlined firms (like Honda, Toyota, Nissan, etc.) pick up the manufacturing facilities these out of touch automotive firms leave behind.
Look at them now, they are spending more money on cars like Mustang, Camaro, Challenger, and Charger, all big engine vehicles that the average consumer doesn't want or need. To turn these companies around, they need to:
1. Fire the dumb ass unions and find cheaper labor (and it can be found in the U.S. Toyota and Honda use non union workers and costs are a fraction of what it is for the Big Three.
2. Figure out how to make their european vehicles safe for American use. Ford's new European Focus is a very good car, they need to make it so it passes U.S. standards. Opel is a GM company that is inventive and efficient, bring it over and stop rebadging it a Saturn or Pontiac.
3. Stop keeping competing with yourself. GM is notorious for this shit. It has cars under Buick, Saturn, Chevy, Pontiac that are essentially the same. If Cadillac and Buick are your luxury brands then don't offer similar cars in other parts of the company. Don't allow GMC to sell Chevy trucks. No one is going to pay the premium for a shitty little name tag. Consumers are getting wiser and the car companies are still acting like we are dumb.
4. Take a style lesson from foreign competitors. See what is making the Camry, Accord, and civic sell and try to emulate. And if you do emulate, try not to price the crap out the vehicle. No one is going to buy a ~$30k plus Ford 500, when a similar equipped Camry can be had for ~$25k.
These are just my points and opinion, but it is a fact that the morons that run these companies have a lot to learn about their own industry.
12-03-2008, 10:42 AM
#140
Senior Moderator
Survival of the fittest. I say let all three manufacturers take it on the freakin' chin. They should have learned their lesson during the 70's with the oil embargo. That is when we first saw these two small companies called Toyota and Honda kill the Big Three's market share. The price of oil goes down and these fool go back to making big v8's.
The problem lies within the Structuring of the contracts and UAW. Sure lack luster product doent help but all 3 have been making strides to try to improve, most notably GM. Get rid of the large amount of financial drain by actually restructuring and boot the UAW and all it drags with it and they all stand a chance to be productive, make a product most want and make profits. I dont think most can comprehend what would happen to the economy if they even 1 were to go under.
12-03-2008, 10:53 AM
#142
99 TL, 06 E350
Pathetic. Let them rot. I see nothing in the plans that'll make them profitable.
If they are serious, they would have started re-structuring now. Not wait for a bailout. There’s no guarantee that they’ll do any of this. As well, nothing in the plans to cut the salaries of the over paid UAW worker.
Detroit 3, as well as the big banks are just ripping off what’s left of America.
If they are serious, they would have started re-structuring now. Not wait for a bailout. There’s no guarantee that they’ll do any of this. As well, nothing in the plans to cut the salaries of the over paid UAW worker.
Detroit 3, as well as the big banks are just ripping off what’s left of America.
12-03-2008, 10:55 AM
#143
The problem lies within the Structuring of the contracts and UAW. Sure lack luster product doent help but all 3 have been making strides to try to improve, most notably GM. Get rid of the large amount of financial drain by actually restructuring and boot the UAW and all it drags with it and they all stand a chance to be productive, make a product most want and make profits. I dont think most can comprehend what would happen to the economy if they even 1 were to go under.
12-03-2008, 11:00 AM
#144
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Here is the problem. How do you get rid of the UAW.
You'd have to up and leave Detroit and build new factories in right to work states.
How much would that cost?
You'd have to up and leave Detroit and build new factories in right to work states.
How much would that cost?
12-03-2008, 11:13 AM
#145
It wouldn't be an overnight thing. Start by restructuring their contracts, giving them less pull, bloated benefits, etc. Slowly phase them out. They have to make it so workers don't want to join the unions. This is the biggest problem. The UAW knows GM can't get rid of them, so they will never loosen their grip. It just seem like bankruptcy is step one in loosening the UAW's grip.
12-03-2008, 11:14 AM
#146
i don't see any reference to the UAW contracts, which, i think, isn't good news. this, along with the multiple brands, are core issues to their problems.
12-03-2008, 11:19 AM
#147
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It wouldn't be an overnight thing. Start by restructuring their contracts, giving them less pull, bloated benefits, etc. Slowly phase them out. They have to make it so workers don't want to join the unions. This is the biggest problem. The UAW knows GM can't get rid of them, so they will never loosen their grip. It just seem like bankruptcy is step one in loosening the UAW's grip.
