Automotive News, Media & Press - GM and American Auto Industry Near Bankruptcy News and Discussion

Can Washington save the Big Three automakers?

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Nov 8 01:52 PM US/Eastern

With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit's rescue.
Only hours after both General Motors and Ford Motor Co. announced large third-quarter losses -- and stressed that they are both rapidly running out of cash -- President-elect Barack Obama focused on the industry's plight during his first news conference since Tuesday's election.

"I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust," Obama told reporters gathered in Chicago.

Just how bad a situation the automakers are facing was hammered home on Friday, when GM reported a 2.5 billion dollar net loss for the third quarter, bringing to nearly 57 billion dollars its losses since the beginning of 2005.

Ford's 129 million dollar quarterly loss, meanwhile, brought to nearly 24.5 billion dollars the deficit it has run up since plunging into the red in 2006.

Yet the losses only partially state the true depth of the problem for the automakers.

Going into the third quarter, GM had 21 billion dollars on its books. By the end of September, that had plunged to 16.2 billion dollars, coming perilously close to the 11 billion to 14 billion dollars it says it needs on hand to keep the company operating.

Ford burned through 7.7 billion dollars in the quarter, though its reserves are nearly twice as richer thanks to a massive line of credit it acquired last year.

Though it doesn't report its full financial data, the privately-held Chrysler LLC is also thought to be fast running out of cash: one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to GM.

That deal, however, was scuttled by GM, and observers believe Cerberus may now rush to find another buyer as the economy continues to worsen.

"I doubt there's anyone who challenges the fact that we're operating in difficult times, perhaps as difficult as we've ever faced in the auto industry," GM Chairman and CEO Rick Wagoner said during a Friday conference call with reporters and industry analysts.

Detroit's situation has certainly worsened in the face of the current economic crisis that combines what many describe as a "perfect storm" of factors, such as high fuel costs, tight credit, job losses and rising commodity prices.

But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.

As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with -- and with varying degrees of success.

Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars.

And even where it has, lamented Consumer Reports' auto analyst David Champion, it has needed "more models that were exciting for people to buy."

Again, Detroit has begun to address that complaint, and a flood of more fuel-efficient -- and exciting -- models are on tap to debut over the next several years. The challenge now will be to keep that flow going.

GM President Fritz Henderson said Friday the automaker will have to cut back on some product programs in order to ensure liquidity.

That creates a conundrum, of course: to stay alive, short-term, the Big Three might be curtailing programs that would ensure long-term success.

So federal aid becomes all the more important, said Joe Phillippi, an automotive analyst and head of AutoTrends Consulting.

"Both the current administration and the incoming administration recognize it will take at least 50 billion dollars to tide the automakers over through 2009, when they start to get some labor cost relief, and an improvement in demand," he told AFP.

Obama said Friday he would push Congress to accelerate the delivery of 25 billion dollars in loan guarantees aimed at helping automakers develop more fuel efficient vehicles ahead of upcoming regulation.

The Big Three asked for another 25 billion in loan guarantees for more general expenses during a meeting with top lawmakers in Washington Thursday.

"Automakers need immediate funding to stay on track during this difficult time," said National Association of Manufacturers president John Engler.

"We're talking about close to a million jobs in America -- we're talking about a lasting impact on our industrial production in the United States. We simply cannot afford to let the auto industry fail."

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GM Says It May Run Out of Operating Cash This Year

By Jeff Green and Mike Ramsey

Nov. 7 (Bloomberg) -- General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.

The largest U.S. automaker reported a $4.2 billion third- quarter operating loss today and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.

``GM is making a pretty direct plea for help,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. ``The message is, `we've done all the things we can do, and we need help.' And if we don't get help, fill in the blank.''

The cash drain reflected the strain of a 21 percent slump in U.S. sales in the quarter as the credit freeze deepened. It also added urgency to U.S. automakers' request for government aid. The companies are asking for $50 billion in new loans, a person familiar with the proposal said.

Chief Executive Officer Rick Wagoner and the CEOs of Ford Motor Co. and Chrysler renewed the push for assistance yesterday in meetings with U.S. House and Senate leaders in Washington. Wagoner said GM also has been in contact with the staff of President-elect Barack Obama.

GM rose 44 cents, or 9.2 percent, to $4.36 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have tumbled 82 percent this year.

$73 Billion in Losses

Today's outlook was the bleakest yet from the automaker, which has lost almost $73 billion since the end of 2004. Using $6.9 billion in cash last quarter pushed GM closer to the $11 billion minimum it says is needed to pay bills.

A bankruptcy filing ``would be a disaster far beyond General Motors and a sad chapter in American history,'' Wagoner, 55, said in a Bloomberg Television interview. GM said on Oct. 24 that bankruptcy ``is not an option.''

Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a Nov. 4 report by the Center for Automotive Research, based in Ann Arbor, Michigan. Ford, which reported using $7.7 billion in cash last quarter, said today it has ``sufficient liquidity.''

Bailout Optimism

A U.S. rescue package for GM, Ford and Chrysler is likely before President George W. Bush leaves office in January, said Dennis Virag, president of Automotive Consulting Group in Ann Arbor.

``Either the federal government provides money for a bailout and lets the industry retool, restructure, and move ahead, or the industry dies,'' Virag told Bloomberg Television.

While GM didn't specify any prospective partners in saying merger discussions were being halted, the biggest U.S. automaker had been in negotiations on a tie-up with Chrysler, according to people familiar with the plans.

Consideration of a strategic acquisition was ``set aside'' to focus on ``immediate liquidity challenges,'' Detroit-based GM said in a statement.

Chrysler CEO Robert Nardelli, who hadn't acknowledged the talks, sent a note to employees that included the wording of GM's statement. The company, owned by Cerberus Capital Management LP, will ``continue to explore multiple strategic alliances or partnerships,'' Nardelli said.

GM Loss, Estimates

GM's per-share operating loss was wider than the average estimate on an adjusted basis of $3.94, based on 10 analysts surveyed by Bloomberg.

Including a non-cash, $4.9 billion one-time gain related to unloading retiree medical bills, GM had a net loss of $2.5 billion, compared with a $38.9 billion year-earlier loss on a tax-accounting charge.

GM's cash use in the fourth quarter should be closer to the levels in this year's first and second quarters, when it was about $3.6 billion, Chief Financial Officer Ray Young said on a conference call.

GM said it is trying to boost cash by $20 billion by the end of next year, an increase from a July 15 plan for $15 billion.

Asset sales, a part of the strategy, have been hampered because potential buyers can't get financing, Chief Operating Officer Fritz Henderson said. GM's Hummer brand of sport-utility vehicles is among the businesses on the block.

Paring Spending

Capital spending is being trimmed in 2009 to $4.8 billion, down $2.4 billion, by delaying the debut of some vehicle programs in North America and Europe by as long as a year. GM will also save $1.5 billion by cutting advertising and dealer promotion support and by reducing production starting next quarter.

GM will further pare engineering and cut back on discretionary expenses, including travel, consulting and unscheduled overtime.

Working-capital spending will be reduced by $500 million by lowering reserves of parts and inventory, the company said. GM also said it will try to slash 30 percent of salaried-workforce expenses, up from a goal of 20 percent.

GM will protect the capital budget for the electric Chevrolet Volt and the Chevrolet Cruze compact car, Henderson said on a conference call.

GM's debt rating was lowered by one grade to CCC+ by Standard & Poor's, which said it was ``cautious'' regarding GM's ability to raise capital.

Ceding a Crown

The latest retrenchment for GM comes two months after its 100th birthday. After 77 years as the world's largest automaker, it is poised to be surpassed in 2008 global sales by Toyota Motor Corp. It employs about 266,000 people around the world with factories in 34 countries.

Today's release on GM's results was delayed 48 minutes past its scheduled 10:30 a.m. arrival because of the need for a wording change, said Julie Gibson, a spokeswoman.

GM's $3 billion of 8.375 percent bonds due in July 2033 fell 4.3 cents to 24 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 34.83 percent.

Credit-default swaps protecting against a GM default for one year rose to a level that implies the market has priced in a more than 66 percent chance of default, according to CMA Datavision.

One-year credit-default swaps were quoted at a mid-price of 51 percentage points upfront, compared with 50 percentage points yesterday, CMA data show. That means it would cost $5.1 million initially in addition to $500,000 over one year to protect $10 million of GM bonds. The contracts reached as high as 52 percentage points upfront on Oct. 16.

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U.S. Democratic presidential candidate Senator Barack Obama (D-IL) (C) shakes hands with a worker at a General Motors plant in Janesville, Wisconsin.

Wed Nov 5, 2008 6:20pm EST
By John Crawley

WASHINGTON, Nov 5 (Reuters) - President-elect Barack Obama courted distressed U.S. automakers during his campaign and pledged to help them, but the industry's health is so bad it may not be able to wait for him to take office.

"He's not here until January (20th) and that's a long time in the life of these companies at the moment," John Engler, a former Michigan governor and president and chief executive of the National Association of Manufacturers, said on Wednesday.

Engler expects fundamental changes in industry before Obama's inauguration. Engler was not specific. General Motors Corp said on Wednesday it plans to reveal new cost cuts when it reports quarterly earnings on Friday. Results at GM and Ford Motor Co are expected to be dismal.

Both GM and Ford congratulated Obama on his election and associated overall U.S. economic weakness with Detroit's worsening financial prospects.

Automakers hold out hope the Bush administration, reluctant to bail out Detroit, will act before yielding power to Obama. Carmakers, their allies in Congress and other industries have called on the Treasury Department to extend loans or other capital as a stop gap.

In coming weeks, companies and their lobbyists plan to "dial up" their urgency. Industry plans to underscore its belief that its immediate problems are not of its own making -- that the dire predicament is closely linked to the global credit crunch and survival depends on federal intervention.

While GM and Ford struggle, prospects at Chrysler LLC are the most uncertain. People involved in discussions about its future say the smallest of the U.S. manufacturers could merge, be spun off or be pushed into bankruptcy if not helped soon.

Engler said a Chrysler failure could cost up to 1 million jobs throughout the economy.

"It's not just the three auto companies, it's suppliers, all the way down the chain," Engler said.

While Obama is not yet in office, industry sources say he could still pressure the Bush administration and exert leverage on the Democratic-led Congress, if he believes action is needed to avert a broad economic crisis in manufacturing.

House of Representatives Speaker Nancy Pelosi called on Wednesday for a $61 billion stimulus plan to spur the U.S. economy, but said passage later this month would depend on Senate Republicans and the mood of the White House.

Pelosi met on Monday with auto industry allies in Congress and key committee chairmen. There is no consensus yet on an aid proposal for Detroit.

Carmakers, their lobbyists and congressional officials have suggested up to $25 billion in direct loans with few or no strings attached to help them through the current crisis, officials said.

Government red tape is holding up another $25 billion in advanced technology loans for automakers that was approved in September. During the campaign, Obama called on the Bush administration to accelerate that financing.

The United Auto Workers (UAW) has suggested billions in congressionally approved aid could go to covering retiree health care costs, freeing up money that companies would otherwise have to contribute for benefits.

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Obama Win Emboldens Auto Bailout Backers

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Democratic presidential candidate Sen. Barack Obama, D-Ill., shakes hands with workers at the GM Flint Engine South plant in Flint, Mich. With thousands of auto workers in Rust Belt states, Democrat Barack Obama promises government aid key to rebuilding U.S. automakers.

By Alex Ortolani

Nov. 5 (Bloomberg) -- General Motors Corp., Ford Motor Co. and U.S. auto-parts makers will greet President-elect Barack Obama with the same plea they have been making for months: We need help from Washington, and fast.

GM, the biggest U.S. automaker, must get government aid because ``time is very short,'' said Roger Altman, the former Treasury official advising the company in its merger talks with Chrysler LLC. ``The consequences of a collapse by GM or all three could be very severe,'' Altman, 62, said in an interview.

The industry's agenda for the new president will be topped by intensified calls for an immediate disbursement of $25 billion in low-interest loans signed into law by President George W. Bush Sept. 30. While the money is supposed to be for the development of fuel-efficient vehicles, automakers argue it should be freed up to meet current capital needs.

Sympathetic lawmakers also have been calling for auto lenders, if not the manufacturers themselves, to get some of the $700 billion bailout fund set aside for financial institutions.

``Time is critical when it comes to availability of capital for this industry,'' said Dave McCurdy, chief executive officer of the Alliance of Automobile Manufacturers, which represents GM, Ford, Toyota Motor Corp. and eight other automakers.

Needed `Right Now'

``That $25 billion is not hitting the street yet, and that's of major import to some of the companies right now,'' McCurdy said.

GM sought about $10 billion from the government last month, with CEO Rick Wagoner lobbying in person, people familiar with the matter said.

One or more automaker failures ``would be a difficult way for a brand-new administration'' to take office, said Altman, an Obama supporter whose Treasury Department service included working as deputy secretary under President Bill Clinton.

Companies dependent on the automakers are also at risk, said Ann Wilson, spokeswoman for the Washington-based Motor and Equipment Manufacturers Association, which represents parts suppliers such as Johnson Controls Inc. and Lear Corp.

``We have a lot of members who are having trouble with the credit crisis right now,'' `she said. `We've got to figure out a way to keep the manufacturing base in this country.''

Plunging Sales

Automakers and lawmakers are seeking aid amid decade-low auto sales in the U.S. this year and tight credit markets that caused $28.6 billion in first-half losses in 2008 at GM, Ford and Chrysler, owned by Cerberus Capital Management LP. GM said Nov. 3 its October sales plunged 45 percent in what it called the industry's worst month since 1945.

Obama said in a speech Oct. 13 that funding for automakers should be on a ``fast track,'' and the government should provide ``more as needed.'' During his campaign, he promised to help keep auto manufacturing jobs in the U.S. with measures such as incentives for building vehicles that use less fuel.

The outcome of the merger talks between GM and Chrysler may hinge on whether the companies can get government aid. The negotiations may intensify this week after the election, according to people familiar with the matter.

Michigan lawmakers including Representative Joseph Knollenberg started a campaign in October for aid to the auto industry through the Emergency Economic Stabilization Act, which authorizes the Treasury to spend as much as $700 billion to provide liquidity to the credit markets.

Governors' Letter

On Oct. 30, six governors from states including Michigan and Ohio sent a letter seeking help for automakers to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson, saying the economic crisis ``threatens to create an unmanageable disaster at the state level.''

The highest priority for Obama will be to ``put the United States on the right track for an economic recovery by fixing the credit markets and restoring consumer confidence,'' Ford spokesman Mike Moran said in an e-mailed statement. He declined to comment on specific actions the automaker would prefer.

A GM spokesman, Greg Martin, didn't respond to an inquiry about key issues for the automaker under the new administration. A Chrysler spokeswoman, Lori McTavish, declined to comment.

The suppliers association also will work on getting a number of bills passed under the new president, spokeswoman Wilson said.

Fuel Standards

One law that has failed to pass this year and may come up again would crack down on the selling of counterfeit products that break intellectual property laws, such as brake pads and tires. Another would provide tax credits for heavy-duty vehicle suppliers that provide safety systems to drivers, Wilson said.

Fuel-emissions standards in the U.S. and globally will also be an issue for automakers and the Obama administration, McCurdy said. The Corporate Average Fuel Economy standards passed this year require manufacturers in the U.S. to have car-and-truck fleets getting an average 35 miles per gallon by 2020.

``We've made a commitment to not only meeting those standards but recognize those standards will continue to rise in the future,'' McCurdy said.

Obama said during his campaign he wanted to put at least 1 million so-called plug-in hybrid vehicles that would get as much as 150 miles per gallon on the road by 2015. He also said he would give consumers who buy the vehicles a $7,000 tax credit.

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Democratic presidential candidate Sen. Barack Obama, D-Ill., left, talks with General Motors Chairman Rick Wagoner on Thursday, June 26, 2008, during a panel discussion with business, labor and academic leaders in Pittsburgh.

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Ok Mr. Obama, do your thing man, please help save our precious auto industry. :nod: :usa:

And fellow Americans, please feel free to do your part as well...buy GM/Ford/Chrysler vehicles. :drive:

Ok Mr. Obama, do your thing man, please help save our precious auto industry. :nod: :usa:

And fellow Americans, please feel free to do your part as well...buy GM/Ford/Chrysler vehicles. :drive:

+1. Oman save are manufacturing back bone. Prove me wrong and I will be greatful.

I voted for the other guy, but please Mr. Obama help save our auto industry. We CANNOT let any one of the big three die! People stop buying Camrys and Accords. The Malibu, and the Fusion are great cars.

We CANNOT let any one of the big three die! People stop buying Camrys and Accords. The Malibu, and the Fusion are great cars.:werd: x 1,000,000,000,000

I agree 100%

I've worked in the auto industry for quite a while now (white collar exec type stuff) so I have a vested interest in seeing the Big 3 succeed...and that's what I hope happens. Regardless whether it's Ford, GM, or Chrysler...we need all 3 of them to be successful.

Here is my primary concern that no bailout package will fix:

We sold 17M vehicles annually a few years back. That is the total number of vehicles purchased regardless of OEM in one year. Now, we are on track for 10-12M vehicles. Insiders have told me that they expect to sell 5M vehicles annually before things improve.

Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.

Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.

There is no doubt about it, we need some MASSIVE downsizing to get through this. Either a lot of people go jobless or everyone does. :(

We sold 17M vehicles annually a few years back. That is the total number of vehicles purchased regardless of OEM in one year. Now, we are on track for 10-12M vehicles. Insiders have told me that they expect to sell 5M vehicles annually before things improve.

Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.That's a good point (and a VERY scary one) but I honestly don't see it dropping down to only 5 million vehicles per year. The other stimulus action (mortgage/bank loan improvements, credit etc.) will hopefully start to kick in before that happens and people will simply need (want) new cars, especially the many people out there that do still have money left for that.

as was said. just giving them money isnt enough. the big three need a plan to get them profitable again. otherwise itll just prolong their demise.

Reid, Pelosi Urge Treasury to Extend Aid to Automakers

By Lori Montgomery
Washington Post Staff Writer
Sunday, November 9, 2008; A01

With the nation's automotive industry hemorrhaging cash, congressional leaders called on the Bush administration yesterday to offer government assistance to the car companies as part of the Treasury Department's $700 billion emergency rescue program.

The call came one day after General Motors, the nation's largest auto manufacturer, announced another multibillion dollar loss for the third quarter and said it was running out of money fast. Ford, the second-biggest car company, also reported heavy losses. Unless the government steps in, analysts warned, GM could face bankruptcy, endangering the livelihoods of about 100,000 North American autoworkers and hundreds of thousands of others whose jobs depend on the industry.

In a letter to Treasury Secretary Henry M. Paulson Jr., House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) asked Paulson to "review the feasibility . . . of providing temporary assistance to the automobile industry during the current financial crisis."

The letter notes that Congress granted Paulson broad discretion to use the bailout money to "restore financial market stability. A healthy automobile manufacturing sector is essential to the restoration of financial market security," the letter continues, as well as to "the overall health of our economy, and the livelihood of the automobile sector's workforce."

If the request is granted, it would expand the federal government's role in private enterprise far beyond the financial sector. Critics have warned that a bailout of GM would attract a long line of other companies to Washington to argue that their survival, too, is critical to the economic health of the country. The move would push the Bush administration to decide winners and losers in yet another huge sector of the economy, and it would force President-elect Barack Obama to manage a complex restructuring of the ailing automotive industry.

The Treasury has so far declined to assist the automakers, which have been devastated by the twin shocks of a collapsing credit market and the sharpest drop in auto sales in more than two decades. But as the news from Detroit has grown increasingly grim, lawmakers from both parties, Michigan officials, auto industry executives and labor leaders have stepped up their campaign for federal aid.

A plan is in the works at the Treasury to use bailout money to take ownership stakes in a wide array of companies beyond the banking sector. But Treasury officials have indicated that participants in its recapitalization program must be financial firms subject to federal regulation. That means GMAC, GM's auto financing arm, may be eligible for quick help, but GM itself may not.

The rescue legislation gives Paulson authority to consider the automakers for future programs, such as auctions to purchase troubled assets. But the Treasury has yet to establish rules for those programs, which means such help could be months away.

Treasury officials declined yesterday to comment directly on the request from Reid and Pelosi.

"We continue to work on a strategy that most effectively deploys the remaining funds to strengthen the financial system and get lending going again," Treasury spokeswoman Jennifer Zuccarelli said.

In recent days, top auto industry executives have been making the rounds in Washington, trying to shake loose federal cash from a variety of sources. And there are strong indications that Democrats, newly empowered in Tuesday's election, are inclined to oblige.

Obama and other key Democrats vowed during the campaign to support as much as $50 billion in low-interest loans for the car companies. On Friday, during his first news conference since his election as president, Obama spoke at length about the "hardship" the industry faces and referred to the auto industry as "the backbone of American manufacturing."

Obama's team of economic advisers includes Michigan Gov. Jennifer Granholm (D) and former Michigan congressman David Bonior, who is considered a strong candidate for Labor secretary. With Granholm on stage with him Friday, Obama said his transition team is already working on "policy options to help the auto industry adjust, weather the financial crisis and succeed in producing fuel-efficient cars," either under existing law or through the passage of "additional legislation."

In the meantime, however, the automakers have gotten little but sympathy. Congress recently voted to fund a $25 billion low-interest loan package intended to help the car companies retool their factories to produce fuel-efficient vehicles that meet tough new emissions standards. But that money has been hung up by red tape. Obama and other Democrats have discussed providing another $25 billion in loans, bringing the total federal aid to $50 billion. But unless the Bush administration agrees to work on an economic stimulus package when Congress returns to Washington later this month, that money would have to wait until at least January.

Analysts fear the firms may not be able to hold on that long. GM and Ford posted big losses Friday as they continued to pay out more in salaries and other expenses than they are taking in from sales. GM said it would cut spending and sell some product lines but nonetheless expects to "fall significantly short" of the cash it needs to operate next year. The failure of GM or one of the other Detroit automakers could wipe out 2.5 million jobs and $125 billion in personal income in the first 12 months, according to a report released this week by the Center for Automotive Research.

This is not unfamiliar territory for the auto industry. In 1979, Chrysler nearly went bankrupt and lobbied the government for assistance. A $1.2 billion loan, coupled with deep executive pay cuts and major union concessions, helped turn the troubled company around. Under Lee Iacocca, Chrysler invented its iconic minivan, popularized the SUV and repaid the loan in four years. The government even made money off the deal.

Asked Friday whether future assistance could mirror the Chrysler bailout, GM executives told investors that they consider the Treasury program a more modern means to solving the crisis.

In their letter to Paulson, Reid and Pelosi wrote that Friday's earnings reports "only reaffirm the need for urgent action."

If the Treasury does decide to assist the auto industry, they wrote, its chief executives should be subject to the same "limits on executive compensation" as other participants in the program and should be required to give the government equity stakes in their firms "to provide taxpayers a return on their investment upon the industry's recovery."

Spokesmen for Ford and GM issued statements thanking the lawmakers for their request.

"We appreciate Congress recognizes the urgency to help the auto industry weather this troubled economic period," GM spokesman Greg Martin said. "We hope Congress and the administration can work together to provide immediate aid."

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Obama set to push ‘big bang’ reform package

By Edward Luce in ‘Washington
Published: November 9 2008 19:17 | Last updated: November 9 2008 19:17

US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday.

Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years.

Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. “These are crises you can no longer afford to postpone [addressing].”

Mr Emanuel, Mr Obama’s first appointment after his emphatic victory over John McCain last week, added that Mr Obama would push hard during the 11-week transition before he is inaugurated for early assistance to the collapsing US car industry, which he described as “an essential part of our economy”.

His comments increased pressure on George W. Bush to approve a widely-touted $25bn emergency package for Detroit – possibly as part of a second emergency stimulus package to stave off further decline in the rapidly deteriorating US economy.

Mr Obama will meet Mr Bush on Monday and is likely to seek the outgoing president’s reassurance that he would not veto any stimulus package that could be passed as soon as next week when Congress meets for a “lame duck” session.

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Auto Makers Force Bailout Issue

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Government Finds It Difficult to Deny Aid to Detroit in Wake of Wall Street

GREG HITT in Washington and JOHN D. STOLL in DetroitArticle
NOVEMBER 10, 2008

The auto-industry crisis is forcing a broader debate over how far the government should go to prop up ailing industries, as the Bush administration resists Democrats' request to use part of the $700 billion financial-rescue fund to aid Detroit's three struggling car makers.

House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, in a letter Saturday, formally requested that Treasury Secretary Henry Paulson consider giving "temporary assistance to the auto industry" using money originally appropriated to shore up the banking system.

The Democratic lawmakers said federal aid should come with "strong conditions," such as requirements that car makers build more fuel-efficient vehicles, and equity stakes for the government so taxpayers could profit if the companies recover.

Senior economic advisers to President-elect Barack Obama said he broadly backs the appeal by Mrs. Pelosi and Mr. Reid on behalf of the auto industry. Mr. Obama, who on Friday called the industry "the backbone of American manufacturing," is scheduled to meet President George W. Bush at the White House Monday.

Rahm Emanuel, chief of staff for Mr. Obama, said Sunday on ABC's "This Week" that Mr. Obama wants the government to move faster to release $25 billion of low-cost federal loans already approved for the auto industry. He said the Bush administration has other authorities it should "use at this immediate time," but didn't specifically call on it to tap financial-rescue funds to help Detroit.

So far, the administration has balked at pleas from auto makers and their allies on Capitol Hill to use money from the Treasury's Troubled Assets Relief Program, or TARP, to help companies outside the financial sector.

"It was not set up for anything else," said Bush spokesman Tony Fratto. He said the only assistance authorized by Congress for the auto industry is a $25 billion loan package meant to help the industry retool to meet higher fuel-economy standards.

Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.
Auto-industry officials and allies are concerned that the rules governing the retooling loans are too strict, requiring that companies accepting the money meet standards of "viability" -- which might exclude money-losing General Motors Corp., Ford Motor Co. and Chrysler LLC.

GM warned Friday that it might not have enough cash to operate its business by the middle of 2009. Tapping into the $700 billion would be the fastest way to inject government cash into the sector, since doing so wouldn't require action by Congress.

Aides said Mr. Obama's economic-transition team is looking into a more flexible definition of "viability" for the $25 billion program.

The push by the Detroit Three for more federal money underscores a bigger problem that will confront the Obama administration and Congress: After riding to Wall Street's rescue, the government could find it hard to refuse other industries seen as teetering on collapse.

Detroit auto executives told top lawmakers last week that the collapse of one or more of their companies would have economywide consequences, putting as many as three million jobs at risk.

Democratic leaders want to convene a lame-duck session of Congress in two weeks to begin dealing with the nation's economic challenges.

Mrs. Pelosi has suggested a short-term stimulus package of as much as $100 billion, including spending for road and bridge projects, extended jobless benefits, funds to help states cover Medicaid costs and food assistance for low-income families. An auto-industry bailout could be added to the stimulus package, or moved separately.

But the Democratic leadership is waiting for a signal from the White House that Mr. Bush would sign a new stimulus bill.

Aside from questions about the wisdom of government intervention or putting taxpayer money at risk, bailing out Detroit could put Washington in the position of subsidizing job losses. The car makers have at least 10 assembly plants more than they need to meet demand, according to Oliver Wyman Consulting. That translates to roughly 30,000 factory jobs plus significant numbers of engineers and other salaried personnel. GM estimates it needs to slash its salaried-employee costs in North America by 30%.

Car makers would likely use federal money to subsidize these job cuts, buying out older workers to make room for new, lower paid replacements.

United Auto Workers President Ron Gettelfinger has said more union concessions are out of the question, union lobbyist Alan Reuther said in an interview with Dow Jones Newswires on Friday. "We feel we've already stepped up" by giving ground last year on future workers' pay and benefits and retiree health care, Mr. Reuther said. The UAW wants assurances a bailout would help secure its members' retirement and health-care benefits.

"Certainly we're speaking to the UAW," a senior Obama aide said Sunday.

—Jonathan Weisman and Joshua Mitchell in Washington contributed to this article.

http://s.wsj.net/public/resources/images/NA-AT870_BAILOU_D_20081109181048.jpg
Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.


http://online.wsj.com/article/SB122616278065311225.html

The UAW is a cancer, that needs to be purged.

"Labor Costs: The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say."

http://www.usatoday.com/money/autos/2007-09-17-gm-uaw_N.htm?csp=34

http://img.photobucket.com/albums/v85/samichlaus/wages.jpg

Inability to adapt to changing market conditions. Reactionary rather than innovative.

Those decisions are made up top.

:secret2:

GM's Shares Tumble on Rising Cash Concerns

http://s.wsj.net/public/resources/images/OB-CQ634_gm_111_D_20081110114751.jpg

By JENNIFER HOYTArticle
NOVEMBER 10, 2008, 12:26 P.M. ET

General Motors Corp.'s shares Monday plummeted to a price it hasn't seen since 1946, on rising concerns the auto maker will run out of cash in the next few months and that any government bailout won't be beneficial to shareholders.

Shares of GM fell 23% to $3.34 in late-morning trading, after earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock.

Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero.

Jeff Embersits, chief investment officer of Shareholder Value Management, said GM's freefall reflects investors' growing concern about the company's liquidity, and how little faith the market has in the benefits that a government bailout would have for shareholders. Another problem with the potential bailout, Mr. Embersits added, is that it may cause foreign auto makers to ask their governments for similar aid. If this occurs, it will wash out the benefits of any aid to GM.

Barclays Capital cut its rating on GM to "underweight" from "equalweight", saying the company will probably burn through its existing cash by February, necessitating a bailout that is likely to come at a big cost to existing shareholders.

"While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," analysts at Barclays Capital said.

Deutsche Bank analysts, who cut their rating on the stock to "sell" from "hold," gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM's future is "bankruptcy-like," and shareholders are unlikely to get anything.

Unicredit also said GM faces an imminent cash crisis. It said that, by extrapolating the average monthly $2.3 billion cash burn of the last 12 months into the future, without government intervention, GM will completely run out of cash by the end of April. Unicredit maintained its sell recommendation on GM bonds, given the risk of a liquidity crisis at the company in the near future and the further declining recovery values for senior unsecured bondholders.

GM Friday posted a net loss of $2.5 billion in the third quarter, and said it ran through $6.9 billion in cash, leaving the auto maker with only a thin cushion between its current cash reserves and the minimum funding requirements for day-to-day operations. The auto maker said it is scrambling to add $5 billion of new cost cuts to an already aggressive plan to bolster liquidity, and it is seeking to raise new financing from banks, private investors and through a government bailout.

http://online.wsj.com/article/SB122633261247513857.html?mod=yahoo_hs&ru=yahoo

An Open Letter to President-Elect Barack Obama

By Ken Elias
November 10, 2008

Dear President-elect Obama,

Upon taking office, you will immediately face some tough decisions about the future of the government’s role in “saving” Ford, GM and Chrysler. As you know, the Detroit-based automotive industry has already bent the ears of your political colleagues, particularly Speaker Pelosi and Senate Majority leader Reid. These Democratic leaders in Congress seek membership approval to provide taxpayer dollars to prevent these automakers from impending collapse. While we respect the efforts of Congressional leadership, and we share their desire to enhance and protect America’s industrial base and employment therein, we ask that you spare a moment to listen to the opinions of people who do not share their belief that massive federal funding will achieve these goals. First, our qualifications.

We have been involved with the American automobile industry for decades. We are factory workers, designers, engineers, managers, mechanics, dealers, part suppliers, enthusiasts, journalists, and consumers. Together, we represent the combined voices of the “front lines” of our industry. We are loyal to our country’s economic self-interest and seek but one outcome: an American auto industry that builds vehicles admired and desired by the American public.

Over the last three decades, for reasons too numerous to elaborate, the majority of Americans (especially passenger car buyers) have switched their loyalties to foreign-owned brands. You will hear various explanations for this failure from the men in charge of Detroit: unfair foreign trade, currency manipulation, fuel economy regulations, health care costs, union collective bargaining agreements, the current credit crisis and more. We urge you to discard these explanations and only look at sales trends for the past three decades. Again, for whatever reasons, American consumers mostly abandoned Detroit.

By the same token, American automakers abandoned their customers, by failing to invest its profits in flexible assembly techniques, new powertrains and platforms, and better design. By failing to spread their investments in a range of vehicles to meet consumer needs, or fully embrace the fuel efficient future that Congress has dictated. To rectify this situation, urgent action is required. But you, as president-elect, must face this crisis with a clear understanding of the limitations you face.

First, accept the fact that jobs will be lost no matter what you do. The American automobile industry has too many products, brands, bureaucrats and dealers relative to the size of its market share. Until it can recapture– or at least maintain– market share, it will continue to contract. As any process of recovery will be slow and arduous, Ford, GM and Chrysler will have to shed thousands more jobs. With or without federal aid, this “downsizing” should continue, and sometimes with less than gracious outcomes.

Second, admit that Chrysler has no future. Actually, it had no future when Daimler sold it to Cerberus. Worse, Cerberus never had any intentions to invest the capital necessary to make a go of it. It has no future products in the pipeline today, and hence is undeserving of rescue. To best protect Chrysler’s past and present employees’ pensions and interests, Chrysler must be allowed to fail and be liquidated. At least some jobs will be saved as the company’s best assets get sold to other automakers, and proceeds will be returned to the debtor’s estate for apportionment among its stakeholders.

Third, understand that GM and Ford needs bespoke funding solutions. Your administration would be well advised to create a menu of funding options, each with different levels of security interest and control assumed by the federal government. Ford and GM’s executive management and their Boards will have the option to choose among a variety of solutions to resurrect their companies’ fortunes. If an initial solution does not work, any return to menu will incur significant costs and dilution. A “one size” solution to the problems of both automakers is not wise and simply doesn’t work.

For example, the cash needs of GM vastly outweigh those of Ford. GM does need a massive financial restructuring, Ford doesn’t. Taking a few billion here and there at GM won’t restore profitability at the company, it just prolongs the agony. Any analyst will tell you that GM needs perhaps $25 to $50b as part of a proper restructuring that includes a major “cramdown” on all stakeholders (including the United Auto Workers’ health care association). This “last resort” menu option then gives the taxpayers a significant interest in the company in return for the cash, with a small piece left for the creditors. And as its largest stockholder of sorts, the Feds get to call most of the shots at GM.

At Ford, the company has done most of the work necessary to restructure itself to long-term profitability in the near future – when auto sales come back to trend if not sooner. The amount of government assistance needed to ride through the crisis is considerably less than what’s required at GM. As a result, Ford will take a different menu option. Less money taken with less risk to taxpayers means less government influence and equity dilution for existing stockholders.

Fourth, the current management team at GM must be replaced, even if GM selects the lowest funding level option off the menu we prescribe. While we do not believe that government should involve itself in the highest levels of American enterprise, if it does, it should do so whilst protecting the financial interests of the American taxpayer. Any funds to GM must come with a wholesale revamping of this company’s Board of Directors and its senior management team.

Fifth, do not fall into the political trap of demands made by the UAW as deserving of a bail-out of their VEBA plan, regardless of what happens to each of the Detroit Three. The UAW itself is a business, with its own motivations for profit (for its members) and metrics of success. Its fortunes must rise and fall with its respective employers and not be treated as an independent party at the political bargaining table for government funding. If you grant a payout to the UAW, you set a future course for enterprise in this country that has long term negative consequences by insuring employment stability. Russia abandoned that principal two decades ago and for good reason.

We wish you all the best for your future and that of our country.

Deutsche Bank sees GM shares as likely worthless

NEW YORK (MarketWatch) -- A Deutsche Bank analyst downgraded Monday shares of General Motors Corp. to sell from hold, saying the automaker was on the path to bankruptcy before the end of the year unless the U.S. government agrees to a bailout.
In a note to investors, Deutsche Bank said Detroit-based GM's cash position will likely fall below $5 billion by late December, leaving its operations underfunded for payables due in early January. To keep operations going and assist in restructuring, the U.S. would have to provide as much as $25 billion and at least $10 billion in loans to keep the company (GM:General Motors Corporation) afloat through next year.
"Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," analyst Rod Lache said in a research note, essentially calling the company's shares worthless with a price target of $0, reduced from $4.
Shares of GM, part of the Dow Jones Industrial Average, dropped nearly 24% to $3.33 in midday trading after falling as low as $3.02 earlier in the session. The stock has been trading at its lowest point on record after record-high gasoline prices pinched sales of its large sport-utility vehicles, followed by the recent credit crisis and general economic malaise across the country.

the rest is here
http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2 D14146A6D20A5%7D&siteid=yhoof

Not looking good for us :(

The UAW is a cancer, that needs to be purged.

"Labor Costs: The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say."



I've been saying this for 3 years now and there are still people who believe, not only that they are good, but that we need the unions. What good does a union do if everybody goes out of business? but i'm sure there is someone here who will try to convince us otherwise like in another thread :eyes:

and I won't get into a political discussion on here, but with a certain someone if office... the unions will become even more powerful and destructive

If things are really that bad, why don't the Big 3 offer "cash back plus low financing" incentives? Always take one or the other. You want to sell some cars? Then mark them down AND offer very low financing. At least you won't have as many cars sitting on the lot.

How much money do they make on a car that does not sell?

All I can say is "Karma is a muther-fucker man" - greedy ass holes are getting exactly what they deserve IMO.

They've been doing what you've said for nearly 10 years now.

Obama asks Bush to provide help for automakers

By Jackie Calmes Published: November 11, 2008

WASHINGTON: The struggling auto industry was thrust into the middle of a political standoff between the White House and Democrats on Monday as President-elect Barack Obama urged President George W. Bush to support immediate emergency aid.

Bush indicated at the meeting that he might support some aid and a broader economic stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia, a measure for which Bush has long fought, people familiar with the discussion said.

The Bush administration, which has presided over a major intervention in the financial industry, has balked at allowing the automakers to tap into the $700 billion bailout fund, despite warnings last week that General Motors might not survive the year.

Obama and congressional Democratic leaders say the administration has all the authority it needs under the bailout law to extend assistance.

Obama went into his post-election meeting with Bush on Monday primed to urge him to support emergency aid to the auto industry, advisers to Obama said. But Democrats also indicate that neither Obama nor congressional leaders are inclined to concede the Colombia pact to Bush, and may decide to wait until Obama assumes power on Jan. 20.

Separate from his differences with Bush, Obama has signaled to the automakers and the unions that his support for short-term aid now, and long-term assistance once he takes office, is contingent on their willingness to agree to transform their industry to make cleaner, more energy-efficient vehicles.

A week after Obama's election, and more than two months before he takes office, the steadily weakening economy and the prospect of many more job losses are testing his effort to remain aloof from the nation's business on the argument that "we only have one president at a time."

As the auto industry reels, rarely has an issue so quickly illustrated the differences from one White House occupant to the next. How Obama responds to the industry's dire straits will indicate how much government intervention in the private sector he is willing to tolerate. It will also offer hints of how he will approach his job under pressure, testing the limits of his conciliation toward the opposition party and his willingness to stand up to the interest groups in his own.

GM's shares tumbled on Monday to 1946 prices, closing down 23 percent to $3.36, as analysts downgraded the stock on worries it would soon run out of cash and shareholders would be wiped out by any federal bailout.

Obama has been far more receptive than Bush to having the government intervene to rescue another major sector of the economy. He called automakers "the backbone of American manufacturing" in his first post-election press conference last Friday, and many thousands of their employees belong to unions that are part of the Democratic Party's base.

But Obama's stance raises the question, with the country in a worsening economic situation, where would the Democrat draw the line as president?

Bush has drawn his line at the automakers' doors, having already been forced to shelve the free-market principles of his Republican Party to bail out the financial industry over the past two months. But Republicans say he would acquiesce in aid to automakers in return for Congress's ratification of the Colombia pact and pending trade agreements with Panama and South Korea.

The outgoing and incoming presidents met at the White House in private, without staff.

The Democratic leaders in Congress, the speaker of the House, Nancy Pelosi, and the Senate majority leader, Harry Reid, have declined to call a lame-duck session for next week, as they had hoped, without assurance that Bush would support a stimulus package.

Obama has called on the Bush administration to accelerate $25 billion in federal loans provided by a recent law specifically to help automakers retool. Late in his campaign, Obama proposed doubling that to $50 billion. But industry supporters say the automakers, squeezed both by the unavailability of credit and depressed sales, need unrestricted cash now, simply to meet payroll and other expenses.

On Friday, Obama said he would instruct his economic team, once he chooses it, to devise a long-range plan for helping the auto industry recover in a way that is part of an energy and environmental policy to reduce reliance on foreign oil and address climate change.