12-03-2008, 11:19 AM
#148
Bankruptcy not an option: GM
http://www.wheels.ca/reviews/article/480166
JULIE HIRSCHFELD DAVIS
The Associated Press
Dec 03, 2008
WASHINGTON–A top executive of General Motors Corp. said Wednesday bankruptcy isn't a viable option, as the United Auto Workers braced for a decision on contract concessions to the endangered Detroit Three.
Fritz Henderson, president and chief operating officer of GM, said choosing the bankruptcy route would further erode consumer confidence in the automaker and "we want them to be confident in their ability to buy our cars and trucks.''
Henderson traveled the network morning news show route on the eve of a new set of congressional hearings on some $34 billion the industry is seeking in federal assistance. At the same time, UAW leaders in Detroit were immersed in intense discussions on possible givebacks for the companies at an emergency meeting in Detroit.
Under consideration were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers' payments into a multibillion-dollar union-administered health care fund.
Henderson said that GM is ready to undertake a host of steps needed to resize. But he also said on NBC's "Today" show that ``to win, you've got to win with product and technology. ... And we do not want to give consumers a reason not to buy our cars and trucks.''
Chrysler LLC and Ford Motor Co. – as well as GM – have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as $34 billion in their second crack at persuading Congress to throw them a lifeline.
Henderson acknowledged Wednesday that the initial appearances by the heads of the car makers was a public relations failure.
"Yeah, it certainly was not our finest hour," he told NBC. ``We were not as clear about what we wanted to do." He also conceded that the decision by the executives to travel to Washington by private jet "was a problem" for lawmakers.
Congressional leaders now are reviewing three separate survival plans from the three automakers as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.
In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said they needed an immediate infusion of government cash to last until New Year's, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion ``standby line of credit" that it says it doesn't expect to use unless one of the other Big Three goes belly up.
But Chrysler said it needed $7 billion by year's end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date – including the prospects of shuttered factories and massive job losses – of what could happen if Congress doesn't quickly step in.
Democratic leaders voiced concern and a desire to do something to avert an automaker collapse, but they made no commitments about helping an industry that's made few friends lately on Capitol Hill.
"It is my hope that we would" pass legislation to help the automakers, House Speaker Nancy Pelosi, D-Calif., said. Senate Majority Leader Harry Reid, D-Nev., said he would lay the groundwork Monday for a possible vote on an auto bailout measure.
In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said they failed to take responsibility for their companies' troubles or justify a federal bailout.
"I think we learned a lot from that experience," Ford CEO Alan Mulally said.
He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all road-tripping the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.
Mulally and Wagoner both said they'd work for $1 a year – something Chrysler's plan said Nardelli already does – if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.
All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.
Nevertheless, Sen. Arlen Specter, R-Pa., said the mood in Congress "candidly is not supportive" of the automakers, although he called the consequences of just one of them failing ``cataclysmic.''
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement.
His panel is to hear testimony Thursday from the auto executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans.
The House Financial Services Committee is to hold a similar session on Friday.
The Associated Press
Dec 03, 2008
WASHINGTON–A top executive of General Motors Corp. said Wednesday bankruptcy isn't a viable option, as the United Auto Workers braced for a decision on contract concessions to the endangered Detroit Three.
Fritz Henderson, president and chief operating officer of GM, said choosing the bankruptcy route would further erode consumer confidence in the automaker and "we want them to be confident in their ability to buy our cars and trucks.''
Henderson traveled the network morning news show route on the eve of a new set of congressional hearings on some $34 billion the industry is seeking in federal assistance. At the same time, UAW leaders in Detroit were immersed in intense discussions on possible givebacks for the companies at an emergency meeting in Detroit.
Under consideration were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers' payments into a multibillion-dollar union-administered health care fund.
Henderson said that GM is ready to undertake a host of steps needed to resize. But he also said on NBC's "Today" show that ``to win, you've got to win with product and technology. ... And we do not want to give consumers a reason not to buy our cars and trucks.''
Chrysler LLC and Ford Motor Co. – as well as GM – have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as $34 billion in their second crack at persuading Congress to throw them a lifeline.
Henderson acknowledged Wednesday that the initial appearances by the heads of the car makers was a public relations failure.
"Yeah, it certainly was not our finest hour," he told NBC. ``We were not as clear about what we wanted to do." He also conceded that the decision by the executives to travel to Washington by private jet "was a problem" for lawmakers.
Congressional leaders now are reviewing three separate survival plans from the three automakers as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.
In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said they needed an immediate infusion of government cash to last until New Year's, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion ``standby line of credit" that it says it doesn't expect to use unless one of the other Big Three goes belly up.
But Chrysler said it needed $7 billion by year's end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date – including the prospects of shuttered factories and massive job losses – of what could happen if Congress doesn't quickly step in.
Democratic leaders voiced concern and a desire to do something to avert an automaker collapse, but they made no commitments about helping an industry that's made few friends lately on Capitol Hill.
"It is my hope that we would" pass legislation to help the automakers, House Speaker Nancy Pelosi, D-Calif., said. Senate Majority Leader Harry Reid, D-Nev., said he would lay the groundwork Monday for a possible vote on an auto bailout measure.
In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said they failed to take responsibility for their companies' troubles or justify a federal bailout.
"I think we learned a lot from that experience," Ford CEO Alan Mulally said.
He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all road-tripping the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.
Mulally and Wagoner both said they'd work for $1 a year – something Chrysler's plan said Nardelli already does – if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.
All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.
Nevertheless, Sen. Arlen Specter, R-Pa., said the mood in Congress "candidly is not supportive" of the automakers, although he called the consequences of just one of them failing ``cataclysmic.''
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement.
His panel is to hear testimony Thursday from the auto executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans.
The House Financial Services Committee is to hold a similar session on Friday.
12-03-2008, 01:09 PM
#149
What your problem is?
Yea but the V8s arent the problem. Hell my dads V8 in his caddy gets similar mileage to my V6 in my TL. My neighbors V8 in his Vette and GTO get 30 on the HWY.
The problem lies within the Structuring of the contracts and UAW. Sure lack luster product doent help but all 3 have been making strides to try to improve, most notably GM. Get rid of the large amount of financial drain by actually restructuring and boot the UAW and all it drags with it and they all stand a chance to be productive, make a product most want and make profits. I dont think most can comprehend what would happen to the economy if they even 1 were to go under.
The problem lies within the Structuring of the contracts and UAW. Sure lack luster product doent help but all 3 have been making strides to try to improve, most notably GM. Get rid of the large amount of financial drain by actually restructuring and boot the UAW and all it drags with it and they all stand a chance to be productive, make a product most want and make profits. I dont think most can comprehend what would happen to the economy if they even 1 were to go under.
2. I agree with the UAW remark, it needs to go. The only problem is GM keeps signing freakin contracts with them and thus giving them more life. GM needs the UAW and the UAW needs GM. If GM is allowed to fail then UAW is gone. I would much rather have the government pay for the close to $8 billion in UAW pensions and benefits while allowing GM and Ford to fail then to give these company's ~$30 billion as a short term fix only to have them come back in 5 years with a hands outstretched again...
3. I think you are getting caught up in the hype of '1 in 10 American jobs are in the automotive industry' comments... In that analysis they were looking a taxi drivers, bus drivers, repair shop operators, etc. These people are not going to be affected if a car company fails. The true number is about 3 million people (even Chrysler's own study stated 4 million). If one goes under, it will hurt for a bit, an American icon gone, six months down the road, no one is going to give a rats's ass....
12-03-2008, 03:14 PM
#151
2G TLX-S
Very soon, the US will become communist US, with government owned banks, insurance corps, mortgage companies, auto companies, .....
12-03-2008, 05:31 PM
#152
It wouldn't be an overnight thing. Start by restructuring their contracts, giving them less pull, bloated benefits, etc. Slowly phase them out. They have to make it so workers don't want to join the unions. This is the biggest problem. The UAW knows GM can't get rid of them, so they will never loosen their grip. It just seem like bankruptcy is step one in loosening the UAW's grip.
12-04-2008, 11:22 AM
#154
Who Can Save Detroit?
http://finance.yahoo.com/banking-bud...-Save-Detroit?
by Chris Isidore
Thursday, December 4, 2008
Automakers are heading back to Capitol Hill to plead for a bailout. They may finally get help...but not from Congress.
Can anyone rescue the U.S. automakers?