While Obama campaigned on a promise of bipartisan conciliation, his choice for his White House chief of staff, Representative Rahm Emanuel, indicated on Sunday that no such deal linking auto-industry aid and a stimulus package with trade pacts was in the cards. "You don't link those essential needs to some other trade deal," Emanuel said on ABC's "This Week."

Democrats close to both Obama's transition team and to Congressional leaders seemed willing to call Bush's bluff, calculating that he would not want to gamble that GM — an iconic, century-old American corporation with business tentacles in every state — would fail on his watch and add to the negative notes of his legacy. Also, economists as conservative as Martin Feldstein, an adviser to a long line of Republican presidents and candidates, have called more broadly for stimulus spending of up to $300 billion.

The major automakers — GM, Ford and Chrysler — are each using up their cash at unsustainable rates. The Center for Automotive Research, which is based in Michigan and supported by the industry, released on Election Day an economic analysis of the impact of one or all of them failing. If the Big Three were to collapse, it said, that would cost at least three million jobs, counting autoworkers, suppliers and other businesses dependent on the companies, down to the hot-dog vendors and bartenders next door to their plants.

The center also concluded that the cost to local, state and federal governments would reach to as much as $156.4 billion over three years in lost taxes and higher outlays for things like unemployment and health care assistance. Separately, some economists say the demise of even one of the automakers could tip the current recession toward a depression.

For Bush, however, the hard-line approach is his only leverage to make the trade agreements part of his legacy. The Colombia deal, especially, is strongly opposed by organized labor groups, which are a major force in the Democratic Party, and by human-rights activists.

In the Senate and during his nomination race against Senator Hillary Rodham Clinton, Democrat of New York, Obama opposed the pacts and especially the Colombia agreement, given that country's reported human rights abuses against unionists. He insists he favors free trade, but only if trading partners agree to protections for their workers and the environment — reflecting the standard Democratic Party line since President Bill Clinton's administration.

On his campaign Web site, Obama said he would oppose the Colombia pact "if President George W. Bush insists on sending it to Congress because the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements."

Organized labor is not the only interest group with influence in the Democratic Party that is weighing in as Obama plans his transition. Environmentalists are adamant that any aid be conditioned on the auto industry's dropping of its opposition to higher fuel-efficiency standards and investing more in new technology. That puts them at odds with unions, who oppose any strings, leaving it to Obama to mediate.

Both as a candidate and now as president-elect, Obama has been in contact with former Vice President Al Gore, who last year won the Nobel Peace Prize for his work on climate change. In a column published in Sunday's New York Times, Gore wrote that "we should help America's automobile industry (not only the Big Three but the innovative new start-up companies as well) to convert quickly to plug-in hybrids that can run on the renewable electricity that will be available."

Obama has said that he wants to meet with the Big Three auto executives, but advisers say no meeting is scheduled. Among his advisers who have communicated with the industry chiefs and their representatives are Jason Furman, the Obama campaign's economic policy director; John Podesta, the head of Obama's transition; and former Treasury Secretary Lawrence Summers, an Obama adviser who is under consideration to be Treasury secretary again.

http://img.iht.com/images/v3/logo_all.gif (http://www.iht.com/articles/2008/11/11/america/11auto.php)

GM needs federal aid in coming weeks

http://img.breitbart.com/images/2008/11/10/081111001615.g5irg0ui/CPS.OED88.111108011527.photo00.photo.jpg
General Motors is in such dire financial straights that it needs to line up a federal aid packaged before president-elect Barack Obama takes office in January, the automaker's chief executive said Monday.

Nov 10 08:16 PM US/Eastern

"This is an issue that needs to be addressed urgently," Wagoner told Automotive News, adding that now is the time to "overshoot, not undershoot" the level of assistance.

GM is willing to offer the government preferred stock, speed the introduction of fuel-efficient vehicles and set limits on executive compensation in exchange for financial aid, Wagoner said.

But Wagoner did not think it would be "a very smart move" for him to resign.

"It's not clear to me what purpose would be served" Wagoner said. "I think our job is to make sure we have the best management team to run GM."

On Friday the biggest US automaker warned it would run out of cash in the first half of next year and appealed to the US government for help to save it from collapse.

The company announced a third-quarter loss of 2.5 billion dollars and said it had burned through another 6.9 billion of cash during the three-month period, leaving it with cash reserves of 16.2 billion.

GM has said it needs cash reserves of between 11 and 14 billion dollars to cover the cost of its operations.

Wagoner said that while the company's cash burn in the fourth quarter should ease to one billion dollars a month, it will likely not be able to survive without government help.

GM has developed a turnaround plan which assumes that sales fall to 11.7 million vehicles next year from recent averages of around 15 million a year.

"I'd question whether the US industry as a whole could survive that without support," Wagoner said, adding that even with government help the automaker will have to do "significantly more restructuring" if industry sales stay that low.

Wagoner and executives from Ford, Chrysler and the United Auto Workers Union asked for the federal government to speed up delivery of 25 billion dollars in loan guarantees for the development of fuel-efficient vehicles.

They also requested another 25 billion in loan guarantees to support operations amid a sharp economic downturn which has pushed vehicle sales to a 25 year-low.

Democratic leaders in the US Congress called Saturday for funds contained in a 700-billion-dollar federal rescue plan for the financial sector to be diverted to the struggling auto industry.

Obama's chief of staff urged swift action Sunday to rescue the US auto industry, but declined to say whether Obama supported the appeal by Democratic House speaker Nancy Pelosi and Senate Majority leader Harry Reid.

"As president-elect Obama has said throughout the campaign and as I think as recently as Friday ... the auto industry is an essential part of our economy and an essential part of our industrial base," Congressman Rahm Emanuel told ABC.

http://img.breitbart.com/images/LogoAFPsmall.jpg (http://www.breitbart.com/article.php?id=081111001615.g5irg0ui&show_article=1)

GM says GMAC mortgage unit may not survive

By BREE FOWLER and TOM KRISHER, AP Auto Writers – Mon Nov 10, 4:17 pm ET

DETROIT – Bad news kept piling up for General Motors Corp. on Monday as its shares plunged to their lowest point in 60 years and the company said in a government filing that the mortgage unit of its finance arm may not survive.

GM also said that Delphi Corp., its former parts operation that was spun off as a separate company in 1999, may not be able to emerge from Chapter 11 bankruptcy protection.

GM shares dropped $1, or 23 percent, to close at $3.36.

They earlier plummeted as low as $3.02 on increasing worries about accelerating cash burn and mounting losses. That marked the automaker's lowest share price since Dec. 2, 1946 when it hit $3, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

Before the markets opened Monday, Brian A. Johnson of Barclays Capital cut his rating on GM to "Underweight" from "Equal Weight" and slashed his price target for the Detroit-based automaker to $1 from $4.

Johnson said that without additional funding, GM's gross cash will likely fall below minimum levels in the first quarter of next year.

The analyst also said that while additional government assistance will likely decrease the likelihood of a bankruptcy protection filing at the nation's largest automaker, it also would likely significantly dilute its equity.

Separately, JPMorgan's Himanshu Patel said he expects GM to receive some form of federal aid, but advised investors to be cautious given the uncertainty. He added that he expects the automaker to end 2008 with $12.6 billion in cash on hand, just above midrange minimum cash and excluding government loans.

Both analysts said they expect the automaker's per-share losses for this year and next to be significantly larger than what was expected. Both slashed their estimates.

Early in the afternoon, GM filed its quarterly report with the U.S. Securities and Exchange Commission that contained more bad news.

The company said that the troubled mortgage industry and frozen credit markets have raised doubts that the mortgage business of its GMAC LLC financial arm can survive.

The filing says that the value of Residential Capital's mortgage loans have deteriorated due to weak housing prices, delinquencies and defaults. It is also having trouble raising capital.

GM owns 49 percent of GMAC LLC, with the rest owned by Cerberus Capital Management LP.

Market developments have so harmed Residential Capital, called ResCap, that there is "substantial doubt about ResCap's ability to continue as a going concern," GM said in the filing.

The automaker also revealed that ResCap's deteriorating finances forced ResCap to shore up its standing with mortgage finance giant Fannie Mae, the largest U.S. buyer and backer of home loans.

ResCap said it posted an additional $200 million in collateral with Fannie Mae and sold off the rights to collect payments on $12.7 billion in loans, or 9 percent of the total amount it collects for Fannie Mae. Had ResCap not acted, Fannie Mae could have severely curtained its loan purchases from ResCap.

GM also said in the filing that Delphi Corp., its former parts-making operation that was spun off in 1999, is unlikely to emerge from bankruptcy protection in the short term and may not be able to emerge at all.

http://news.yahoo.com/s/ap/20081110/ap_on_bi_ge/gm_shares_3

They've been doing what you've said for nearly 10 years now.

Really? Show me one GM car or truck that I can buy with a big rebate AND low financing.......it is always pick one or the other. Am I missing the obvious? :ripped:

White House is open to Big 3 aid

Administration says $700B bailout not for carmakers, but would consider other funding.

David Shepardson / Detroit News Washington Bureau
Tuesday, November 11, 2008

WASHINGTON -- The White House said Monday it would consider additional immediate aid for Detroit's Big Three if Congress acted, but signaled that it does not support opening the $700 billion Wall Street rescue package to the automakers.

The Wall Street bailout was designed to help financial institutions and there was no specific discussion about helping auto companies as part of that plan, White House spokeswoman Dana Perino said.

"Congress is going to come back into town next week," Perino said. "If they decide to try to do something more on the auto industry, we would listen."

President-elect Obama and President Bush discussed the problems of the Big Three during a meeting Monday in the Oval Office.

Obama spokesman Robert Gibbs said topics included "the need to get the economy back on track" and "what's going on in the auto industry." The discussion on the auto industry wasn't limited to just one of the nation's three largest car makers, he said. "It was a discussion about the broad health of the industry."

Perino noted that the administration had "rushed" to get regulations finished last week for $25 billion in low-cost loans to automakers and suppliers to speed production of more fuel-efficient vehicles.

"The Energy Department is now accepting applications for those loans and we'll continue to work with Congress on the others," she said.

Michigan lawmakers and the automakers are moving aggressively to try to shift public opinion in favor of more federal aid for the Big Three.

Michigan's congressional delegation on Monday wrote to Treasury Secretary Henry Paulson, urging him "in the strongest possible terms" to use his authority under the Emergency Economic Stabilization Act, which birthed the Wall Street rescue plan, or other laws, to "provide emergency assistance to the domestic automobile industry."

Automakers seeking support

Before Congress returns for a few days starting Nov. 17, carmakers are reaching out to policymakers, consumers, employees, retirees and dealers, urging them to contact lawmakers and express support for the domestic auto industry.

The push for federal aid comes after GM said Friday that it burned through $6.9 billion in cash in the third quarter, leading to a $2.5 billion loss in the quarter, and said it may not have enough cash to survive past the middle of 2009. It said it had called off merger talks with Chrysler. On Monday, analysts said GM could run below minimum funding levels to operate by the first quarter of next year.

Ford Motor Co. also reported a third-quarter loss Friday and said it burned through $7.7 million in cash during the period.

GM posted a link on a company Web site for its dealers to send letters to Congress, and will be posting similar letters for retirees and consumers. The effort is called "Mobilize Our Auto Nation."

"What happens to the U.S. auto industry matters on Main Street," the letter said. "There are some 14,000 U.S.-brand dealers in cities and towns across the country, employing approximately 740,000 people, with a total payroll of some $35 billion.

"The collapse of the U.S.-based auto industry would account for a direct, indirect and spin-off employment drop of 2.95 million people, and a personal income drop of $150.7 billion."

Perino was asked why the administration was willing to boost the bailout to insurer AIG to $150 billion, $27 billion more than previously, but not take equity stakes in automakers. "If (Congress) wants to do anything in addition for the automakers, we'll certainly listen to ideas they have on how to accelerate the (retooling) loans to viable companies, as laid out in the legislation. I think right now we need to let them to continue to do their work," she said.

Rep. John Dingell, D-Dearborn, chairman of the House Energy and Commerce Committee, questioned the AIG bailout, when the administration isn't moving to help automakers.

"One thing is certain: as the federal government continues to help prop up Wall Street, it cannot afford to ignore Main Street and blue-collar jobs," Dingell said. "The situation with our automobile industry is dire and it is vital that our government provide low-interest loans now to help out domestic automobile manufacturers weather this economic storm."

Can Big 3 meet eligibility?

One big issue for automakers is whether they can meet the requirements on "financial viability" that are part of the $25 billion Energy Department loan program. GM, Ford and Chrysler are burning through large amounts of cash amid plunging car and truck sales and it isn't clear whether they could pass financial tests required in the Energy Department rules.

GM and Ford have not applied for funds yet. GM isn't likely to apply until the end of this month. Chrysler applied on Monday, but it was not clear how much the automaker requested.

House Speaker Nancy Pelosi, D-Calif., and Sen. Majority Leader Harry Reid, D-Nev., sent a letter to Paulson on Saturday urging him to grant automakers immediate access to the $700 billion Wall Street bailout in exchange for equity stakes and limits on executive compensation and bonuses.

There appears to be some support for broadening the plan to include the automakers. Before Congress voted on the Wall Street rescue in September, the Treasury Department sent a letter to U.S. Rep. Joe Knollenberg, R-Bloomfield Township, that said automakers were eligible for the program if Paulson and the Federal Reserve certified that it was necessary to stabilizing the economy.

Republicans and Democrats said "inaction is not an option."

"The health of our nation's economy hangs in the balance," said Rep. Fred Upton, R-St. Joseph, and co-chairman of the Congressional Auto Caucus. "We can either stand by and do nothing, watching tens of thousands of jobs in Michigan and Middle America evaporate, or we can meet our challenges head-on, proudly protecting America's middle-class workers and putting us back on the road to economic recovery."

http://www.detnews.com/apps/pbcs.dll/article?AID=/20081111/AUTO01/811110396/1148

GM shares hit 60-year low on worries of collapse
Posted by Bree Fowler | The Associated Press November 10, 2008 19:46PM

DETROIT — Bad news kept piling up for General Motors on Monday as its shares plunged to their lowest point in 60 years and some industry analysts predicted the automaker would collapse without a government bailout.

In addition, GM said it would cut 1,900 factory jobs on top of the 3,600 cuts announced on Friday.

"Without government assistance, we believe that GM's collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers and sectors of the U.S. economy," Deutsche Bank's Rod Lache wrote in a note to investors.

He essentially said GM's common stock is worthless by cutting his price target to $0.

RELATED STORIES
• Aides: Obama suggested to Bush more help for auto industry

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• GM: GMAC mortgage unit may not survive

GM shares dropped $1, or 23 percent, to close at $3.36. Shares slipped at one point to $3.02, the lowest level since Dec. 2, 1946, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

The weakening economy and tight credit markets have worsened conditions for the Detroit-based automaker, which has been reporting steep sales declines from foreign competition and changing consumer preferences.

On Friday, the automaker reported a $2.5 billion loss in the third quarter and warned that its cash levels could fall below what's needed to run its business by the end of the year if the U.S. economy doesn't turn around and it doesn't get government aid.

Also Monday, GM said in a regulatory filing that Delphi Corp., its former parts operation that was spun off as a separate company in 1999, may never emerge from Chapter 11 bankruptcy protection. It also echoed statements from last week that the mortgage unit of its finance arm may not survive.

Lache said Monday that GM, whose cash burn accelerated to $6.9 billion during the third quarter, would be unable to fund its operations past December without a government bailout. That's assuming suppliers don't tighten commercial payment terms.

The three U.S.-based automakers have been pressing for an additional $50 billion in loans from Congress to help them survive the tough economy and pay for health care obligations for retirees. That's on top of a previously approved $25 billion government loan package for new technology.

Lache estimated that the government will need to provide GM with $10 billion in loans to keep it going through 2010 and as much as $25 billion to fund its cash burn and recovery.

The 1,900 additional layoffs will come in the first quarter of next year at parts stamping, engine and transmission factories in North America as GM cuts expenses to deal with its worsening cash crisis.

Spokesman Tony Sapienza said the cuts are in addition to 3,600 factory layoffs announced on Friday, bringing the total announced in the past week to 5,500.

Sapienza would not say which plants would be affected by the new round of layoffs. GM has 26 powertrain and 22 stamping plants in North America.

The layoffs will be indefinite, he said, but no plants will be closed.

GM also filed a notice with the state of Michigan saying it would lay off 650 factory workers and another 52 salaried employees at its Orion Township, Mich., assembly plant starting Jan. 23. Sapienza said those layoffs are part of the 3,600 announced Friday.

The Orion plant makes the Chevrolet Malibu and Pontiac G6 sedans, which Sapienza said are selling well but have fallen victim to the overall U.S. market decline.

At Delphi, struggling parts maker may be forced to sell its assets if it can't find new investors and can't escape from bankruptcy, and that could cost GM more money, the automaker said in its filing.

"As a result, we may be required to pay additional amounts to secure the parts we need until alternative suppliers are secured or new contracts are executed with the buyers of Delphi's assets," GM's filing said.

Out of necessity, GM took a greater role in Delphi's reorganization this fall after a group of equity investors pulled out of a deal to invest up to $2.55 billion in April. Delphi has been operating under court protection since Oct. 8, 2005.

GM's finance arm, GMAC LLC, said last week that auditors had raised doubts about the viability of its mortgage business, Residential Capital LLC. GM repeated that warning in a regulatory filing Monday, saying the value of ResCap's mortgage loans have deteriorated due to weak housing prices, delinquencies and defaults, while the company also is having trouble raising capital.

GMAC is 51 percent owned by the New York-based private equity firm Cerberus Capital Management LP, while GM holds the rest.

Before the markets opened Monday, Brian A. Johnson of Barclays Capital cut his price target for the Detroit-based automaker to $1 from $4. The analyst also said that while additional government assistance could decrease the likelihood of a bankruptcy protection filing at the nation's largest automaker, it also would likely significantly dilute its equity.

If the government steps in, shareholders may be shut out because, similar to bankruptcy rules, the automaker's secured and unsecured credit holders are better protected than equity holders.

Also Monday, the entire Michigan congressional delegation in a letter urged Treasury Secretary Henry Paulson "in the strongest possible terms" to use authority given him under the $700 billion Wall Street bailout legislation to provide emergency help to domestic automakers. They said the struggles of the auto companies were "well within the broad mandate of the Treasury Department to promote stable economic growth."

Over the weekend, Democratic leaders in Congress urged the Bush administration in a letter to consider expanding the $700 billion bailout to include the U.S. automakers.

White House spokeswoman Dana Perino said Monday that protecting the financial markets "is what Congress had in mind when it passed that rescue package. There was not discussion of specific help to auto companies during that debate, and so Congress' intent was to help financial institutions."

Perino said "that doesn't mean that Congress wasn't also thinking about the auto industry," since Congress approved $25 billion in loans for the companies to retool plants to build more fuel-efficient cars. If Congress chose to provide more help to the auto industry, Perino said the White House would listen.

The Treasury Department was reviewing the letter from the Democratic leaders, a spokeswoman said Monday.




Source:
http://www.mlive.com/business/index.ssf/2008/11/gm_shares_hit_60year_low_on_wo.html



Maybe if Congress off of their ass and did something about the unfair trade advantages the foreign automakers had the Big 3 would have a chance to dig themselves out of the hole. Toyota has lost law suits and been found guilty of using slave labor, yet GM is expected to not only compete with Toyota but also pay its workers a fair wage. Odd how that works.

Really? Show me one GM car or truck that I can buy with a big rebate AND low financing.......it is always pick one or the other. Am I missing the obvious? :ripped:

Maybe GM thinks selling their product at a loss is a crappy business model?

GM either needs to make the cash up front, via a markup, or else get it from you over time via the interest. GM prefers the upfront deal, since inflation works in the consumer's favor when they off 0% APR loans, no interest rate to offset inflation, so overtime your no interest payments become less valuable.


Not that their current model isn't crappy, but liquidating billions of dollars worth of vehicles at a loss would be stupid.

Maybe if Congress off of their ass and did something about the unfair trade advantages the foreign automakers had the Big 3 would have a chance to dig themselves out of the hole. Toyota has lost law suits and been found guilty of using slave labor, yet GM is expected to not only compete with Toyota but also pay its workers a fair wage. Odd how that works.:werd: :nono:

[I]

But Wagoner did not think it would be "a very smart move" for him to resign.

"It's not clear to me what purpose would be served" Wagoner said. "I think our job is to make sure we have the best management team to run GM."



LOL! Sorry but Wagoner needs to leave, GM has had a shitty higher management team for a while now, It took them THIS long to finally bring good cars out but they already lost the people to others....it's time for new management and to get rid of some of the brands and get back in the game.



It would be REALLY REALLY sad to see GM go under.....that and our economy can't afford to have that happen.

What real unfair advantage does Toyota have?

Most of these foreign companies engineer and assemble vehicles in the US for the US market just like Ford and GM do abroad.

What real unfair advantage does Toyota have?

Most of these foreign companies engineer and assemble vehicles in the US for the US market just like Ford and GM do abroad.

They don't have the UAW hanging over their heads

Here's a conspiracy theory for you - The UAW is on the payroll of Honda, toyota, etc to run the domestics into the ground :secret2:

:jest:

Democratic aides: Pelosi supports automakers help

http://ak.imgfarm.com/images/ap/Obama_Transition.sff_DCSW102_20081105131029.jpg

Nov 11, 3:22 PM (ET)
By DAVID ESPO

WASHINGTON (AP) - Democratic aides say Speaker Nancy Pelosi intends to seek legislation to provide relief to the battered auto industry, and wants it done in a post-election session of Congress likely to convene in the next few days.

Pelosi is not expected to specify how large a bailout she wants. The aides who described her views Tuesday did so on condition of anonymity, saying they were not authorized to discuss it publicly.

The speaker's decision comes a few days after General Motors warned it is rapidly running out of cash, and Ford announced its situation was only slightly better.

President Bush would have to agree to sign the legislation, which would be passed well before President-elect Obama takes office.

http://apnews.myway.com/article/20081111/D94CUL0O0.html

GM's Skid Quickens as Crunch Raises Bankruptcy Threat

By Mike Ramsey
Nov. 11

(Bloomberg) -- General Motors Corp., burning cash as U.S. sales slide, is being pushed closer to bankruptcy as it waits to learn whether the auto industry will win a new round of government loans.

The shares slid for a fifth day on concern the biggest U.S. automaker won't have enough cash to make it through the end of the year. Only federal aid could prevent a collapse, and reorganizing in court may not be possible because the credit crunch has dried up financing, analysts said.

``Strategic bankruptcy is not an option for GM,'' said Mark Oline, a credit analyst with Fitch Inc. in Chicago. ``This is an issue of operating or not operating.''

The prospect of a forced liquidation raises the stakes for GM's quest for new federal borrowing after saying on Nov. 7 it may run out of operating cash as soon as year's end. GM had $16.2 billion on hand as of Sept. 30, down from $21 billion at the end of June, and needs $11 billion to pay its monthly bills.

GM is canceling press events set for next week at the Los Angeles Auto Show to focus instead on discussing new models at the North American International Auto Show in Detroit in January, a spokesman, Scott Fosgard, said today.

`Unimaginable'

``A bankruptcy wouldn't address our immediate liquidity concerns,'' said Renee Rashid-Merem, a spokeswoman for Detroit- based GM. ``It's not an option for GM because it creates more problems than it solves.''

Chief Executive Officer Rick Wagoner said GM's U.S. sales ``would be devastated'' by a bankruptcy filing. Deliveries fell 21 percent last quarter and 45 percent in October. The ``unimaginable consequence'' of a bankruptcy ``motivates us to really come up with cash in every way possible,'' Wagoner said in a Nov. 7 Bloomberg Television interview.

Investors may be concluding that GM won't succeed. The shares slid 43 cents, or 13 percent, to $2.93 at 1:30 p.m. in New York Stock Exchange composite trading, chopping their value almost in half in the past week. Deutsche Bank AG said yesterday the stock may be worthless in a year.

The U.S. bond market is closed today for the Veterans Day holiday. GM's 8.375 percent bond due in July 2033 rose 1.75 cents yesterday to 25.75 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bond yielded 32.5 percent.

GM, Ford Motor Co. and Chrysler LLC have asked for $50 billion in aid to weather the worst auto market in 17 years, people familiar with the discussions said. That would be in addition to $25 billion approved in September to help retool plants to build more fuel-efficient vehicles.

White House View

President George W. Bush would consider ``ideas on accelerating'' federal loans to the automakers, though borrowings under the $700 billion bank-rescue plan have gone ``as far as they can,'' a White House spokeswoman, Dana Perino, told reporters traveling with Bush in New York.

She denied a New York Times report that Bush linked auto- industry assistance to a free-trade agreement with Colombia when he met yesterday with President-elect Barack Obama at the White House. ``There was no linkage,'' Perino said.

The White House signaled its opposition yesterday to a proposal by House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada for Treasury Secretary Henry Paulson to tap the bank-rescue package.

Democrats' View

Democratic lawmakers reject Paulson's arguments that he lacks authority to do so, Senator Carl Levin of Michigan said yesterday in an interview.

Should Paulson continue to resist using funds from the financial bailout approach, Congress would craft language to help the automakers and add it to the stimulus plan to be considered next week, Levin said. Treasury spokeswoman Brookly McLaughlin referred questions to the White House.

GM is cutting jobs and shutting plants after almost $73 billion in losses since the end of 2004. U.S. sales were hammered this year by gasoline prices that peaked at $4.11 a gallon in July, damping demand for light trucks, then crimped further when the credit freeze curbed buyers' access to loans.

Wagoner, 55, told trade publication Automotive News that GM needs an aid package before Obama takes office in January. The automaker had about $43 billion in debt at the end of 2007, according to a regulatory filing.

Default Risk

Credit-default swaps protecting against a GM default for one year rose yesterday to a level that implies the market has priced in a more than 71 percent chance of default, according to CMA Datavision.

One-year credit-default swaps were quoted at a mid-price of 55.5 percentage points upfront, compared with 51 percentage points on Nov. 7, CMA data show. That means it would cost $5.55 million initially in addition to $500,000 over one year to protect $10 million of GM bonds.

Bill Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said GM shouldn't take government money because ``it has been hamstrung for years because it has too much debt and it has contracts that are uneconomic.''

Ackman, who said he doesn't have a position in GM securities, said yesterday on the Charlie Rose show the automaker should file for a so-called prepackaged bankruptcy with financing to keep operating while in court protection.

That may be difficult. Such debtor-in-possession loans have ``all but shut down,'' CreditSights Inc. said yesterday in a report. The loans, which are paid off when companies exit bankruptcy, aren't being made as lenders become more averse to risk, wrote Chris Taggert, a New York-based analyst.

GM would have no choice but to shut down, said Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut. A GM failure that stops production would cost 2.5 million jobs in the U.S. in the first year, according to the Ann Arbor, Michigan-based Center for Automotive Research.

``In this world, you don't go Chapter 11 reorganization,'' Keller said in an interview. ``You go Chapter 7 liquidation.''

http://images.bloomberg.com/r06/navigation/logo.gif (http://www.bloomberg.com/apps/news?pid=20601087&sid=azOHgjt14vZ8&refer=worldwide)

Dingell: Waxman 'Anti-Manufacturing, Left-Wing' Democrat

November 11, 2008
by Hill Staff

Rep. John Dingell (D-Mich.) has called his challenger for the chairmanship of the House Energy and Commerce Committee, Rep. Henry Waxman (D-Calif.), an "anti-manufacturing, left-wing Democrat".

Dingell, who is in the process of whipping up support from colleagues to retain support of the influential committee, told a Detroit radio show last week that Waxman lacks a concern for the manufacturing industry, particularly the auto industry (workers in which populate Dingell's southeast Michigan district).

"At a time when the auto industry, American manufacturing, American industry needs somebody who understands these things in that particular spot to look after them and see that they are fairly treated," Dingell said, "he wants to put in an anti-manufacturing, left-wing Democrat."

Dingell also denied the battle was a proxy battle against House Speaker Nancy Pelosi (D-Calif.) over leadership. "As of this particular time, Nancy is not in this particular race. And we don't want this to get to be a race between us and her," Dingell said. "And I don't think that it is. And if I have any say, it will not become so."

Dingell called the battle between him and Waxman a "long-standing fight" over the policy direction of the committee, but promised that he would win the votes to stay on as chairman.

http://briefingroom.thehill.com/2008/11/11/dingell-waxman-anti-manufacturing-left-wing-democrat/

Senator Carl Levin’s (D-MI) Letter To Treasury Secretary Henry Paulson

Dear Secretary Paulson:

We are writing to urge you in the strongest possible terms to use your authority under the Emergency Economic Stabilization Act (EESA) or other statutes to immediately address a significant and systemic threat to the U.S. economy and provide emergency assistance to the domestic automobile industry.

The U.S. auto industry represents almost four percent of U.S. gross domestic product and represents ten percent of U.S. industrial production by value. One out of every 10 U.S. jobs is auto-related. General Motors, Ford and Chrysler account for roughly 70 percent of U.S. auto production and are estimated to support around five million jobs across all 50 states. According to a report released last week by the Center for Automotive Research, the failure of even one US automaker would mean the loss of millions of jobs and cost our economy hundreds of billions of dollars. Inaction is not an option

These last years have seen the domestic automakers pursue an unprecedented restructuring that has put them in a very competitive position with respect to product quality (Ford has tied Toyota and Honda in quality according to Consumer Reports), fuel efficiency (GM offers 17 models achieving 30 MPG or better - twice the nearest competitor), and advanced technology vehicles (Chrysler has announced the launch of electric vehicles beginning in 2010 and all three companies have extensive hybrid offerings).

In addition, the three domestic automakers spend a combined $12 billion annually on research and development. This R&D capacity is a national asset that would be put at risk if we do not restore the health of our auto industry.

This vital role that the domestic auto industry plays in our economy is broadly recognized. Congressional Leaders in both the House and Senate have met with representatives of the industry and its workers at the most senior level and have expressed to you that A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector’s workforce.

On Friday, President-elect Obama said, The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil… I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars
here in the United States of America… I’ve asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose.

As you know, both General Motors and Ford released 3rd Quarter earnings last week that make clear the severity of the strain the auto industry is experiencing. It is our view that providing emergency assistance to this uniquely important industry, which is struggling to meet the challenge of a severe financial crisis that has spread far beyond Wall Street, is consistent with the authority granted to you by EESA, and indeed well within the broad mandate of the Treasury Department to promote stable economic growth.

Given the urgency of the situation, we ask that you work with us in the coming days to provide immediate loan support to the domestic auto industry, including, if necessary, amending EESA.

Sincerely,

Senator Carl Levin

http://elections.foxnews.com/2008/11/10/raw-data-letter-michigan-delegation-paulson-requesting-auto-industry-aid/

Maybe GM thinks selling their product at a loss is a crappy business model?

GM either needs to make the cash up front, via a markup, or else get it from you over time via the interest. GM prefers the upfront deal, since inflation works in the consumer's favor when they off 0% APR loans, no interest rate to offset inflation, so overtime your no interest payments become less valuable.


Not that their current model isn't crappy, but liquidating billions of dollars worth of vehicles at a loss would be stupid.

You are correct in what you say.....not selling vehicles at all is a much better option :eyes:

You are correct in what you say.....not selling vehicles at all is a much better option :eyes:

Are you talking about OEM's or dealers? To the best of my knowledge, once a car is at the dealership it's already been purchased by that dealer which is a sale for the OEM. Obviously sales volumes are down about 33% right now though from an overall standpoint.

What real unfair advantage does Toyota have?

Most of these foreign companies engineer and assemble vehicles in the US for the US market just like Ford and GM do abroad.

No they don't. Having a hand full of plants and a test track isn't even in the same ballpark as GM and Ford. The overwhelming majority of imports are built elsewhere with parts made outside of N.America.

So the dealers own the cars on the lot? I always wondered who actually owns them. I thought dealers were just a middle-man. So it is up to the dealer in most cases what kind of deal you can get? I mean, could you tell them "I want the rebate and the financing"?

I am mixed on this one...we bail out all these motherfuckin banks whose CEO's got all these golden parachutes. Now the homeowners want a bailout because they bought a house they couldn't afford, borrowed money on the house to buy Cars, Boats and every other fucking thing you can think of. Now the Automakers need money because they were the greedy assholes building to many SUV's to put all the money in their pockets. Now they have nothing because they didn't have enough small cars that people want in their car line up because gas prices went through the roof..maybe I am not mixed about it at all. i feel really bad for all these auto workers losing their jobs. I think you can really blame the Reckless wannabe home owners for the economy tanking.

Would it be possible for GM to just tell the union to fuck off? What I mean is can they just shut down a few plants and not pay the union workers (as well as cutting salaried positions) and then let it got to court? By the time they actually have to pay up the economy may have started recovering and they could be in a better position to afford it. I am sure they have several lawyers on the payroll so they wouldn't be paying anything extra in the meantime.

What real unfair advantage does Toyota have?For one, their home market is PROTECTED allowing the likes of Toyota/Honda/Nissan to thrive there while GM/Ford/Chrysler (among numerous other 'non Japanese based' corporations) are virtually LOCKED out from doing any viable business on that soil.
BIG advantage when it comes to securing one's profits and maintaining global market share/pricing competitiveness.

A big dose of their own medicine on OUR soil would suit me JUST FINE right now.

For one, their home market is PROTECTED allowing the likes of Toyota/Honda/Nissan to thrive there while GM/Ford/Chrysler (among numerous other 'non Japanese based' corporations) are virtually LOCKED out from doing any viable business on that soil.
BIG advantage when it comes to securing one's profits and maintaining global market share/pricing competitiveness.

A big dose of their own medicine on OUR soil would suit me JUST FINE right now.

:stupid::metoo:
I agree 110%.

What about a stimulus check or a tax break from the government when you purchase a big 3 car? If I was looking at buying a new car and I got money back from the government I'd buy american for sure. I'm sure that would spark americans to stop buying foriegn cars.

As much as my blood is blue I don't want any of the big 3 to fail.

-Mark

Really? Show me one GM car or truck that I can buy with a big rebate AND low financing.......it is always pick one or the other. Am I missing the obvious? :ripped:


Yes Sir this is what you are missing.

Take the BIG REBATE - go to your bank and bring their check to buy the vehicle you desire.......

In my opinion,:D if you buy any vehicle and don't investigate the interest rates you can receive from YOUR BANK ie CREDIT UNION; you're wasting YOUR money.

p.s. Let the US auto industry fail. When they fail the union contracts END. Then the table between US and foreign companies building cars in US will be level.

:angel: Jakes Dad

So the dealers own the cars on the lot? I always wondered who actually owns them. I thought dealers were just a middle-man. So it is up to the dealer in most cases what kind of deal you can get? I mean, could you tell them "I want the rebate and the financing"?

Dealers own the cars on the lot the same way 90% of N.America owns their car/truck. They went to the bank and got a loan. Manufacturers give the dealers cash(holdback) to pay for several months interest as incentive to stock inventory. That's why sales are cyclical, after 3 months or so the dealer has to move their inventory or risk having to pay the bank interest.

In theory you can get a better deal on a car that just rolled of the transport than one that sat for several months.

For one, their home market is PROTECTED allowing the likes of Toyota/Honda/Nissan to thrive there while GM/Ford/Chrysler (among numerous other 'non Japanese based' corporations) are virtually LOCKED out from doing any viable business on that soil.


But their home market is dinky, overly saturated and American companies hardly make anything that would have a chance of being competitive globally outside of the Americas.

But their home market is dinky, overly saturated and American companies hardly make anything that would have a chance of being competitive globally outside of the Americas.

It may be dinky but it's still the second largest market in the world. Hell if you believe http://www.expressindia.com/news/fullstory.php?newsid=59286 America will have a truly dinky car market compared to china. I just can't fathom 62 million cars.

What about a stimulus check or a tax break from the government when you purchase a big 3 car? If I was looking at buying a new car and I got money back from the government I'd buy american for sure. I'm sure that would spark americans to stop buying foriegn cars.Wow, :thinker: that's a brilliant idea. It really could help some solve some of the logistical problems about how to make sure the money gets put to good/productive use. :nod:
There still has to be some stimulus to help the credit/bank/loan situation so those buyers can get some decent financing but it could work.

p.s. Let the US auto industry fail. When they fail the union contracts END. Then the table between US and foreign companies building cars in US will be level.Ok, but what about the shareholders and the fixed income elderly that have their entire retirement investments/401k in GM?
They (I) could lose it ALL under a bankruptcy/reorganization. :nono:

and American companies hardly make anything that would have a chance of being competitive globally outside of the Americas.So basically you're saying that America as a whole is essentially worthless, useless and weak and should just fold up and die?:huh: :confused:

Maybe you're right but I'm still stayin'. :usa:

the fixed income elderly that have their entire retirement investments/401k in GM?
They (I) could lose it ALL under a bankruptcy/reorganization. :nono:

so now we're responsible for other peoples STUPIDITY ... we should go back and give all the Enron employees money too because their entire 401k was in 1 basket also!

Ok, but what about the shareholders and the fixed income elderly that have their entire retirement investments/401k in GM?
They (I) could lose it ALL under a bankruptcy/reorganization. :nono:


Did you forget I am retired? I put into SS, I receive SS at 62-1/2. Not required to touch your 401K money until 70-1/2. I still work. GM didn't go down hill overnight. Never put all your money in one bassket. For Christ sake think or hire someone to think for you.

All you young folks have many issues facing you - good luck :chug:

Us folks on fixed incomes normally have children. All five of ours are married and have jobs. In the old days several family generations lived together. No one on a fixed income should ever have problems - if they raised thier kids right.

CNN just reported that a bailout of US auto industry seems UNLIKELY!!! :(

http://www.cnn.com/2008/POLITICS/11/13/mitchell.auto/index.html


Story Highlights




Daniel Mitchell: Bailing out the Big Three would reward shoddy management
A bailout would be unfair to other auto companies making cars in the U.S., he says
Mitchell says auto execs, workers and unions are overpaid
Bankruptcy would let the companies streamline their operations, Mitchell
says



Might make some of you angry:

Should GM be allowed go to Bankrupt and reorganise? Tough to swallow but a bailout and slight changes aren't going to save GM.




CNN) -- General Motors, Ford, Chrysler and the United Auto Workers union are pouring millions of dollars into a lobbying campaign for a taxpayer bailout.

The money devoted to influence peddling in Washington would be better spent on improving quality and finding ways to reduce a bloated cost structure, but both management and UAW have decided that fleecing taxpayers is a better option.

A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the synonymous with inflexible and anti-competitive work rules.

Perhaps most important, though, is that a bailout would be bad for the long-term health of the American auto industry. It would discriminate against the 113,000 Americans who have highly-coveted jobs building cars for Nissan, BMW and other auto companies that happen to be headquartered in other nations.

These companies demonstrate that it is possible to build cars in America and make money. Putting them at a competitive disadvantage with handouts for the U.S.-headquartered companies would be highly unjust.

A bailout also would be bad for General Motors, Ford and Chrysler. The so-called Big Three desperately need to fundamentally restructure their practices. More specifically, the car companies need to endure some short-term pain in order to restore long-term viability. But that won't happen if politicians raid the treasury.
Don't Miss

* Commentary: Save automakers to help economy
* CNNMoney.com: Why GM can't survive bankruptcy
* In Depth: Commentaries

Getting access to taxpayer money would be akin to giving an alcoholic the key to a liquor cabinet. It also would be bad for American taxpayers and the American economy. For instance:

• A bailout will hurt the overall economy by misallocating resources. When politicians grant special favors to a certain industry or a particular union, such decisions necessarily mean that market forces are being replaced by special-interest deal-making. This type of interference with free markets is why nations such as France, Germany and Japan tend to grow more slowly and enjoy less prosperity.

But if America goes down this same path of government intervention, it is inevitable that we will suffer the same fate of stagnation and higher unemployment.

• A bailout will encourage other industries to seek taxpayer handouts. The Wall Street bailout was a disaster in many ways, most notably as measured by the weak stock market and economic volatility. But another negative aspect of the bailout is that other industries have now decided that it is OK to stick their snouts in the public trough, as well.

First Wall Street's high fliers get a bailout. Now the inefficient management and union at the Big Three want a handout. Who will be next in line to pillage taxpayers? Giving handouts in exchange for political support is akin to getting high. Once politicians decide they like the buzz of campaign contributions, they'll turn into junkies with ordinary Americans footing the bill.

• A bailout is a perverse transfer from poor taxpayers to rich taxpayers. America's Founding Fathers surely never envisaged that the federal government would take money from one group of Americans and give it to another group. Yet much of the federal budget is devoted to redistribution programs.

Bailouts are a particularly bizarre form of redistribution, however, because the corporate bureaucrats at the Big Three are among the very richest Americans. The UAW bosses make extravagant salaries, as well, and even regular union workers make an average of approximately $70 per hour, far higher than the average American.