General Motors, Ford Motor and Chrysler LLC each unveiled plans Tuesday that detailed how they would return to profitability if they get federal loans.
Still, even with President-elect Obama and the outgoing Bush administration saying they support providing assistance to the automakers, it's not clear that they will get the help they need.
The CEOs of the three firms are again appearing in front of Congress Thursday and Friday to make their case for what's now a $34 billion loan package. They had originally been requesting $25 billion.
GM is asking for up to $18 billion and says it needs $4 billion of that almost immediately to avoid running out of cash before the end of the year.
Chrysler is seeking $7 billion and has warned that it too could run out of cash.
The situation is a bit better at Ford but it said it wants to be able to access up to $9 billion as a backstop.
The Big Three's last visit to Capitol Hill was nothing less than a public relations disaster, as many members of the House and Senate denounced the CEOs for their bad decisions and worse symbolism. Each CEO flew to Washington to ask for help aboard their own corporate jets.
This time, GM CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli all drove to Washington in fuel-efficient hybrids. And they all have agreed to cut their salaries to $1 a year if they get federal loans.
Will that be enough to convince a skeptical Congress to grant Detroit the help it needs? Here's a look at how various rescue situations for the Big Three could play out, even if Congress says no (or simply doesn't vote on) a bailout.
Congress Gives In
Even critics in the House and Senate may be reluctant to reject the automakers' request for help.
There are few members of Congress who haven't heard from the auto dealers in their district, as the U.S. automakers mobilized dealers to turn up the pressure on Washington.
And since the Big Three's 14,000 dealers employ about 740,000 people nationwide, legislators have to worry about rising job losses if a Big Three automaker were to fail -- even if their district is no where near the Midwest auto belt.
But one of the problems facing the automakers is that they are asking for money from the current session of Congress, which includes more Republicans than the new Congress that will take office on Jan. 6.
Democratic leaders of both houses, who support the automakers' request for help, still won't commit to a vote by the current Congress. But once the new session starts, there could be a vote early in the year...even before President-elect Obama is inaugurated on Jan. 20.
While GM officials stress they need help before then, others believe they might be able to survive long enough for the new Congress to keep them out of bankruptcy.
"If the GM board decided there was help on the way in early January, I'm sure they'd make an effort to preserve cash and get to that point," said Bob Schulz, Standard & Poor's senior auto credit analyst.
The Treasury or Fed Decide to Help
If Congress doesn't act before the end of this year, it's still possible that other parts of the government step in.
Some Democrats, including House Speaker Pelosi, insist that the Treasury Department could use some of the $700 billion set aside in October to help banks and Wall Street firms.
But Treasury Secretary Henry Paulson and the Bush administration strongly oppose that idea. What's more, the Treasury has already committed all but $20 billion of the first $350 billion it is allowed to hand out without approval from Congress.
That leaves the Federal Reserve as another option. The Fed agreed to loan $85 billion to insurer American International Group in September and has been loaning hundreds of billions of dollars more to major companies, many outside the financial sector. It also recently agreed to guarantee up to $306 billion in assets of struggling bank Citigroup.
A spokesman for the Fed did not return calls seeking comment.
The Fed could probably justify intervention as necessary given the tens of billions of unsecured debt that could go into default if there was a bankruptcy of one of the Big Three. Fed Chairman Ben Bernanke pledged in a speech earlier this week that the central bank wasn't done doing what is necessary to avoid damage to the financial system and the economy.
Still, some Fed watchers think the agency would be unlikely to go where Congress has refused to go.
"The Fed is already so activist that I feel Bernanke...would see assistance to Detroit as unnecessarily complicating an already very complicated relationship with Congress," said Tom Schlesinger, executive director of Financial Markets Center, a research firm that closely follow the Fed.
But he also said the Fed might be more open to such a move if Democratic leaders in Congress signal they would welcome such stop-gap support.
"There may be winking and nodding going on as we speak," he said.
Union Concessions Provide a Spark
The United Auto Workers union announced Wednesday that members will be willing to make modifications in the contracts they reached with the three U.S. automakers just last fall.
Those contracts granted the companies many cost-savings concessions, including a two-tier wage and benefit structure for new hires and a shift of $100 billion in future retiree health care costs to trust funds controlled by the unions.
The 2007 contract closes much of the labor cost gap between the automakers and the non-union plants operated in the United States by Asian automakers.
Ford estimates that its hourly labor costs will go down from an average of $71 under its previous contract of $71 for pay, benefits and all retirement costs down to $53 an hour by 2010 under the new contract. The comparable numbers for the Asian auto plants is $49 an hour, according to Ford.
But none of the savings that the UAW can offer, while important to their long-term competitiveness, will provide the automakers with the billions they need to get through the current auto sales slump.
"To be honest with you, right now if the UAW members went in these facilities and worked for nothing...it would not help the companies that much," said UAW President Ron Gettelfinger.
Fresh Start After Bankruptcy
Many critics of the auto industry argue that bankruptcy is the best choice for the Big Three. A bankruptcy judge has broad powers to let the automakers shed their debts and other obligations, as well as get out of labor contracts that they can no longer afford.
Other industries, including steel and airlines, have used bankruptcies to emerge financially healthy.
But the automakers say that consumers' concerns about warranties and the resale value of vehicles would stop them from buying from a bankrupt automaker. The resulting drop in sales would make already bleak conditions worse.
There are also questions about whether the automakers could get the financing they need to operate under bankruptcy court. Many lenders that have loaned to bankrupt companies in the past have exited the field in the wake of the credit crunch. And experts question whether the crucial source of funds needed to emerge from bankruptcy would be available to the automakers.
"The size of the companies, the state of the capital markets [and] the uncertainty about how bankruptcy would play out...means the ability to get [financing] is a big question mark," said S&P's Schulz.
Car Buyers Come Back
The Big Three's problem is mainly that demand for their products has fallen off a cliff. And unfortunately, consumers are the least likely saviors of the industry.
Sales have been in a downward spiral all year and the nation's major automakers, including Toyota and Honda, each reported sales drops of at least 30% in November on Tuesday, resulting in the worst month for industrywide U.S. auto sales since 1982.
The fact that overseas automakers also saw huge drops in sales is a sign that the problems in the auto industry are not due only to bad decisions by Detroit.
Toyota also cut its production Wednesday due to weak sales. It now has more laid off U.S. workers collecting nearly full pay than the Big Three, according to the UAW.
With the economy getting weaker, job losses mounting and credit remaining tight, a needed rebound in demand appears unlikely in the near-term. The seasonally adjusted annual sales rate was just over 10 million vehicles in November, far below the 16.1 million vehicles sold in 2007
Chrysler is forecasting that industrywide sales will stay below 14 million through 2012. GM expects somewhat stronger sales but is still designing a business plan to be profitable even if annual sales are in the 13 million range.
But if the economy does turn around next year and credit conditions improve, some experts say that there could be pent up demand for cars. And that could deliver the revenue and cash flow the automakers sorely need.
Thursday, December 4, 2008
Automakers are heading back to Capitol Hill to plead for a bailout. They may finally get help...but not from Congress.
Can anyone rescue the U.S. automakers?
General Motors, Ford Motor and Chrysler LLC each unveiled plans Tuesday that detailed how they would return to profitability if they get federal loans.
Still, even with President-elect Obama and the outgoing Bush administration saying they support providing assistance to the automakers, it's not clear that they will get the help they need.
The CEOs of the three firms are again appearing in front of Congress Thursday and Friday to make their case for what's now a $34 billion loan package. They had originally been requesting $25 billion.
GM is asking for up to $18 billion and says it needs $4 billion of that almost immediately to avoid running out of cash before the end of the year.
Chrysler is seeking $7 billion and has warned that it too could run out of cash.
The situation is a bit better at Ford but it said it wants to be able to access up to $9 billion as a backstop.
The Big Three's last visit to Capitol Hill was nothing less than a public relations disaster, as many members of the House and Senate denounced the CEOs for their bad decisions and worse symbolism. Each CEO flew to Washington to ask for help aboard their own corporate jets.
This time, GM CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli all drove to Washington in fuel-efficient hybrids. And they all have agreed to cut their salaries to $1 a year if they get federal loans.
Will that be enough to convince a skeptical Congress to grant Detroit the help it needs? Here's a look at how various rescue situations for the Big Three could play out, even if Congress says no (or simply doesn't vote on) a bailout.
Congress Gives In
Even critics in the House and Senate may be reluctant to reject the automakers' request for help.
There are few members of Congress who haven't heard from the auto dealers in their district, as the U.S. automakers mobilized dealers to turn up the pressure on Washington.