The government should not be in the business of giving unearned wealth to any group of citizens, but surely liberals and conservatives both can agree that politicians should not be taking money from middle class taxpayers and giving it to upper-middle class and rich taxpayers.

Advocates oftentimes admit that bailouts are not good policy, but they invariably argue that short-term considerations should trump long-term sensible policy. Their biggest assertion is that a bailout is necessary to prevent bankruptcy, and that avoiding this result is critical to prevent catastrophe.

But Chapter 11 protection may be precisely what is needed to put American auto companies back on the path to profitability. Bankruptcy laws specifically are designed to give companies an opportunity - under court supervision - to reduce costs and streamline operations.

Bankruptcy would not be popular in some quarters, to be sure. The bloated management structure would be streamlined and many overpaid executives would be unhappy about having to find new jobs.

The UAW would be equally upset, particularly since bankruptcy might force an end to extravagant pension benefits and inefficient workplace practices. But bankruptcy is akin to getting an alcoholic to put down the bottle. There clearly will be short-term discomfort, but compassionate people recognize that this is the best approach.

America is on a dangerous path. The Wall Street bailout was a mistake. It transferred a huge amount of money from the productive sector of the economy to the government, and also exacerbated "moral hazard" by rewarding companies and executives who made dumb decisions. But this may be the tip of the iceberg.

A bailout of U.S.-headquartered auto companies also would be a mistake, as would bailouts of homeowners or any other constituency. If politicians genuinely want to help the economy, they should focus on reducing the burden of government, not increasing it.

Mitchell says auto execs, workers and unions are overpaid

No really?!? :rolleyes:

That is one of the biggest issues right there, the union workers wages are way above what their work is actually worth. Good to see SOMEONE has it right, and on CNN too, amazing.

lol... now they're spending millions trying to get a bailout to avoid their financial woes because they don't have any money

Definetly surprised to see a story on CNN calling out the unions ... but they're right ... the wages are ridiculous to work in an assembly line (hence why they can outsource it to poor countries and have people w/little to no qualifications do the job)

It is an outrage for the Delphi strike to even come into the thoughts of their minds (couple years ago) when those bitches were making 30 dollars and hour plus all those benefits you know GM and its similar companies offer.

That surely put them at over 80K a year with the benefits added. No wonder 40% of a car's production cost is labor and insurances.

I know tons of factories that shell out 16 an hour for harder work and the employees are grateful just to have jobs anymore. Not in the North but you get my drift?

If I could stand the ho-hum factory life I would of never of gone to college and just moved up north to park my ass in front of Delphi's place. Would of been easier than college for sure.

U.S. Automaker Bailout in Doubt

http://d.yimg.com/us.yimg.com/p/afp/20081111/capt.cps.oeg90.111108073421.photo03.photo.default-341x512.jpg

By John Crawley and Rachelle Younglai
Thu Nov 13, 2008 10:18pm EST

WASHINGTON, Nov 13 (Reuters) - A senior Democratic senator raised doubts on Thursday that an attempt to bail out U.S. automakers had enough support to clear Congress this year.

As Republicans amplified their concerns about a bailout, Senate Banking Committee Chairman Christopher Dodd raised the biggest red flag for fellow Democrats trying to craft a $25 billion rescue and pass it during a post-election session set to start next week.

"Right now, I don't think there are the votes," Dodd of Connecticut told reporters about prospects in the Senate. "I want to be careful of bringing up a proposition that might fail," he said.

Although Dodd said "we ought to do something" and personally backed using money from the ongoing $700 billion financial services rescue program to help Detroit, he was skeptical that enough Republicans would support a bailout.

Senate Majority Leader Harry Reid, a Nevada Democrat, also cautioned that success of a bailout rests with Senate Republicans and the White House. With their slim majority, Democrats cannot force a measure through the Senate or trump a White House veto.

The White House opposes the approach being taken by congressional Democrats but has not threatened to block any bailout. Bush administration officials have said they would consider other steps Congress can take to help General Motors Corp, Ford Motor Co and Chrysler LLC.

Dodd said there have been "legitimate issues raised" about how to help. He plans to hold a hearing next Tuesday, and a House of Representatives Financial Services Committee hearing is set for Wednesday.

House Financial Services Chairman Barney Frank, a Massachusetts Democrat, is trying to write a bill that would amend the financial services rescue package to include $25 billion for carmakers.

The government would likely take an equity stake in the firms and Congress would impose stiff conditions.

CONCESSIONS FROM AUTOMAKERS

In a letter to automaker chief executives on Thursday, the senior Republican on the Senate Finance Committee recommended specific concessions from the automakers.

"They should take every step possible, including cutting executive salaries and bonuses, and exhaust all alternatives before coming to the taxpayers for tens of billions of dollars in help," Charles Grassley of Iowa said.

The stakes for action in Washington rose earlier in the day when Goldman Sachs suspended its rating on GM and said the automaker needs at least $22 billion in aid. Goldman also said it would be difficult for Chrysler to survive without help.

House lawmakers are not formally scheduled to meet next week and Republicans on Thursday voiced greater skepticism about the rescue approach and Detroit's long-term viability.

Senior Republicans are open to considering changes in terms of the $25 billion in federal loans approved in September to help automakers retool factories and make more fuel efficient vehicles. They do not, however, favor extracting more money from the Treasury Department's rescue program.

"Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy," House Republican leader John Boehner of Ohio said in a statement.

The administration is also encouraging lawmakers to expedite the retooling loans, which automakers have said are loaded with requirements and cannot help them survive their worst-ever financial crisis.

Democratic Sen. Charles Schumer of New York, chairman of the Joint Economic Committee, expects some Republican support for a bailout but he did not know if it would be enough for congressional passage.

Explaining the White House opposition to using Treasury bailout money, Commerce Secretary Carlos Gutierrez said in an interview with Reuters that a number of other industries have also knocked on that agency's door asking for help.

"Where do you draw the line?" Gutierrez asked.

http://www.reuters.com/resources/images/logo_reuters_media_us.gif (http://www.reuters.com/article/marketsNews/idINN1339368420081114?rpc=44)

The only reason I would ever think about saving the auto industry are the jobs.

By save - I say give them the money. Reduce the pay of it's leaders and employees and retired folks

Every political person always talks about creating new jobs. Jobs that pay above minimum wage.

The auto industry already exists.

Yes, it's directors and some of it's employees are overpaid for the amount of work they do in our eyes. They do show up for work. They even build a products that has a warranty.

In contrast, EVERY professions sports figure, team owner, are over paid.

In contrast, EVERY political person says they aren't responsible for anything. They too are overpaid. They get paid when they don't show up and don't vote.

GM has reducted and streamlined it's work force.
By 2010 GM will have reduced it's structural costs by 13 to 14 BILLION.
The collapse of the U.S.-based auto industry would account for an employment drop of 2.95 million people the first year and another 3 million the next two years.
A personal income drop of 150.7 billion dollars the first year etc.etc.etc.
The auto manufacturers have been investing $10 billion, of their money, in plants and equipment each year.
The Volt is breakthrough technology. GM is building it.
Every Chevrolet TRUCK offers an engine that gets 20 MPG Highway.

So, for anyone to say the US Auto Industry has had their head someplace where it didn't belong really isn't a fair statement.

Had the banking industry not failed. People would still be buying cars and trucks. If we continue to point fingers at each other we won't solve any problems.

Yes, we have problems in our country. It's the fault of your parents and folks my age. You kids can fix the problems - We've supported your ass since birth. :D:D Sorry about your damn luck! :chug:


:angel: Jakes Dad

Interesting thread. From commentary, it's obvious in some cases whose "ox will be gored".

However, regardless of whether some form of bailout is provided or not, it seems to me that the ultimate issue is whether the big 3 USA automakers can sell cars if they continue to operate. If they can't, then even 200 billion isn't enough.

Recall that most of the people that read and contribute to these forums are very knowledgeable about cars and most peform some or all of their own repairs and maintenance. However, that isn't true of significant majority of Americans. Their cars are just as important to them as ours are to us although likely for different reasons, and those people insist upon and require a support infrastructure consisting of dealerships for warranty work/repairs and service/repair facilities that are convenient and affordable.

My questions regarding the above comments are these.

1. Would you be prepared to invest 30k in an automobile if you were concerned that the manufacturer and the support infrastructure for that automobile might either disappear or contract significantly within 2-3 years?
This would likely means that warranty guarantees would be eliminated or modified significantly. It would also likely mean that parts would become more costly and difficult to obtain if at all. Yes I am aware that some company might buy all or pieces of a failed manufacturer at firesale prices and continue some type of support, but not many would be comforted by that arrangement given the history of such transactions.

2. Suppose that in order to get you to buy an automobile that one of the 3 USA automakers provided you with an incentive consisting of some number of shares of the manufacturing company INSTEAD OF either rebates or financing (not likely). By rejecting a rebate or financing offer, you would in effect be investing in the company. Would it make any difference to you?

Bottom line. I'll let others pay 30k and see how they come out. If it looks like it's working OK, then I might think about buying one. I don't want to spend 30k today and have the value of that car drop significantly overnight because the manufacturer went out of business.

Senate will debate $25 billion auto bill Monday

http://d.yimg.com/us.yimg.com/p/rids/20081105/i/r4231012115.jpg

By JULIE HIRSCHFELD DAVIS, Associated Press Writer

WASHINGTON – A bill to rescue the troubled auto industry with $25 billion in emergency loans inched forward Friday when Majority Leader Harry Reid said the Senate will begin debate Monday and hold a test vote two days later. Supporters scrambled for votes to break an expected filibuster.

They expect to need 12 to 15 GOP votes to attach the measure to a $6 billion bill the House passed in October that would extend jobless benefits. So far, however, they had only one firm commitment, from Sen. George Voinovich of Ohio, a state with several auto plants and manufacturers of auto supplies.

"Right now, I don't think there are the votes" for the auto rescue, Sen. Chris Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, said Thursday.

But Sen. Carl M. Levin, D-Mich., an architect of the carmaker aid, said he was "confident that there will be bipartisan support for legislation to support the U.S. auto industry."

Reid, D-Nev., rejected Dodd's suggestion to wait until next year when Democrats will have bigger majorities in the House and Senate as well as Barack Obama in the White House.

In a letter Friday to Sen. Mitch McConnell, R-Ky., the minority leader, Reid made a plea for the GOP to allow votes on the package next week.

McConnell has not taken a public position on the plan. He has called instead for a measure that would speed release of a separate $25 billion loan package for the carmakers, which was approved in September to help them develop fuel-efficient vehicles.

The White House backs that idea.

"We're seeing if they would be willing to accelerate loans for viable companies," Dana Perino, the White House press secretary, said of congressional Democrats.

In fact, Democrats are reluctant to do that, because it would mean removing restrictions on the money backed by environmental and consumer groups. Environmental groups, a key Democratic constituency, insist that any aid for the auto industry be tied to stricter clean-air rules and better fuel economy for their products.

Removing those limits from the $25 billion loan package approved in September "would be a huge bait and switch," said Ann Mesnikoff, director of the clean cars campaign at the Sierra Club.

The Democrats' new carmaker aid plan would carve out part of the $700 billion Wall Street bailout for loans to the three major U.S. auto companies. The measure would provide for the government to hold some kind of ownership stake in the companies for the duration of the loan to ensure that taxpayers shared in any gain and would ultimately be reimbursed.

Citing an economic downturn that has choked off sales and frozen credit, General Motors Corp., Ford Motor Co. and Chrysler LLC are lobbying feverishly for Congress to approve the aid,

With feelings still raw from the election and the public dismayed by the Wall Street rescue, the auto proposal remains a tough sell. Some Senate Republicans are skeptical the aid would lead to changes by the companies that could make them viable in the long run. But several states with Republican senators have Detroit Three auto factories.

"Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy," House Republican Leader John Boehner of Ohio, said in announcing his opposition to the measure.

Supporters of the auto bailout are targeting lawmakers who represent states with auto plants and auto suppliers, as well as Republicans in states with high unemployment rates. McConnell's state is home to Ford and GM plants.

Sen. Kit Bond of Missouri, R-Mo., left open the possibility that he could be persuaded to back a carmaker rescue. "While I have real concerns with another taxpayer funded bailout, there are also thousands of workers in Missouri whose jobs are on the line so the devil will be in the details," Bond said in a statement.

Democrats would have no problem passing the bill in the House, where they have a much larger majority than the narrow 50-49 one they will have in the Senate once President-elect Barack Obama resigns on Monday. But Speaker Nancy Pelosi, D-Calif., has been reluctant to convene a formal session until she is sure the measure will pass the Senate.

Lawmakers in both houses will be in Washington next week to reorganize their leadership teams and committee assignments for the 111th Congress that will convene on Jan. 3.

The bill Democrats are writing would insert the government squarely into the car companies' operations. It would require that the companies submit a plan for long-term viability in exchange for the loans, share a portion of future profits with the government and reimburse taxpayers before any other shareholder, according to aides familiar with it.

"We certainly want to make sure that there's a plan how are you going to get out of this mess," said Sen. Charles E. Schumer, D-N.Y.

The car companies also would face tougher restrictions on pay for their executives and dividends for their shareholders than did the financial companies that got a piece of the original bailout.

http://news.yahoo.com/s/ap/20081114/ap_on_go_co/auto_bailout

Also part of the problem is they don't make cars that most people can afford. It is in part due to the wages, benefits, and so on for employees. I also believe it is because they think they have to sell a car with all the bells and whistles which drives up the cost. Remember the days of ordering that new Camaro with the big engine, manual tranny, posi, and even radio delete? The idea of selling less for more isn't working so I think they need to get back to building them the way people can afford them. That 20 something can't afford the 35,000 plus Z28 but he'll scrape together the money almost anyway he can if he can get that V8, 6 spd, posi equipped plain jane looking Camaro for around 20,000. He don't need the leather, MP3 stereo, PW,PDL, (ok AC and cruise is acceptable).

Also part of the problem is they don't make cars that most people can afford. It is in part due to the wages, benefits, and so on for employees. I also believe it is because they think they have to sell a car with all the bells and whistles which drives up the cost. Remember the days of ordering that new Camaro with the big engine, manual tranny, posi, and even radio delete? The idea of selling less for more isn't working so I think they need to get back to building them the way people can afford them. That 20 something can't afford the 35,000 plus Z28 but he'll scrape together the money almost anyway he can if he can get that V8, 6 spd, posi equipped plain jane looking Camaro for around 20,000. He don't need the leather, MP3 stereo, PW,PDL, (ok AC and cruise is acceptable).


what performance car can you buy for 20k right now?

That's the problem! In order to get the big engine, you have to buy it with all the other stuff attached. Convenience group this, lighting package that, and so on. Just put in the drivetrain we like and we'll personalize it ourselves as we can afford.

That's the problem! In order to get the big engine, you have to buy it with all the other stuff attached. Convenience group this, lighting package that, and so on. Just put in the drivetrain we like and we'll personalize it ourselves as we can afford.

thats fine but the days of 20k musclecars are long gone. not even imports are that cheap. you cant get an evo or wrx or even a 350z anywhere near that new so how will gm price it that low? the reason 4th gens were reasonably priced was because alot of corners were cut and cheap parts were used.

It comes down to the simple idea of selling more for less, not less for more. It is possible to sell it for that, you can get a new truck for that why not a car. They make the Cobalt available without such things as ABS, so you can't tell me they can't do it. Besides, anyone wanting to buy a Camaro for any kind of racing whether drag racing or autocross, drifting, most folks that are real serious end up stripping the car down and getting rid of that stuff. It adds alot of weight.

It comes down to the simple idea of selling more for less, not less for more. It is possible to sell it for that, you can get a new truck for that why not a car. They make the Cobalt available without such things as ABS, so you can't tell me they can't do it. Besides, anyone wanting to buy a Camaro for any kind of racing whether drag racing or autocross, drifting, most folks that are real serious end up stripping the car down and getting rid of that stuff. It adds alot of weight.

The general population want all the fancy stuff.

The general population want all the fancy stuff.

+1 Most Americans are totally spoiled and want that stuff.
I can personally relate. I would rather order option by option because I don't care for power everything and auto trans.

1. Would you be prepared to invest 30k in an automobile if you were concerned that the manufacturer and the support infrastructure for that automobile might either disappear or contract significantly within 2-3 years?Yes.
Why? Because I like the vehicles. Be it a Corvette, Mustang or Challenger...or even a Malibu, Taurus or Sebring that Joe Public might be considering over a Camry, Accord or Altima.
I would still buy the domestic nameplate even if the future outlook is grim just as I would still support and honor my nation's armed forces as they go into enemy territory when it might also look like a losing battle. :usa:
My love for what is American, be it a product, a service or a human, is not conditional on whether it's warranty will still be honored next year or not.

Also part of the problem is they don't make cars that most people can afford. It is in part due to the wages, benefits, and so on for employees.Well in all fairness, the new Camaro is priced right in line with it's (direct and indirect) competitors and that's EVEN WITH all of those unfortunate extra wage and benefit costs.
Just imagine how much this awesome new car could undercut the competition without all of the legacy costs. :drive:





I also believe it is because they think they have to sell a car with all the bells and whistles which drives up the cost. Remember the days of ordering that new Camaro with the big engine, manual tranny, posi, and even radio delete? The idea of selling less for more isn't working so I think they need to get back to building them the way people can afford them. That 20 something can't afford the 35,000 plus Z28 but he'll scrape together the money almost anyway he can if he can get that V8, 6 spd, posi equipped plain jane looking Camaro for around 20,000. He don't need the leather, MP3 stereo, PW,PDL, (ok AC and cruise is acceptable).Good point, even those that can afford the $32k+ might also prefer a lighter, cheaper version of the V8 models, I know I would love a stripper version of the new car just as I love my current 4th gen stripper. :cool:
But as mentioned above, ALL other cars (Mustang, Challenger, 350Z, Evo, STI, 335i etc.) that might compete in that performance segement are also priced the same or HIGHER so I wouldn't exactly call the Camaro out of reach, at least not when compared to other cars. And the V6 model might actually be priced far lower than anything else that comes even remotely close to it's performance level. :nod:

I myself would love to be able to buy a stripped version of the new Camaro, no ac either, just like how I bought my new '86 Mustang GT. Would offering the new cars like this make a big difference in overall profits of the company? I doubt it. I'll bet these days it probably takes more time to put less parts into the car. Back in the '80's I worked at a non union shop that had hired some guys who had worked at Harvester, which was union. These guys had to be retrained to multi-task, and to think ahead to what they next needed to do, once they completed the work they currently were doing. My feeling is that unions had their place in our history and helped us get through the industrial revolution, but unless the rest of the world has union shops, we simply can't compete in today's global economy with our union shops. Most of these union workers make a lot more money than I do, I'm lucky my wife has a good job. I recently heard a local guy complain that he is going to make 60k less this year at GM because they cut back on overtime! I feel that we should get rid of the unions before no one has a job, and cut waay back on the white collar pay. In today's world if you work in a non union shop that has crummy and unsafe working conditions, quit and get a new job! Bob

I myself would love to be able to buy a stripped version of the new Camaro, no ac either, just like how I bought my new '86 Mustang GT. Would offering the new cars like this make a big difference in overall profits of the company? I doubt it. I'll bet these days it probably takes more time to put less parts into the car. Back in the '80's I worked at a non union shop that had hired some guys who had worked at Harvester, which was union. These guys had to be retrained to multi-task, and to think ahead to what they next needed to do, once they completed the work they currently were doing. My feeling is that unions had their place in our history and helped us get through the industrial revolution, but unless the rest of the world has union shops, we simply can't compete in today's global economy with our union shops. Most of these union workers make a lot more money than I do, I'm lucky my wife has a good job. I recently heard a local guy complain that he is going to make 60k less this year at GM because they cut back on overtime! I feel that we should get rid of the unions before no one has a job, and cut waay back on the white collar pay. In today's world if you work in a non union shop that has crummy and unsafe working conditions, quit and get a new job! Bob

With such low wages he is probably taking out the trash or test fitting nuts and bolts. :eyes:

Actually, I wouldn't be suprised...

more food for thought..

UAW leader says no more concessions
UAW president insists workers will make no more concessions; says workers have done enough
Mark Williams, AP Business Writer
Saturday November 15, 2008, 1:07 pm EST
Yahoo! Buzz Print Related:Ford Motor Co., General Motors Corporation
COLUMBUS, Ohio (AP) -- Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger says workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy. " Gettelfinger also on Saturday called on Congress to act quickly on a bailout plan for the auto industry. He says something needs to be done before President-elect Obama takes office in January.

Gettelfinger says it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady the automakers.

more news:

Insurers pull cover from GM and Ford suppliers

By Kiran Stacey, John Reed and Jonathan Guthrie

Published: November 14 2008 02:00 | Last updated: November 14 2008 02:00

Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers, which have removed cover from their suppliers.

The withdrawal of credit insurance - which covers suppliers against the risk of the car companies' failing - has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.

Euler Hermes, Atradius and Coface, which control more than 80 per cent of the world's credit insurance market, are refusing to write policies for suppliers trading with GM or Ford on credit.

GM and Ford are two of the biggest groups ever to be blacklisted. The cut-off of cover will primarily affect big operations in Europe, where the insurers do the bulk of business. US suppliers largely operate without insurance.

The move leaves three possible scenarios: GM and Ford can start paying upfront for goods; they can hope their suppliers will trade uninsured; or they couldbe unable to buy the parts they need for car production.

The insurers have risk assessors working closely with the companies and are party to details not released to the market.

Even if the carmakers can keep the supply chain working, the refusal to provide cover will further weaken investor confidence.

GM last week said it might run out of the money needed to operate its business by early next year, and Ford revealed it had burned through $7.7bn (£5.2bn) in the latest quarter, twice the rate in the first half.

Detroit's three carmakers are lobbying Congress for funds to help survive the downturn.

more food for thought..

UAW leader says no more concessions
UAW president insists workers will make no more concessions; says workers have done enough
Mark Williams, AP Business Writer
Saturday November 15, 2008, 1:07 pm EST
Yahoo! Buzz Print Related:Ford Motor Co., General Motors Corporation
COLUMBUS, Ohio (AP) -- Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger says workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy. " Gettelfinger also on Saturday called on Congress to act quickly on a bailout plan for the auto industry. He says something needs to be done before President-elect Obama takes office in January.

Gettelfinger says it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady the automakers.




so....making no money > making less money ? :confused:

This ought to win them over on capitol hill. Is this the mentality I can continue to expect if my tax dollars go to bailing out the disaster this company has become? ..no thanks.

more food for thought..

UAW leader says no more concessions
UAW president insists workers will make no more concessions; says workers have done enough
Mark Williams, AP Business Writer
Saturday November 15, 2008, 1:07 pm EST
Yahoo! Buzz Print Related:Ford Motor Co., General Motors Corporation
COLUMBUS, Ohio (AP) -- Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger says workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy. " Gettelfinger also on Saturday called on Congress to act quickly on a bailout plan for the auto industry. He says something needs to be done before President-elect Obama takes office in January.

Gettelfinger says it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady the automakers.Ok, that's fine.
Then they'll be out of fv<king work altogether.
Hope there's enough room in the homeless shelters because trust me, the ever so productive and ultra cost efficient Toyota or Honda :eyes: are NOT hiring them.

I don't hate/disaprove of the UAW or unions in general but I do hate REALLY STUPID people who would sooner lose their jobs and help sink huge American icons/institutions in the process instead of just accepting a reasonable cut in pay and health benefits.
And before any union workers come in here and give me any grief on the topic I'm currently staring a roughly $275k+ loss :nono: in the face with my combined GM and Ford shares so it's not like I didn't put my money where my mouth is or have no right to speak. My investments along with the cars I've purchased have helped towards paying GM/Ford employees for the last few years.

Its not the pay and benefits that is the worst part, it is the people who aren't working and collecting 85-100% of their pay for years.

For one, their home market is PROTECTED allowing the likes of Toyota/Honda/Nissan to thrive there while GM/Ford/Chrysler (among numerous other 'non Japanese based' corporations) are virtually LOCKED out from doing any viable business on that soil.
BIG advantage when it comes to securing one's profits and maintaining global market share/pricing competitiveness.

A big dose of their own medicine on OUR soil would suit me JUST FINE right now.
Some interesting reading-
http://gmfactsandfiction.com/

Also, I read somewhere that Chrysler is the largest selling American automaker in Japan- at 1.4%!! That is how fair their market is.

Ok Mr. Obama, do your thing man, please help save our precious auto industry. :nod: :usa:
Right. Let the same guys who destroyed the American auto industry with outrageous regulations, "green" taxes and surcharges and ridiculous union pandering save the industry THEY destroyed :eyes:

The government CAN'T save the auto industry. They can only steal your money and give it to them, except you get nothing in return but a bigger tax bill.

Want to know how the government can help the auto industry? Stop the ridiculous union pandering, get rid of CAFE regulations, stop making it so they have to put 72 fucking airbags and other safety equipment in cars and let THE PEOPLE AND THE MARKET decide what they want in automobiles instead of politicians. The American auto industry is dying because the government makes them do things that are not in their best interest.

The government destroyed the business, and the people want the same government to try and bail it out? Why don't you guys try and lose weight by going on an "all cake diet" if we're just going to freely say and do stupid things? Why the HELL do people have the "let the government fix it" attitude? Don't people know by now that government intervention can only make things worse?

Government intervention destroys companies. Tax breaks and minimal regulation is what saves them.

The government CAN'T save the auto industry. They can only steal your money and give it to them, except you get nothing in return but a bigger tax bill.

Want to know how the government can help the auto industry? Stop the ridiculous union pandering, get rid of CAFE regulations, stop making it so they have to put 72 fucking airbags and other safety equipment in cars and let THE PEOPLE AND THE MARKET decide what they want in automobiles instead of politicians. The American auto industry is dying because the government makes them do things that are not in their best interest.

The government destroyed the business, and the people want the same government to try and bail it out? Why don't you guys try and lose weight by going on an "all cake diet" if we're just going to freely say and do stupid things? Why the HELL do people have the "let the government fix it" attitude? Don't people know by now that government intervention can only make things worse?

Government intervention destroys companies. Tax breaks and minimal regulation is what saves them.Essentially, I do agree with you on all of that. Although your own words even state that they ruined it...so perhaps maybe it is they that should fix it?
And yes I do know that 'they' really means 'we' (taxpayers) but if you think a measly 25 or even 75 billion (yes I said measly) is a lot of money to potentially save (it might work...it might not) an entire HUGE national/international industry then I would love to hear what you think about the off the charts, over the top and unfathomable costs of rampant unemployment increases, welfare needs, LOST TAX BASE (no paycheck = no social security insurance paid in, no unemployment insurance paid in, no long term disability insurance paid in, NOTHING gets contributed for future generations) and vocational retraining that WILL BE coming immediately after GM, Ford and Chrysler close their doors.
Your tax dollars pay for all of that as well.
I don't believe in such a heavy government presence in these industries either but we're WAAAYYYY past those principles now...it's basically a case of pay me now or pay me later. :nono:

Essentially, I do agree with you on all of that. Although your own words even state that they ruined it...so perhaps maybe it is they that should fix it?
No. That won't happen. The only thing "they" will do is give money to them. That will happen by the following:

1.) Printing more cash and further devaluing the already devalued US Dollar
2.) Increasing the inflation rate by #1
3.) Putting us, our children and our children's children in even more debt
4.) Raising your taxes

That money is coming from YOU, not THEM. God forbid the Federal Government EVER cut THEIR spending and pass that money down to corporations and the taxpayers.

The government will only make it worse because they WON'T FIX THE PROBLEM. If they wanted to fix the problems, they'd remove CAFE regulations, cut down on emissions testing, remove "green" taxes like the gas guzzler tax, stop mandating ridiculous safety standards and, most of all, FUCK THE UAW. The government needs to get their noises out of where they don't belong. THAT is how the government can fix it - by removing themselves entirely from the situation - NOT by destroying the US Dollar and putting the taxpayer's children in debt for the rest of their lives. That is now you DESTROY EVERYONE, not just GM. If there is ANOTHER bailout, we'll all suffer for decades more - and the Big Three will only find themselves in the same situation again down the road because the government REFUSES to fix the problem - which is THE GOVERNMENT ITSELF.

And yes I do know that 'they' really means 'we' (taxpayers) but if you think a measly 25 or even 75 billion (yes I said measly) is a lot of money to potentially save (it might work...it might not) an entire HUGE national/international industry then I would love to hear what you think about the off the charts, over the top and unfathomable costs of rampant unemployment increases, welfare needs, LOST TAX BASE (no paycheck = no social security insurance paid in, no unemployment insurance paid in, no long term disability insurance paid in, NOTHING gets contributed for future generations) and vocational retraining that WILL BE coming immediately after GM, Ford and Chrysler close their doors.
Your tax dollars pay for all of that as well.
I don't believe in such a heavy government presence in these industries either but we're WAAAYYYY past those principles now...it's basically a case of pay me now or pay me later. :nono:
It won't save shit. The government won't fix the problem. All you are doing is destroying our currency, saddling the taxpayers with more debt and causing more inflation. You're making everything worse by bailing out the automakers. The ONLY thing the government can do to fix this is to cut the automaker's taxes, fuck the UAW and remove emissions and safety regulations and let the market dictate what belongs in cars, not politicians.

The government does not fix anything. They only make things worse.

And BTW, you're totally wrong about us having no choice in the bailout. Are you aware that's what caused the Great Depression? The government went out and bailed out certain industries and let others fail. This caused ENORMOUS uncertainty - the WORST thing to occur in markets. It caused radical volatility because traders didn't know if the government would bail things out or not. This wound up destroying the entire market. If you do bailouts, you either have to bail out EVERYONE or bail out NO ONE. Since you can't bail out EVERYONE, you CAN'T BAIL OUT ANYONE! NO MATTER WHAT! If not, you'll cause massive volatility, uncertainty and instability. We need to stop these bailouts NOW and formally announce there will not be another bailout from the US Government on ANYTHING. Only then will you cease to see these wild daily swings. I've never seen the market this volatile in my life, and it's because of people who have your mindset. You're DESTROYING the market, and honestly, I think you're totally clueless the detrimental effect selective bailouts have on market stability.

I can't believe there is a single person in America that would be for a bailout for anyone, ever. Does ANYONE in this country learn from history? This has all happened before. This is why I pulled out my investments when the DOW was at 14,000 two years ago. I saw this coming. It was totally obvious if you know history. People need to pull their heads out of their asses and open their eyes. I swear, 90% of this country is semi-conscious at best :(

The ONLY thing the government can do to fix this is to cut the automaker's taxes, fuck the UAW and remove emissions and safety regulations and let the market dictate what belongs in cars, not politicians.I would go for that as well.

Bottom line is the big picture looks quite bleek no matter what does or does not happen. I think the shitstorm that is potentially coming our nation's (and the entire civilized world's) way could make that Great Depression look like the prosperous post war '50s and '60s by comparison. :nono:

GM sold remaining share of Suzuki for 230million it seems.

http://www.autoblog.com/2008/11/17/gm-selling-remaining-suzuki-stake-for-230m/

The Unions were designed to insure FAIR labor practices. If the majority of laborers make $14-$17 an hour for similar physical labor, then that is what the auto workers should make. It is time to change the role of Unions; the unfair labor practices of the last 2 centuries are esentially gone. If your employer is working you 40 hours in a regular week and paying you 1.5x or 2x for overtime, giving you proper safety equipment, etc you have a fair job.

I would go for that as well.

Bottom line is the big picture looks quite bleek no matter what does or does not happen. I think the shitstorm that is potentially coming our nation's (and the entire civilized world's) way could make that Great Depression look like the prosperous post war '50s and '60s by comparison. :nono:
I agree it looks bleak, and seriously, it's probably way too late to help. However, I'd rather see the Big Three fail than the entire stock market collapse. That WILL happen if the government keeps up this "selective bailout" crap. That's the WORST thing for markets - for a massive government entity with a large pocketbook to go around and pick and choose who to give free money to. It makes investors unable to do their job because they can't speculate. That's why we have this ridiculous volatility in the markets. We have to stop this madness now or it's going to ruin all our lives.

The Unions were designed to insure FAIR labor practices. If the majority of laborers make $14-$17 an hour for similar physical labor, then that is what the auto workers should make. It is time to change the role of Unions; the unfair labor practices of the last 2 centuries are esentially gone. If your employer is working you 40 hours in a regular week and paying you 1.5x or 2x for overtime, giving you proper safety equipment, etc you have a fair job.
That's what unions were SUPPOSED to do. They have wayyyyy too much power now.

My whole family is union labor. My dad, my grandfather, my uncle...without union labor I wouldn't be in school. However, unions today have gone way too far. I've worked with over a dozen union contractors in the past year. Guess what? They do half the work for twice the money vs. non-union labor. Corporations are forced to use union labor against their will. In Philadelphia, the new Comcast building they built...they had some kind of specialized "green" plumbing system that needed to be installed by specialized people that were non-union so they weren't going to use union plumbers. The union took them to court and sued, so they had to put in a completely redundant (and useless) secondary plumbing system in just to employ the union plumbers! So they had to pay for TWO PLUMBING SYSTEMS because the union is so fucking corrupt and mad with power.

All the union is good for nowadays is stealing from companies and brainwashing mass amounts of workers into voting Democrat. That's the only purpose of unions, and that is why unions get so much damn funding - they provide millions of Democrat voters, so the Democrats always pander to them. It's a big fucking scam and they're destroying American industry. We have a president-elect that wants to double capital gains taxes though, so it's obvious politicians hate American industry :eyes:

ChocoTaco369 for President! :usa:

^^^He's not old enough.... I nominated him in the SeatStayUp forum. :lol:

I think the auto US industry WILL get their bailout... only thing is.... I think congress will fart around on their asses like they did with the $700,000,000,000 bailout and take forever to pass it... and it may be too late by the time is does pass to do any real good.

I hate to say it.... but unless the economy improves.... they will simply BURN through the bailout money and be back for more.... which they will also probably get, especially under an Obama administration and dems in control of congress.

There was another auto maker(non-us) that was in the news the other day.... I can't remember who... but they are getting aid from their government!!!!!!

The REAL problem here is the economy.... not many people are looking to buy a new car right now:(

The REAL problem here is the economy.... not many people are looking to buy a new car right now:(

so why aren't Toyota/Honda/etc on the verge of bankruptcy? I would argue that the REAL problem here is a company that wasn't smart enough/able to prepare for a rainy day. The writing has been on the wall for years...

[QUOTE=wabmorgan;10497441]There was another auto maker(non-us) that was in the news the other day.... I can't remember who... but they are getting aid from their government!!!!!!
QUOTE]

It looks like the Germans are considering aid packages for a few of their manufacturers but nowhere near the scale over here. The Big Three are also begging for money in the UK...

It pisses me off that as a Pharmaceutical chemist, I make less an hour than a guy standing on a UAW assembly line when I'm trying to make sure the medicine you take not only doesn't kill you, but actually helps to make you better.

WTF did I go to school for 4years undergraduate with continuing graduate courses and work in a highly regulated industry that is ultra competitive. I should have applied for a job at a UAW factory and turned bolts for a living and been better off than I am today.

I'm sorry, that's just not right. Unions encourage people to work only as hard as not to get fired. With gauranteed wage increases, why bother going the extra mile or working harder than the guy next to you if you are both going to get the same pay increase at the end of the year.

This coutry is circling the drain and about to be flushed. Doctors are being discouraged from practicing medicine because with the combination of astronomical school loans and through the roof malpractice insurance, they are living at a poverty level for years.

I'm sorry, something is wrong when an uneducated, lower skilled, assembly line worker can make a better living than a doctor.

It's time for the unions to be dissolved. With OSHA and labor laws, there is no need for unions. Best person gets the job, period.

so why aren't Toyota/Honda/etc on the verge of bankruptcy? I would argue that the REAL problem here is a company that wasn't smart enough/able to prepare for a rainy day. The writing has been on the wall for years...

I agree with you here..Plus what is the money going to do to help GM? It's a bandaid to a really big problem. All the money in the world is not going to help them at all..They have deeper problems. jmo

so why aren't Toyota/Honda/etc on the verge of bankruptcy? I would argue that the REAL problem here is a company that wasn't smart enough/able to prepare for a rainy day. The writing has been on the wall for years...

Operational costs. A lot of people who work for Toyota work mandatory overtime for no additional money. Their wages are nothing.

They spend nothing on vehicle development, benefits, and retirement compared to GM and Ford.

I myself would love to be able to buy a stripped version of the new Camaro, no ac either, just like how I bought my new '86 Mustang GT. Would offering the new cars like this make a big difference in overall profits of the company? I doubt it. I'll bet these days it probably takes more time to put less parts into the car. Back in the '80's I worked at a non union shop that had hired some guys who had worked at Harvester, which was union. These guys had to be retrained to multi-task, and to think ahead to what they next needed to do, once they completed the work they currently were doing. My feeling is that unions had their place in our history and helped us get through the industrial revolution, but unless the rest of the world has union shops, we simply can't compete in today's global economy with our union shops. Most of these union workers make a lot more money than I do, I'm lucky my wife has a good job. I recently heard a local guy complain that he is going to make 60k less this year at GM because they cut back on overtime! I feel that we should get rid of the unions before no one has a job, and cut waay back on the white collar pay. In today's world if you work in a non union shop that has crummy and unsafe working conditions, quit and get a new job! Bob


I gotta hand it to ya Bob, I don't see other sponsors taking sides against the UAW like you.......especially being situated in a near the Fort Wayne Truck plant, Marion Metal Fab and within easy driving distance from several others. Not all us UAW folks are like the idiot whining about his loss of OT. I do think you are mistaken grouping us all in with the few bad apples that seem so handy to refer to in times like this. Granted there has been much greed and MISMANAGEMENT on both sides. I do think what we are about to witness something truly tragic happening to the manufacturers of the vehicles we care for, GM, Ford and Chrysler.

Its not the pay and benefits that is the worst part, it is the people who aren't working and collecting 85-100% of their pay for years.

My uncle's plant in Linden NJ went down like 6 or 7 years ago. He has not helped to produce a vehicle since then and has received 95% pay! with almost full benefits!! He is the quintessential reason GM is in trouble. Fuck the UAW! I pray the auto industry goes bankrupt so all of these outrageous UAW contracts can be burned.

ChocoTaco for President!

Off topic, but the same disgusting union problems exist in our public schools. Teachers an administrators have no business making 250K+ a year!

so why aren't Toyota/Honda/etc on the verge of bankruptcy? I would argue that the REAL problem here is a company that wasn't smart enough/able to prepare for a rainy day. The writing has been on the wall for years...
Thats the point, foreign manufacturers don't have UAW's sucking the blood from them. Their laborers are paid what the free market bears. Yes, GM has showed up late to the hybrid party, but they still sell more cars than any manufacturer in the world (for now) and despite that, not only cant they turn a profit, they cant avoid bankruptcy.

so why aren't Toyota/Honda/etc on the verge of bankruptcy? I would argue that the REAL problem here is a company that wasn't smart enough/able to prepare for a rainy day. The writing has been on the wall for years...

As others have pointed out.... they have less associated costs... however... sales are not just down for GM/Ford/Chrysler .... sales are down for ALL auto manufacturers.

It is indeed the economy (and lack of credit) that are the biggest problems.

As others have pointed out.... they have less associated costs... however... sales are not just down for GM/Ford/Chrysler .... sales are down for ALL auto manufacturers.

It is indeed the economy (and lack of credit) that are the biggest problems.


True, auto sales are down, but you should still be working in a profitable region. Granted profits won't be up with low sales, but it doesn't make sense when you make less money than your operating costs. The problem is when you need such a high sales figure to break even, it doesn't give you much room for slow times.

Thats the point, foreign manufacturers don't have UAW's sucking the blood from them. Their laborers are paid what the free market bears. Yes, GM has showed up late to the hybrid party, but they still sell more cars than any manufacturer in the world (for now) and despite that, not only cant they turn a profit, they cant avoid bankruptcy.

Two other big things.

They make products people actually want to buy over and over again without discounts, rebates and resale killing spiffs.

They also don't nurse numerous worthless brands and huge dealer networks with them. They have a mainstream brand,a luxury brand and very few dealers for both and that's it.

Auto chiefs on hotseat in Congress

Nov 18 10:04 AM US/Eastern

The chiefs of the "Big Three" US automakers travel to Congress Tuesday to plead with lawmakers to save their talismanic American industry, despite fading hopes for a quick congressional bailout.

The chairmen and CEOs of General Motors, Ford and Chrysler will testify to the Senate Banking, Housing and Urban Affairs Committee as Democrats mount a long-odds bid to pass a 25-billion-dollar rescue package.