And since the Big Three's 14,000 dealers employ about 740,000 people nationwide, legislators have to worry about rising job losses if a Big Three automaker were to fail -- even if their district is no where near the Midwest auto belt.
But one of the problems facing the automakers is that they are asking for money from the current session of Congress, which includes more Republicans than the new Congress that will take office on Jan. 6.
Democratic leaders of both houses, who support the automakers' request for help, still won't commit to a vote by the current Congress. But once the new session starts, there could be a vote early in the year...even before President-elect Obama is inaugurated on Jan. 20.
While GM officials stress they need help before then, others believe they might be able to survive long enough for the new Congress to keep them out of bankruptcy.
"If the GM board decided there was help on the way in early January, I'm sure they'd make an effort to preserve cash and get to that point," said Bob Schulz, Standard & Poor's senior auto credit analyst.
The Treasury or Fed Decide to Help
If Congress doesn't act before the end of this year, it's still possible that other parts of the government step in.
Some Democrats, including House Speaker Pelosi, insist that the Treasury Department could use some of the $700 billion set aside in October to help banks and Wall Street firms.
But Treasury Secretary Henry Paulson and the Bush administration strongly oppose that idea. What's more, the Treasury has already committed all but $20 billion of the first $350 billion it is allowed to hand out without approval from Congress.
That leaves the Federal Reserve as another option. The Fed agreed to loan $85 billion to insurer American International Group in September and has been loaning hundreds of billions of dollars more to major companies, many outside the financial sector. It also recently agreed to guarantee up to $306 billion in assets of struggling bank Citigroup.
A spokesman for the Fed did not return calls seeking comment.
The Fed could probably justify intervention as necessary given the tens of billions of unsecured debt that could go into default if there was a bankruptcy of one of the Big Three. Fed Chairman Ben Bernanke pledged in a speech earlier this week that the central bank wasn't done doing what is necessary to avoid damage to the financial system and the economy.
Still, some Fed watchers think the agency would be unlikely to go where Congress has refused to go.
"The Fed is already so activist that I feel Bernanke...would see assistance to Detroit as unnecessarily complicating an already very complicated relationship with Congress," said Tom Schlesinger, executive director of Financial Markets Center, a research firm that closely follow the Fed.
But he also said the Fed might be more open to such a move if Democratic leaders in Congress signal they would welcome such stop-gap support.
"There may be winking and nodding going on as we speak," he said.
Union Concessions Provide a Spark
The United Auto Workers union announced Wednesday that members will be willing to make modifications in the contracts they reached with the three U.S. automakers just last fall.
Those contracts granted the companies many cost-savings concessions, including a two-tier wage and benefit structure for new hires and a shift of $100 billion in future retiree health care costs to trust funds controlled by the unions.
The 2007 contract closes much of the labor cost gap between the automakers and the non-union plants operated in the United States by Asian automakers.
Ford estimates that its hourly labor costs will go down from an average of $71 under its previous contract of $71 for pay, benefits and all retirement costs down to $53 an hour by 2010 under the new contract. The comparable numbers for the Asian auto plants is $49 an hour, according to Ford.
But none of the savings that the UAW can offer, while important to their long-term competitiveness, will provide the automakers with the billions they need to get through the current auto sales slump.
"To be honest with you, right now if the UAW members went in these facilities and worked for nothing...it would not help the companies that much," said UAW President Ron Gettelfinger.
Fresh Start After Bankruptcy
Many critics of the auto industry argue that bankruptcy is the best choice for the Big Three. A bankruptcy judge has broad powers to let the automakers shed their debts and other obligations, as well as get out of labor contracts that they can no longer afford.
Other industries, including steel and airlines, have used bankruptcies to emerge financially healthy.
But the automakers say that consumers' concerns about warranties and the resale value of vehicles would stop them from buying from a bankrupt automaker. The resulting drop in sales would make already bleak conditions worse.
There are also questions about whether the automakers could get the financing they need to operate under bankruptcy court. Many lenders that have loaned to bankrupt companies in the past have exited the field in the wake of the credit crunch. And experts question whether the crucial source of funds needed to emerge from bankruptcy would be available to the automakers.
"The size of the companies, the state of the capital markets [and] the uncertainty about how bankruptcy would play out...means the ability to get [financing] is a big question mark," said S&P's Schulz.
Car Buyers Come Back
The Big Three's problem is mainly that demand for their products has fallen off a cliff. And unfortunately, consumers are the least likely saviors of the industry.
Sales have been in a downward spiral all year and the nation's major automakers, including Toyota and Honda, each reported sales drops of at least 30% in November on Tuesday, resulting in the worst month for industrywide U.S. auto sales since 1982.
The fact that overseas automakers also saw huge drops in sales is a sign that the problems in the auto industry are not due only to bad decisions by Detroit.
Toyota also cut its production Wednesday due to weak sales. It now has more laid off U.S. workers collecting nearly full pay than the Big Three, according to the UAW.
With the economy getting weaker, job losses mounting and credit remaining tight, a needed rebound in demand appears unlikely in the near-term. The seasonally adjusted annual sales rate was just over 10 million vehicles in November, far below the 16.1 million vehicles sold in 2007
Chrysler is forecasting that industrywide sales will stay below 14 million through 2012. GM expects somewhat stronger sales but is still designing a business plan to be profitable even if annual sales are in the 13 million range.
But if the economy does turn around next year and credit conditions improve, some experts say that there could be pent up demand for cars. And that could deliver the revenue and cash flow the automakers sorely need.
12-04-2008, 03:17 PM
#156
2G TLX-S
Very true. While still strapped to the union burden, the 'cars' can't travel too far, even with $34B of government aid, before the 'cars' start breaking down again.
12-04-2008, 09:31 PM
#157
Punk Rocker
I love how GM is going to "accelerate the development of green cars" that nobobdy wants to buy in order to save their business. Last I checked, all the excitement for GM these days comes from cars like the ZR1/Z06, CTS/V, G8, and Enclave; none of which is a "green" car. GM's problems stem from too much overhead, plain and simple. Forcing them to stop building the cars that people actually want to buy is not gonna save them.....
12-04-2008, 11:30 PM
#158
Senior Moderator
The Bankruptcy Option...
From Worldcarfans...
GM and Chrysler executives have each held private discussions on a possible pre-arranged bankruptcy
Executives at GM and Chrysler have each held private discussions on a possible pre-arranged bankruptcy for their companies. The two automakers are said to be considering the option as a measure of last resort to secure badly needed funding from the US government.
The automakers would much rather get the bailout without having to resort to bankruptcy, fearing a bankruptcy will completely drive away their customers. But lawmakers in the US Congress, and the current Bush administration, have shown themselves very skeptical of a bailout for the US auto industry and have demanded to see detailed restructuring plans from each automaker as a condition for aid.
GM is very quickly running out of cash. CEO Rick Wagoner told the Congress in testimony today that his company needs 4 billion dollars before the end of the month and another 4 billion in January just to stay afloat. Chrysler is also in dire need of cash. Ford is fairing the best of the three. It has asked for a 9 billion US dollar line of credit as its part of the bailout package but says it may not need to tap it, depending on market conditions in 2009.
But Ford CEO Alan Mulally says the industry desperately needs the bailout and that if GM collapses, it may take down his company too.
"The collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises," Mulally said in Congressional testimony today, as reported by Bloomberg.
But many Republican lawmakers remain opposed to a bailout.
Alabama Senator Richard Shelby said the automakers' plans were not serious and had "few concrete details."
"If you made this presentation to get a bank loan I suspect that any sensible banker would summarily reject your request," Shelby said, as quoted in the Bloomberg story.
In other testimony, chief economist of Economy.com, a Moody's Corp. website, Mark Zandi, said that automakers would need a lot more than the 34 billion on the table right now. "They would ultimately need 75 billion (US) to $125 billion to avoid this fate [of collapse]," Zandi told the Congressional panel.
Executives at GM and Chrysler have each held private discussions on a possible pre-arranged bankruptcy for their companies. The two automakers are said to be considering the option as a measure of last resort to secure badly needed funding from the US government.
The automakers would much rather get the bailout without having to resort to bankruptcy, fearing a bankruptcy will completely drive away their customers. But lawmakers in the US Congress, and the current Bush administration, have shown themselves very skeptical of a bailout for the US auto industry and have demanded to see detailed restructuring plans from each automaker as a condition for aid.