Their testimony, to be followed by an appearance before a House of Representatives panel Wednesday, comes with millions of jobs threatened as the industry's crippling losses are exacerbated by the deepening economic crisis.

Ford CEO Alan Mulally, Chrysler boss Robert Nardelli and Richard Wagoner of General Motors will testify to the committee, under the chairmanship of Democrat Chris Dodd who has already cast doubt a bailout can pass this week.

On Monday, Democratic Senate leaders in Congress opened a "lame duck" session vowing to fight for a new loan program for the auto industry.

Senior party members condemned the reluctance of the White House and Republican leaders to siphon off the money from a 700-billion-dollar finance industry bailout which has already been approved.

Senate Majority leader Harry Reid hit out at Treasury Secretary Henry Paulson for refusing to adapt the huge bailout to aid the auto industry, saying: "All it would take is one stroke of a pen and that problem would be solved.

"We are seeing a potential meltdown in the auto industry, with consequences that could directly impact millions of American workers and cause further devastation to our economy."

On Monday, Senators Reid and Robert Byrd unveiled their 100-billion-dollar economic recovery package that includes the 25 billion dollars for the auto industry, sourced from the 700-billion-dollar bailout.

The Reid/Byrd Economic Recovery Act of 2008 "requires a long-term financial plan from the companies and has robust provisions for oversight, taxpayer protection, and executive compensation," a Democratic Party statement said.

But the White House got in a preemptive strike before lawmakers reported for work, saying the special rescue funds for banks were not the answer, calling on Congress to adapt an existing 25-billion-dollar auto industry loan program.

"The administration does not want US automakers to fail, and in fact we support assistance to automakers," Bush's press secretary Dana Perino said.

But "we believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers -- from the 25-billion-dollar Department of Energy loan program," she added.

"This is the appropriate funding to use for automakers rather than seeking an additional 25 billion dollars from the TARP program" -- the Troubled Asset Relief Program, as the bailout is known.

Democratic leaders would need at least 10 Republican votes to pass the bailout in the Senate and overcome the minority's obstruction tactics with a 60-seat filibuster-proof majority.

Perino pointed out that any attempt to reopen the TARP program would not make it through the Senate, and said the White House was working with Senate Republican minority leader Mitch McConnell on the issue.

Underscoring Detroit's desperation, Ford announced Tuesday it would sell a 20-percent stake in its Japanese partner Mazda Motor Corp to raise 540 million dollars in much-needed cash.

"This agreement allows Ford to raise capital that will help fund our product-led transformation, and at the same time, allows Ford and Mazda to continue our successful strategic relationship in the best interest of both companies," Ford's Mulally said.

Automakers have warned that millions of jobs depend on quick federal aid to the manufacturers of iconic brands including Buick, Cadillac, Chevrolet and Jeep, and have taken out web and newspaper ads warning of the dire consequences of the industry's demise.

Wagoner has warned GM needs an infusion of cash in the coming weeks to prevent a devastating bankruptcy at the nation's largest automaker and cannot wait until president-elect Barack Obama -- who has promised to bail out the sector -- is sworn in on January 20.

http://img.breitbart.com/images/LogoAFPsmall.jpg (http://www.breitbart.com/article.php?id=081118140418.pei9p116&show_article=1)

Thats the point, foreign manufacturers don't have UAW's sucking the blood from them. Their laborers are paid what the free market bears. Yes, GM has showed up late to the hybrid party, but they still sell more cars than any manufacturer in the world (for now) and despite that, not only cant they turn a profit, they cant avoid bankruptcy.

Not true. Toyota has a very generous contract with the workers that build their cars as recognized UAW members. Their wages are comparable to the wages of GM and Ford workers. The biggest killer right now for the workers is Healthcare costs. This countries number 1 flaw is its insistance that everything must be profitable including healthcare and medicine. As a result of the high healthcare costs (from healthcare companies wanting to look good for their shareholders and rasing their prices) It equals a decrease in spending power.

People also suggest that the workers are over paid and yet they arent buying the new cars and trucks that they themselves build because they cant afford them.

Congress takes first step on automaker bailout

Tue Nov 18, 2008 3:44am ESt

WASHINGTON (Reuters) - Senate Democrats took the first step toward bailing out the nation's crippled auto industry on Monday by proposing a $25 billion loan program, a plan that faces stiff political headwinds with millions of jobs potentially riding on the outcome.

With the year's congressional calendar down to a few days, lawmakers and the Bush administration sparred over the best way to extend help to General Motors Corp, Ford Motor Co and Chrysler LLC.

"We're surprised that Senate Democrats would propose a bailout that fails to require automakers to make the hard decisions needed to restructure and become viable," White House spokeswoman Dana Perino said.

The Senate bill would, however, impose conditions. The government would take warrants for shares in exchange for aid, which would come with limits on executive compensation and a prohibition on the payment of dividends.

Automakers would also have to submit plans on how they intend to remain competitive, pummeled by plunging sales, little access to credit and a weakening economy.

Executives from the three companies are expected to amplify their calls for help at congressional hearings beginning on Tuesday.

Carl Levin of Michigan, the plan's chief advocate in the Senate, said the proposal to amend the Treasury Department's existing $700 billion rescue plan for financial services firms is the most efficient way to help auto manufacturers.

House Democratic leaders, led by House Financial Services Committee Chairman Barney Frank, released a draft of almost identical legislation later on Monday.

But the White House and many Republicans favor amending another law -- one approved in September to extend automakers $25 billion in technology loans to retool factories and make more fuel efficient cars.

MARKET FEARS

A rescue package for U.S. automakers could avert another stock market plunge like the one seen after Lehman Brothers' collapse in September.

"The reason people think failure could be cataclysmic is that there are so many companies that are tied to the auto industry," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The Senate proposal comes as GM said it would delay incentive payments to its U.S. dealers by two weeks in an effort to "gain some cash liquidity" for the fourth quarter.

The payments for dealer incentives, which are made on a weekly basis, will be delayed from November 28 until December 11, GM spokesman Pete Ternes said.

Liquidity is the key concern for the automakers as their remaining cash reserves dwindle.

"If General Motors is unable to solidify government aid this week and is forced to wait for the next administration, we would become more concerned about working capital related liquidity risks... ," Citigroup autos analyst Itay Michaeli said in a note to clients on Monday.

The companies and their allies in Congress argue a bailout is justified on grounds they back one in 10 U.S. jobs.

GM, Chrysler and Ford employ close to 250,000 people in the United States and supporters claim they touch more than 4 million other jobs including suppliers, dealers, car haulers and rental companies.

Many parts suppliers and dealers have agreements with transplanted automakers as well, potentially interrupting the business of competitors to the Big Three in the short term.

A potential threat to the integrated supplier network prompted Japan's Honda Motor Co Ltd to support an aid package for its U.S. rivals.

BAILOUT SKEPTICISM

But segments of the public disagree that a rescue is in order. In interviews, Americans said the planned rescue was unfair and would make it harder to reform the U.S. automakers.

"They need to restructure. If they get bailed out they are not going to do it," said Eric Smith, a paint contractor interviewed in Chamblee, Georgia, on the outskirts of Atlanta.

U.S. automakers say they are urgently trying to overhaul their businesses to meet a global demand for fuel efficient products, like better performing gasoline engines, electric cars and more hybrids.

But industry executives say they may never get there unless the bailout is approved. They add that the shock of any collapse will shake the economy.

If the auto industry comes under severe pressure, GM Chief Executive Rick Wagoner said in a television interview on Sunday, "the impact on the whole U.S. economy will be devastating."

All three companies have rejected reorganizing under bankruptcy protection.

For the Senate measure to pass, it must gain support from both Democrats and Republicans in the narrowly divided chamber where 60 votes are needed to overcome any procedural hurdles.

Aides and lawmakers have expressed doubt about the Democratic effort with so little time and White House opposition.

Nevertheless, two prominent Republicans senators signaled they would be willing to consider a plan. Pennsylvania's Arlen Specter said he was open to supporting the automakers under certain conditions, and Christopher Bond of Missouri, expressed a similar sentiment and said action was needed now.

"I'm pleased to see there seems to be broad support for assisting the auto industry despite disagreements," Bond said.

Bush, whose limousine is made by GM, opposes a bailout using Treasury rescue funds that the administration argues are, by law, intended only for distressed financial services companies.

President-elect Barack Obama, who will be sworn in January 20, has encouraged an aid package, but not a blank check. Obama has said conditions should also include labor, suppliers and lenders so that "we are creating a bridge loan to somewhere, as opposed to a bridge loan to nowhere."

http://www.reuters.com/resources/images/logo_reuters_media_us.gif (http://www.reuters.com/article/politicsNews/idUSTRE4AD08120081118?sp=true)

Automakers beg for aid as bailout bill stalls

Nov 18, 8:58 AM (ET)
By JULIE HIRSCHFELD DAVIS

WASHINGTON (AP) - Detroit's Big Three automakers are begging Congress for a $25 billion government rescue, while the legislation clings to life support on Capitol Hill and top lawmakers and the White House suffer from bailout fatigue.

Democratic congressional leaders want to tap the $700 billion Wall Street rescue package for new loans to U.S. auto manufacturers and suppliers, but the White House and GOP lawmakers say the beleaguered industry shouldn't get any new funds.

President George W. Bush and GOP lawmakers instead propose diverting $25 billion in loans approved by Congress in September - designed to help auto manufacturers retool their factories so they can make more fuel-efficient vehicles - to cover the firms' immediate financial woes.

But auto executives, backed by leading Democrats, insist they need another $25 billion in emergency loans to avert a collapse of one or more of their companies before year's end. That would bring the total federal help for the industry to $50 billion this year.

The executives, along with the head of the United Auto Workers union, were making their case Tuesday at a hearing before the Senate Banking Committee as auto bailout backers hunted the votes necessary to pass the plan in a postelection session. Aides in both parties and lobbyists tracking the plan privately acknowledge they are far short.

The debate comes as the financial situation for General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC grows more precarious. GM has said it could run out of cash by year's end without government aid.

"They're going to need to address what is the perception among some of our colleagues here that there's still some quality issues with the Big Three, and they haven't begun to do the necessary restructuring - because they have," said Sen. Carl M. Levin, D-Mich., an architect of the bailout.

Ford CEO Alan Mulally argued Tuesday in advance of the hearing that his company already been laboring to "transform our business" into a more profitable one that meets 21st century demands for fuel-efficient vehicles.

Interviewed on ABC's "Good Morning America," Mulally denied that automakers resisted restructuring their companies to meet current marketing realities.

He also took exception to assertions the company has been badly managed, saying that "if everybody can remember, we had gotten back to profitability in the first quarter of this year ... None of us ever anticipated that we'd be in a world where our sales in this industry have fallen by 40 percent in the first nine months. "

Levin's bill would provide loans with initial interest rates of 5 percent to the U.S. automakers and suppliers in exchange for a federal stake in the companies or warrants that would let the government profit from future gains. Loan applicants would have to give the government a plan for "long-term financial viability."

But the measure stops short of giving the government a say over the firms' operations through an oversight board or hard limits on executive compensation. While taking advantage of the program, the companies could not pay dividends, award bonuses to executives making more than $250,000 a year, or give golden parachute payments to top people departing from the firms.

A vote on the measure - which includes an extension of jobless benefits - could come as early as Thursday. But in an acknowledgment of the long odds facing such a plan, Majority Leader Harry Reid, D-Nev., also laid the groundwork for a straight up-or-down vote on the more widely supported unemployment measure, which is probably all that can pass this week.

The Senate auto bailout bill notes that 355,000 U.S. workers are directly employed by the auto industry, and an additional 4.5 million work in related industries. That doesn't count the 1 million retirees, spouses and dependents who rely on the firms for retirement and health care benefits.

Critics argue that the industry's business practices - including lavish pay and benefits packages for auto workers - have created unsustainable costs for the faltering companies that can only be solved with bankruptcy.

"I can't see how injecting capital with all the legacy issues that each of these companies has is better than reorganization," said Sen. Bob Corker, R-Tenn.

http://apnews.myway.com/article/20081118/D94HCM080.html

Stalemate dims prospects for $25B auto bailout

http://ak.imgfarm.com/images/ap/Senate_Democrats.sff_DCSW113_20081117134904.jpg

Nov 17, 4:55 PM (ET)
By STEPHEN OHLEMACHER and JULIE HIRSCHFELD DAVIS

WASHINGTON (AP) - Prospects dimmed Monday for enactment of a $25 billion bailout for the faltering auto industry before year's end, as congressional Democrats and the Bush administration seemed headed for a stalemate. Help for Detroit's Big Three, which have been battered by the economic meltdown that has choked their sales and frozen their credit, is falling victim to a partisan fight over where the money should come from.

Senate Democrats said they would press ahead with their plan to carve out a portion of the $700 billion Wall Street bailout to pay for the loans, but aides in both parties and lobbyists tracking the plan acknowledged they did not currently have the votes to do so. The White House and congressional Republicans insist that the automaker bailout money instead come from redirecting a separate $25 billion loan program approved by Congress to help the industry develop more fuel-efficient vehicles.

In addition, besides opposing the use of any of the $700 billion for the automakers, the administration has told top lawmakers it does not plan to ask for the second half of that huge fund that Congress approved this fall to aid the financial industry, congressional officials said Monday.

The Treasury Department said its message on not tapping half the fund applied only to the next few days and that no decision had been made for the rest of the administration's two months - but officials stopped short of saying the funds would be used before Bush leaves office.

Majority Leader Harry Reid, D-Nev., said he would hold a test vote this week on a broad economic aid plan - including spending on public works projects, aid to cash-strapped states, an extension of jobless aid, and the carmaker loans - that most now concede has virtually no chance of passing.

If that fails, he will seek a vote on the auto industry bailout and the unemployment benefits, Reid said. It could come as early as Wednesday.

"If we move forward, we can protect and create American jobs, help working families and prevent our economy from falling even further into recession," Reid said as he opened a postelection session. "I ask my colleagues to show the American people that in the face of tremendous economic pain and uncertainty, we will not wait until January."

The White House, meanwhile, took pains to clarify its position on the bailout, saying the administration "does not want U.S. automakers to fail." Press secretary Dana Perino complained that reporting on the White House's statements on this issue has involved "attempts to shorthand the administration's position."

Perino's statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. The White House opposes the idea of automakers getting an additional $25 billion.

The debate in Washington comes as the financial situation for General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC grows more difficult.

"There's a high degree of urgency" for federal action if GM is going to stave off a financial crisis, Rick Wagoner, GM chairman and chief executive, said Sunday in a joint appearance with United Auto Workers President Ron Gettelfinger on WDIV-TV in Detroit.

In her statement Monday, Perino said, "The auto industry is an important part of our manufacturing base, and we want the industry to succeed and compete in the global economy." But she also said that media reports have erroneously depicted the administration as taking too harsh a stand on financial relief.

"We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers - from the $25 billion Department of Energy loan program," Perino said.

She said the $700 billion rescue program "was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector." Perino also said that any new legislative effort to help the big carmakers should require that those manufacturers are viable companies, ones willing to restructure themselves for the long term.

President-elect Barack Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan - not simply as a blank check.

"For the auto industry to completely collapse would be a disaster in this kind of environment," Obama said in a "60 Minutes" interview aired Sunday night on CBS. "So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan - what does a sustainable U.S. auto industry look like?"

http://apnews.myway.com/article/20081117/D94GUIK80.html

GM asks Germany for €1 billion credit guarantee

http://img.iht.com/images/2008/11/18/18germany550.jpg
Carl-Peter Forster, president of GM Europe, and the German chancellor, Angela Merkel, in Berlin. Merkel said a decision on helping the GM unit Opel might be made before Christmas.

By Brian Knowlton
Published: November 17, 2008

WASHINGTON: As top Detroit auto executives prepared to make their most intense plea for aid to Congress on Tuesday, General Motors also pleaded Monday for a €1 billion credit guarantee from the German government to help its Opel subsidiary.

The request, greeted with some skepticism in Germany - Chancellor Angela Merkel promised a reply by Christmas - demonstrated how what had been building as a Washington drama involving efforts to save the venerable Detroit auto industry was fast becoming a story about how the international industry might be transformed by the spreading financial crisis.

Governments around the world, from Tokyo to Berlin, are mulling over pleas by auto industries that say their very survival may be at stake. In addition to GM's plea to the German government, the carmaker is selling its 3 percent stake in Suzuki Motor to raise $230 million.

"There's a high degree of urgency" for federal assistance if General Motors is to avert a full-blown crisis, Rick Wagoner, the company's chairman and chief executive, said in a joint appearance in Detroit with Ron Gettelfinger, who heads the industry's largest union, the United Auto Workers. "It's really time to move on this," Wagoner said.

Wagoner and Gettelfinger, who will be key witnesses at a hearing Tuesday before the Senate Banking Committee, are allies of convenience - particularly after President-elect Barack Obama said that any new aid should depend on automakers and labor coming together behind a plan to make the industry sustainable. Also testifying will be Alan Mulally, who heads Ford, and Robert Nardelli of Chrysler.

But in an atmosphere of rare hostility toward an auto industry whose huge size and long-time success generally meant that it got its way, Wagoner's very job might be at stake. When Senator Carl Levin, Democrat of Michigan, was pressed Sunday as to whether Wagoner should resign as part of any bailout, he told NBC, "I'd be happy to tell Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not."

The Senate majority leader, Harry Reid of Nevada, was set to introduce legislation Monday to use $25 billion from the $700 billion bailout package for the struggling automakers. Democrats say Congress must act now to protect millions of well-paying jobs throughout the economy that depend on a stable auto industry.

The Democrats promise to impose tough conditions on the money and to create an oversight board, with power to veto company spending plans - such as, according to Representative Barney Frank of Massachusetts, "ventures that would take some of this money, maybe, and put it overseas."

But the White House, while suggesting Monday that its stance on aid to the industry had been cast in overly harsh terms, essentially repeated its position that any help should come from money Congress approved earlier - $25 billion to help the industry retool - not from an additional $25 billion to come from the larger bailout.

"The auto industry is an important part of our manufacturing base, and we want the industry to succeed and compete in the global economy," said Dana Perino, the White House spokeswoman. But, she added, "we believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers - from the $25 billion Department of Energy loan program." The $700 billion rescue program, she added, was meant exclusively for the financial sector.

Analysts say several factors have contributed to the unusually stiff headwinds facing automakers: their longtime resistance to building more fuel-efficient vehicles, which cost them sympathy in many parts; the closing of some auto industry-linked plants in several states, eroding the political support Detroit once enjoyed there, even as foreign automakers built new facilities across the South; and the absence of high-profile Detroit leaders of the prominence of Lee Iacocca, who was essential in the 1979 Chrysler bailout.

Republicans in Congress have been highly critical of the Democratic-backed bailout efforts, saying that the industry is paying the price for decades of bad management, bloated payrolls and poor designs.

"I don't believe the $25 billion they're talking about will make them survive," said Senator Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee. "It's just postponing the inevitable." The hearing Tuesday before the Banking Committee is one of several on the industry set for the coming days.

In Congress, the showdown between the Bush administration and the Democratic-controlled Congress appeared to budge a bit Monday when the Bush administration expressed its support at least in principle for helping the auto industry - as long as the $700 billion financial-sector rescue program was not involved. Obama personally asked Bush to provide help when they met last week at the White House.

But the president has given little clear leeway.

Prospects for any ambitious action this year appeared to dim. Jim Manley, a spokesman for Reid, said that the broad economic stimulus bill favored by Obama - and which might indirectly give a boost to the auto industry - was unlikely to pass this year.

http://img.iht.com/images/v3/logo_all.gif (http://www.iht.com/articles/2008/11/17/america/gm.php)

Off topic, but the same disgusting union problems exist in our public schools. Teachers an administrators have no business making 250K+ a year!

Where thte hell do you live that a public school teacher makes $250,000 a year? My father in law is a college professor with a PhD and he makes no where near half that money.

Not true. Toyota has a very generous contract with the workers that build their cars as recognized UAW members. Their wages are comparable to the wages of GM and Ford workers. The biggest killer right now for the workers is Healthcare costs. This countries number 1 flaw is its insistance that everything must be profitable including healthcare and medicine. As a result of the high healthcare costs (from healthcare companies wanting to look good for their shareholders and rasing their prices) It equals a decrease in spending power.

People also suggest that the workers are over paid and yet they arent buying the new cars and trucks that they themselves build because they cant afford them.

bottom line... GM pays a hell of a lot more than Toyota does for labor. There is no arguing that (all of the big three pay way more than toyota). I'm not talking about what each person makes an hour, I'm talking about that person's wage, pension fees,etc. Comes out to Toyota paying roughly $45 per labor hour and the big three paying < $70 and hour

I used to live in Dayton, Ohio....had a few friends working for Delphi (major supplier and I believe part ofthe UAW). Anyhow, they would always brag about how if they worked on a holiday, they would get triple pay and a vacation day later. Effectively making quadruple pay for that day. And BTW, triple time for these guys was about $85 hour.

To top it all off, they would tell me how they had to just get their quota done for their shift, and then go watch TV and collect pay for the remainder of the shift. It was either that, or just work so slow that you don't finish early. God bless this fucked up country :(

To top it all off, they would tell me how they had to just get their quota done for their shift, and then go watch TV and collect pay for the remainder of the shift. It was either that, or just work so slow that you don't finish early. God bless this fucked up country :(


It's not the countrys fault, it's the Unions fault :D They take something that sounds like a great idea (not to put too much pressure on the workers) and turn it into steadfast rules ... "for this amount we'll tighten 100 bolts an hour per person on the assembly line" ... then because of Union laws the worker could actually get in trouble if they outperform the quota

Unions, good in the 1930s, outdated in the 21st century

I used to live in Dayton, Ohio....had a few friends working for Delphi (major supplier and I believe part ofthe UAW). Anyhow, they would always brag about how if they worked on a holiday, they would get triple pay and a vacation day later. Effectively making quadruple pay for that day. And BTW, triple time for these guys was about $85 hour.

To top it all off, they would tell me how they had to just get their quota done for their shift, and then go watch TV and collect pay for the remainder of the shift. It was either that, or just work so slow that you don't finish early. God bless this fucked up country :(

...and look what happened to the GM Moraine plant in Dayton.

GONE. 'Tis only the beginning.

I had a co-worker who did lab work say that they had a union at one of his old jobs, and that they had to get x number of samples tested per 8 hour shift. Well, he could knock them out in about 3 hours, then he'd literally sit around and read for the next 5 hours or take a nap.

I'm sorry, the union mentality of working has long since past.

It seems to me, that any company looking for financial assistance has to show ability to pay back a loan, or line of credit. As a small business, I have to have a detailed business model to try and get any money from a bank. Even then they laugh.
I may have missed it, but I don't think I've seen anywhere where they've explained how they're going to pay this back. They cannot continue business as usual and expect to survive. They also shouldn't need to be told what to do to get this money.
Again, as a small business owner, I can tell you, no one wants to invest in a struggling business. It doesn't make sense. So, the gubment is going to invest in failing companies with our money. Something none of them would do with their own money, on a private basis. Seems rediculous when you look at it like that, doesn't it. We should be livid.

Senate rips auto industry
Dodd calls executives 'devoid of vision' and business model 'failed' as Big Three seeks $25 billion in taxpayer money

Last Updated: November 18, 2008: 4:34 PM ET

AMERICA'S MONEY CRISIS
Senate rips auto industry
Internet retail growth rate at 7-year low
Stocks fight back
Thanksgiving travel to wane
What entrepreneurs are feeling: Fear
Photos

GM's downward spiral: A timeline
The Detroit automaker's whopping $15.5 billion quarterly loss Friday wasn't a record, but it's the latest chapter in a steady slide that began more than 20 years ago.
View photos
NEW YORK (CNNMoney.com) -- Skeptical Senators grilled auto industry executives at a hearing Tuesday, calling them short sighted and unimaginative, as they seek a $25 billion taxpayer-funded bailout to ward off looming bankruptcy.

"Their board rooms in my view have been devoid of vision," said Sen. Chris Dodd (D-CT), chairman of the Senate Banking, Housing and Urban Affairs Committee, in opening remarks at a hearing attended by the executives of the nation's Big Three automakers. "The Big Three turned a blind eye to opportunities. They have promoted and often driven the demand of inefficient, gas guzzling vehicles, and dismissed the threat of global warming."

Dodd called the hearing "an opportunity to reject a subsidy for failed business practices."

Other Senators agreed.

"We have little evidence this $25 billion will do anything to promote long term success," said Michael Enzi (R-Wyo.) "I'm pretty sure if you took this bill to your banker and asked for $25,000, he'd send you back to do more work."

But the request is not without its supporters.

"Survival of the auto companies is imperative for America to remain the global leader in innovation," said Sen. Charles Schumer (D-NY). "We should not drop out of the race before we have a chance to compete."

"We can't afford to lose thousands of jobs," said Sen. Robert Casey (D-Penn.) "What is a recession could become a depression if these companies fail in the next couple of months."

The U.S. auto industry, already struggling due to high labor costs and weak brands, is being stung further as car buying grinds to a halt amid credit difficulties, job losses and fears of a recession. The industry has been lobbying hard for a $25 billion loan from the $700 billion government bailout originally slated for the finance sector.

Without it, General Motors (GM, Fortune 500) will likely go bankrupt within months, and Ford (F, Fortune 500) and Chrysler could soon follow.

In prepared testimony released before the hearing, Chrysler's Chairman & CEO Robert Nardelli said the industry needs assistance because of "the devastating automotive industry recession caused by our nation's financial meltdown, and the current lack of consumer credit, which has resulted in the critical lack of liquidity."

If bankruptcy occurs, the industry and its supporters say the blow to the U.S. economy would be huge. They say nearly 2 million jobs are either directly or indirectly tied to the auto sector, and that Detroit is a pillar of the American manufacturing economy.

Supporters also claim the government would lose over $100 billion in tax revenue over the next few years if the auto industry goes belly-up.

The industry says it needs the loans to hold it over until the economy improves, their new models can woo consumers and savings from labor contracts have a chance to kick in.

Without a bailout, Nardelli stressed that "this would put at risk health care coverage for retirees, which is part of Chrysler's nearly $20 billion total health care obligation, $2 billion in annual pension payments to our retirees and surviving spouses, approximately $7 billion in current payables, $35 billion in future annual supplier business and 56,600 direct Chrysler employees earning $6 billion in wages."

But critics say problems with the U.S. auto industry are systemic, and giving them $25 billion would only delay the inevitable. They also say it would encourage other mismanaged businesses to come to the government, hat in hand, a proposition the American taxpayer cannot afford.

They say bankruptcy would be the best thing for the industry, allowing automakers to shed expensive labor contracts and reorganize as smaller, more efficient firms.

So far, it appears unlikely the current Congress will let the industry borrow $25 billion under the bailout plan. While many Democrats support the move, most Republicans and some Democrats are against it, and the measure is not thought to have enough votes to pass the Senate.

And automakers say that waiting for assistance until the new Congress is in session next year could jeopardize their financial health. Bankruptcy, they fear, would not result in reorganization, but quick liquidation in this tight credit environment."

Rather than grant $25 billion in new loans from the bailout, the White House wants to modify $25 billion in loans that were originally granted in September to allow automakers to use that money to pay their bills. Originally, those loans were supposed to help Detroit make more fuel-efficient vehicles.

Some think the White House proposal stands a better chance of passing Congress.

"I think the proposal that the administration has made - to basically change the qualifications of the money that we have already appropriated - is a sound way to go forward," Senate Minority Leader Mitch McConnell (R-Ky.), said Tuesday.

and 56,600 direct Chrysler employees earning $6 billion in wages."


6,000,000,000/56,600=106,007.067 average earnings. And there in lies the problem.........
Now I know some make more and some less, but damn that's alot per person.

TTAC is speculating Chinese companies may buy American automakers or simply buy whatever is left after bankruptcy.

http://www.thetruthaboutcars.com/breaking-news-chinese-may-buy-gm-and-chrysler/

"Their board rooms in my view have been devoid of vision," said Sen. Chris Dodd (D-CT), chairman of the Senate Banking, Housing and Urban Affairs Committee, in opening remarks at a hearing attended by the executives of the nation's Big Three automakers. "The Big Three turned a blind eye to opportunities. They have promoted and often driven the demand of inefficient, gas guzzling vehicles, and dismissed the threat of global warming."

Dodd called the hearing "an opportunity to reject a subsidy for failed business practices."

Other Senators agreed.


ouch. Looks like the sun is setting pretty fast on the big 3.

Maybe its time to grab that C6Z06 before it really becomes a collectable.

bottom line... GM pays a hell of a lot more than Toyota does for labor. There is no arguing that (all of the big three pay way more than toyota). I'm not talking about what each person makes an hour, I'm talking about that person's wage, pension fees,etc. Comes out to Toyota paying roughly $45 per labor hour and the big three paying < $70 and hour


Youre refering to the tier 1 pay scale which is no longer the standard of new workers coming in. Nor has it been for nearly 10 years now. The UAW agreed to a 50% pay cut(i.e. $28hr to $14hr) for new workers hiring in at GM as well as Ford and Chrysler. To hold them to the previous tier without acknowledgeing the new tier is just picking the piece you dont like to represent your arguement.

Bottom line... you call them labor and I call them human beings with families and healthcare needs and retirment needs. The workers didnt design the cars they build nor are they repondsible for drug and healthcare companies raising their prices to show a larger profit on wall street. We require thier labor same as we require accountants but because they get dirty for a living they are not deserving of a living wage I guess.

TTAC is speculating Chinese companies may buy American automakers or simply buy whatever is left after bankruptcy.

http://www.thetruthaboutcars.com/breaking-news-chinese-may-buy-gm-and-chrysler/

oh now that would be good!!! :bang:

Where thte hell do you live that a public school teacher makes $250,000 a year? My father in law is a college professor with a PhD and he makes no where near half that money.

Administrators make up to 250K+, the teachers make 55-125k plus insane benefits in my mom's HS in Mount Vernon, NY. Then everyone wonders why a $190 million town school budget isn't enough.

Not true. Toyota has a very generous contract with the workers that build their cars as recognized UAW members. Their wages are comparable to the wages of GM and Ford workers. The biggest killer right now for the workers is Healthcare costs. This countries number 1 flaw is its insistance that everything must be profitable including healthcare and medicine. As a result of the high healthcare costs (from healthcare companies wanting to look good for their shareholders and rasing their prices) It equals a decrease in spending power.

People also suggest that the workers are over paid and yet they arent buying the new cars and trucks that they themselves build because they cant afford them.

I guess I am a little ignorant regarding the Asian unions. Read my post #100, does this sound reasonable to you? What would the Asian manufacturers do in this situation?

Well what are the circumstances behind your uncle not working for starters? The plant im thinking of in Linden is the GM auto plant which produced the Blazer and Jimmy that closed in 05 and was demoed a couple years ago. If your uncle had enough time in he may have been given a pension which is what GM agreed to but if not then I dont understand how he doing that.

Administrators make up to 250K+, the teachers make 55-125k plus insane benefits in my mom's HS in Mount Vernon, NY. Then everyone wonders why a $190 million town school budget isn't enough.

Wow. Must be a Georgia vs. New York differance. That sounds insane.
Sounds like the UAW needs to move all employees to $14.00 per hour if that is the wage for new hires. Yes a paycut sucks, but being without a job and without benefits sucks way more. And hey, then at $14 per hour they would actually be making $.41 LESS than me and I am an x-ray tech! I find an assembly line worker making twice what I make hard to swallow.

Wow. Must be a Georgia vs. New York differance. That sounds insane.
Sounds like the UAW needs to move all employees to $14.00 per hour if that is the wage for new hires. Yes a paycut sucks, but being without a job and without benefits sucks way more. And hey, then at $14 per hour they would actually be making $.41 LESS than me and I am an x-ray tech! I find an assembly line worker making twice what I make hard to swallow.

Its not about who works harder or whos job is more complex. Thats where the Marxist talk starts. Its about paying a living wage and building a strong middle class in this country. Thats why we have enjoyed such a strong economy.

You made the right choice when you put your confidence in General Motors, and we appreciate your past support. I want to assure you that we are making our best vehicles ever, and we have exciting plans for the future. But we need your help now. Simply put, we need you to join us to let Congress know that a bridge loan to help U.S. automakers also helps strengthen the U.S. economy and preserve millions of American jobs.

Despite what you may be hearing, we are not asking Congress for a bailout but rather a loan that will be repaid.

The U.S. economy is at a crossroads due to the worldwide credit crisis, and all Americans are feeling the effects of the worst economic downturn in 75 years. Despite our successful efforts to restructure, reduce costs and enhance liquidity, U.S. auto sales rely on access to credit, which is all but frozen through traditional channels.

The consequences of the domestic auto industry collapsing would far exceed the $25 billion loan needed to bridge the current crisis. According to a recent study by the Center for Automotive Research:

• One in 10 American jobs depends on U.S. automakers
• Nearly 3 million jobs are at immediate risk
• U.S. personal income could be reduced by $150 billion
• The tax revenue lost over 3 years would be more than $156 billion

Discussions are now underway in Washington, D.C., concerning loans to support U.S. carmakers. I am asking for your support in this vital effort by contacting your state representatives.

Please take a few minutes to go to www.gmfactsandfiction.com, where we have made it easy for you to contact your U.S. senators and representatives. Just click on the "I'm a Concerned American" link under the "Mobilize Now" section, and enter your name and ZIP code to send a personalized e-mail stating your support for the U.S. automotive industry.

Let me assure you that General Motors has made dramatic improvements over the last 10 years. In fact, we are leading the industry with award-winning vehicles like the Chevrolet Malibu, Cadillac CTS, Buick Enclave, Pontiac G8, GMC Acadia, Chevy Tahoe Hybrid, Saturn AURA and more. We offer 18 models with an EPA estimated 30 MPG highway or better — more than Toyota or Honda. GM has 6 hybrids in market and 3 more by mid-2009. GM has closed the quality gap with the imports, and today we are putting our best quality vehicles on the road.

Please share this information with friends and family using the link on the site.

Thank you for helping keep our economy viable.

Sincerely,



Troy Clarke

------------

Only takes a minute! Do it to support our American automobile industry!

http://gmfactsandfiction.com/

You made the right choice when you put your confidence in General Motors, and we appreciate your past support. I want to assure you that we are making our best vehicles ever, and we have exciting plans for the future. But we need your help now. Simply put, we need you to join us to let Congress know that a bridge loan to help U.S. automakers also helps strengthen the U.S. economy and preserve millions of American jobs.

Despite what you may be hearing, we are not asking Congress for a bailout but rather a loan that will be repaid.

The U.S. economy is at a crossroads due to the worldwide credit crisis, and all Americans are feeling the effects of the worst economic downturn in 75 years. Despite our successful efforts to restructure, reduce costs and enhance liquidity, U.S. auto sales rely on access to credit, which is all but frozen through traditional channels.

The consequences of the domestic auto industry collapsing would far exceed the $25 billion loan needed to bridge the current crisis. According to a recent study by the Center for Automotive Research:

• One in 10 American jobs depends on U.S. automakers
• Nearly 3 million jobs are at immediate risk
• U.S. personal income could be reduced by $150 billion
• The tax revenue lost over 3 years would be more than $156 billion

Discussions are now underway in Washington, D.C., concerning loans to support U.S. carmakers. I am asking for your support in this vital effort by contacting your state representatives.

Please take a few minutes to go to www.gmfactsandfiction.com, where we have made it easy for you to contact your U.S. senators and representatives. Just click on the "I'm a Concerned American" link under the "Mobilize Now" section, and enter your name and ZIP code to send a personalized e-mail stating your support for the U.S. automotive industry.

Let me assure you that General Motors has made dramatic improvements over the last 10 years. In fact, we are leading the industry with award-winning vehicles like the Chevrolet Malibu, Cadillac CTS, Buick Enclave, Pontiac G8, GMC Acadia, Chevy Tahoe Hybrid, Saturn AURA and more. We offer 18 models with an EPA estimated 30 MPG highway or better — more than Toyota or Honda. GM has 6 hybrids in market and 3 more by mid-2009. GM has closed the quality gap with the imports, and today we are putting our best quality vehicles on the road.

Please share this information with friends and family using the link on the site.

Thank you for helping keep our economy viable.

Sincerely,



Troy Clarke

------------

Only takes a minute! Do it to support our American automobile industry!

http://gmfactsandfiction.com/

i guess GM sent this to alot of people today.

Right. Let the same guys who destroyed the American auto industry with outrageous regulations, "green" taxes and surcharges and ridiculous union pandering save the industry THEY destroyed :eyes:

The government CAN'T save the auto industry. They can only steal your money and give it to them, except you get nothing in return but a bigger tax bill.

Want to know how the government can help the auto industry? Stop the ridiculous union pandering, get rid of CAFE regulations, stop making it so they have to put 72 fucking airbags and other safety equipment in cars and let THE PEOPLE AND THE MARKET decide what they want in automobiles instead of politicians. The American auto industry is dying because the government makes them do things that are not in their best interest.

The government destroyed the business, and the people want the same government to try and bail it out? Why don't you guys try and lose weight by going on an "all cake diet" if we're just going to freely say and do stupid things? Why the HELL do people have the "let the government fix it" attitude? Don't people know by now that government intervention can only make things worse?

Government intervention destroys companies. Tax breaks and minimal regulation is what saves them.

I agree with you Choco. I am all against this huge bailout. I keep my outlook on it simple. When an individual makes financial mistakes, or loses their job, or various other reasons, does the government come bail you out? Hell no. You run up your credit cards, buy 2 new cars that you can't afford and you lose your job so you lose the 2 cars and your house gets foreclosed on.

Let Detroit Go Bankrupt

http://graphics8.nytimes.com/images/2008/11/19/opinion/19romney.enlarge.jpg

By MITT ROMNEY
Op-Ed Contributor
Published: November 18, 2008

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Mitt Romney, the former governor of Massachusetts, was a candidate for this year’s Republican presidential nomination.

http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif (http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2)

Big Three CEOs Flew Private Jets to Plead for Public Funds

http://a.abcnews.com/images/Blotter/abc_wagner_2_081118_mn.jpg

By BRIAN ROSS and JOSEPH RHEE
November 19, 2008

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

Even as their companies fail, Ford and GM CEOs continue lavish lifestyles.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

"We want to continue the vital role we've played for Americans for the past 100 years, but we can't do it alone," Wagoner told the Senate

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is one of eight luxury jets in the GM fleet that continues to ferry executives around the world despite the company's dire financial straits.

"This is a slap in the face of taxpayers," said Tom Schatz, President of Citizens Against Government Waste. "To come to Washington on a corporate jet, and asking for a hand out is outrageous."

Wagoner's private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

After the hearing, Wagoner declined to answer questions about his travel.

Ford CEO Mulally's corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.

Plants Closed, Company Jets Stay

Mulally made his case Tuesday before the committee saying he's cut expenses, laid-off workers and closed 17 plants.

"We have also reduced our work force by 51,000 employees in the past three years," Mulally said.

Yet Ford continues to operate a fleet of eight private jets for its executives. Just Tuesday, one jet was taking Ford brass to Los Angeles, another on a trip to Nebraska, and of course Mulally needed to fly to Washington to testify. He did not address questions following the hearing.

"Now's not the time to do that sort of thing," said John McElroy of the television program "Autoline Detroit."

"Now's the time to be humble and show that you're sharing equally in the sacrifice," McElroy said.

GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.

Private jet travel is perhaps the greatest perk of all for CEOs, who say it allows them to travel more efficiently and safely, even in a recession.

AIG, despite the $150 billion bailout, still operates a fleet of corporate jets. The company says it has put two out of its seven jets up for sale and is reviewing the use of others. Though there are no such plans by GM or Ford.

"It appears that the senior management of the automakers simply don't get it," said Schatz.

http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1

Big 3 carmakers beg for $25B, warn of catastrophe

http://ak.imgfarm.com/images/ap/Michigan_Meltdown.sff_MICO203_20081118155414.jpg
Ford assemblymen mesh the engine to the drive shaft on the 2009 Ford F150 truck at the Dearborn Truck Assembly in Dearborn, Mich.

Nov 18, 6:56 PM (ET)
By JULIE HIRSCHFELD DAVIS

WASHINGTON (AP) - Detroit's Big Three automakers pleaded with a reluctant Congress Tuesday for a $25 billion lifeline to save the once-proud titans of U.S. industry, pointedly warning of a national economic catastrophe should they collapse. Millions of layoffs would follow their demise, they said, as damaging effects rippled across an already-faltering economy.

But the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans.

"Our industry ... needs a bridge to span the financial chasm that has opened up before us," General Motors Corp. (GM) CEO Rick Wagoner told the Senate Banking Committee. He blamed the industry's predicament not on management failures but on the deepening global financial crisis.