GM is very quickly running out of cash. CEO Rick Wagoner told the Congress in testimony today that his company needs 4 billion dollars before the end of the month and another 4 billion in January just to stay afloat. Chrysler is also in dire need of cash. Ford is fairing the best of the three. It has asked for a 9 billion US dollar line of credit as its part of the bailout package but says it may not need to tap it, depending on market conditions in 2009.
But Ford CEO Alan Mulally says the industry desperately needs the bailout and that if GM collapses, it may take down his company too.
"The collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises," Mulally said in Congressional testimony today, as reported by Bloomberg.
But many Republican lawmakers remain opposed to a bailout.
Alabama Senator Richard Shelby said the automakers' plans were not serious and had "few concrete details."
"If you made this presentation to get a bank loan I suspect that any sensible banker would summarily reject your request," Shelby said, as quoted in the Bloomberg story.
In other testimony, chief economist of Economy.com, a Moody's Corp. website, Mark Zandi, said that automakers would need a lot more than the 34 billion on the table right now. "They would ultimately need 75 billion (US) to $125 billion to avoid this fate [of collapse]," Zandi told the Congressional panel.
12-04-2008, 11:32 PM
#159
Senior Moderator
Americans Opposed To Bailout for NA Automakers
From CNN via WCF...
US automakers hoping for government aid stand a better chance winning over lawmakers than the American public.
In a poll conducted earlier this week by CNN, 61 percent of respondents were opposed to a bailout for the ailing US auto industry.
The CEO's of the Big 3 were roundly criticized last month for arriving in Washington to ask for a bailout each in their own corporate jet. Even Democratic lawmakers sympathetic to their cause have chastised Big 3 management and have demanded that the industry do more to prove they will capably restructure their companies and use the bailout money wisely.
On Tuesday, the companies presented their restructuring plans to the Congress and are now asking for a 34 billion dollar package, instead of the previous 25 billion they were pleading for just last month. They claim worsening market conditions has led them to bleed cash much faster.
November sales figures were dismal across the board and hit Japanese automakers just as hard as the domestic brands. Nissan suffered a 42 percent drop in sales compared to November of 2007. For Toyota, it was almost 34 percent. GM and Chrysler fell precipitously at 40 and 47 percent, respectively. Ford faired the best at 30 percent, while US car sales as a whole were down 33 percent for the month.
The American public, along with a majority of Republicans in Congress and the Bush administration, oppose a bailout, but the consequences could be worse than they believe. Alan Mulally, CEO of Ford, has said his company may not need a bailout, but that if GM collapses it may lead to a domino effect in the industry and take out suppliers and ultimately take his company down too.
In a poll conducted earlier this week by CNN, 61 percent of respondents were opposed to a bailout for the ailing US auto industry.
The CEO's of the Big 3 were roundly criticized last month for arriving in Washington to ask for a bailout each in their own corporate jet. Even Democratic lawmakers sympathetic to their cause have chastised Big 3 management and have demanded that the industry do more to prove they will capably restructure their companies and use the bailout money wisely.
On Tuesday, the companies presented their restructuring plans to the Congress and are now asking for a 34 billion dollar package, instead of the previous 25 billion they were pleading for just last month. They claim worsening market conditions has led them to bleed cash much faster.
November sales figures were dismal across the board and hit Japanese automakers just as hard as the domestic brands. Nissan suffered a 42 percent drop in sales compared to November of 2007. For Toyota, it was almost 34 percent. GM and Chrysler fell precipitously at 40 and 47 percent, respectively. Ford faired the best at 30 percent, while US car sales as a whole were down 33 percent for the month.
The American public, along with a majority of Republicans in Congress and the Bush administration, oppose a bailout, but the consequences could be worse than they believe. Alan Mulally, CEO of Ford, has said his company may not need a bailout, but that if GM collapses it may lead to a domino effect in the industry and take out suppliers and ultimately take his company down too.
12-04-2008, 11:43 PM
#160
"Bankruptcy will completely drive away our customers" is a cop-out. People still fly bankrupt airlines. Your customers were driven away by your bloated prices and sub-par quality.
Exactly why they should not get bailed out. The cycle will never end. A restructuring MUST happen.
In other testimony, chief economist of Economy.com, a Moody's Corp. website, Mark Zandi, said that automakers would need a lot more than the 34 billion on the table right now. "They would ultimately need 75 billion (US) to $125 billion to avoid this fate [of collapse]," Zandi told the Congressional pane