And Robert Nardelli, CEO of Chrysler LLC, told the panel the bailout would be "the least costly alternative" when compared with damage from bankruptcy.

Sympathy for the industry was sparse, with bailout fatigue dominating Capitol Hill. Lawmakers bristled with pent-up criticism of the auto industry, and questioned whether a stopgap loan would really cure what ails the companies.

Banking Committee Chairman Christopher Dodd, D-Conn., told the leaders of GM, Chrysler and Ford Motor Co. (F) that the industry was "seeking treatments for wounds that I believe to a large extent were self-inflicted."

Still, he said, "At a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."

Sen. Mike Enzi, R-Wyo., complained that the larger financial crisis "is not the only reason why the domestic auto industry is in trouble."

He cited "inefficient production" and "costly labor agreements" that put the U.S. automakers at a disadvantage to foreign companies.

Ford CEO Alan Mulally told senators the auto industry was "a pillar of our economy. We look forward to working with you to be part of the solution" to the financial crisis.

GM's Wagoner said that despite some public perceptions that his company was not keeping pace with the times and technological changes, "we've moved aggressively in recent years to position GM for long-term success. And we were well on the road to turning our North American business around."

"What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II."

Failure of the auto industry "would be catastrophic," he said, resulting in three million jobs lost within the first year and "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."

Chrysler's Nardelli sought to respond to critics who suggest the automakers seek Chapter 11 bankruptcy protection, as have some airlines that later emerged restructured and leaner.

"We just cannot be confident that we will be able to successfully emerge from bankruptcy," Nardelli said.

Chrysler was bailed out by the federal government once before, in 1979, with $1.2 billion in loan guarantees. The company repaid the loan, plus interest, ahead of schedule.

The three said a $25 billion government infusion could get them through 2009, with Chrysler and Ford each getting about $7 billion and GM needing $10 billion to $12 billion to pull through.

Joining the Big Three CEOs, Ron Gettelfinger, president of the United Auto Workers union, said the emergency loans were important for the survival of the industry and union jobs. He said the UAW recognized that "in order for these companies to be competitive, we had to make tough calls" in labor concessions.

Congressional leaders worked behind the scenes trying to hammer out a compromise that could speed some aid to the automakers before year's end. But the outlook seemed poor.

"My sense is that nothing's going to happen this week," Sen. Bob Corker, R-Tenn., said at the opening of the hearing.

Democratic Sen. Max Baucus of Montana said he also smelled a flameout. "I sense that nothing is going to be passed," the Finance Committee chairman said.

Earlier, House Majority Leader Steny Hoyer said Congress might have to return in December - rather than adjourning for the year this week, as expected - to consider an auto bailout.

"Dealing with the automobile crisis is a pressing need. We are talking about a lot of people ... and a great consequence to our economy," said Hoyer, D-Md.

The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said it will delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year's end without government aid.

In the Senate, Democrats discussed but rejected the option favored by the White House and GOP lawmakers to let the auto industry use a $25 billion loan program created by Congress in September - designed to help the companies develop more fuel-efficient vehicles - to tide them over financially until President-elect Barack Obama takes office.

"There is a way to do this," said Sen. Mitch McConnell, R-Ky., the minority leader.

House Speaker Nancy Pelosi, D-Calif., and other senior Democrats, who count environmental groups among their strongest supporters, have vehemently opposed that approach because it would divert federal money that was supposed to go toward the development of vehicles that use less gasoline.

"I don't think that's going very far in our caucus," said Senate Majority Leader Harry Reid, D-Nev.

Instead, they want to draw the $25 billion directly from the $700 billion Wall Street bailout - bringing the government's total aid to the car companies to $50 billion.

A Senate vote on that plan, which would also extend jobless benefits, could come as early as Thursday, but it currently lacks the support to advance. Treasury Secretary Henry Paulson renewed the administration's opposition on Tuesday.

Even the car companies' strongest supporters conceded Tuesday that changing the terms of the fuel-efficiency loan program might be the only way to secure funding for them with Congress set to depart for the year and the firms in tough financial shape.

"While I believe we have to have retooling going into next year, if in the short run the only way we have to be able to get some immediate help is to take a portion of that, I would very reluctantly do that - but only because I believe President-elect Obama is going to be focused on retooling and on a manufacturing strategy next year," said Sen. Debbie Stabenow, D-Mich.

The White House said the government shouldn't send any more money to the struggling auto industry on top of the already-approved loans.

"We don't think that taxpayers should be asked to throw money at a company that can't prove that it has a long-term path for success," said White House Press Secretary Dana Perino.

http://apnews.myway.com/article/20081118/D94HLE300.html

http://www.nytimes.com/2008/11/19/business/economy/19ports.html?pagewanted=1&_r=1
Here is a goog article, every one is hurting.

http://www.nytimes.com/2008/11/19/business/economy/19ports.html?pagewanted=1&_r=1
Here is a goog article, every one is hurting.

Too bad, you won't see that all over CNBC, and others.

A Second Helping? | 6:38 p.m. Sen. Corker asks the C.E.O.’s if they would pledge not to come back to Congress asking for more money later on, if they are given $25 billion now. They each appear unsure how to respond, but Mr. Wagoner jumps in and says he would agree to that, if Sen. Corker can promise that the economy will turn around at a particular point in time so that more consumers want to buy cars again.

Senator Corker, unsatisfied, replies, “You’re going to be back, aren’t you?”

http://thelede.blogs.nytimes.com/2008/11/18/live-blogging-the-senate-automaker-hearings/index.html?hp

Yeah, the case for a bailout is getting weaker and weaker by the day.

If GM files for bankruptcy, how will it affect the pension and health insurance of GM retirees? I would like to know because my father is a GM retiree and my family depends on his benefits.

I also have several other relatives who depend on their GM benefits, both retired hourly and retired salary.

Thanks,

I'm pretty sure pension is backed by the government, so if it fails at GM tax payers will be paying out ....

I'd like to kick whomever stupid idea it was to create a "Pension System" in the nuts... how the h*** did they think that would work? it's a pyramid scheme

I'm pretty sure pension is backed by the government, so if it fails at GM tax payers will be paying out ....

I'd like to kick whomever stupid idea it was to create a "Pension System" in the nuts... how the h*** did they think that would work? it's a pyramid scheme

Your absolutly right! What we need in this country is something full proof like the 401Ks they are impossible to fail us.....we'll unless the market tanks but like thats ever gonna happen ;)

Well what are the circumstances behind your uncle not working for starters? The plant im thinking of in Linden is the GM auto plant which produced the Blazer and Jimmy that closed in 05 and was demoed a couple years ago. If your uncle had enough time in he may have been given a pension which is what GM agreed to but if not then I dont understand how he doing that.

I found out some more specifics from my uncle's GM career. He worked in the Tarrytown plant, and time and again he would be "laid off" from GM receiving 95% pay (mind you, in some instances this would last for over 40 weeks). Eventually the plant closed 10 years ago and he went to the Linden NJ plant. You are correct, that plant produced Jimmy's and other small SUV's. That plant closed about 6 years ago. Ever since Linden, he has received 95% pay with almost full benefits. His only requirement from GM is to go to "People to People" from 9-3 which is a non-for-profit community service organization. He has been employed by GM for about 25 years and they finally persuaded him to retire this year and began receiving his pension.

Now what argument can you possibly come up with to justify this complete nonsense? HE WAS GETTING PAID FOR 6 YEARS TO BUILD VEHICLES FOR GM AND HE WAS NOT BUILDING VEHICLES. HE WAS ABLE TO GET AWAY WITH THIS BECAUSE OF THE UAW CONTRACTS. I did not read this in an article or hear it on TV. I have watched this go on right in front of me for a long time. I always wondered how GM was able to stay afloat after allowing something like this to occur. I guess their time is up. :eyes:

Not true. Toyota has a very generous contract with the workers that build their cars as recognized UAW members. Their wages are comparable to the wages of GM and Ford workers. The biggest killer right now for the workers is Healthcare costs. This countries number 1 flaw is its insistance that everything must be profitable including healthcare and medicine. As a result of the high healthcare costs (from healthcare companies wanting to look good for their shareholders and rasing their prices) It equals a decrease in spending power.

People also suggest that the workers are over paid and yet they arent buying the new cars and trucks that they themselves build because they cant afford them.

The only UAW workers that build Toyota vehicles are the ones that work in GM plants under GMs contract (Tacoma, Corolla, Vibe). Unless something has changed.

Not true. Toyota has a very generous contract with the workers that build their cars as recognized UAW members.
That is a very misleading/well crafted sentence.


Their wages are comparable to the wages of GM and Ford workers.

Ever been to Japan?

Too bad, you won't see that all over CNBC, and others.True...bash the Big 3 while praising all of the import nameplates, this has been the general media's dialogue for YEARS now. :nono:

True...bash the Big 3 while praising all of the import nameplates, this has been the general media's dialogue for YEARS now. :nono:

They (the Big Three) have made it pretty easy for a long time now with embarrassing products and whittling all their brands to nothing consumers care about anymore.

Detroit automakers' rescue stalls in Senate

http://ak.imgfarm.com/images/ap/Congress_Autos.sff_DCEV107_20081119122311.jpg

Nov 20, 7:57 AM (ET)
By KEN THOMAS

WASHINGTON (AP) - A plan to give troubled U.S. automakers billions of dollars in government-backed loans is on life support, leaving the fate of hundreds of thousands of workers and Detroit's once-venerable car companies hanging in the balance.

Senate Majority Leader Harry Reid, D-Nev., canceled plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans have rejected Democrats' plan to dip into that pot of money.

Warning of economic disaster, a bipartisan group of senators from auto industry states are trying to reach a deal on an alternative package. If an agreement can be reached, Reid said, the Senate still could vote on it as part of a measure to extend jobless benefits.

But Reid acknowledged that was "not going to be easy."

With all sides sensing doom for a Big Three automaker rescue, the finger-pointing began. White House press secretary Dana Perino said that if Congress "leaves for a two-month vacation without having addressed this important issue ... then the Congress will bear responsibility for anything that happens."

Congressional Democrats countered that the Treasury Department already had the power to grant emergency funds to the automakers, but the Bush administration opposed the approach.

The leaders of General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 million jobs. Detroit's automakers, hurt by a sharp drop in sales and a nearly frozen credit market, burned through nearly $18 billion in cash reserves during the last quarter, and GM and Chrysler both said they could collapse in weeks.

"I don't believe we have the luxury of a lot of time," GM CEO Rick Wagoner told a House hearing.

Alan Mulally, the CEO of Ford Motor Co., said the company had sufficient cash reserves to make it through 2009. But United Auto Workers union president Ron Gettelfinger said a bankruptcy could spawn others.

"If there's a Chapter 11 (for) one of the companies, it will drag at least one other with them, if not all of them. And I do not believe Chapter 11 is where it will end. It will go to liquidation," he said ominously.

Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.

"My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass.

The stakes are high. The Detroit automakers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. About 1 million more people work in dealerships nationwide. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

The White House and congressional Republicans have called on Democrats to support a GOP plan to divert a $25 billion loan program created by Congress in September - designed to help the companies develop more fuel-efficient vehicles - to meet the auto giants' immediate financial needs.

Sens. Carl Levin, D-Mich., Kit Bond. R-Mo., and George Voinovich, R-Ohio, are trying to broker an alternative that could provide bridge loans or a guarantee that the fuel-efficiency loan fund ultimately would be replenished. Negotiators were discussing a scaled-down aid package of $5 billion to $8 billion to help the automakers survive through year's end.

But it was unclear whether any progress could be made. Democrats strongly oppose letting the car companies tap into the energy loans for short-term cash-flow needs.

Despite the gridlock in Congress, there could be a contingency plan: a return to Washington in December for another postelection session to try to strike a deal.

House Majority Leader Steny Hoyer, D-Md., noted that Democratic leaders were planning to gather for an economic conference the week of Dec. 8. "That is available," Hoyer said. "The year has not ended."

http://apnews.myway.com/article/20081120/D94ILVBO0.html

They (the Big Three) have made it pretty easy for a long time now with embarrassing products and whittling all their brands to nothing consumers care about anymore.I have no idea what you're talking about.:huh:

Malibu is bad car?
Corvette is a bad car?
Mercury Milan?
Dodge Caravan?
Ya know, Camry and Accord are NOT the only decent cars left out there...well not yet at least. :nono:

Japan made purely shitty, rusting and undesirable cars once (and for a long time) too, but somehow so many of you have forgotten (and forgiven) that.

Wagoner doesn't exactly exude strong leadership:

http://www.youtube.com/watch?v=YD9sz8rvheI&fmt=18

Personally, I think he knows exactly when they will run out of money, and its a lot sooner than he wants to admit.

I have no idea what you're talking about.:huh:

Malibu is bad car?
Corvette is a bad car?
Mercury Milan?
Dodge Caravan?
Ya know, Camry and Accord are NOT the only decent cars left out there...well not yet at least. :nono:

Japan made purely shitty, rusting and undesirable cars once (and for a long time) too, but somehow so many of you have forgotten (and forgiven) that.

why do you even bother defending GM and the big 3? it is a FACT that their business model has caused them to fail! Yes they have some great cars but that does not take away from the fact that they MISMANAGED the company and are therefore left to suffer the consequences!!!! How are you still arguing this subject?

I have no idea what you're talking about.:huh:

Malibu is bad car?
Corvette is a bad car?
Mercury Milan?
Dodge Caravan?
Ya know, Camry and Accord are NOT the only decent cars left out there...well not yet at least. :nono:

Japan made purely shitty, rusting and undesirable cars once (and for a long time) too, but somehow so many of you have forgotten (and forgiven) that.

Uh yes, most of their cars including the new and hugely overhyped Malibu are pretty mediocre to bad. The Corvette is an exception but one of the very few, proof that GM can make a great car steeped in heritage and focused on it's mission when it wants to. So what's the excuse for all the rest of the clunkers they make?

The Japanese companies have been making excellent vanilla products for the everyman since the 1980s now and have captured generations of buyers who are never going to look back.

That's nobody's fault but the Big Three's.

i hope something good comes from all of this the moral distress that this is going to cause to americans is not good, this will hurt are economy even more....god willing we come out of this one soon... my prayers with all americans that are close to loosing their jobs......i dont agree with unions, i hate them with a pasion but man i hope all those people dont loose their job

http://money.cnn.com/news/newsfeeds/articles/djf500/200811191506DOWJONESDJONLINE000837_FORTUNE5.htm


Fuck ford and chevy. Greedy bastids.

-Mark

They should REALLY re-consider their answer on that question. Hell... I would work for $1 if that is what I had to do to save my company.

They should REALLY re-consider their answer on that question. Hell... I would work for $1 if that is what I had to do to save my company.While I would NEVER state something as stupid and anti American as this:Fuck ford and chevy.I do agree that, like Lee Iacocca before them, these guys really should make that oh so important gesture, it really does send a positive message.
Even if they only made a dollar a year for the next 3-4 years, if you average it with the 15-25 million per year each one has made in the past it still averages out to over 3-5 mil a year in the long run, not too bad. ;)
Plus they could work in some nice stock option plans in place of the salary or something, it would be a much bigger incentive to build the companies back up and drive up the share prices. :nod:

$1 went a lot further back in 1980 :D

I love seeing these greedy CEOs squirm :thumb:

They couldn't work for 1 dollar because they have already spent all their money with little in savings. lol i if these people worked for 20 000 a week they would surely go bankrupt with all those houses and cars they have to upkeep.

While I would NEVER state something as stupid and anti American as this:I do agree that, like Lee Iacocca before them, these guys really should make that oh so important gesture, it really does send a positive message.



I wouldn't call it "anti-american" when the many of the Ford and Chevy cars are either made in Mexico and Canada. Who's anti-american now? And calling it stupid well.... We all know they are going to get the bailout. So my tax dollars are going to pay for their screw up and guess what, they are still going to get there huge salary and their bonuses. THAT to me is stupid. Let them fail.

No money for automakers so far with all the jobs they provide but they are throwing $20B MORE at Citi on top of what they are already getting.

shit, dont take a dollar, and work for $50,000. if they did that, it would win hearts, minds, and sales...GARUNTEED

Even $50K would be better than the millions they are getting now....

As LS1LT1 said... it is an "oh so important gesture".

Some governors are doing this as well now. Arnold Schwarzenegger, Governor of Calyfornia ;) and Phil Bredesen Governor of Tennessee both waved their salaries.

shit, dont take a dollar, and work for $50,000. if they did that, it would win hearts, minds, and sales...GARUNTEEDEven $50K would be better than the millions they are getting now....

As LS1LT1 said... it is an "oh so important gesture".

Some governors are doing this as well now. Arnold Schwarzenegger, Governor of Calyfornia ;) and Phil Bredesen Governor of Tennessee both waved their salaries.I agree. I applauded Iacocca for YEARS after he did that and it was so monumental that they're even still talking about 25+ years later so apparently it does have a very positive impact.
Yes these CEOs believe that if you want quality management to help fix these problems then you have to pay for that quality and that it's the 'American way' but they've been paid PLENTY so far even in bad (aka: HORRIBLE) times and they are the captains of these ships so now it might be time to step up to the plate and show some good will.

They need to be handed an ultimatum: If the taxpayers hand you $25M; you work for $1 a year with benefits and maybe stock options, or loose your job, and benefits. Otherewise we taxpayers will give you nothing.

They need to be handed an ultimatum: If the taxpayers hand you $25M; you work for $1 a year with benefits and maybe stock options, or loose your job, and benefits. Otherewise we taxpayers will give you nothing.

agreed.

Arnold Schwarzenegger, Governor of Calyfornia ;) and Phil Bredesen Governor of Tennessee both waved their salaries.

http://politicalhumor.about.com/library/blschwarzeneggerjokes2.htm

"Arnold Schwarzenegger has announced he will refuse his $175,000 salary and will work for free. I believe he will be worth every penny." —Craig Kilborn

Did you forget I am retired? I put into SS, I receive SS at 62-1/2. Not required to touch your 401K money until 70-1/2. I still work. GM didn't go down hill overnight. Never put all your money in one bassket. For Christ sake think or hire someone to think for you.

All you young folks have many issues facing you - good luck :chug:

Us folks on fixed incomes normally have children. All five of ours are married and have jobs. In the old days several family generations lived together. No one on a fixed income should ever have problems - if they raised thier kids right.

I would have to agree with you. My dad is now 66 years old. He retired in 1999 after working at the same company for about 35 years. His salary was never very high, and his company did not have the best benefits, 401k, or anything for that matter. But yet he saved up his money, made good investments and was able to retire at the age of 57. My mom did not work for most of the marriage except for some house cleaning on the side. Neither one of them has worked since my dad retired in '99 and they are doing fine. A 401k is nice especially when your company contributes, but there are plenty of high yield bonds, money markets, and worthwhile stocks that pay dividends that you can invest in.

One of the high yield bonds that I invested in last year is currently paying out 13.03% interest. Granted the value of the bond is lower than when I bought it, but when it goes lower, the yield gets higher. But eventually it will end up at about the same buying price again. These are good for long term investments because the interest is a lot better than what you will get at a bank. The risk is not high and over 40 years it will make you some nice money especially if you keep adding money into it.

Pretty much all of my dad's investments have been in safer stocks that pay decent dividends or these money markets/bonds that pay interest. Occasionally he made riskier investments when he had money he could play with, and sometimes he did well, and other times he didn't. But he never gambled with money he could not afford to lose.

My grandfather (RIP) made a good amount of money. Some was from investing in the stock market, but his source of income was real estate. He used to own houses and apartments that he would rent out. And back then, he had my dad and uncle doing all of the work for free, so he didn’t have to worry about labor. :D Renting out multiple family homes is still a good investment if you do it right. And if you own multiple homes years down the road when they are all paid off, you have some nice monthly income coming in.

GM Prepackaged Reorganization

By Richard N. Tilton
November 25, 2008

In recent congressional testimony, GM admitted that its experts are “exploring” Chapter 11 reorganization. At the same time, GM continues to argue that a bankruptcy filing is the nuclear option– it would vaporize jobs and inflict cataclysmic damage on the overall U.S. economy. While acknowledging the danger, many argue that reorganization is both necessary and unavoidable. They suggest that GM’s recreation should somehow take place outside of the time-tested legal process known as Chapter 11. Sentiment is growing that a taxpayer-finnaced “prepackaged” Chapter 11 is the best way to solve both GM’s business and financial problems, and perhaps of other automakers. Maybe so. Let’s have a look…

Why is a non-bankruptcy loan to GM a poor use of taxpayer money?

A lender to an insolvent company on the verge of bankruptcy wants its loan to be repaid. It would not allow loan proceeds be used to pay off existing liabilities. GM owes unsecured bondholders about $40b. There is no indication that bondholders have agreed to standstill, waive interest payments, or restructure the debt. GM’s Series D debt of $800m comes due in June 2009, when GM must pay the debt, default or get bondholders to extend the maturity date. GM owes trade creditors about $28b and owes another $34b in accrued expenses.

GM’s legal obligations to bondholders and trade creditors cannot be changed or modified without a bankruptcy case, or the written consent of each individual creditor, That’s a near impossible task. Attempting to reorganize GM outside of a legal proceeding would encourage creditors to holdouts for special treatment, delaying any chance at restructuring

A commercial lender supporting GM– which is insolvent on the basis of its balance sheet– would ask how paying the existing claims of bondholders and suppliers will help GM with its current cash flow problems. They would not allow loan proceeds to be diverted to unsecured creditors. Without a Chapter 11 case, taxpayer loans to GM could be used to pay interest on $40b of GM unsecured debt, and to pay the $800m Series D debt coming due in June 2009.

GM must also pay $7.5b to the retiree trust in January 2010,– another liability for which it does not have funds. Taxpayer money should not be used to bailout existing debt or to pay non-essential existing liabilities. The restructuring of GM’s payment obligations can be most quickly and effectively accomplished in a pre-packaged chapter 11 case.

What is a prepackaged chapter 11?

In a true “pre-packaged” reorganization, the debtor proposes its reorganization plan and solicits votes before they file for Chapter 11 protections. For companies with publicly traded debt and other securities, Chapter 11 gives them the chance to restructure its debts without the “normal” delay and expense of extended negotiations.

A partial “prepack” involves a pre-petition solicitation of certain classes of creditors (e.g. bondholders) and a post-filing solicitation of other classes of creditors (e.g. unsecured suppliers). If the parties have agreed in writing on how their claims will be treated under the plan, sometimes called a “pre-negotiated” prepack, pre-filing voting on the reorganization plan is not essential. [Under a GM reorganization plan, the common shareholders receive nothing and therefore do not get to vote.]

Bottom line: a prepack doesn’t have to address every issue of every creditor group. Smaller claims are usually resolved after a Chapter 11 plan is approved.

A prepackaged reorganization is not ideal for companies that want to terminate large numbers of unprofitable or burdensome contracts. However, GM qualifies. They’ve been restructuring/downsizing for a few years, implementing plant closings, laying-off employee and making other changes to address market realities.

A big advantage of Chapter 11 pre-pack: the debtor can quickly and easily sell assets and operating divisions (e.g. Hummer, AC Delco) to create cash for ongoing operations. The claims of persons affected by the sales are funneled into the bankruptcy court for expedited resolution. Disputes with creditors need not delay the sales.

What is involved in preparing a business plan and application for a chapter 11 “debtor-in-possession” loan?

In a prepackaged chapter 11 reorganization, the financing for the chapter 11 debtor is in place before the Chapter 11 case is filed. The financing often includes a commitment to provide the “exit” financing used to fund the debtor’s obligations– after creditors and the bankruptcy court approves its Chapter 11 reorganization plan.

Given the current state of commercial credit markets, the U.S. Treasury will have to commit to the reorganization plan exit financing. The reorganization plan will set forth the repayment terms for the existing secured debt, the new U.S. Treasury loan and the Department of Energy (DOE) loan.

As with any loan application, the starting point for GM will be its current assets and liabilities, its cash flow and its realistic projections. All of which go into a measured calculation as to the borrower’s credit worthiness and ability to repay the loan, with interest.

In Chapter 11 cases, the debtor prepares detailed projections and budgets, taking into account the reduction in its current liabilities that result when the case is filed. For example, after GM files for Chapter 11, it will no longer pay interest or principal on its unsecured debt. Chapter 11 lets GM stop paying liabilities incurred before bankruptcy. This will increase the cash available for operations. The debtor’s cash flow projections reflect all these deferrals and changes to current liabilities.

How will retiree claims be treated in a pre-packaged chapter 11 case?

GM retiree claims are– primarily– unsecured claims, As such, they have the same priority as bondholders and other unsecured creditors.

In January 2010, the UAW and its related retiree trust will assume most of GM’s retiree liabilities for current retirees. In January 2010, GM has to pay the retiree trust $7.5bin cash and other transfers of assets. The trust also receives a $4.4b GM convertible debt issue– which is an unsecured claim against GM.

Over ensuing years GM must pay the trust additional amounts estimated to be between $10b to $17b. A basic rule of bankruptcy: claims having the same priority in payment get the same treatment under a Chapter 11 reorganization plan. Thus, all unsecured claims, including claims of the retiree trust, should get the same treatment.

In a pre-packaged Chapter 11 case, creditors can agree on different treatment of claims having the same priority. But this invariably leads to more delay and expense. In a GM chapter 11 case, these future payments to retirees are frozen. They’re treated as unsecured claims; they’ll get a distribution under the GM reorganization plan.

What happens at the beginning of a pre-packaged chapter 11 case?

Despite assertions that reorganization in Chapter 11 is not a realistic option, a company with pre-arranged financing is quite able to operate in Chapter 11. In nearly every mega case where a restructuring of an operating business is contemplated, the bankruptcy court enters “first day orders.” Basically, these are all the court approvals that the business needs to continue to operate its business in the ordinary course. First day orders deal with everything from financing, to advance payments, approval of bank accounts, authority to honor customer warranty claims, and reimburse dealers— all the details needed to prevent disruption of the operating business.

While it is definitely a lot of paperwork, legal and turnaround professionals do this type of work every day. The courts routinely approve first day orders designed to save operating businesses.

GM’s assertion that millions of jobs will be “lost” ignores the simple fact that companies continue to operate their businesses while in chapter 11, albeit under a great deal of scrutiny. GM already finances its largest suppliers (Delphi and American Axle) and has a receivable financing program for other suppliers so that the suppliers have access to cash.

These programs can continue in Chapter 11, or even be improved. For example, GM could ask the reorganization court to approve cash pre-payments to essential suppliers. The past due claims of suppliers are unsecured claims. In bankruptcy, these claims have the same priority in payment as GM’s unsecured debt. In planning a prepack, it’s not unusual for the debtor, with the consent of its major creditors, to prepay critical suppliers before the prepack is filed.

What will creditors get in a pre-packaged GM reorganization plan?

A GM reorganization plan must be based on a realistic projection of future profitability. Future cash flows will determine the enterprise value of the reorganized company, and hence the value of new common shares which will be distributed under the plan. Fortunately for taxpayers, in a Chapter 11 case the debtors’ financial projects are open to public scrutiny and to the comments and objections of creditors affected by the Chapter 11 plan.

GM will not have resources to make a cash distribution to creditors. So the reorganization plan will involve a distribution of newly-issued debt and new common stock, with the old debt and old common shares being extinguished. The new common stock will be listed on a national exchange, It wil,l have an immediately ascertainable value based on the financial projections that GM will have to produce to get creditor approval of its Chapter 11 plan.

Under the reorganization plan, the trust for retirees should not receive payment on the $4b short term note, the $4.4b long term note, or its other claims against GM. But will the trust will get its pro rata share of the newly issued debt and common stock of reorganized GM.

Since the new common stock will be publicly traded, it can be sold to fund retiree obligations assumed by the retiree trust. In a Chapter 11 case, creditors can also agree that retirees will get better treatment than is customary. But this requires a vote of creditors and special treatment that’s likely to be contentious, and delay the Chapter 11 case.

Government financing for a GM pre-packaged reorganization

A U.S. Treasury non-bankruptcy equity investment in GM (i.e., purchase of GM preferred stock) is a bad investment for a company already balance sheet insolvent by more than $60b. A primary beneficiary of an equity type investment: the existing unsecured bondholders and unsecured creditors, who would have a claim on the proceeds.

Some suggest that taxpayers should make an unsecured loan. Any such a loan would have the same priority as the other $105b of existing GM liabilities, making loan repayment unlikely. Taxpayers should demand that any loan made to GM be made only in connection with GM’s Chapter 11 filing, that it be fully secured, and only disbursed pursuant to detailed written budgets.

Naturally, lenders to Chapter 11 debtors should insist on competent management. They should also hire their own accountants and reorganization professionals so that the lender has an independent analysis and opinion of the debtor’s viability, business plans and the “viability” of the debtor’s goals and financial projections.

In a pre-arranged Chapter 11 case, the U.S. Treasury could extend to GM a secured debtor-in-possession line of credit for say $40b, a line of credit secured by a first security interest on all GM assets, being junior only to GM’s existing secured line of credit of $4.4b.

A portion of the U.S. Treasury line of credit should be available to support essential suppliers through loans, letters of credit and pre-payments. On the first day of a pre-packaged Chapter 11case, the bankruptcy court is likely to give interim approval to a portion of the total credit line. Ten day’s later, they’ll have a hearing to approve the balance of the loan facility.

Since the government lacks experience in administering secured loans to insolvent companies in Chapter 11 reorganization, it might be preferable to have the loan guaranteed by the US Treasury. Funds would be advanced periodically by a consortium of financial institutions experienced in lending to Chapter 11 debtors. They’d be better able to monitor day-to-day compliance within the terms and covenants of the loan.

This would not eliminate oversight by the US Treasury and Congress. But it would delegate the devilish details of loan administration to experts.

GM’s Chapter 11 reorganization plan can be expedited

Given the importance of US automakers to the economy, and the need for a successful reorganization to preserve jobs, a GM Chapter 11 reorganization case will be expedited. The chief judge can assign multiple judges to handle different aspects of the case, recognizing that speed is essential to a successful reorganization. Bondholders and other creditors should support expedited handling of their claims– a successful reorganization is the best way for creditors to realize value.

A pre-packaged plan can be approved quickly; the plan has been negotiated and accepted by creditors entitled to vote before the Chapter 11 case is begun. In a partial “pre-pack,” the largest creditor groups informally approve the general principles of the plan before the case is filed. Formal solicitation and voting take place under the supervision of the bankruptcy court.

By using accelerated schedules, a prepack can be accomplished in months, not years. Pre-filing negotiations over the terms of the reorganization plan often result in agreement on difficult issues: payments to suppliers, support for the dealer network, honoring customer warranty claims, and even changes to employee work rules and benefits. All of these agreements can be rapidly documented.

Treatment of claims and shareholders under a GM reorganization plan

Given GM’s own statements about its shortage of cash for the foreseeable future, it’s unlikely that GM would make any cash distributions to existing creditors. Cash will be needed to retool plants and complete ongoing restructuring efforts. It will also be needed to eassure trade creditors that enough cash is available– so that trade creditors will extend new trade credit to GM.

Under a reorganization plan, creditors and shareholders are put in classes. Creditors having the same priority in payment often grouped in the same class. A simple GM reorganization plan would have the following elements:

-Taxpayers have a $40b first lien on all GM assets for monies lent by the US Treasury and the DOE. If GM’s debtor in possession financing cannot be refinanced by commercial banks, then taxpayers will finance GM’s exit from Chapter 11. Taxpayers should get warrants for 10 percent of GM’s new common shares, to reward them for the risk of financing GM in Chapter 11.

-GM’s existing $4.4b secured line of credit will retain its lien on GM’s assets and be extended.

-Consumer warranty claims are expressly assumed under the Chapter 11 plan.

-$40b of unsecured bondholder debt will receive its pro rata share of any new unsecured debt issued by GM and a pro rata share of GM’s new common shares. The common shares will trade on the public market and will have an immediately realizable value. No interest will be paid on any new debt until all taxpayer loans to GM are paid in full, with interest

-Trade payables of about $39b (the $17 to $27b owed to the retiree trust,) and any other unsecured claims get their pro rata share of any new debt and new common shares.

-The retiree trust may merit special treatment, although potential future liabilities to the trust of $27b not only would weigh heavily on GM’s post reorganization success, but also would depress the market value of any new common shares issued by GM. With creditor consent, the retiree trust could receive subordinated debt, with future maturity dates timed to GM’s future profitability. Without access to GM’s cash flow projections, it is hard to suggest what treatment would be fair to retirees while still protecting GM’s other creditors.

-Old common shares do not vote on the plan, get no distribution, and are canceled. Existing stock options are eliminated

-A new Board of Directors selected by creditors is in charge of reorganized GM, with board representation for the major creditor constituencies.

GM’s Hypothetical Post-Reorganization Balance sheet

Projected Assets: $90b

Estimated Liabilities
$4.4b: existing secured line of credit
$10b: secured term note to US Treasury
$12b: secured term note to the Department of Energy (GM’s share of the DOE funds for alternative vehicles)
$1b: trust or secured letter of credit established to guarantee payment of consumer warranty claims
$2b: current tax liabilities

Subtotal: $29.4b of secured and priority claims

$9b: accrual for consumer product warranty liability
$10b: for current claims arising in during the Chapter 11 case which will be paid by GM in the ordinary course of business
$5b: new unsecured debt (payment in kind) set aside for miscellaneous claims, with maturities deferred and no cash interest payment
$5b: subordinated debt, issued with laddered maturity dates timed to fund the retiree trust only if it runs out of money in the future
$15b: accrual for pension and retirement obligations for current employees
$5b: leases and other obligations, including liabilities to foreign subsidiaries

Subtotal: $39bof unsecured debt and unsecured liabilities

Total estimated liabilities: $78.4b

Equity distribution
90 percent of newly issued GM common shares distributed to bondholders, the retiree trust, and other unsecured creditors
10 percent of new equity reserved for the US Treasury

Final thoughts on labor, management and Detroit

The UAW represents labor in negotiations with GM management. GM’s management, not labor, has been behind the GM steering wheel as GM went over the cliff of Insolvency. UAW negotiators are tough, well-informed professionals. The UAW is not inflexible; witness its recent agreement to defer $1.7b of payments to the retiree trust, a deferral which has helped GM stay alive. The UAW has its own staff of accountants and restructuring professionals who are prepared to sit down and negotiate and help GM propose a viable reorganization plan

GM’s Board of Directors, its management and the UAW have made mistakes. But their serious efforts to restructure GM should not be doubted. Rick Wagoner has spent 30 years at GM, but his efforts have been overtaken by circumstances. In reorganization the board will be replaced, as will some of the operations managers and senior executives.

Undue criticism of GM’s management and the UAW distracts from the need to urgently develop and implement a viable pre-packaged reorganization plan. GM’s management needs to get down to business and develop a reorganization plan that will protect taxpayers and earn the support of Congress.

Anyway, GM’s chapter 11 case should be filed in Detroit. The birthplace of the American auto industry should be the place of GM’s rebirth.

(Mr. Tilton is a corporate bankruptcy attorney. He represented creditor banks in the Chrysler restructuring and has represented creditors and debtors in prepackaged Chapter 11 cases. He is the editor of the book Bankruptcy Business Acquisitions, Second Ed., published by the American Bankruptcy Institute in 2006)

http://www.thetruthaboutcars.com/editorial-gm-death-watch-219-gm-prepackaged-reorganization/

GM Said to Study Shedding Saab, Saturn, Pontiac to Win U.S. Aid

By Jeff Green and Greg Bensinger

Nov. 26 (Bloomberg) -- General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said.

Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year’s end, said the people, who didn’t want to be identified because no decision has been made. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac.

The review of the 82-year-old Pontiac division, one of GM’s earliest, shows the scope of the survival plan being given to Congress on Dec. 2 to show GM can repay federal aid. GM also seeks to cut debt levels and reduce costs for active and retired union workers, people have said.

Chief Executive Officer Rick Wagoner is under a deadline set by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Congress has scheduled a Dec. 5 hearing on a $25 billion auto-industry rescue and may vote the week of Dec. 8.

A GM spokesman, Steve Harris, declined to comment on what may be included in the Detroit-based automaker’s plan.

Directors are scheduled to review a proposal Nov. 30 and Dec. 1, people familiar with the plans said. The automaker will prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material, the people said. GM said Nov. 7 it may be short by year’s end of the $11 billion minimum in cash needed to pay monthly bills.

Prodding From Congress

Members of Congress such as Republican Senator Bob Corker Jr. of Tennessee have suggested the automakers might benefit from being able to shed some of their dealers.

GM’s eight U.S. brands are the most among the domestic automakers, compared with four at Ford Motor Co. and three at Chrysler LLC. The Hummer sport-utility vehicle unit was put on the block in June. GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales.

GM has 1,071 outlets for Pontiac, 400 for Saturn and about 105 for Saab among its 6,400 dealers, said Susan Garontakos, a spokeswoman. GM has been trying to combine Cadillac/Hummer/Saab and Pontiac/Buick/GMC brands into consolidated dealerships that would benefit from greater sales and lower marketing costs.

GM, which turned 100 this year, established the Pontiac division in 1926. The brand’s sales peaked at 896,980 in 1978, according to trade publication Automotive News. That was the year GM sold 9.55 million vehicles worldwide, the highest ever, and came at the end of an era when Pontiac attracted notice for sports coupes such as the Firebird.

This year, Pontiac sales are down 21 percent, compared with a 15 percent industrywide decline through October.

Very Surprised

Combining Buick, Pontiac and GMC dealerships has “been working very well,” said Randy Marion, owner of Randy Marion Chevrolet-Pontiac-Buick in Mooresville, North Carolina, and a member of GM’s National Dealer Council. “I would be very surprised if they had any intention of getting rid of Pontiac.”

GM established the Saturn brand in 1985, five years before selling the first vehicle. Most of the U.S. dealers are stand alone, according to GM. Sales reached a peak in 1994 at 286,003 units, according to Autodata Corp. in Woodcliff Lake, New Jersey. This year’s deliveries are down 19 percent.

GM made its initial investment in Sweden’s Saab in 1990 and took full control in 2000. Its sales climbed to a record 47,914 in 2003. In 2008, they’re down 31 percent through October.

Cash Burn

Declines across GM’s brands are adding to losses of almost $73 billion since the end of 2004. After burning through $6.9 billion in cash last quarter, GM said Nov. 7 that it had $16.2 billion as of Sept. 30. GM has said a bankruptcy filing would be a “disaster.”

GM gained $1.25, or 35 percent, to $4.81 at 4:15 p.m. in New York Stock Exchange composite trading.

The company’s 8.375 percent bonds due in July 2033 rose 5 cents to 19 cents on the dollar, yielding 43.9 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.

GM said Nov. 24 that its nine-year marketing accord with Tiger Woods, the world’s top-ranked golfer, will be discontinued next month by mutual agreement. GM has also delayed incentive payments to dealers, extended holiday shutdowns and announced plans to cut about 3,600 jobs early next year as production slows.

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Damn, you couldn't just post a link instead of a novel?

Damn, you couldn't just post a link instead of a novel?

Link's at the bottom as always.

My Kingdom For Your Debt

By Ken Elias
November 29, 2008

Rick Wagoner lost control of General Motors this week. Forget about his title; game over for the embattled former Duke basketball wannabe. There’s a new sheriff at GM - and it’s a bunch of Wall Street guys that few on Main Street can name. It’s the hedge funds that have been acquiring GM’s bonds. So here’s how these guys will play The General to make a killing on the pending government bailout:

First, they’ve been reading TTAC. The money men know GM can’t possibly turn the business around without a major restructuring. That means fewer brands, dealers, a busted UAW and a balance sheet that looks healthy, rather than one destined for the emergency room. They know that one of two things has to happen. Option one: bankruptcy. It’s the most obvious choice, but one to be avoided at all costs (as per GM management).

Option two: a non-C11 cram-down on all the creditors, the unions and anyone else to whom the GM monster owes money. Either way, every one of these creditors will end-up with a bunch of paper (new equity or new debt), but no cash for the credit already extended.

The bond market sees this coming. GM’s non-bank debt– mostly unsecured obligations– trades between 10 and 20 cents on the dollar. Translation: anyone holding GM paper has very little prospect of getting paid in full when the debts come due. Right now, GM’s attempting the cram-down on those bondholders (and the United Auto Workers). GM CEO Rick Wagoner hopes to trade debt for equity– or perhaps arrange a debt exchange– with GM’s bondholders. That’ll show Congress that he’s “making progress.”

But Red Ink Rick seems to have forgotten that Wall Street “hedgies” control GM’s debt. And they want to make money soon rather than never later. And the plain truth is that the hedge fund playas are going to win this game with or without a GM bankruptcy. Either GM gives them the terms they want, now, or GM will have to file. The hedge fund boys don’t care which way GM goes. In either scenario, they’ll end up controlling the company.

Their terms are simple: give the hedge funds enough new shares now so they can control the General’s Board of Directors. All indications are that GM’s bending to their demands. At the same time, the bondholders are demanding that Wagoner show them the rest of the plan he’s going to present to Congress that proves GM can avoid C11. That means better terms from the UAW labor agreements and the VEBA health care program, killing some brands and dealers, and making even more cost cuts.

And if GM files? No big deal. The government won’t let GM be liquidated. Nor will it nationalize the automaker. The reorganization will happen fast. Again, the bondholders will get to call the shots– right behind the $5b or so of secured bank debt. It’s a pittance in the scope of GM’s total liabilities; the automaker’s bond debt totals nearly $36b or so.

Assuming the hedge funds have been acquiring GM’s bond debt for pennies on the dollar, their total outlay might be around $4 to $8b. That’s not a lot of money, considering that the Feds are likely to put in another $12b or so of your hard-earned taxes. And that’s AFTER the group haircut.

The hedge funds will end-up calling the shots at a company that does $150b in sales with a global franchise and a new balance sheet financed by the taxpayers. Better yet, it’s a company that must be structured in a way to make money. The government wants to get paid back; the Feds will be sure that everyone gives enough so the company can be profitable. And that works for the hedge funds too– they got in on the cheap for a company guaranteed not to fail. (Ish.)

But don’t expect the hedge fund guys to show-up at the Capitol this week. In fact, they’ll stay well out of the limelight while Congress worries about Rick’s mode of transport to D.C. All the hedge funds want is a plan that works, and money from Congress. And then they can steer the wheels at a new GM, one that’s got a new balance sheet, a new management and a slimmed down North American business that makes money. It’s a good bet to take.

How much would a newly profitable GM be worth?

http://www.thetruthaboutcars.com/editorial-gm-death-watch-220-my-kingdom-for-your-debt/

GM Board Reviewing Wagoner’s Plan to Save Automaker

By Jeff Green

Nov. 30 (Bloomberg) -- General Motors Corp.’s board is meeting in Detroit to discuss a rescue plan to present to Congress in two days that may determine if Chief Executive Officer Rick Wagoner can save the company and keep his job.

Directors started reviewing the proposal at noon today and will continue tomorrow, people familiar with the plans said. GM will prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material, the people said. GM said Nov. 7 it may be short by year’s end of the $11 billion minimum in cash needed to pay monthly bills.

GM shares have gained on investor optimism that a plan to slash debt, cut labor costs and possibly eliminate half the automaker’s U.S. brands may help win as much as $12 billion to stay in business during the steepest industry slowdown in at least a decade. The stock rose the most in a two-day period in at least 28 years in New York trading at the end of last week, and climbed five out of six days.

“We envision the current Congress will authorize a short- term bridge loan that carries” GM, Ford Motor Co. and Chrysler LLC to the start of President-elect Barack Obama’s administration in January, Himanshu Patel, a New York-based analyst at JPMorgan Chase & Co., said in a note to investors on Nov. 25. He rates GM and Ford shares “neutral.”

GM wants to cut its $43 billion in debt, even after getting the government loans, to ensure its future viability, people familiar with the plan said last week. The automaker will ask current debt holders to exchange current bonds for lower value debt that may also include equity, the people said.

Closing Plants

The company also may seek an end to provisions that pay union employees not to work when their plants are shut down, the people said. GM is trying to close plants and slow production to adapt to auto sales that may fall to 11.7 million cars and trucks next year from 16.1 million last year.

The largest U.S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because details haven’t been presented to Congress.

Lawmakers grilled Wagoner during two days of testimony Nov. 18 and Nov. 19 before deadlocking over whether to let the automakers tap $25 billion in low-interest borrowing.

‘Forthright Assessment’

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid agreed to a second lame-duck congressional session and instructed Wagoner and fellow CEOs Alan Mulally of Ford and Robert Nardelli of Chrysler to prepare specifics on how they’ll navigate past the crisis.

Pelosi and Reid told the automakers in a Nov. 21 letter that they must provide “a forthright, documented assessment” of their operating cash positions, short-term liquidity needs “and how they will meet the financing needs associated with the plan to ensure the companies’ long-term viability.”

While Republican critics such as Senator Richard Shelby from Alabama have said the auto chiefs were “arrogant” two weeks ago and that management changes might be needed, neither the government nor GM’s board has yet signaled Wagoner will need to leave to get an agreement, people familiar with those discussions said.

After burning through $6.9 billion in cash last quarter, GM said Nov. 7 that it had $16.2 billion as of Sept. 30, raising the prospect of falling short by year’s. GM has said a bankruptcy filing would be a “disaster.”

Prospective Buyers

The automaker, already marketing its Hummer unit to prospective buyers, is also studying whether to sell or close the Pontiac, Saab and Saturn brands, people familiar with those plans said last week. GM also sells models under Chevrolet, Cadillac, Buick and GMC brands.

GM gained 43 cents, or 9 percent, to $5.24 on Nov. 28 in New York Stock Exchange composite trading. Dearborn, Michigan- based Ford rose 54 cents, or 25 percent, to $2.69. This year, GM has declined 79 percent and Ford dropped 60 percent.

GM’s 8.375 percent bonds due in 2033 rose 4 cents to 23 cents on the dollar Nov. 28 to yield 36 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt has fallen from 36.5 cents at the end of October and 81 cents at the end of last year, Trace data show.

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Branding Isn’t Everything

By Robert Farago
December 1, 2008

It’s been a while since we’ve run a Ford Death Watch. Which doesn’t mean Ford isn’t dying. It is. It’s just dying more slowly and less spectacularly than GM and Chrysler. In fact, Ford’s head-faked the press. They’ve convinced the pundocrats that The Blue Oval Boys don’t need federal bailout bucks to survive. Oh what the Hell, FoMoCo CEO Alan Mulally just about told Congress, as you’re offering… we might as well accept. In truth, the Detroit’s last man standing is about to hit the pavement just as hard as its cross-town co-conspirators.

Tomorrow, the injury will be audible– and not just in the halls of Congress. Ford’s November sales stats will go splat. Ford analyst George Pipas will seek shelter in metal-moving relativism. Just as Ford proudly trumpets the fact that their cars are nearasdammit as reliable as Toyota’s, Pipas will claim that Ford’s sales drop is nearasdammit as bad (i.e. good) as Toyota’s. Which will be both true and irrelevant.

All things being negative, ToMoCo is still on track to bank $5b in profit this year. Meanwhile, Ford shed $2.6b in Q3, burning through $7.7b of its cash pile. So forget Toyota. General Motors is the more appropriate comparison. And there are only two significant differences between Ford’s plight and that of GM: scope and scale.

GM has eight U.S. brands, six of which need to die. Ford sells four brands in the U.S. (discounting Mazda, so to speak), two of which need to die. GM has around 6550 dealers, five thousand of which need to die. Ford has around 4k dealers, 3k of which need to die. Meanwhile, Ford and GM are struggling under the weight of identical labor contracts, desperately trying to shed plants and jobs. In short, as goes GM, so goes Ford.

Commentators— and Ford— like to point out that The Blue Oval Boys are in less danger of running out of cash than GM. Truth be told, the danger’s the same; only the timeline varies. Ford’s decision to stock-up on money before the current fiscal meltdown– mortgaging everything up to and including their logo– was either the smartest move the company ever made or the luckiest. Or both. But it doesn’t alter the end result. Unless Ford starts taking in more money than it spends, it’s going to go bankrupt.

As he bellies-up to the Congressional bailout bar, Big Al will parrot GM’s CEO and claim that numbers alone don’t tell the story. Right-sizing, on track, bridge loan, bright future, new products, fuel efficiency, world platform, economic downturn, yada yada yada. As the only American automaker with a plausible turnaround tale to tell (which isn’t saying much), Ford will get the money. After all, with Congress wants to save SOMEONE in the auto industry.

Whether or not the feds re-stoke Ford’s coffers and/or help it reduce its overheads, FoMoCo’s comeback is destined for failure, for one reason: branding. Ford doesn’t have any.

Quick: what’s Ford’s slogan? Drive Quality, Drive Green, Drive Safe, Drive Smart or Drive One? Yes. The latter is Ford’s ur-slogan, which says, well, nothing. Given the ailing American automaker’s product overlap, the company’s call to arms might as well be “pick one.” Edge, Flex, Taurus X or Escape?

Make no mistake: this is no small matter. If Ford is to survive, it must come-up with a compelling reason to buy a Ford instead of anything else.

Reliability? Toyota. Resale value? Honda. Price? Hyundai. Stress-free shopping? Saturn. Buy American? Only if you’re thinking continentally. In today’s mixed media world, a car company without tightly-focused branding is like a twenty dollar bill that’s been bleached white in the wash.

Ford’s anodyne anonymity doesn’t end there. Lincoln’s “Reach Higher” slogan– a not-so-subliminal slam at working class buyers– reflects the luxury brand’s lack of a coherent product or marketing plan. And if that’s not enough to convince you that Ford doesn’t “get it,” Lincoln’s farrago of MK monikers illustrates the point nicely. As do the vehicles themselves: a range of tarted-up Fords whose excellence is there for no one to see.
As for Mercury, other than ogling their comely spokesmodel, what’s the point?

Legislators are not likely to concern themselves with such things. They’ll be busy working to unpick the Gordian knot that is Ford’s business model outside of Chapter 11. The automaker will argue that its 2010 Euro-style products will save the company. Politicians will attempt to shoot holes in Mulally’s strategy, and then cross their fingers and sign the check.

But if the pols really wanted to protect the taxpayer’s money (as if), they’d remember that nobody ever presented a business plan that ends in bankruptcy. They’d focus on the fact that Ford’s future depends on its products. And its products depend on their branding. They should look Mr. Mulally in the eyes and ask a simple question: what, sir, is a Ford?

http://www.thetruthaboutcars.com/ford-death-watch-48-branding-isnt-everything/

Why is it that I keep fearing that there will be a Toyota in my garage in the future???? :(

And I have(hate) to ask..... if heathcare cost and retiree benefits add $1600 to the price of car.... what will borrowing billions of dollars add to the price of car???? :(

Damn:bang: this is sad :(

CNN reports GM needs cash by end of December or it may be too late....

http://money.cnn.com/news/newsfeeds/articles/djf500/200812021629DOWJONESDJONLINE000624_FORTUNE5.htm

Why can't the GM employees pay at least a portion of their health insurance like the rest of us working people? Hell, I work for a pharmaceutical / health care company and pay upwards of $3000 / year for my family's medical benefits.

Wow, what changed from the last date they announced they needed money by? If the biz has really gotten that bad and the cash flow is that negative a bailout isn't going to help them. So why care? We all know GM won't enact the severe measures needed if they get a easy breezy bailout.


Sounds like a ploy: Inflate the percieved sense of urgency and congress will just give you the OK because the deadline is too close to really look into this matter further.

Dongfeng Says It Received Sales Pitch for GM Assets

By Tian Ying

Dec. 3 (Bloomberg) -- Dongfeng Motor Group Co., China’s third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors Corp. as the U.S. carmaker tries to avoid running out of cash.

“We’ve gotten e-mails and investment materials asking us whether we would be interested in buying some of GM’s assets,” Hu Xindong, head of investor relations, said by phone today. “So far, our management has not yet reviewed the issues and we have not yet responded.” He declined to name the investment banks or the assets. GM said it wasn’t in talks with Dongfeng.

GM is seeking a buyer for its Hummer unit and has said it will consider options for Saab and Saturn as it asks Congress for $18 billion in aid. Dongfeng and SAIC Motor Corp., the country’s largest automaker, aim to add overseas brands to help boost sales outside of their home market.

“To get enough capital to invest overseas is not a problem for Chinese companies including automakers,” said Yu Bing, an analyst at Pingan Securities Co. in Shanghai. “But they are more and more aware of possible risks involving overseas acquisition, including issues about local legal regulation and labor union.”

‘No Grounds’

“There are no grounds to these rumors” about Dongfeng looking at assets, said Henry Wong, GM’s Shanghai-based spokesman. “We do not comment on speculation in the press.”

Dongfeng, which makes vehicles with Nissan Motor Co., Honda Motor Co. and PSA Peugeot Citroen, rose 4.6 percent to HK$2.05 at the close of trading in Hong Kong. The Hubei province-based automaker has lost 63 percent this year, compared with the Hang Seng Index’s 51 percent fall.

GM, Ford Motor Co. and Chrysler LLC, are seeking $34 billion from the U.S. government to stave off an industry collapse. Ford is exploring the sale of its Volvo unit as it focuses on its namesake brand.

Western financial companies have turned to Chinese investors for money as they seek to shore up capital eroded by almost $1 trillion in writedown and losses triggered by the collapse of the U.S. subprime mortgage market.

Blackstone Group LP, manager of the world’s largest buyout fund, agreed last month to allow China Investment Corp., its second-largest outside shareholder, to raise its stake to as much as 12.5 percent.

SAIC paid $116 million for the design rights of MG Rover Group Ltd.’s Rover 25 and 75 models in 2005. The Shanghai-based company also owns 51 percent of South Korea’s Ssangyong Motor Co.

Still, rising risks are damping Chinese investors’ enthusiasm for overseas opportunities.

CIC Chairman Lou Jiwei said today he wouldn’t “dare” invest the sovereign wealth fund’s money in foreign financial firms after losing $6 billion on stakes in Morgan Stanley and Blackstone.

CIC, with $200 billion, last year invested $5 billion for 9.9 percent of Morgan Stanley and $3 billion in Blackstone. Both New York-based companies have lost more than three-quarters of their market values since the investments were made.

http://images.bloomberg.com/r06/navigation/logo.gif (http://www.bloomberg.com/apps/news?pid=20601209&sid=asln5uzgdBj4&refer=transportation)

Wow, what changed from the last date they announced they needed money by? If the biz has really gotten that bad and the cash flow is that negative a bailout isn't going to help them. So why care? We all know GM won't enact the severe measures needed if they get a easy breezy bailout.

Sounds like a ploy: Inflate the percieved sense of urgency and congress will just give you the OK because the deadline is too close to really look into this matter further.

You are exactly right and that's exactly what all three automakers prepared for Congress with their "plans" revealed yesterday.

U.S. Could Take Stakes in Big 3

Bailout Plan Gives Government Warrants in Exchange for Loans; Passage

DECEMBER 9, 2008

WASHINGTON -- Congress and the White House inched toward agreement on legislation that would throw a financial lifeline to the Big Three auto makers, giving the government a substantial ownership stake in the industry and a central role in its restructuring.

Under the terms of the draft legislation, which continued to evolve Monday evening, the government would receive warrants for stock equivalent to at least 20% of the loans any company receives. The company also would have to agree to limits on executive compensation and dividend payments, much like those contained in the government's $700 billion rescue of the financial industry.

Assuming congressional Democrats and the White House come to agreement on the plan, the car industry would be the latest to submit to strict government scrutiny in return for a bailout, joining most prominently the banking sector.

The auto industry would undergo a restructuring process akin to bankruptcy reorganization, only with fewer rigors and with the government, not a judge, in control, and with many associated political complications.

The program would be overseen by an official, tapped by President George W. Bush, whom congressional aides and lawmakers describe as an "auto czar." This person would act as a kind of trustee with authority to bring together labor, management, creditors and parts suppliers to negotiate a restructuring plan. He or she also would be able to review any transaction or contract valued at more than $25 million.

"We call this the barbershop," said House Speaker Nancy Pelosi, a California Democrat. "Everybody's getting a haircut here, in terms of the conditions of the bill," she said, noting the likely impact on labor, bondholders, shareholders, car dealers, suppliers and executives. "The management itself has to take a big haircut on all of this."

Senior congressional Democrats and top Bush aides wrestled late Monday with final details of the package, which the White House would prefer were even tougher on the car makers. General Motors Corp., Ford Motor Co. and Chrysler LLC have asked for a total of $34 billion to weather the downturn in the economy and steep slump in vehicle sales. GM and Chrysler say they need a cash infusion before the end of December to avoid shutting down.

The White House has been pressing for a compromise package but gave a chilly reception to the latest overture by Democrats. White House officials suggested the package isn't rigorous enough, people familiar with the matter said, and would open the door for companies that aren't financially viable to receive long-term financing.

"We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good-faith investment by taxpayers," said White House spokeswoman Dana Perino.

The latest version of the bill would extend to the companies billions of dollars in short-term financing. These bridge loans are expected to total about $15 billion, enough to carry the auto makers through next March.

Any deal would have to be ratified by Congress. Support there remains tepid and opposition remains high, especially among Republicans in the Senate, who can block the bill through a filibuster.

A handful of Republican senators have said they are willing to help the industry, but it isn't clear how many will swing behind legislation this week. Senate Minority Leader Mitch McConnell (R., Ky.) said the rescue must be financed out of existing funds and include strong taxpayer protections. Mr. McConnell stopped short of endorsing the bill Monday, but did note the auto industry is "an important source of jobs throughout America, including my own state of Kentucky."

Democratic leaders have hopes of pushing a bill through Congress this week, with the Senate likely moving first. "Congress is trying to save Detroit," said Senate Majority Leader Harry Reid (D., Nev.). "If senators are willing to work together...we can pass legislation."

In a statement, GM noted the "extraordinary action" that both the auto makers and Congress will be taking. "As part of our plan, we will abide by the conditions proposed in the bill and will continue our restructuring with great urgency," the company said, urging passage of the bill.

Chrysler said it looks "forward to working with Congress and this administration, and the next administration, and to completing our restructuring in an orderly fashion."

The congressional plan appears to be aiming for many of the benefits of restructuring in bankruptcy court, without an actual bankruptcy filing. But the financing offered the companies is only enough for a few months. In bankruptcy, companies typically line up so-called debtor-in-possession financing that is enough to last them most or all the way through the process.

"I think Congress is trying to go halfway," said Evan Flaschen, bankruptcy attorney with the Connecticut firm Bracewell & Giuliani LLP. "Now you wonder if there will be a second half to this with more money."

As in bankruptcy court, the legislation tries to establish a process under which the auto makers would negotiate with creditors. The companies would be expected to modify contracts with bondholders and unions. The threat looming under the proposed program would be an actual bankruptcy filing -- which the trustee could prompt by withdrawing the loans -- something auto makers have argued could lead to their liquidation as buyers flee.

One danger for auto makers is exposing the industry to congressional meddling as it attempts to build a new business model. The legislation, among other things, would bar the companies from participating in legal challenges to state laws designed to impose limits on greenhouse-gas emissions. The White House opposes that provision, congressional aides said.

If the car companies don't make satisfactory progress toward fixing their long-term problems by the end of March, the auto czar could submit to Congress a plan "and request legislative implementation," according to the draft bill.

The short-term loans would be financed out of an existing $25 billion program created to help the industry meet fuel-economy standards. Under the terms of the bill, the loans would mature in seven years. For the first five years the companies would pay a 5% interest rate; after that, a 9% rate would be levied, the bill says.

The bill doesn't specify what would happen to a company's existing management. GM Chief Executive Rick Wagoner has come under pressure from top lawmakers to step down. He was defended Monday vigorously by GM Vice Chairman Bob Lutz, who said in an interview that Mr. Wagoner has "total support of the board of directors" and shrugged off criticism from lawmakers.

"To blame the American automobile executives for this frankly is ridiculous," Mr. Lutz said, suggesting an unforseen downturn in the economy and housing market are the culprits. "How were we supposed to forecast this when the government doesn't forecast it and the financial institutions couldn't?"

In a sign of how messy the reorganization could become, the United Auto Workers union is seeking to attach strings to any concessions it makes for the Big Three. Marc McQuillen, president of UAW Local 2404 in Charlotte, N.C., said the union is looking for an equity stake in GM and likely a seat on the company's board. UAW officials in Detroit couldn't be reached for comment.

A coalition of about 30 mayors from Michigan, Ohio, Kentucky, Indiana and other auto-producing states were scheduled to meet Monday night in Washington to discuss strategy for several meetings with lawmakers and legislative aides Tuesday. "Every community that has a plant lives under the sword," said Lordstown, Ohio, Mayor Michael Chaffee. He said a plant closure in his town would "be the death knell for this area."

http://online.wsj.com/article/SB122875608562688401.html

$15b Bailout Plan Revealed

http://www.thetruthaboutcars.com/wp-content/uploads/2008/12/american-leyland.jpg

By Robert Farago
December 8, 2008

The Detroit bailout bill. While we digest it, here’s what we know so far… Automotive News [sub] (http://www.autonews.com/article/20081208/ANA02/812080269/1200) says that yes indeed, there will be a car czar. Appointed by President Bush. The Freep is more specific. “Under the bill, automakers would have to submit a restructuring plan by March 31 to what’s being called a ‘financial viability advisor,’ who would have the power to set negotiations among the company, unions and creditors. If the advisor deems the company isn’t making progress, the loans could be called back.” In other words, he or she could throw The Big 2.8 into bankruptcy, without passing go, without collecting $34b (just some of it). Well, fair enough. But from there, things get seriously gnarly…

“The industry superintendent [euphemism three] would create his or her own plan for a government-mandated overhaul if the Detroit 3 failed to create acceptable proposal before April.”

WTF? So if Ford, Chrysler and GM can’t get their shit together, the feds take over? Can they do that? Not yet. But soon…

“As with the first rescue plan, automakers would have to pledge stock to the government equal to 20% of the loan value in return for the money, and the loans would be senior to all of the company’s other debts.”

So for a 20 percent stake in a company with negative net worth, Uncle Sam gets to call ALL the shots as and when they want? And how does that square with the Ford family’s special class of voting stock? Dunno.

That last bit– re: creditor cram-down– represents a HUGE departure from existing financial regulations. For the first time, the U.S. government will be able to come into a [theoretically] solvent company (invited or not) and force legal creditors to the back in the queue. Call it nationalization via the front door. Faustian doesn’t even begin to cover it.

And if you need proof that this bill will create D2.8 reform in name only, The Wall Street Journal [sub] (http://online.wsj.com/article/SB122875608562688401.html?mod=testMod) says “Despite calls for the ouster of auto executives, the heads of the three U.S. auto companies would not lose their jobs as part the package under discussion, a senior congressional aide said Monday.”

Still, GM CEO Rick Wagoner and his teams’ golden parachutes are headed for dumpster. Allegedly. “Additionally, no bonuses could be paid to the top 25 senior employees, and no golden parachutes would be extended to departing senior employees.” Fine print please…

It gets worse…

One of the key strings: Detroit has to drop its lawsuit against California’s emissions regulations. How does it help Chrysler, Ford and GM make enough money to repay your pay money? Obviously, it doesn’t. Obviously, it COSTS them money; otherwise they wouldn’t have been fighting the regs (duh).

Even before the checks cashed, the politicians are molding the D2.8’s corporate policies in accordance with political correctness, not profit. As we’ve pointed out, this is just the beginning of some extremely bad decision-making.

He who owns the gold makes the rules.

DRAFT BAILOUT BILL (http://www.thetruthaboutcars.com/wp-content/uploads/2008/12/autobilldraft.pdf)

The overreaction pendulum has swung. The government screwed up the 700 billion financial "bailout" without putting together the proper oversight and controls to accomplish what was wanted and so now they are overreacting as usual and will place onerous requirements on the loans to auto companies to compensate including the US government taking an ownership position.

They might as well just go ahead an nationalize the car companies and consolidate all 3 into one company named USAuto and be done with it. (Has a patriotic appeal don't you think). If they do this, then all of the workers would be civil service employees and that would end the jobs concern issue.

The auto companies are going to continue to exist for a long time no matter what. This will occur for 2 reasons. (1). Once the government takes an ownership position, they will always argue that they have to protect the investment of the taxpayers and so will continue to pump money into the companies in effect throwing good money after bad. (2). The same arguments that are being made today will be made in 6 months or a year or 5 years about how we can't let the industry fail because of all of the jobs and the cost if we don't don't something blah, blah, blah... so the government will keep providing money.

Of course, the government will also insist that it knows what consumers want and will direct the companies to manufacture those types of vehicles. Currently, the "green" movement has a lot of influence so there will be a big push to build hybrids and electrics because the government has decided that that's what we all want AND need. Of course, it later may be discovered that the hybrid and electric batteries screw up the landfills and the environment and there will be a big push for natural gas or hydrogen cars etc... All of this will amost guarantee that the companies won't be profitable under government direction unless of course the government subsidizes the purchase of these vehicles and imposes tariffs and taxes on companies that won't go along. Of course, the government will provide those subsidies and tariffs so it will still be happy days.

Of course, we can always hope that the next president will be a former Nascar driver and his administration will direct the car companies to build 500hp stick shift rear drive v8's.

If we (the government) are going to help the US auto companies, it ought to be a 1-year loan with the understanding that THERE WOULD BE NO MORE. If they make it great, if not you had your chance and the government just writes it off as a bad debt.

Taking risks with bailout for U.S. automakers

http://img.iht.com/images/2008/12/09/09auto.550.jpg

By David E. Sanger
Published: December 9, 2008

WASHINGTON: When President-elect Barack Obama talked on Sunday about realigning the American automobile industry he was quick to offer a caution, lest he sound more like the incoming leader of France, or perhaps Japan.

"We don't want government to run companies," Obama told Tom Brokaw on "Meet the Press." "Generally, government historically hasn't done that very well."

But what Obama went on to describe was a long-term government bailout that would be conditioned on government oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Obama said "actually works, that actually functions."

It all sounds perilously close to a word that no one in Obama's camp wants to be caught uttering: nationalization.

Not since Harry Truman seized America's steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization, or its functional equivalent, on this kind of scale. Obama may be thinking what Truman told his staff: "The president has the power to keep the country from going to hell." (The Supreme Court thought differently and forced Truman to relinquish control.)

The fact that there is so little protest in the air now — certainly less than Truman heard — reflects the desperation of the moment. But it is a strategy fraught with risks.

The first, of course, is the one the president-elect himself highlighted. Government's record as a corporate manager is miserable, which is why the world has been on a three-decade-long privatization kick, turning national railroads, national airlines and national defense industries into private companies.

The second risk is that if the effort fails, and the American car companies collapse or are auctioned off in pieces to foreign competitors, taxpayers may lose the billions about to be spent.

And the third risk — one barely discussed so far — is that in trying to save the nation's carmakers, the United States is violating at least the spirit of what it has preached around the world for two decades. The United States has demanded that nations treat American companies on their soil the same way they treat their home-grown industries, a concept called "national treatment."

Yet so far, there is no talk of offering aid to Toyota, Honda, BMW or the other foreign automakers that have built factories on American soil, employed American workers and managed to make a profit doing so.

"If Japan was doing this, we'd be threatening billions of dollars in retaliation," said Jeffrey Garten, a professor at the Yale School of Management, who as under secretary of commerce in the 1990s was one of many government officials who tried in vain to get Detroit prepared for a world of international competition. "In fact, when they did something a lot more subtle, we threatened exactly that," referring to calls for import restrictions.

Garten said he was stunned by the scope of the intervention that Washington was now considering. "I don't know that we've seen anything like this since the government told the automakers what kind of tanks to make during World War II," he said. "And that was just for the duration of the war — this could be for much, much longer."

It is hard to measure just what kind of chances Obama may be taking with this plan, in part because so many parts of it are still in motion.

In the short term, Democrats are floating the idea of linking $15 billion in immediate loans to the designation of a "car czar" who, in doling out the money, could require or veto big transactions or investments — essentially a one-man board of directors. The White House indicates that President George W. Bush, who has spent his entire presidency proclaiming that the government's role is to create an environment that spurs free enterprise and minimizes government regulation, would very likely sign the rescue plan.

The first $15 billion and the car czar who oversees it, however, are only the beginning. "After that, we're in uncharted water," said Malcolm Salter, a professor emeritus at Harvard Business School who has studied the auto industry for two decades and, until a few years ago, was an adviser to General Motors and Ford. "Think about this: Who in the federal government would have the tremendous insight needed to fix this industry?"

Depending on how the longer-term revamping of the industry proceeds, Washington could become a major shareholder in the Big Three, it could provide loans, or, in one course that Obama seemed to hint at on Sunday, it could organize what amounts to a "structured bankruptcy." In that case, the government would convene the creditors, the unions, the shareholders and the company's management, and apportion a share of the hit to each of them. If that "consensus building" sounds a lot like the role of the Japanese Ministry of International Trade and Industry in the 1970s and the 1980s, well, it is.

To promote the Japanese car industry on the way up, the trade ministry nudged companies toward consolidation, and even tried to mandate which parts of the market each could go into. (Soichiro Honda, the founder of the company, rebelled when bureaucrats told him he was supposed to limit himself to making motorcycles.) By the 1980s, Congress was denouncing this as "industrial policy," and arguing that it put American makers at a competitive disadvantage — and polluted free enterprise.

Now, it is Congress doing exactly that, but this time as emergency surgery. Other nations will doubtless complain, or begin doing the same for their own companies. "We're at this moment in history, in which the Chinese are touting that their system is better than ours" with their mix of capitalism and state control, said Garten, who has long experience in Asia. "And our response, it looks like, is to begin replicating what they've been doing."

http://img.iht.com/images/v3/logo_all.gif (http://www.iht.com/articles/2008/12/09/business/09nationalize.php?page=1)

Holy crap, General Motors is really going to become Government Motors.

Here is part of an interview yesterday with Bob Lutz of GM:

--------------------------------------------------------------

Roberts: One more question, Bob, certainly, as a condition of this bridge loan, the government is going to appoint a car czar to oversee what you do with it. They will talk about what kind of models you should build, fuel efficiency you should get. There will be a government approval of any vehicles you make. Who would you like to see as the car czar?

Lutz: Wait a minute. We don't know if it will be a czar or overseer. I doubt whether this person would dictate the product policy.

Roberts: Certainly an idea they are talking about. Who would you be comfortable with as car czar?

Lutz: I wouldn't even -- other than myself? Unfortunately I'm not available because I'm still gainfully employed.


-----------------------------

If Lutz thinks that the government is not going to get into his britches, he'd better have a quick chat with Nancy Pelosi and her firiends. They have every intention of telling him what to build.

Goodbye V8s :(

See what happens from picking on ford and crysler all these years.... bad carma!!! j/k Ya this sucks i hate the fact that this is a possibility.

Goodbye V8 for sure if the gubberment has a car czar calling the shots on products.

I wonder if we'll see a G8 GXP or a new Camaro...

Goodbye V8 for sure if the gubberment has a car czar calling the shots on products.Among the concessions being made will be the dropping of an emissions standards type lawsuit against CA and I think a request that ALL vehicles being sold in the U.S. now meet the stricter CA emissions laws.
Buy those V8s now while ya still can.





I wonder if we'll see a G8 GXP or a new Camaro...The Camaro, definitely. The G8 GXP, maybe, it too might just make it in under the wire.
But after that we will likely see a plethora of 4 cylinders and V6s from here on out, even in trucks.
And even though I'm a hardcore power/performance guy at heart, if it ultimately saves the U.S. auto industry then I'm ALL for it. :nod:
Of course that's real easy for me to say because I've already got my two great running 11 second GM cars. I do feel bad for the young enthusiasts coming up now that may never know what a fast, new V8 car feels like. :nono:

This really doesn't bode well for our hobby or iconic cars like the Corvette going into the future.

i dont think they will stop making v8s all together, the only thing that would accomplish is being abscent from that part of the industry, as Gm has been experiencing with the hiatus of the camaro, i believe maybe that they will stop making as many but get rid of them all together i doubt it.....ill be damned if the goverment or anybody tells me what i have to drive.......i wont really mind i have another 4 generations of camaros i still have to buy and restore anyway, that will keep me busy for the next 20 years

Of course, we can always hope that the next president will be a former Nascar driver and his administration will direct the car companies to build 500hp stick shift rear drive v8's.

Amen to that! :chug:

Watch out. There may be a new begger at the "bailout" trough. GM probably won't operate very well without GMAC. I can see it all now. GMAC requests a 15 billion bailout loan so that they can qualify as a bank holding company so that they can get more bailout money from the 700 billion in bailout money that was set up for the financial industry. I just want to know "where's the line". I want to get in it.



GMAC at the brink 12/9/2008


NEW YORK (CNNMoney.com) -- GMAC Financial Services, the finance unit tied to automaker General Motors, said Wednesday it is coming up well short in its efforts to raise the capital it needs to become a bank holding company, a move the unit is counting on to gain access to needed funds from the Treasury Department and Federal Reserve.

The unit, which is 49% owned by General Motors and 51% owned by private equity firm Cerberus Capital Management, had applied to become a bank holding company last month but warned Wednesday that it may have to pull the application.

The looming failure is another blow to embattled automaker GM (GM, Fortune 500).

GMAC needs to raise $30 billion from investors holding its notes to meet the Fed's capital requirements but the firm said Wednesday it was struggling to get those investors to agree to exchange their bonds for new notes and preferred stock.

So far the offer, which has been extended through 5 p.m. ET Friday, has raised only about $8.3 billion in new capital. The company had $9 billion in capital on hand at the end of the third quarter.

GMAC had been hoping to become a bank holding company since that status would allow the firm to tap into the Troubled Asset Relief Program, the $700 billion in bailout funds set up for Wall Street firms and banks in October, as well as the Fed's discount window, the method that the central bank uses to loan money to directly to banks and other finance firms.

While new funds for GMAC would not have been used to offset losses at the automaker as it seeks a federal bailout and struggles to avoid bankruptcy, it was crucial to the finance unit's ability to again start making car loans to potential GM customers.

GMAC's car loan and mortgage loan businesses, key sources of revenue in the past, have essentially ground to a halt in recent months.

Further problems for GMAC would be a crippling blow to GM's network of nearly 6,500 dealers, most of which get the financing they need to operate and buy vehicle inventory from the automaker. And GMAC's statement indicated it faces additional, though unspecified problems, due to the failure of its efforts to raise capital.

House GOP proposes auto-industry-funded insurance program

http://images.politico.com/global/v3/blog_images/headerlarge_thecrypt.jpg

December 10, 2008

THE House GOP leadership Wednesday released an alternative plan to the Democrats' proposed $15 billion in loans to the auto makers. The plan is reminiscent of an loan-insurance-themed proposal that House Republicans pushed hard during the financial bailout debate. The plan would be industry funded.

During the financial debate, critics argued that the banks didn't have the capital to fund the insurance plan. It's likely that automakers would also claim they don't have the cash to fund the insurance program. Indeed, GM has said it might not have enough cash to continue operating for more than a few weeks.

"Rather than a taxpayer-funded government bailout that replaces private investment,," explains a leadership memo, "the House GOP plan proposes that the government provide insurance, funded by the participants with a modest FDIC-like fee, which would cover up to 50 percent of the losses of new investment in the case of default, helping to unlock immediate private investment."

GOP Leaders Propose American Automotive Reorganization and Recovery Plan

Boehner: GOP Plan “Protects taxpayers and helps working families by allowing the auto companies to become competitive again, without nationalizing an industry in need of real reform – not another taxpayer bailout.”

WASHINGTON, DC – House Republican Leader John Boehner (R-OH) and his House GOP leadership colleagues today introduced an American Automotive Reorganization and Recovery Plan as an alternative to legislation scheduled for a vote today by House Democratic leaders to provide $15 billion of taxpayer funds to the “Big Three” automakers with inadequate assurances that American taxpayers will be reimbursed. Boehner issued the following statement on his opposition to the Democrats’ legislation and the Republican alternative:

“Washington must address the challenges facing the auto industry and our entire economy not through endless taxpayer-funded bailouts that prolong workers’ pain and put taxpayers’ money at risk, but by fixing problems and removing barriers that make it harder for families to prosper. The House Republican American Automotive Reorganization and Recovery Plan protects taxpayers and helps working families by allowing the auto companies to become competitive again without nationalizing an industry that needs real reform, not another taxpayer bailout.

“Let’s be clear: our nation – and my home state of Ohio – needs a healthy auto industry that produces cars Americans want to buy and provides good-paying jobs. But during these difficult economic days, stressed-out families and taxpayers cannot afford to part with another dollar of their hard-earned money without strict assurances that they will recover these funds in short order. The Democrats’ proposal does not provide adequate assurances to ask them to take this substantial risk. Instead of laying the groundwork for the long-term viability of the auto industry, I’m concerned that this proposal asks taxpayers to further subsidize a business model that is failing to meet the needs of American workers and consumers.”

NOTE: House Republican leaders today introduced the American Automotive Reorganization and Recovery Plan to protect taxpayers and help auto workers and their families by allowing the auto companies to become competitive again. Rather than a taxpayer-funded government bailout that replaces private investment, the House GOP plan proposes that the government provide insurance, funded by the participants with a modest FDIC-like fee, which would cover up to 50 percent of the losses of new investment in the case of default, helping to unlock immediate private investment A full summary of the plan follows and is available here:

The American Automotive Reorganization and Recovery Plan

Working families throughout our country are struggling to pay their bills and facing economic anxieties not seen in America for generations. Employers are finding themselves torn between staying in business and laying off people over the holidays. Nowhere are these challenges more acute than in states that are heavily dependent on auto manufacturing. It is essential that Washington address these challenges not through taxpayer-funded bailouts that prolong working families’ pain and put taxpayers’ money at risk, but by fixing problems and removing barriers that make it harder for working families to prosper.

Washington has failed this basic test with respect to the American auto industry. Republicans want to make certain that in its response to the resulting crisis, Washington does not fail American taxpayers as well. A responsible plan should do two things: it should protect taxpayers, and it should help auto workers and their families by allowing the Big Three to become competitive again. The Democrats’ plan does neither. Congress should not be stampeded into rubber-stamping a plan that guarantees failure at the taxpayers' expense.

The Democratic Bailout proposal has three fundamental flaws:

• The only thing crazier than trusting the same management and union officials who got the Big Three into this mess to get them out is trusting a bunch of Washington politicians and bureaucrats – the very same people who ran up a $455 billion deficit last year. American auto workers and their families deserve better.

• If no private investors believe the Big Three restructuring plans are realistic enough to support with their own money, why should we put up taxpayer money? American taxpayers deserve better.

• The Big Three restructuring plan and the Democratic proposal lack accountability. There is no guarantee that once they get taxpayer money the restructuring they promise will occur. Once the taxpayers prop them up once, there will be a big incentive to keep bailing them out – keeping the industry dependent on government aid, lashing it to the majority’s political agenda, and further denying American auto workers the security of a viable industry that is back on its feet and ready to compete. American auto workers and their families deserve better.

What We Should Be Doing: The American Automotive Reorganization and Recovery Plan

Hard Benchmarks:

On December 2, the Big Three presented to Congress their plans for restructuring. While the plans included laudable goals, too few details were provided as to how the companies will actually achieve the restructuring and the savings they have promised. In some instances new agreements to achieve the savings would not be entered into for months or perhaps years.

The Big Three must lock in the restructuring they have promised in a matter of weeks, not months or years. Congress should instead establish firm benchmarks and a tight timeline for restructuring. Such benchmarks will include for example requiring that by March 31, 2009 each company should reach agreement whereby:

• The companies’ creditors agree to a framework to reduce each company’s indebtedness by at least 1/3.

• The UAW holds to concessions already made and further:

• Concedes the elimination of Supplemental Unemployment Benefits;

• Concedes elimination of the Jobs Bank Program;

• Agrees to either reduce company retiree health care obligations or otherwise convert a portion of such obligations into equity; and

• Agrees to reduce wages and benefits to the levels paid by non-Big Three manufacturers.

A Process for Reaching Expedited Agreement, Instead of Nationalizing America’s Auto Companies

Because of the many legal and contractual hurdles to restructuring, the companies are urged to accomplish their restructuring through the use of a pre-packaged bankruptcy or another mechanism to bring all stakeholders to the table for an agreed-upon determination of their future. It is important that these stakeholders reach reasonable compromises amongst themselves. Creating a government bureaucracy or a “car czar” to arbitrarily pass judgment on the thousands of details involved with a restructuring is akin to nationalizing the auto companies.

Interim Financing: Insurance, Rather than a Taxpayer-Funded Bailout

The Big Three may need some form of interim financing as they finalize their restructuring. In normal economic times, if their restructuring plan is considered viable, such financing should be available in the private market. Because of the current credit crisis, limited assistance may be appropriate in the form of insurance, rather than a taxpayer-funded government bailout that replaces private investment. We propose that the government provide insurance, funded by the participants with a modest FDIC-like fee, which would cover up to 50% of the losses of new investment in the case of default, helping to unlock immediate private investment (not unlike debtor in possession financing). Such insurance would expire on March 31, 2009. This proposal ensures that taxpayers are protected and provides a powerful incentive for the Big Three to quickly implement their restructuring plans.

http://images.politico.com/global/v3/homelogo.gif (http://www.politico.com/blogs/thecrypt/1208/House_GOP_proposes_autoindustryfunded_insurance_pr ogram.html)

Auto rescue bill in peril, opposed by GOP senators

WASHINGTON – Emergency aid for the nation's imperiled auto industry was thrown into jeopardy Wednesday, opposed by Republicans who were revolting against a hard-fought deal between Democrats and the Bush White House to speed $14 billion to ailing carmakers.

The House was on track to vote on the bailout Wednesday night, and Democrats held out hope that it could be enacted by week's end. But a growing number of GOP senators declared they would not go along.

The White House, though not formally endorsing an agreement with congressional Democrats, dispatched administration officials to Capitol Hill to make a case for the rescue package. During a contentious, closed-door luncheon with Senate Republicans, White House Chief of Staff Josh Bolten got an earful of criticism from the rank-and-file, some of whom have already announced plans to block the measure.

"They got a good dose," said opponent Tom Coburn, R-Okla., as he emerged from the session.

Even auto state Republicans who have pushed hard for a bailout said the measure needed work. Sen. Kit Bond, R-Mo., said he wanted to see changes. And Sen. George V. Voinovich, R-Ohio, said the bill didn't have the necessary Republican votes to pass Congress.

The Republicans' revolt came as the House began procedural votes on the package.

It would provide money within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co. — which has said it has enough liquidity to stay afloat — would be eligible for federal aid as well.

The plan would create a government "car czar," to be named by President George W. Bush to dole out the loans, with the power to force the carmakers into bankruptcy next spring if they didn't cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Opposition from congressional Republicans reflected the tricky task of enacting yet another federal rescue in a bailout-weary Congress, with Bush's influence on the wane.

"People realize that this bill is an incredibly weak bill, (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Sen. Bob Corker, R-Tenn.

The scene so far has been somewhat reminiscent of the tense atmosphere of early October on Capitol Hill, when lawmakers argued, cajoled, threatened and lobbied one another, ultimately passing a $700 billion bailout plan that Bush signed into law for Wall Street financial firms.

Debate on the bailout unfolded as a congressional panel reviewing the financial rescue questioned the Bush administration's spending of those funds and challenged its reluctance to use the money to reduce foreclosures. The House was set to add language to the auto aid bill to require that banks that are bailed out by the government report quarterly on how much they have increased or decreased lending.

With Republicans balking and some absent from the emergency, postelection debate, mustering the 60 votes needed to advance the auto rescue measure in the Senate was proving tricky.

Sen. Mitch McConnell, the GOP leader, said Wednesday afternoon that his side had only recently gotten a copy of the measure. He said, "Everybody is still kind of poring through it, trying to figure out exactly what it does. But everybody understands the significance of the issue and the enormity of the problem."

Opposition wasn't limited to Republicans.

Democratic Sen. Max Baucus of Montana announced he was against the measure because of a provision to bail out transit agencies. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors — which have since been declared unlawful tax shelters — have gone sour.

At the White House, Deputy Chief of Staff Joel Kaplan told reporters at a late-morning briefing that the administration had yet to read the fine print of its "conceptual agreement" with congressional Democrats.

However, he indicated clear support, saying Bush would personally lobby Republicans.

House Republicans swiftly voiced their opposition and called for a plan that would instead provide government insurance to subsidize new private investment in the Big Three automakers, demand major labor givebacks and debt restructuring at the companies, and encourage them to declare bankruptcy.

Rep. John A. Boehner, R-Ohio, the minority leader, said the legislation "asks taxpayers to further subsidize a business model that is failing to meet the needs of American workers and consumers."

Under the bill being considered Wednesday, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The carmakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the Big Three, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

A breakthrough came when Democrats agreed to scrap language — which the White House had called a "poison pill" — that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

There was still heartburn among Republicans, however, over language that would force the automakers to abide by those states' limits. Democrats insisted on it as a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.

Kaplan said the Bush administration would work with President-elect Barack Obama's team on choosing the so-called "car czar," acknowledging that Bush's tenure ends soon and the automakers' woes will continue well into 2009.

Obama defended the auto bailout as necessary given the threat a potential Big Three collapse could pose to an already battered economy.

"As messy as it may be, I think there's a sense of, 'Let's stabilize the patient,'" he said in an interview published in Wednesday's Chicago Tribune and Los Angeles Times.

The car czar would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more. The companies — including the private equity firm Cerberus, which owns a majority stake in Chrysler — would have to open their books to the government overseer.

And if Chrysler defaulted on its loan, Cerberus would be responsible for reimbursing the government.

Also included in the bill is an unrelated pay raise for federal judges.

http://news.yahoo.com/s/ap/20081210/ap_on_go_co/congress_autos

sigh... its called chapter 11 people.... freaking politics.....

White House plans to use bank bailout funds to aid automakers

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Senator Bob Corker, whose alternate bailout proposal was ultimately rejected, speaking on Capitol Hill on Friday.

By David M. Herszenhorn and Micheline Maynard
Published: December 12, 2008

WASHINGTON: Following the collapse on Thursday evening of efforts to rescue U.S. automakers with congressional legislation, the Bush administration shifted positions on Friday and said that it would dip into the money set aside for the $700 billion financial bailout to keep General Motors and Chrysler from going bankrupt.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Dana Perino, President George W. Bush's spokeswoman, said in a carefully nuanced statement released minutes before the financial markets opened in New York.

"However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program - to prevent a collapse of troubled automakers."

The Treasury Department promptly indicated that it would provide short-term relief to the automakers. "Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said a Treasury spokeswoman, Brookly McLaughlin.

TARP is the Troubled Assets Relief Program, the official name of the Treasury's financial rescue program, originally intended to assist banks.

Referring to the carmakers, the White House statement said, "A precipitous collapse of this industry would have a severe impact on our economy. It would be irresponsible to further weaken and destabilize our economy at this time."

The statement indicated that Bush was prepared to capitulate on his objection to using the bank bailout funds to stave off imminent bankruptcy filings at General Motors and Chrysler and possibly Ford in the future.

In its statement, the White House appeared resigned to using the Treasury program for Detroit as well as the banking industry, though it warned that the car companies and unions had to make "meaningful concessions" to make the companies viable. At the moment, the Treasury has committed about $335 billion of the first $350 billion that Congress has authorized.

Two of the Big Three, General Motors and Chrysler, have said they are so short of cash that they may not be able to survive through this month without aid. The third, Ford Motor, is also struggling with weak sales.

After Senate Republicans balked at supporting a $14 billion auto rescue plan approved by the House on Wednesday, negotiators worked late into Thursday evening to broker a deal. But they deadlocked over Republican demands for steep cuts in pay and benefits by the United Automobile Workers union in 2009.

The failure in Congress to provide a financial lifeline for GM and Chrysler was a bruising defeat for Bush in the waning weeks of his term, and for President-elect Barack Obama, who on Thursday had urged Congress to act to avoid a further loss of jobs in an already deeply debilitated economy.

"It's over with," the Senate majority leader, Harry Reid, said on the Senate floor, after it was clear that a deal could not be reached. "This is going to be a very, very bad Christmas for a lot of people as a result of what takes place here tonight."

After the Senate talks broke down, Republican opponents of the congressional bailout traded accusations with the United Automobile Workers union over who was responsible for the defeat of the legislation that would have provided temporary financing until the automakers restructured.

Senator Bob Corker, a Republican from Tennessee, suggested the fault lay with the UAW's president, Ron Gettelfinger, whose union would not agree to the Republican demands that workers accept wage concessions early next year as part of a deal.

But at a news conference Friday morning in Detroit, Gettelfinger said the union feared that it was "being set up" by Corker, who Gettelfinger said was asking for concessions that were not sought from other participants in the talks.

"We could not accept the effort by the Senate G.O.P. caucus to single out workers and retirees," he said, rather than spreading the pain among "all stakeholders."

The union had agreed that it needed to bring wages and benefits at the domestic automakers into line with those of the U.S. operations of Japanese competitors, but it said that any such changes "would take time to work out and implement."

In Washington on Thursday evening, the Republican leader in the Senate, Senator Mitch McConnell, sought to explain why his members had scuttled the deal.

"We have had before us this whole question of the viability of the American automobile manufacturers," he said. "None of us want to see them go down, but very few of us had anything to do with the dilemma that they have created for themselves."

McConnell added: "The administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it frankly wouldn't work."

Moments later, the Senate fell short of the 60 votes need to bring up the auto rescue plan for consideration. The Senate voted 52 to 35, with 10 Republicans joining 40 Democrats and 2 independents in favor.

Immediately after the vote, the Bush administration was under pressure to act on its own to prop up GM and Chrysler, an idea that administration officials have resisted for weeks.

Despite the finger pointing on all sides, the usual zest for political jousting seemed absent given the grim economic outlook.

"Senate Republicans' refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship," House Speaker Nancy Pelosi, a Democrat from California, said in a statement.

Senator George Voinovich, Republican of Ohio, and a supporter of the auto rescue efforts, said, "I think it might be time for the president to step in."

GM and Chrysler issued statements expressing disappointment with the failure in Congress.

GM said, "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis."

Chrysler said it would "continue to pursue a workable solution to help ensure the future viability of the company."

Ford, which is in better financial shape than its competitors, had said it would not seek the emergency short-term loans for the government but urged Congress to help its competitors because the fates of the Big Three were so closely linked.

http://img.iht.com/images/v3/logo_all.gif (http://www.iht.com/articles/2008/12/12/business/auto.php)

Angry UAW members lash out at Southern senators

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Mark Madden, a General Motors Corvette assembly plant worker, hangs a door on a Corvette Friday, Dec. 12, 2008 at the Bowling Green, Ky., facility. Madden put a sign up at his work station when talks about helping the ailing auto industry began to fail. (AP Photo/Joe Imel, Daily News)


Tom Krisher and Kimberly S. Johnson, AP Auto Writers
Friday December 12, 2008, 6:52 pm EST

DETROIT (AP) -- Festering animosity between the United Auto Workers and Southern senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.

The vitriol had been near the surface for weeks as senators from states that house the transplant automakers' factories criticized the Detroit Three for management miscues and bloated UAW labor costs that lawmakers said make them uncompetitive.

But the UAW stopped biting its tongue after Republicans sank a House-passed bill Thursday night that would have loaned $14 billion to cash-poor General Motors Corp. and Chrysler LLC to keep them out of bankruptcy protection. The Bush administration later stepped in and said it was ready to make money available to the automakers, likely from the $700 billion Wall Street bailout program.

Still, autoworkers remain angry with the senators who tried to negotiate wage and benefit concessions from the union, then scuttled the House-passed bill that would have granted the loans and set up a "car czar" to oversee the nearly insolvent companies and get concessions from the union and creditors. Their top targets were Senate Minority Leader Mitch McConnell, R-Ky.; Sen. Bob Corker, R-Tenn., who led negotiations on a compromise; and Sen. Richard Shelby, R-Ala., who has been a vocal critic of the loans.

Kentucky, Tennessee and Alabama all house auto assembly plants from foreign automakers, and union officials contend the senators want to drive UAW wages down so there would be no reason for workers at the foreign plants to join the union.

"They thought perhaps they could have a twofer here maybe: Pierce the heart of organized labor while representing the foreign brands," UAW President Ron Gettelfinger said at a Friday morning news conference in Detroit.

Republicans in several Western states -- where unions are often shunned -- joined the Southerners in opposition.

But lawmakers and their spokesmen said the criticism is off base. Jonathan Graffeo, Shelby's spokesman on the Senate Banking Committee, said the senator has consistently opposed taxpayer-funded bailouts.

"He opposed the Chrysler bailout in 1979 when there were no foreign auto manufacturers in Alabama, and he opposed the recent $700 billion bailout of the banking industry," Graffeo said.

"Bailouts generally don't work, and this is a huge proposed bailout, and I fear it's just the down payment on more to come next year," Shelby said on the Senate floor Thursday night. "These companies are either already failed or failing, and that's a shame. These aren't the General Motors, Ford and Chrysler I knew."

Corker said the alternative he tried to develop would have provided federal money in exchange for restructuring the companies' debt and making the UAW more competitive in wages with workers at U.S. plants of Japanese competitors.

"Our members wanted to know that the UAW was willing to be competitive," Corker said.

"I basically pleaded with them to give me some language by some date certain that they were competitive with these other companies," Corker said. "That's where it broke down."

Hourly wages for UAW workers at GM factories already are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota -- generally viewed as the main competitor of the Detroit Three -- says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

The union, GM and Chrysler have contended that the companies have restructured and the UAW has granted concessions that would make them competitive in 2010, but the economy went south this year and forced them into trouble. A third Detroit automaker, Ford Motor Co., asked for loans in case of emergency but says it has enough cash to make it through 2009.

Union officials also accused the senators of retaliating for the UAW's overwhelming support of Democratic candidates in federal races. The union gave $1.9 million to Democrats but only $11,500 to Republicans in the 2008 election cycle.

Many Democrats support the Employee Free Choice Act, which would take away employers' rights to demand a secret ballot on whether workers will join a union. Instead, workers could form unions by getting a majority of employees to sign a card in support of it.

"There's a lot at stake. If Republicans think now they can tarnish labor, it's going to be difficult to pass the Employee Free Choice Act," said Gary Chaison, professor of labor relations at Clark University in Worcester, Mass. "The unions are going to say that a strong labor movement is good for America. One of the things Republicans are trying to show now is that a strong labor movement isn't good for America."

Other union officials joined Gettelfinger to form a chorus of anger and frustration with the senators.

"What this is is the Southern conservative senators trying to destroy the United Auto Workers, trying to destroy unions," said Mike O'Rourke, president of a UAW local at a GM factory in Spring Hill, Tenn., Corker's home state. "It's a sad day in America when the senators turn their back on Main Street."

In an effort to help the auto companies get federal aid, the UAW last week offered to delay company payments into a union-run trust fund that will take over retiree health care costs starting in 2010. It also agreed to end the controversial "jobs bank" program in which laid-off workers get most of their pay and benefits after unemployment pay runs out.

Most Southern U.S. auto plants run by Toyota, Honda Motor Co., Nissan Motor Co., BMW AG, Daimler AG and other manufacturers are nonunion. The UAW has tried numerous times without success to organize workers at the foreign-owned factories.

Spokesmen for Toyota and Nissan declined comment, but Honda spokesman Ed Miller said in a statement the company did not lobby against the bill.

"Honda has been encouraging initiatives that would maintain the short- and long-term viability of the U.S. auto industry, including the hundreds of the shared supplier companies in the United States," he said.

As the Detroit Three have declined and ceded market share to the foreign nameplates, the UAW's membership has plummeted 69 percent, from a peak 1.5 million in 1979 to 465,000 at the end of 2007.

Associated Press Writer Ken Thomas in Washington and AP Business Writer Ellen Simon in New York contributed to this report.

http://us.i1.yimg.com/us.yimg.com/i/us/fi/gr/partner_logos/ap_left_170x33.gif (http://finance.yahoo.com/news/Angry-UAW-members-lash-out-at-apf-13823458.html)

Executive Orders

By Ken Elias
December 13, 2008

Earlier this month, in their search for bailout bucks for Detroit, Congress caved to the President’s insistence that legislators leave the $700b Troubled Asset Relief Program (TARP) alone. Last week, Congress failed to activate Plan B: hijacking the $25b funds they’d already allocated to the Department of Energy for “retooling” loans. At the eleventh hour, President Bush said, “Oh, alright then. Let’s talk TARP.” And so Plan C: the President of The United State will outline his plan to put up to $15b in play from the TARP monies. It’s a stunning about-face, whose details will be revealed on Monday. Those are the broad strokes. Before suggesting the presidential approach to Detroit’s debacle, let’s zoom in…

Congress’ bailout bill blew-up in the Senate, not the House, which gladly offered-up your money for a faulty plan. The Senate Republicans were not happy creating a powerless “car czar” to oversee the public purse. Senator Dick Shelby was right– the toothless bill would have become an endless payout to Detroit. Senator Corker offered the United Auto Workers (UAW) a deal to make it work. UAW Boss Ron Gettelfinger passed on “parity” with the transplants, as Corker demanded in his alternative legislation. Big Ron said they’d talk about it at their next contract round, in 2011.

And there you have it: proof positive that the UAW isn’t about to make a wholesale change in how they do business. If left in the care of an enfeebled car czar, they’d go along to get along, and nothing more. And now the UAW is banking on money from the TARP as a “holdover”– so they can maintain the status quo until a Democratic President and Congress can… maintain the status quo.

And this is just the union side of the equation. For some reason, GM CEO and Chairman of the Board Rick Wagoner is still in charge of the failed American automaker. Congress has bought Wagoner’s umpteenth “turnaround plan” without question. This despite the fact that its worst case scenario is too optimistic by half and there is nothing within it– nothing– that promises a necessary product and brand-related renaissance. As long as Wagoner’s administration remains, the possibility of GM making profits is– indeed remains– minimal.

So now the ball’s in President Bush’s court. Short of letting the free market exact its final determination (an inevitable reckoning), it’s time for a tough deal. In fact, President Bush has the opportunity now to craft the deal that needs to get done, recognizing the fact that GM and Chrysler are already bankrupt.

First, the President must demand that each company puts up collateral equal or greater to the loan amount advanced. Since no commercial lender will provide funds, and the government is using our money, we want protection. Especially as $15b represents a lifeline to future funding requests, not a solution to GM and Chrysler’s fundamental problems.

This caveat would force Chrysler’s collapse. This company has no collateral of value; existing lenders already have tied that up. Either Cerberus puts something else up of value, or it doesn’t. And that means lights out for the Pentastar. That’s a good thing for taxpayers; there’s no future for Chrysler on its own. Period. And ChryCo’s cratering will help GM and Ford survive.

Second, the President must demand that the UAW immediately end the JOBS Bank (not just suspend it). The JOBS Bank language effectively forces GM (and the rest of Detroit) to pay off workers with huge termination packages to leave their jobs when plants are closed. It’s the so-called “Attrition Program” agreed to by the UAW. I’m not against providing some money when jobs are lost, but GM needs to restructure now (again). It can’t afford big payouts to let labor go.

Third, the President must insist that GM begin negotiations to restructure its balance sheet. The Commander-in-Chief can force GM to provide a go-forward balance sheet and viable operating plan– by not advancing the total funds GM needs to survive until March. He can set January 15th, a week before President Obama takes office, as a deadline.

Basically, we’re asking GM’s highly paid bankruptcy advisory team to write the Plan of Reorganization (“POR”) today (without negotiation with creditors). This POR would illustrate – in a public document – exactly how GM can become a viable company. It would let outsiders comment on its validity and believability. It will tell all the parties where they will come out in the end. And it sets the stage for President Obama and Congress to make the final decision whether it’s better for GM to go through bankruptcy or not.

Lastly, the President should place all the usual terms and conditions about executive compensation, prohibitions on golden parachutes, no mergers/acquisitions and tough GAO oversight with weekly reporting.

I hope that President Bush doesn’t punt on his responsibilities with our money. Kicking the problem down the line to the next administration is an easy solution, but not the right one. The President needs to step up and start the end of the madness. He should set the stage for a real and meaningful program for a long overdue restructuring of GM. Chrysler is already dead, so why continue the charade? Ford, well that is for later…

http://www.thetruthaboutcars.com/editorial-bailout-watch-287-executive-orders/

Canada To Help Bail Out Big 3 Automakers

Wallace Witkowski
MarketWatch

SAN FRANCISCO -- The Canadian government will provide General Motors Corp. , Ford Motor Co. , and Chrysler LLC with CA$3.5 billion ($2.8 billion) to help shore up the Canadian auto sector, CTV News reported late Friday on its Web site. The support falls short of the CA$7 billion the automakers requested, the news agency said.

Moody’s : Prepackaged Bankruptcy Filing Most Likely

By Bertel Schmitt
December 16, 2008

The ratings agency Moody’s Investors Service gets, well, a bit moody about the “bankruptcy is no option” outlook favored in certain Detroit circles. Moody’s says the odds are 4:1 against that happening, Automotive News (sub) reports.

Moody’s said there is about a 70 percent chance of a prepackaged bankruptcy coupled with government assistance. Moody’s graciously places these odds on all three Detroit automakers.

A government bailout without a bankruptcy, Detroit’s favorite, is given just a 25 percent chance.

Detroit will find solace in the fact that Moody’s sees just a 5 percent chance of a “freefall” bankruptcy without a prepackaged plan.

“We think it’s most likely that a prepackaged bankruptcy filing coupled with government financial assistance will be needed to restructure the Big Three,” Moody’s Senior Vice President Bruce Clark said in a statement.

http://www.autonews.com/article/20081216/COPY01/312169870/1197

Goodbye V8 for sure if the gubberment has a car czar calling the shots on products.

I wonder if we'll see a G8 GXP or a new Camaro...

I am pretty sure we will need those for industrial trucks and heavy duty vehicles.

The Moon’s a Balloon

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In fourteen days, GM and Chrysler will submit realistic plans for viability to Congress. See what I did there? With January’s sales slaughter revealed, it’s obvious neither automaker can survive without a huge and ongoing injection of working capital from the nation’s working capitol. Even if Uncle Sam provides this staggering amount of money– more than enough to start a car company from scratch– GM and Chrysler wouldn’t make enough profit to pay the interest and the principal during the loan’s term. The plans the automakers are about to present to your elected representatives are a fictional moon shot– with a make-believe launch vehicle that couldn’t propel a chimpanzee ten feet.

Chrysler will point to its deal with FIAT as their lifesaver. In truth, it’s nothing more than a “free look” for the Italians to figure out what pieces of Chrysler they want to buy when the liquidation sale begins.

Worse, if Congress bails out Chrysler with more of YOUR dollars, the deal gets even sweeter for FIAT. Entry to the US market on the back of the taxpayers, a significant ownership stake and eventual control (for $25m) of Chrysler and the time to try and make it all work. That’s some plan. For FIAT.

But here’s the kicker. Nardelli says Chrysler needs “only” three billion dollars more of your money to get there. Are Bob Corker and Dick Shelby the only two guys in Washington that can see the sheer and utter stupidity of this? It’s as clear as daylight that this dog won’t hunt.

What’s the point of throwing $7b (or more) into a company that has no reason to exist in the US market? A company that needs import technology for small cars and engines to meet the new standards from the Green Party? Heck, save our money and let FIAT come in on their own.

In GM’s case, the plan will look like everything else Wagoner and his team have presented in the past. Goals and actions that have no hope of realization. So far, the UAW hasn’t made the accommodations required– and never will– to the terms of wage/benefit/work rule parity with the transplants.

The unsecured bondholders and other financial creditors might take a cramdown BUT… one of the most skillful members of this group - PIMCO - has already pulled out of the negotiations. How about restructuring of the brands and dealer network? They’ll reveal their latest “no plan” plan (i.e. “we’re still reviewing all options”).

The facts are self evident. GM alone lost 122k units of sales in January 2009 versus lasy year. At an average wholesale to GM of say $24k/unit, that’s a loss of nearly $3b in revenues for the month. Or a run rate of $36b/year. Throw in the drop in sales in Europe and elsewhere around the world, and it might be another $1b to $2b dollars a month in lost revenues. Combined, it could be as much as $50b revenue hit (annualized) for the first half of this year. GM simply can’t cut its expenses fast enough.

As for Chrysler, it’s worth repeating what Jim Press told his dealers. (”Without orders, the company has to liquidate.”) Uh Jim, your dealers have over 350k units on the ground and you sold 62k units in January. Do you really expect them to “stock up” now?

Bottom line: the car market will suck for the next six months, if not longer. It makes no sense for Congress, the President or the Car Czar to try and craft a plan that saves Detroit with taxpayer dollars without a bankruptcy.

GM and Chrysler have no viability plan that can work in the current sales environment (not that they had one during better times). If anything, now IS the time for bankruptcy, not later. Let the bankruptcy court system do what it’s designed to do best: figure out what’s worth saving (GM) and what’s not (Chrysler).

When the market does come back– and it will– a restructured and reorganized GM will be well suited to offer a smart and sensible line of brands, cars, and dealers that will all earn substantial profits. Parts of Chrysler will still exist (Jeep, Mopar, a couple of other). And Ford might be able to survive on its own as it gains share from the pieces shed by its Detroit rivals.

Why go to all this trouble of proving a case that doesn’t meet the sniff test to the most junior financial analyst on Wall Street? Is it pure politics to save union jobs and avoid the shame of bankruptcy? Or has Washington, DC and the Messiah Crew (Obama, Pelosi, Reid, and the Democrats in Congress) simply lost all sense of the common good with your tax dollars?

Forget it. Let’s not spend any more taxpayer dollars on a moon shot from Detroit.

The Man Who Would Be Czar

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By Edward Niedermeyer
February 4, 2009

Point three of Barack Obama’s ethics pledge to the American people is that “no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.” Obviously that’s a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to “restructure” the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.

According to the Detroit News, the leading candidate for Obama’s “Car Czar” position is a certain Mr Steven Girsky, who the DetN describes as a “longtime auto industry analyst.” Having advised Centerbridge Industrial Partners and JP Morgan on auto issues, Girsky is more than simply an analyst. Automotive News [sub] reported in October of 2008 that Girsky was hired by the United Auto Workers to advise on the proposed Chrysler-GM merger and as AN dryly put it “he may also advise the UAW on a possible federal bailout of the U.S. automakers.” Girsky was also a consultant to GM’s CEO and CFO for just under a year, leaving the firm in 2006. As of October 2008, he also served on the board of Dana Corp, a massive auto supplier firm.

Does Girsky’s experience make him incapable of living up to Obama’s high moral standards? Technically, no. Like Tom Daschle before him, Girsky is clearly a lobbyist, though he’s not registered as one (the defacto brightline for Obama). But having been paid by the UAW within months to advise them on bailout strategy, he’s also clearly not going to live up to the “no work on regulations or contracts directly and substantially related to their prior employer for two years” standard. And if he is appointed as Car Czar, it’s safe to say that he will be guiding regulations and money disbursements that are “substantially related” to the work he has been doing for the UAW.

But as with so many political decisions, the choice of a Car Czar will likely be decided on the lesser of two evils. After all, Girsky may be steeped in the cozy relationships between GM management, the UAW and the government, but at least he has industry experience. Steven Rattner of Quadrangle Group has also been named as a possible czar, but as Newsweek reports, his main qualifications appears to be as a Democratic fundraiser (he is married to the National Finance Chairwoman of the DNC) and media-elite insider. Sure he covered energy and economy beats at the NY Times back in the day, but there’s little to indicate that he would make an especially good Car Czar.

Meanwhile, for all of Girsky’s industry connections, some of his ideas are decidedly TTAC-ish. Like when he got AN Executive Editor Edward Lapham’s collar up by suggesting [sub] that the Detroit Three might need to cut as many as 70 percent of its dealerships. He even seems to cause some consternation among his UAW employers, based on this post at Salon. And that might just indicate the kind of experience and perspective that Obama’s team clearly needs. After all, his Climate and Energy Czar Carol Browner told Automotive News [sub} at the DC Auto Show that there are “lots of clean cars out there and options for the consumer.” You know, because the OEMs say so.

Meanwhile, it seems that nothing will stop or slow the rolling tide of money that is about to slosh into the automotive industry. $2b worth of battery research money is said to be going into the forthcoming stimulus package, and the Senate just approved an amendment to the stimulus bill which would make auto loan interest and state sales taxes deductable from federal taxes. Whether Girsky or Rattner is appointed as Car Czar won’t likely make much of a difference in terms of the amount of money that will be funneled into the industry over the following years. The crucial distinction is whether experience is worth the possibility of a conflict of interest.

Obama’s strict ethical standards are admirable, but if his options for Car Czar are between an industry insider who defines the term “revolving door” and a candidate who is being considered solely due to his political connections, something has clearly gone wrong. I’m not sure this kind of compromise is what people had in mind when they voted for “change we can believe in.” But in this familiarly frustrating choice, at least Girsky has a record of taking stands on crucial issues facing the industry. If he can publicly explain his recent UAW dealings in a way that passes Obama’s muster, Girsky may actually be the least of the available evils

http://www.thetruthaboutcars.com/bailout-watch-371-the-man-who-would-be-czar/

Let them burn and allow new companies to fill the void.

You're an idiot.

i agree

Why is downsizing the company our first and only option explored? Let's down-size America!

Let them burn and allow new companies to fill the void.Do you mean 'new companies' as in a restructured GM and Chrysler (and maybe Ford as well)?
Or do you mean 'new companies' as in Hyundai, Kia and/or some new Chinese built line of vehicles etc?

I don't know how you feel about your RWD V8 but I like mine...I'd rather not be forced to someday drive a Hyundai Accent or Kia Rio LOL. ;)

Obama and the dems will throw BILLIONS to GM in the name of saving jobs.

GM is safe for at least 5 years or thereabouts.

Do you mean 'new companies' as in a restructured GM and Chrysler (and maybe Ford as well)?
Or do you mean 'new companies' as in Hyundai, Kia and/or some new Chinese built line of vehicles etc?

I don't know how you feel about your RWD V8 but I like mine...I'd rather not be forced to someday drive a Hyundai Accent or Kia Rio LOL. ;)
Funny you mention RWD and V8s, and that's exactly what Hyundai just released in this country.
Obama and the dems will throw BILLIONS to GM in the name of saving jobs.

GM is safe for at least 5 years or thereabouts.
And I think that's exactly the wrong way to do it... we need more than a band-aid.

Funny you mention RWD and V8s, and that's exactly what Hyundai just released in this country.
Quick, someone land the rights to hyundaitech.com. :jest:
And I think that's exactly the wrong way to do it... we need more than a band-aid.

I agree, but without a restructured deal from the UAW and time (which is the issue here), I don't think they can save it. The Big 3 are losing money just by coming to work and turning the lights on. They really need sales to save them (among other things), and the economy sucks so bad right now that they can't give cars away. Watching this unfold is like watching a train wreck. You really want to see what happens, but at the same time, you really don't.

I don't think even if everyone one America bought a big 3 car it would help them much. They are so screwed from bad descions in the past, that they need a bailout, everyone to buy a couple of cars, and all the moons and planets to be lined up perfectly for them to come out ahead.

What do you think about the tax credit for purchasing a new vehicle; I think I heard this mentioned in the news but come to think about it even this will not help. I don't really know what the answer is to the present situation...

It would have to be a HUGE credit

Do you mean 'new companies' as in a restructured GM and Chrysler (and maybe Ford as well)?
Or do you mean 'new companies' as in Hyundai, Kia and/or some new Chinese built line of vehicles etc?

I don't know how you feel about your RWD V8 but I like mine...I'd rather not be forced to someday drive a Hyundai Accent or Kia Rio LOL. ;)

no no no, I don't mean Hyundai, kia or any other foreign company. I mean either a restructured GM, etc or a completely new American car company. Assuming they failed, That is just too big of a void to not be filled in by another company (or several smaller companies) that could do it better and more efficiently without draining the taxpayers. Sorry I didn't elaborate. ;)

IF GM and Chrysler fail, can we take the good parts of both companies and build a new American Motors Corporation? :D

January ‘09 NA Automotive Production Falls 65.6%

“442,241 vehicles were built last month, compared with 1,170,816 in January 2008. The previous smallest month took place during a UAW strike at Delphi Automotive Systems Corp. in July 1998. That month, North American automakers produced 667,074 vehicles. Total U.S. vehicle output plunged 65.6 percent; Canada fell 58.0 percent; and Mexico shriveled by 49.8 percent.”

http://www.autonews.com/article/20090206/ANA02/902069970/1176

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

By Russ Dallen
Latin American Herald Tribune staff

SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.

This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

http://www.laht.com/images/logo_lath.jpg (http://www.laht.com/article.asp?CategoryId=12396&ArticleId=320909)

Congressional Bailout Report: What They Knew Before They Loaned the Money

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By Robert Farago
February 8, 2009

TTAC proofreader and Editor Jeff Puthuff has been helping me chase down the Chrysler–Cerberus story, trying to identify the automaker’s secret co-investors. In the midst of that pursuit, Jeff has unearthed this heretofore unreported document:

“U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring” Dec. 3. 2008 (Prepared for Members and Committees of Congress).” The Congressional Research Service (CRS) drafted the report for elected representatives contemplating whether or not to loan Chrysler and GM money to prevent their bankruptcy. The U.S. Senate and House of Representatives eventually failed to create a bill to fund the loans (though not for lack of trying). Then-president Bush stepped in at the eleventh hour and provided $17.4b worth of federal loans, by stretching the provisions of the Troubled Asset Relief Program (TARP). There are some startling—and not so startling—insights.

Widely quoted Center for Automotive (CAR) Research Study Debunked, Rejected

A general criticism of this analysis is that it assumes that the suppliers and all other automakers, aside from the the initially failed company or companies, would see their output drop to zero, and that they would be merely passive observers of an industry collapse. There are many examples in recent years of bankrupt or financially distressed suppliers being supported by their OEM customers, or by other suppliers that acquire parts of the business to gain new contracts or to be able to continue servicing their own contracts from a failed subassembly producer…

While CAR posits, for the sake of analysis, that, in the first year, no auto manufacturing in the United States could survive a major Detroit 3 bankruptcy, in actuality, such an extreme outcome is unlikely. Immediate and radical restructurings among suppliers is a more likely outcome, and other brands would continue to produce.

U.S. Auto Manufacturing Employment Declining Generally, Anyway

Automotive manufacturing employment has also fallen as a share of total employment in manufacturing. While total manufacturing employment has fallen by more than three million jobs since September 2001, employment in motor vehicle manufacturing dropped at an even faster rate, with its share of total manufacturing employment falling from 7.4% to 6.4%. During this period, total automotive sector employment, including services fell from 5.1 million to 4.6 million, while total U.S. employment grew by six million. As a result, automotive employment, including both manufacturing and services, as a share of total U.S. employment, fell from 3.9% to 3.3%.

GM - Chrysler Shotgun Marriage Still An Option

GM’s plan to acquire Chrysler and merge the two companies, which was widely reported in October 2008, was similarly withdrawn when the companies could not find sufficient funds, including proposed federal financial support, for the deal. The plan could still be resurrected as part of a general plan of government financial assistance for the Detroit 3.

Chrysler / GM Chapter 11 Could Increase Consumer Confidence

One might question whether the recent urgent requests for financial assistance do not diminish consumer confidence at least as much as would a bankruptcy filing designed to reorganize the company and lead to financial viability . . . filing under Chapter 11 could boost consumer confidence in the troubled automakers.

Feds Could Back Vehicle Warranties

If Congress finds that concern about warranty coverage is an issue that would doom a reorganization, it could be possible to provide for alternative warranty coverage. This might be funded with premiums paid by automakers, similar to premiums paid by financial institutions to the Federal Deposit Insurance Corporation (FDIC).

Loan Default Risk

However, direct loans from the federal government commit government money more immediately than would loan guarantees. Several have questioned the advisability of extending such loans, fearing that the troubled automakers may be unable to repay them even if the loan terms are very favorable.

Loans Could Leave Federal Government SOL

Under current bankruptcy law, the loans, if unsecured, would enjoy no priority status under 11 U.S.C. § 507. This means that the government potentially could “stand in line” with the other non-priority unsecured creditors and ultimately might receive only a few pennies for each dollar of outstanding loan balance. In the worst case, there might be no funds to divide between these creditors.

Chrysler Pension Plan Funding Unknown

As a privately-held company, Chrysler is not subject to the same SEC reporting requirements as are GM and Ford. Current information about pension plans was not available at the time this CRS report was written.

Loans Less Onerous Than Previous ChryCo Guarantees

By comparison to the broadly defined elements of these plans, the Chrysler loan guarantee legislation of 1980 was far more prescriptive in exchange for a loan guarantee that was worth far less than the $25 billion requested by the Detroit 3 in 2008, even allowing for inflation.

Clearly, the U.S. Congress had enough information to know that providing GM and Chrysler with federal loans was an extremely risky not to say stupid idea. As did President Bush. By making these loans, the president pushed “the Detroit problem” down the line to president-elect Obama.

The bottom line: adding more fuel to Chrysler and GM’s pyre is just as boneheaded now as it was then.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt

By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.

GM rose 5 cents to $2.89 at 11:16 a.m. in New York Stock Exchange composite trading. Chrysler isn’t publicly traded.

Carmaker Opposition

The automakers have dismissed calls to reorganize under bankruptcy protection, saying a Chapter 11 restructuring would scare away buyers and lead to liquidation. They are working toward a Feb. 17 deadline to show progress on a plan put in place as part of the U.S. loans received in December from the Troubled Asset Relief Program. The companies must reduce labor costs and show how they will repay the money by next month.

GM and Chrysler are already trying to restructure out of court by cutting labor costs, reducing debt levels and eliminating dealers. GM is in talks to pare $27.5 billion in unsecured debt to about $9.2 billion in a swap for equity.

The company said it plans to shutter dealers and reduce obligations to a union retiree health fund by half to $10.2 billion in a separate equity swap. Chrysler Chief Executive Officer Robert Nardelli has said his company will also try to cut debt.

Delphi Talks

GM said today it’s in negotiations to take back portions of Delphi Corp., a parts supplier the automaker separated from a decade ago, in order to maintain portions of its supply chain. GM said it’s also considering more plant closures, job eliminations and pay cuts for administrative workers.

The automaker probably will close at least two factories, which according to the Wall Street Journal may include a truck plant in Pontiac, Michigan.

Chrysler will temporarily shut three plants, the company said last week. Those closures will be in Michigan and Canada.

January sales from automakers plunged 55 percent at Chrysler, 49 percent at GM and 40 percent at Ford Motor Co., the second-largest U.S. automaker. Ford has declined bailout funds.

The U.S. government has the option of working out an intercreditor agreement outside of bankruptcy that would give it rights to some collateral ahead of others. Such agreements, often made when money is lent to a company that already has liens on most of its assets, are usually negotiated when the loan is made.

U.S. Law Firm

Cadwalader, Wickersham & Taft LLP is advising the government on how to make sure it gets paid back first, including by way of intercreditor agreements, the people involved with the talks said. The law firm, hired last month, is working for the government with Sonnenschein, Nath & Rosenthal, a Chicago-based firm with capital-markets experience, and Rothschild Inc., an investment bank, the people said.

The issues are “extremely complex,” said Bruce Clark, a credit analyst at Moody’s Investors Service.

The existing loan agreements appear to give the banks a superior position to the government, Clark said.

“The ultimate position of the government could end up being determined by whatever concessions various creditors make, and the determination of a bankruptcy court if it ever gets there,” he said.

When the automakers were lobbying the government for assistance, lawmakers made a point of saying that the government must be assured that if the companies failed, taxpayers wouldn’t lose the investment.

Existing Lenders

Workman, who isn’t involved in the negotiations, said the U.S. couldn’t force its loans to supersede existing secured lenders, so it built in a measure that allowed the debt to be converted to debtor-in-possession financing.

“A carrot and stick approach is spot on,” he said.

As it stands, the government loans fall below existing debt secured by most assets for Auburn Hills, Michigan-based Chrysler and Detroit-based GM. Prior lenders have first position on some assets. The government has first position on assets not already pledged.

Chrysler has $7 billion in loans from a group of banks, including New York-based JPMorgan, Goldman Sachs and Citigroup. It also has $2 billion in loans from owners Cerberus Capital Management LP and Daimler AG. Cerberus owns 80.1 percent of Chrysler. Daimler owns the remainder.

GM has $6 billion in loans secured by assets from lenders including JPMorgan and Citigroup. JPMorgan spokesman Brian Marchiony, Goldman Sachs spokesman Michael Duvally and Citigroup spokeswoman Danielle Romero-Apsilos declined to comment.

Lori McTavish, a spokeswoman for Chrysler, declined to comment beyond confirming the primacy of the bank loans. Treasury spokesman Isaac Baker and GM spokeswoman Renee Rashid-Merem declined to comment. GM Vice Chairman Bob Lutz will retire at the end of 2009, the company said today in a separate statement.

Unless the automakers show by March 31 that they will be able to return to profit and repay the money, the government can demand return of the loans.

http://images.bloomberg.com/r06/navigation/logo.gif (http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=atjQ8fjgT.kY)

Retail Sales: 8.5m is the new 11.5m

By Edward Niedermeyer
February 9, 2009

Remember the “worst case sales scenario” in GM’s viability plan? It predicted 11.5m annual sales in the US. Unless a turnaround arrives sometime this year, there’s no chance that sales will hit that number. According to Automotive News [sub], annual sales expectations for 2009 have dropped to 9.8m units. But there’s still a surprising amount of unfounded optimism among Detroit’s spinners and marketing mavens. Specifically, Ford’s execs say that retail sales have “stabilized” over the past four months. Too bad, then, that they’ve stabilized at an abysmal rate of 8.5m units per year. “We’re heartened to see it stabilize — although stabilizing at an awful level,” said Ken Czubay, Ford vice president of U.S. sales and marketing. Heartened? Seriously? But enough of the maudlin posturing. There are scapegoats to blame!

And unsurprisingly, the villain is the same malefactor that was blamed for bringing Detroit to its knees in the first place: the credit market. “People are coming in wanting to buy vehicles, and they are being turned down,” says GM’s executive director of global market and industry analysis Mike DiGiovanni. “We have to break and thaw the credit markets for consumers who want to buy automobiles. We’re seeing some minor thawing occurring, but it is not nearly enough.” This despite billions in TARP money flowing to GMAC and Chrysler Financial. And a host of indicators that show US automakers were in deep excrement before credit markets even began to seize up.

A sense of acceptance has set in. Chrysler’s Jim Press says “we need to recalibrate where the market is and stop dreaming about pent-up demand. Looking at the economy and taking a realistic view of the credit situation, there’s not a lot of reason to think the entire industry is going to have a lot of growth. We want to operate in a conservative manner.” Or, as Stephan Jacoby of the less-exposed Volkswagen Group of America puts it, “right now, we have no sign when the industry can improve, actually.”

http://www.autonews.com/article/20090209/ANA06/902090346/1078

GM fights to avoid bankruptcy protection

By Julie MacIntosh and Nicole Bullock in New York and John Reed in Detroit and Bernard Simon in Toronto

Published: February 9 2009 19:37 | Last updated: February 9 2009 23:43

General Motors is working to convince key stakeholders to help it avoid the need to seek bankruptcy protection but, because such an effort would probably require more government money, its most critical task will be addressing the US Treasury’s concerns over the terms of its investment.

GM must present a plan proving its long-term viability to Congress by next Tuesday as a condition of the $13.4bn emergency bridge loan it was granted in December.

Several sets of negotiations are taking place simultaneously. They revolve around GM’s proposal to swap up to two-thirds of its debt for equity, and fresh concessions from the United Auto Workers, including the financing of a new union-administered healthcare fund.

Only advisers to the various parties are currently involved in the talks, which are expected to centre on due diligence issues for the next day or two, one person familiar with the negotiations said.

The US government has the power to either endorse GM’s plans or push it into bankruptcy and the US Treasury’s decision to hire advisers Cadwalader, Wickersham & Taft, Sonnenschein Nath & Rosenthal and Rothschild suggest it may be toughening its stance.

“The government is the biggest stakeholder here,” one person close to the matter said. “Unless they agree the plan is viable and they consent, the debt becomes due.”

If the government gives GM additional funding, the structure and terms of both its old and new investments could come up for debate, including whether taxpayers’ interests should come before those of current debtholders.

The government’s role as stakeholder reduces GM’s options. But it also gives it more weight in negotiations with unions, auto dealers and bondholders.

“The carrot is, this is in everybody’s best interest,” said Don Workman, a bankruptcy lawyer at Baker & Hostetler LLP. “The stick is, they’re saying that if we don’t do this consensually, GM and Chrysler will go into bankruptcy court and the judge will prime you.”

Separately, GM is negotiating with bankrupt Delphi, its largest supplier, to take over some of Delphi’s manufacturing plants, a person briefed on the talks said.

The move could give GM more flexibility in its negotiations with the United Auto Workers, the labour union.

Bondholders said their talks with GM were ongoing. The company’s long-term bonds were quoted at their low of 13 cents on the dollar. In an indication of the severity of the situation, the same bonds were quoted at around 80 cents a year ago.

http://media.ft.com/cms/6f68385c-882a-11da-a25e-0000779e2340.gif (http://www.ft.com/cms/s/0/f80a1926-f6d8-11dd-8a1f-0000779fd2ac.html)

GM to Offer Two Choices: Bankruptcy or More Aid

http://s.wsj.net/public/resources/images/P1-AO731_GM_D_20090213183030.jpg

By JOHN D. STOLL and SHARON TERLEP
FEBRUARY 14, 2009

General Motors Corp., nearing a federally imposed deadline to present a restructuring plan, will offer the government two costly alternatives: commit billions more in bailout money to fund the company's operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM's thinking.

The competing choices, which highlight GM's rapidly deteriorating operations, present a dilemma for Congress and the Obama administration. If they refuse to provide additional aid to GM on top of the $13.4 billion already committed they risk seeing an industrial icon fall into bankruptcy.

Some experts and members of Congress say bankruptcy reorganization is the surest way for GM to cut costs and become viable. But it could be a politically unpalatable development during a recession that already has thrown millions of workers out of jobs.

GM may close more plants under a restructuring plan it must present to the Treasury by Tuesday. Its Hamtramck, Mich., plant has been idled.
Treasury Department officials believe GM needs at least $5 billion more in U.S. loans to keep operating beyond the first quarter, said people familiar with the situation.

The call for additional funds will be a key part of the revitalization plan GM is required to file with the Treasury by Tuesday, though it is unclear whether GM will furnish a dollar amount, said people familiar with the matter. The plan is supposed to describe how the company will become self-sustaining and better compete with foreign rivals.

But it's increasingly unlikely GM will have a finished plan in time. Negotiations with GM's unions and bondholders haven't yet produced commitments to concrete concessions as required by terms of the federal loans; talks are expected to continue over the holiday weekend. People involved in the talks say progress has been slowed by the fact the Obama administration has yet to appoint a "car czar," as envisioned by the bailout program.

GM will argue it needs the additional government funds to stay out of bankruptcy court, people familiar with the matter said. At the same time, the company -- which previously had dismissed suggestions that it might need to file for bankruptcy -- has moved closer to such a prospect.

GM believes government funds would be needed for debtor-in-possession financing should the company seek bankruptcy because such money wouldn't be available from private sources, said people familiar with the situation.

The auto maker eventually may seek permission to extend the March 31 deadline to complete certain restructuring actions by at least several months.

Rick Wagoner, GM's chairman and chief executive, once fiercely opposed a bankruptcy filing, saying it would scare off customers. But his opinion has softened, and he has been influential in shaping the plan for a possible filing, said people involved in the strategy.

GM declined to comment.

GM's board began more seriously considering bankruptcy in November as the company's liquidity headed toward unsustainable levels. In early December, at the board's prompting, Mr. Wagoner hired bankruptcy lawyers and advisers to begin preparing a contingency plan, said people familiar with the matter.

In the months that followed, these bankruptcy experts worked alongside advisers Evercore Partners and Morgan Stanley, both of which previously worked for GM, to develop multiple options for GM's future.

One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.

GM received a tax break of around $3 billion as part of President Obama's economic stimulus plan. The break saves GM from having to pay taxes associated with its bailout.

Chrysler LLC is also due to file a viability plan Tuesday. The company is expected to submit two scenarios, one spelling out how it can restructure as an independent company and the other taking into account its tentative alliance with Fiat SpA, people familiar with the matter said.

Chrysler was given $4 billion in U.S. loans after nearly running out of money. The company is looking to Fiat to provide technology for small and midsize cars that Chrysler would build and sell under its own brands. In exchange, the Italian company would take a 35% Chrysler stake.

GM's Concessions Talks With UAW CollapseOther stakes in Chrysler could be parceled out to compensate the UAW and debt holders for cost concessions, leaving majority owner Cerberus Capital Management LP with a dramatically diminished holding, people familiar with the matter said. Cerberus now owns 80.1% of Chrysler, and Daimler AG 19.9%.

But like GM, Chrysler also needs more government help to stay afloat. The company has said it intends to ask for $3 billion in additional loans.

For the past few weeks, Chrysler has been urging dealers to order more vehicles to give the company enough revenue to keep going through the end of March. On Friday, executives said in a conference call that it reached its goal of bringing in 78,000 orders for February, said a dealer who participated in the call.

Chrysler declined to comment on its revamping plan.

GM's viability plan will present a restructuring strategy allowing it to be profitable in each of the regions in which it operates globally, people who have seen the plan said. The plan will include broad restructuring targets, including more than 10 plant closures in North America.

While GM's plan will include updates on talks with unions and bondholders related to concessions, the auto maker is expected to ask for leeway on when it can provide specific details about what cuts the two parties are willing to make.

Negotiations with the United Auto Workers union and a bondholders committee have been slow for several reasons. For one, both expressed frustration over the amount of sacrifice they are being asked to take, compared to other stakeholders such as dealers and even asbestos litigants. And both argued that a car czar is needed to help expedite the talks.

UAW President Ron Gettelfinger has been asking the Obama administration for more time to negotiate with the auto makers. Mr. Gettelfinger, a strong supporter of Mr. Obama's presidential campaign, is also hopeful that the government will take responsibility for some of GM's $47 billion in retiree health care obligations, said people familiar with his thinking.

House Speaker Nancy Pelosi (D., Calif.) and House Financial Services Chairman Barney Frank (D., Mass.) on Friday sent a letter to the chief executives of GM and Chrysler laying out expectations for their viability plans.

The lawmakers asked that the plans demonstrate "a commitment that the sacrifices necessary to turn the industry around will be shared equitably by all stakeholders" and "a demonstrated commitment to restructure your company's debt in a manner that protects the interests of the taxpayers."

—Deborah Solomon and Jeff McCracken contributed to this article.

http://online.wsj.com/article_email/SB123458663412987489-lMyQjAxMDI5MzE0NTUxODU2Wj.html

The UAW Walks

http://www.thetruthaboutcars.com/wp-content/uploads/2009/02/2007924uaw_strike_3.jpg

By Robert Farago
February 14, 2009

If you recall, President Bush gave GM some money ($9.4b) and told them to come back later for more ($4b). The second tranche (as the gourmands would says) depending on sorting out the United Auto Workers (UAW), convincing bondholders to swap debt for equity and rationalizing their brand portfolio. Anybody familiar with the UAW, rapacious capitalists (are there any other kind?) and General Motors knew that the chances of ANY of that happening were somewhere between none and the situation going in reverse. And so it hasn’t come to pass. After we learned that GM bondholders aren’t playing ball, Automotive News reports that the UAW has walked away from the ballpark. It seems the union isn’t happy with GM’s insistence that the union accept stock in lieu of cash for the GM-funded Mother of All Health Care Funds (a.k.a. VEBA). Did I say GM-funded? We’re on the hook now. Anyway, why would the UAW step up to the plate? The union would have to accept the idea that GM has a future when they, of all people, know it doesn’t.

The UAW is owed some $20 billion by GM, money pledged to a healthcare trust fund for retirees. It faces demands from the company that it surrender a claim on half of that amount in exchange for stock in a recapitalized GM.

But the union has balked at saddling retired workers with additional risk. GM’s bondholders, who are being asked to write off some $18 billion in debt in exchange for GM stock, have also held out for better terms, people briefed on the talks have said.

So now we’re left with GM’s “secret” admission that Congress faces a stark choice: continue to prop-up a failed enterprise with taxpayer money or throw GM into bankruptcy. Who knew?

As strange as this sounds, I bet they’ll give GM and Chrysler the money. It’s too early in the Obama Administration to piss on illusory rainbows, and there are plenty of people who remain in denial about the parlous state of the Big 2.8 and yes, the U.S. economy.

When the situation doesn’t get any better heading into winter of ’09, when the mood turns from hopeful to resigned, THEN Congress will pull the plug, as part of their new “get tough” gestalt.

GM Bondholders Seek to Minimize ‘Free Riders’ in Debt Exchange

By Caroline Salas

Feb. 15 (Bloomberg) -- General Motors Corp. bondholders are working with the automaker to craft a debt exchange that discourages investors from not participating, according to a person with direct knowledge of the discussions.

The talks include giving investors who exchange their debt greater security and more seniority over unsecured bondholders who don’t in an effort to ensure maximum participation and avoid bankruptcy, said the person, who declined to be identified because the negotiations are confidential. Detroit-based GM needs to cut two-thirds of its $27.5 billion in unsecured public debt as required by the U.S. government so it can keep $13.4 billion in aid and skirt bankruptcy. Talks are continuing ahead of a progress report due Feb. 17

Bondholders want to avoid a repeat of their experience with GMAC LLC. Pacific Investment Management Co., manager of the world’s biggest bond fund, reneged on a Dec. 15 agreement to join other creditors in the finance company’s $38 billion debt swap. The value of Pimco’s holdings subsequently soared. The 10- member GM bondholder committee overlaps with the GMAC group.

“There is little incentive not to be a ‘free rider’ holdout on the exchange, as GM is unlikely to be able to offer a coercive deal that makes tendering bondholders better off than non-tendering bondholders in event of a later bankruptcy,” Brian Johnson, an analyst at Barclays Capital in New York, wrote in a report dated Feb. 13.

The government is requiring that GM convince bondholders to accept terms that reduce $27.5 billion in unsecured debt to $9.2 billion in an exchange for equity. About $14.1 billion in debt won’t be affected by the exchange offers.

Most Assets Pledged

“The problem with the debt exchange is that with little equity value in GM, and a highly leveraged company remaining, the bondholders are not receiving significant value for giving up their par claims,” Barclays’ Johnson wrote in the report.

One of the obstacles to coming up with an attractive offer for bondholders is that GM has already pledged most of its assets to existing debt, according to the person.

The bondholder committee, which includes San Mateo, California-based Franklin Resources Inc. and Fidelity Investments of Boston, is also discussing how much of their principal they’re willing to give up, the person said.

A JPMorgan Chase & Co. report on Feb. 11 suggested bondholders should recover 50 cents on the dollar based on the treatment of a retiree health-care fund. The government’s loan terms require GM to get an agreement from the United Auto Workers to cut cash contributions to a union-run retiree health- care fund to $10.2 billion from $20.4 billion in exchange for equity.

Recovery Estimates

Bondholders aren’t just looking at the treatment of that fund in their requests and haven’t asked for a 50-cent recovery, the person said. The UAW union stopped negotiations with GM Feb. 13 after objecting to proposals relating to the retiree health- care fund, a person familiar with the talks said.

GM’s $3 billion of 8.375 percent bonds due in 2033 rose 1 cent on Feb. 13 to 15.8 cents on the dollar, their highest price in almost a month, to yield 53 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. A year ago, the debt traded at about 81 cents.

In December, Newport Beach, California-based Pimco pulled out of an investor group participating in GMAC’s debt swap. While holders led by Dodge & Cox accepted as little as 60 cents on the dollar to reduce GMAC’s debt, the bonds Pimco kept soared as much as 83 percent, to 80.5 cents on the dollar, after GMAC won approval to become a federally backed bank.

Pimco resigned from the steering committee of GM bondholders in January.

http://images.bloomberg.com/r06/navigation/logo.gif (http://www.bloomberg.com/apps/news?pid=20601087&sid=acIJSWMZBDMs&refer=home)

GM Bondholders Double Negative on Debt for Equity Swap

By Robert Farago
February 15, 2009

Back when TTAC spied GM’s slide into bankruptcy with our little editorial eye, we never imagined that it would be such a convoluted process. On one hand, GM’s slow mo train wreck has provided plenty of grist for our mill. On the other, there’s only so much Firesign Theater a carmudgeon can take before he or she wants to play the Eagles “How Long” at top volume and be done with it. Still, ours is to question why. So why are reporters covering the GM bondholders debt for equity swap– or lack thereof– resorting to double negatives? ”General Motors Corp. bondholders are working with the automaker to craft a debt exchange that discourages investors from not participating, according to a person with direct knowledge of the discussions.” I’m gonna take a flyer here: is that same as forcing them to participate? So what stick has Bloomberg unearthed/used common sense to suggest?

The talks include giving investors who exchange their debt greater security and more seniority over unsecured bondholders who don’t in an effort to ensure maximum participation and avoid bankruptcy.

Translation: the GM bondholder committee doesn’t want any “free riders:” bondholders who hold out from the swap, who later kick ass. There is history here…

In December, Newport Beach, California-based Pimco pulled out of an investor group participating in GMAC’s debt swap. While holders led by Dodge & Cox accepted as little as 60 cents on the dollar to reduce GMAC’s debt, the bonds Pimco kept soared as much as 83 percent, to 80.5 cents on the dollar, after GMAC won approval to become a federally backed bank.

[Quick digression: there should be a criminal investigation into that deal. PIMCO pulled out of the GMAC swap just hours before the Fed granted GMAC a waiver so it could become a bank. Just before the U.S. Treasury dumped $6b of your hard-earned tax dollars into the sub-prime purveyors to keep them afloat. If that doesn't not pass the smell test, nothing does. Or doesn't.]

The GM bondholders are scared shitless of Pimco, who resigned from the steering committee of GM bondholders in January, claiming “we don’t work well with others.” On the other hand, why should they play ball and prop-up GM?

“There is little incentive not to be a ‘free rider’ holdout on the exchange, as GM is unlikely to be able to offer a coercive deal that makes tendering bondholders better off than non-tendering bondholders in event of a later bankruptcy,” Brian Johnson, an analyst at Barclays Capital in New York, wrote in a report dated Feb. 13.

So much for that then. But instead of leaving it at that Bloomies wants to offer its readers a piercing glimpse into the obvious, dressed-up as inside information.

One of the obstacles to coming up with an attractive offer for bondholders is that GM has already pledged most of its assets to existing debt, according to the person.

Ya think?

Bankruptcy not out of the question for GM, White House aide says

Gordon Trowbridge / Detroit News Washington Bureau
Sunday, February 15, 2009

WASHINGTON -- A top White House adviser on Sunday refused to rule out bankruptcy for General Motors as the deadline for the domestic carmakers' restructuring plans looms this week.

"We're going to need a restructuring of these companies. How that restructuring comes about is going to have to be determined," said David Axelrod, a senior adviser to President Obama, said on NBC's "Meet the Press."

Axelrod's comments came in response to questions about a Wall Street Journal report on Saturday that GM will offer two options when it files its federal restructuring plan on Tuesday: A continued infusion of federal aid to keep the company in business, or a government-financed bankruptcy.

The plan is a condition of the more than $13 billion federal loan GM received in December. The plan must outline how the company will return to competitiveness; the government has the option of recalling the loan and essentially forcing a bankruptcy by the end of March if Obama administration officials do not believe the company is making adequate progress.

Chrysler LLC must also submit a plan to justify its own federal bailout money; Ford Motor Co. has not yet asked for aid, but could if its business prospects continue to slip.

Axelrod's comments continue a pattern of administration comments on the issue: refusing to address the bankruptcy issue directly, either to embrace it or to rule it out. In a roundtable discussion with The Detroit News and other regional newspapers this week, Obama also did not directly address bankruptcy.

Michigan lawmakers have forcefully opposed bankruptcy, saying the companies would be unlikely to emerge from a bankruptcy because car buyers would refuse to consider products from a bankrupt company. Any bankruptcy would almost certainly still involve a massive federal financial commitment, because private capital markets are unlikely to provide the financing that would be necessary.

"We need an auto industry in this country," Axelrod said Sunday. "We have an interest in seeing the auto industry survive. But it's going to take a real restructuring."

http://www.detnews.com/apps/pbcs.dll/article?AID=/20090215/AUTO01/902150315/1148

Obama faces tough decisions on US auto industry

Feb 15 08:21 PM US/Eastern
By TOM KRISHER and KEN THOMAS

WASHINGTON (AP) - The Obama administration faces difficult choices on the fate of the U.S. auto industry, weighing the cost of pouring billions more into struggling companies against possible bankruptcies that could undermine plans to jump-start the economy.

General Motors Corp. and Chrysler LLC are racing against a Tuesday deadline to submit plans to the government to show how they can repay billions in government loans and return to viability despite a sharp decline in auto sales.

The terms of the federal loans set "targets" for concessions, largely from debt-holders and the United Auto Workers union, but concession talks have made little progress with just a couple days left before the initial deadline.

Negotiations between GM and the UAW broke off Friday night but resumed Sunday, still focusing on exchanging the company's cash payments into a union-run retiree health care trust for GM stock, according to a person briefed on the talks who didn't want to be identified because the bargaining is private.

GM and UAW officials declined comment.

GM and Chrysler don't need to have everything nailed down for Tuesday's progress reports, but the companies are expected to detail concessions along with plant closures, the potential elimination of brands and thousands of job cuts.

After Tuesday there will be several weeks of intense negotiations ahead of a March 31 deadline for the final versions of the plans.

Detroit-based GM and Auburn Hills, Mich.-based Chrysler are living off a combined $13.4 billion in government loans. If they don't receive concessions by March 31, they face the prospect of having the loans pulled, followed by bankruptcy proceedings.
Any bankruptcy would be particularly painful with some economists predicting the country could lose 2 million to 3 million jobs this year and the unemployment rate, now 7.6 percent, could swell past 9 percent by the spring of 2010.

In network interviews Sunday, White House senior adviser David Axelrod didn't respond directly when asked if the U.S. economy could withstand a GM bankruptcy. Nor did he directly address a question about whether the Obama administration would let GM go into bankruptcy.

"I'm not going to prejudge anything. I think that there is going to have to be a restructuring of those companies. I'm not going to get into the mode of how that happens. We'll wait and see what they have to say on Tuesday," he told "Fox News Sunday."
Executives at the two automakers have said bankruptcy is not an option because consumers would not buy cars from a company that might go out of business.

"How that restructuring comes is something that has to be determined," Axelrod said. "But it's going to be something that's going to require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company. And everyone's going to have to get together here to build companies that can compete in the future."

Harley Shaiken, a University of California-Berkeley labor economist who has studied the automakers, doesn't think the Obama administration would run the risk of bankruptcies given its efforts to create jobs.

"We're clearly on the edge of that abyss right now. Going over it would do irreparable damage not simply to the auto industry but to the manufacturing base in this country," Shaiken said.

Under the GM and Chrysler loan terms, both companies have "targets" to reduce debt and labor costs. One target says the automakers need to convert half of their payments into a health care trust fund for retirees in stock rather than cash, reducing their debt. Another requires the companies to reduce their unsecured debt by two-thirds by persuading investors to swap the debt for equity in the companies.

In 2007 contract talks, the union agreed to take on retiree health care to help the companies remove billions in liabilities from their books. But the contracts only require the company to pay the union 60 percent of the liability, Shaiken said. If half those payments come in risky stock, the trust fund may not have enough money, he said.

According to others briefed on the talks, bargaining has shifted to Ford Motor Co., the healthiest of the Detroit Three and the only one not receiving government loans. Ford is seeking the same concessions as GM and Chrysler so it's not placed at a disadvantage.

Another complication is that Obama has not yet appointed an overseer of the plans—a so-called "auto czar"—and many industry officials have said the lack of an administration point-person has slowed the discussions. Steven Rattner, a private equity investor, and Stephen Girsky, a veteran auto industry analyst, have been mentioned as leading contenders to be part of an Obama auto team.

Sen. Carl Levin, D-Mich., said Thursday that he did not expect the reports Tuesday to provide "very specific information because there's no car czar. I do think there will be an outline of directions."

Axelrod wouldn't say whether the administration would offer the auto industry more bailout money. GM already has borrowed $9.4 billion to stay in business, and it would receive an addition $4 billion if the Treasury Department approves its viability plan. Chrysler wants $3 billion more on top of the $4 billion it has already borrowed.

"We need to see what it is that they come up with this week," he said.

http://www.breitbart.com/article.php?id=D96CC1880&show_article=1

Fuck the biased media, I can't even read those articles without wanting to puke.

"despite a host of indicators that show GM was deep in excrement before the credit crisis"
What garbage, their product now and before this thing was better than its ever been in their century-long history. How is that "deep in shit"? Why is the American media so full of jap-biased wannabe tree-hugging prius-driving-with-a-carbon-footprint-bigger-than-a-H2 liberal assholes? The only indicator that GM was deep in shit before the credit thing is the untrue garbage that people like that guy are putting out. Maybe if they actually did any research for their articles and reported on the facts people would be more willing to buy from the big three.
I understand in any situation like this nobody, especially the media is going to be happy, their job is to report on the bad. But GM IS still selling more cars than any other company in the world, so it's not like their beloved imports are doing much better, they just have bigger cash reserves in part because of all the money our government loves to throw at them. All I want is a little fairness in the media, is that too much to ask for? I'm not even looking for fairness in Road and Track or Car and Driver yet, just the news media.

Ehh, won't happen.

if you think GM was floating through the clouds in the 90s you're delusional; lets be realistic here.

Obama Is Said to Drop Plan for ‘Car Czar’ to Fix Detroit

By BILL VLASIC
Published: February 15, 2009

DETROIT — President Obama has dropped the idea of appointing a single, powerful “car czar” to oversee the revamping of General Motors and Chrysler and will instead keep the politically delicate task in the hands of his most senior economic advisers, a top administration official said Sunday night.

Mr. Obama is designating the Treasury secretary, Timothy F. Geithner, and the chairman of the National Economic Council, Lawrence H. Summers, to oversee a presidential panel on the auto industry. Mr. Geithner will also supervise the $17.4 billion in loan agreements already in place with G.M. and Chrysler, said the official, who insisted on anonymity.

The official also said that Ron Bloom, a restructuring expert who has advised the labor unions in the troubled steel and airline industries, would be named a senior adviser to Treasury on the auto crisis.

The unexpected shift comes as G.M. and Chrysler race to complete broad restructuring plans they must file with the Treasury by Tuesday. The companies’ plans are required to show progress in cutting long-term costs as a condition for keeping their loans.

The administration official said the president was reserving for himself any decision on the viability of G.M. and Chrysler, both of which came close to bankruptcy before receiving federal aid two months ago.

One of President Obama’s top advisers said Sunday that the administration had not ruled out a government-backed bankruptcy as a means to overhaul the automakers.

“We’re going to need a restructuring of these companies,” the adviser, David Axelrod, said on “Meet the Press” on NBC. He added that a turnaround of the companies would “require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company.”

The automakers had been expecting the appointment of a car czar to break the logjam of negotiations with the United Auto Workers over the finances of a retiree health care trust, and with bondholders about reducing the companies’ debt.

Mr. Bloom is known for bringing his Wall Street experience as an investment banker to an advisory role as the “in-house” banker for the steel workers’ union. With the auto union locking horns with bondholders in the G.M. revamping deliberations, Mr. Bloom appears to bring credibility with both the union and the debtors. Mr. Bloom could not be reached for comment Sunday night.

Another senior administration official said that Mr. Obama had considered appointing a car czar, and among those considered for the job was the private equity executive Steven Rattner. It was not clear why the administration changed course or whether Mr. Rattner would have a role on the task force.

The panel, called the Presidential Task Force on Autos, will draw officials from several agencies including the departments of Treasury, labor, transportation, commerce and energy, according to the administration official.

Many members of the task force have already been working closely with G.M. and Chrysler on the viability plans they are preparing for the government.

G.M. and Chrysler are both expected to request more loans to stay solvent during what is shaping up as another miserable year for auto sales.

Chrysler’s chairman, Robert L. Nardelli, has said his company needs another $3 billion in addition to the $4 billion loan it received in January.

G.M. originally asked for $18 billion in aid in December. G.M. has borrowed $9.4 billion so far and is scheduled to receive another $4 billion, if the Treasury is satisfied with its revamping plan.

G.M. said in a statement that it welcomed the new task force and that it looked forward to sharing its plan “to restore our company to viability and to meet the requirements of its loan agreements.”

Representatives of Chrysler could not be reached for comment on Sunday night.

The administration official who disclosed the change in Mr. Obama’s plans for oversight of the auto industry said the group would review the companies’ submissions for a week or two before responding publicly. Until then, the auto makers are expected to continue talks with the union and other stakeholders.

On Sunday afternoon, G.M. and the U.A.W. resumed discussions in Detroit about reducing the company’s labor costs, a person with direct knowledge of the talks said. This person, who spoke on condition of anonymity because the discussions are private, characterized the talks Sunday evening as “intense” but did not indicate that an agreement was imminent.

The U.A.W. had walked away from the bargaining table late Friday as the two sides clashed over how to cover retiree health care costs.

U.A.W. leaders in December agreed to help the automakers by delaying when the companies are required to make multibillion-dollar payments into a new trust fund designed to pay for retiree health coverage.

The Ford Motor Company is not taking federal aid, and therefore does not need to submit plans for approval. But Ford, which lost $14.6 billion in 2008, the most in its history, is expected to ask the U.A.W. for whatever concessions are granted to G.M. and Chrysler.

Both G.M. and Chrysler are likely to outline deep cuts in jobs, plants and models in their restructuring plans. One G.M. executive said the automaker is proposing a much smaller company with fewer brands and far fewer people.

G.M. and Chrysler recently extended buyout and early retirement offers to nearly all of their 90,600 hourly workers as they try to eliminate factory jobs and replace older workers making about $28 an hour with new hires who can be paid half as much.

G.M. announced plans last week to cut 10,000 white-collar jobs worldwide, including 3,400 in the United States. It said that salaries for those who remain on staff would be cut by as much as 10 percent through at least the end of 2009.

Over all, automakers are expected to sell between 10 million and 11 million vehicles in the United States this year, far below the 16.2 million they sold in 2007. G.M. said last week that the two-year drop is roughly equal to the capacity of 24 assembly plants.

http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif (http://www.nytimes.com/2009/02/16/business/economy/16auto.html?_r=1&ref=business)

UAW Members Get Free Lawyers– And They Ain’t Giving Them Up for You

By Robert Farago
February 16, 2009

The United Auto Workers (UAW) contracts are facing unprecedented public scrutiny. It could have something to with the fact that it’s now OUR money the automakers are pissing away– sorry, “lavishing upon” union members. Or it could be that the normally passive– sorry, “pro middle class” MSM’s smells blood in the union boss’ water. In any event, here’s one for working class heroes: unlimited free legal advice. The Freep: “Established in 1978, the UAW Legal Services Plan provides ‘personal legal services,’ to about 725k workers, spouses and retirees from several companies, according to the program’s Web site. It is the largest pre-paid legal services program in the country. Before I give the jumpers the inside dope (in a non Michael Phelps kinda way), you wanna guess how much 290 attorneys cost the Big 2.8 et al.? Seriously, you gotta guess. ‘Cause the Freep doesn’t even estimate the cost. Blood boiling? Ready for the jump then…

Three out of four autoworkers have used the legal services for a variety of purposes. In 2008, the letter said, that included:

Bankruptcy assistance: 9,392 UAW members, including 2,938 Ford members.

Divorce assistance: 6,899 members, including 1,924 Ford members.

Foreclosure assistance: 2,973, including 821 Ford members.

Real estate: 27,000, including 6,265 Ford members.

Now you could argue that the automakers agreed to this, let’s say, $100m boondoggle. So it’s not the union’s “fault” the shyster service exists. OK, sure, BUT– the UAW is “fighting to keep free legal services for its members.” That’s not what I’d call “shared sacrifice.” In fact, I’d say it’s a scam. Disagree? Sue me.

White House Grants GM $4b Bailout Loan Ahead of Viability Plan

Tue Feb 17, 2009 1:21am GMT

WASHINGTON, Feb 16 (Reuters) - The U.S. government will release $4 billion in additional aid to General Motors Corp on Tuesday as planned, a White House aide said on Monday, ahead of the deadline for the automaker to submit a new survival plan.

The aide said GM's smaller rival Chrysler LLC's request for additional aid would be treated as a new request and dealt with separately.

GM is seeking concessions from the United Auto Workers union and creditors under the terms of its $13.4 billion federal bailout. It must submit a restructuring plan to U.S. officials on Tuesday showing how it can cut costs and pay back the loans.

President Barack Obama has decided to launch a government task force for restructuring the U.S. auto industry instead of naming a "car czar" with sweeping powers.

He is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel together with White House economic adviser Lawrence Summers, a senior administration official said on Sunday.

To date, GM has received $9.4 billion in federal aid that has allowed it to stay in operation since the start of the year. It is widely expected to seek additional assistance with the restructuring plan due Tuesday.

Chrysler, controlled by Cerberus Capital Management, has been granted $4 billion in federal and is seeking an additional $3 billion.

http://uk.reuters.com/resources/images/logo_reuters_media_uk.gif (http://uk.reuters.com/article/marketsNewsUS/idUKN1631969120090217)

GM Europe unions seek spin-off of Opel, Saab

16 Feb 2009

FRANKFURT (Reuters) - General Motors Corp's European labor leaders called on Monday for a spin-off of the Opel/Vauxhall brand rather than face what they called potentially fatal cost-cutting in Europe by the stricken U.S. carmaker.

"The spin-off of Opel/Vauxhall ... and the spin-off of (Swedish brand) Saab is the only reasonable and feasible option for General Motors which would not destroy the European operations and its European assets and could avoid lawsuits," a statement on the labor force's website said.

GM, recipient of a bailout from Washington, has a Tuesday deadline to present a plan to the U.S. government on how it plans to remain viable.

The workers' statement, signed by the heads of the company's European Employee Forum, said GM management had show main elements of the plan called Project Renaissance to selected analysts last week.

"The current plan could include for the Opel/Vauxhall brand and the GM/Opel/Vauxhall subsidiaries mass dismissals and probably several plant closures. This would have disastrous consequences for the GM brands and companies in Europe and will finish them off," the statement said.

"Moreover, the plan is not viable taking in consideration the needed loans guaranteed by European governments and the existing legally binding contracts on the European and national level."

The statement did not make clear whether European labor representatives had actually seen the plan and the labor leaders were not immediately available for comment.

http://www.reuters.com/resources/images/logo_reuters_media_us.gif (http://www.reuters.com/article/GCA-autos/idUSTRE51F2IX20090216)

Union Talks Seen as Key as G.M. Makes Case for Funds

By BILL VLASIC and NICK BUNKLEY
Published: February 16, 2009

DETROIT — With its access to a government lifeline possibly at risk, General Motors executives were locked in intense negotiations Monday with leaders of the United Automobile Workers over ways to cut its vast bills for retiree health care.

G.M. will file what is expected to be the largest restructuring plan of its 100-year history on Tuesday, a step it must take to justify its use of a $13.4 billion loan package from the federal government.

The plan will outline in considerable detail, over as many as 900 pages, how G.M. will further cut its work force, shutter more factories in North America and reduce its lineup of brands to just four, from eight, according to executives knowledgeable about its contents. The remaining core brands will be Chevrolet, Cadillac, GMC and Buick.

But G.M.’s plan to shrink its way to profitability will not mean much without an agreement with the U.A.W.

On Monday, G.M. pressed union leaders in a meeting in Detroit for a deal on financing what was the centerpiece of the 2007 U.A.W. contract — a perpetual, G.M.-financed trust to cover health care costs of hundreds of thousands of retired hourly workers and their surviving spouses.

Both sides were hopeful that either an agreement, or at least significant progress, might be achieved by the time G.M. submitted its plan, according to three people familiar with the substance of the negotiations.

Talks are also continuing between the U.A.W. and Ford Motor and Chrysler. But the focus of negotiations has been with G.M., which has to address how a company that lost more than $20 billion last year can afford $5 billion a year in medical bills.

In its overall plan, G.M. needs to show President Obama’s new cabinet-level task force that it can substantially reduce costs and make a convincing case about its long-term viability by a March 31 deadline.

The company has already extended buyout offers to its entire United States unionized work force to reduce their ranks by another 20,000 jobs. It has also announced a 14 percent reduction in salaried workers around the world, leaving many of its white-collar workers in Detroit with limited prospects.

The plan will also probably include revisions in executive compensation and targets for cutting dealers and brands like Saturn and Pontiac.

Details of the plan have been closely guarded. G.M.’s board met Monday to review its contents, which will not be completed possibly until Tuesday, according to one G.M. official who asked not to be identified because of confidentiality agreements.

Chrysler was also said to be in the final stages of completing its plan on Monday, which will include further cuts in its manufacturing operations in the United States and more details on its strategy to rebuild its product lineup with a network of foreign alliances.

The plan was still under discussion late Monday with officials at Cerberus Capital Management, owner of an 80 percent stake, according to a person with knowledge of the situation.

The White House press secretary said Monday that the Obama administration was “anxious” to see the plans, but shared no timetable on when the president’s task force would comment.

“We’re anxious to take a look at the plans, understanding that it is extremely important to have a strong and viable auto industry,” the press secretary, Robert Gibbs, told reporters aboard Air Force One. “Obviously that is going to require some restructuring to ensure its viability.”

On Monday, the president designated the Treasury secretary, Timothy F. Geithner, and the chairman of the National Economic Council, Lawrence H. Summers, to oversee the task force on the auto industry.

The move surprised executives at G.M. and Chrysler, who were expecting the appointment of a “car czar” who would play an active part in negotiations between G.M. and Chrysler and their unions and lenders.

The task force is not likely to complete any review of the plans for at least a week or 10 days, according to an administration official who spoke on condition of anonymity. The president expects negotiations between G.M. and the U.A.W. and others to continue without pause for the plan’s submission, the official said.

Talks between G.M. and its bondholders have cooled while the automaker considers the framework of an agreement offered by the bondholders to reduce G.M.’s debt to $9 billion, from $28 billion.

The U.A.W. talks, however, have been constant since Saturday, when Ron Gettelfinger, the union’s president, at one point cut off discussions with G.M. — only to drive across town to take up the topic of retiree health care with Ford.

Ford has not received government loans, so it is significant that the U.A.W. appears to believe it must address retiree health care at all three Detroit auto companies simultaneously.

G.M. has the most at stake with the U.A.W. Its future obligations for retiree health care are estimated at $47 billion, and by next year it is required by its contract to contribute more than $10 billion to the trust set up in 2007.

The company, which nearly ran out of money before receiving the first $9.4 billion of its $13.4 billion in late December, is pressing the U.A.W. to accept stock for as much as 50 percent of its next contribution to the trust, according to two people knowledgeable about the discussions.

Mr. Gettelfinger, for his part, is trying to protect one of the jewels of the U.A.W. contract, which is essentially health care for life for anyone who worked on the assembly line and their surviving spouses. G.M. has already canceled health care for more than 100,000 of its salaried retirees.

“The U.A.W. at this point understands that it can very well turn into the villain of this whole thing by insisting that its workers receive health care benefits that few workers do,” said Gary N. Chaison, a labor expert at Clark University in Worcester, Mass.

U.A.W. members are bracing for bad news, and worrying that their health care plan will be sacrificed to keep G.M. from going bankrupt.

“Where does it all stop?” said Mike Green, president of U.A.W. Local No. 652, which represents workers in Lansing, Mich. “It would be devastating. Our typical person works between 30 and 40 years. They did their part. Why should they have it taken away with the sweep of a pen?”

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Chrysler asks govt for $5 billion more in loans

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Feb 17, 4:54 PM (ET)
By TOM KRISHER and KEN THOMAS

DETROIT (AP) - Chrysler LLC on Tuesday told the U.S. government it needs even more taxpayer money to survive. General Motors is expected to do the same. Acknowledging that industry conditions are worse than expected when it made the case in December for a government bailout, Chrysler requested an additional $5 billion in government loans. It originally said it would need $3 billion more. The company had previously received $4 billion from the Treasury Department.

General Motors Corp. (GM) is expected shortly to release the details of its own restructuring plan and follow that up with a news conference at 6:30 p.m. GM has received $13.4 billion in government loans - $4 billion of that on Tuesday.

To prove they can survive as viable companies, both Chrysler and GM need to sharply reduce costs. To that end, Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models. GM has previously outlined reductions to both its hourly and salaried work force and has said it plans to cut back to four vehicle brands from eight.

Both companies are required to reach concessions with the United Auto Workers union and debt holders. While no final deal was reached ahead of the government-imposed 5 p.m. deadline for the restructuring plans, GM was said to be close to an agreement on labor concessions and Chrysler said concessions have been fundamentally agreed upon. The progress in the GM talks was according to a person briefed on the negotiations who asked not to be named because GM's plan hasn't been submitted.

GM executives have said the company only has to show substantial progress by the deadline, with the whole plan finalized by March 31.

The plans still have to be vetted by Treasury and the new autos task force announced by the Obama administration Sunday night.

The news came on a day when President Barack Obama signed into law a massive economic recovery plan. Signs that the recession is deepening were more immediate for investors, however, and they dumped stocks and pushed oil prices sharply lower.

GM is likely to seek more money, at least up to the $18 billion that it requested from Congress in December under its worst-case scenario projections. That scenario has arrived with U.S. sales at a 26-year low and auto sales dropping in other parts of the world, a person briefed on GM's plan said.

The plan will stick with GM's public strategy of trying to remain viable and avoiding Chapter 11 bankruptcy protection, said the person, who spoke on condition of anonymity because the plan has not been finalized.

GM's plan will discuss cost savings from labor concessions and additional plant closures, but the locations of those plants will not be revealed, another person briefed on the plan said Monday. The number of factories to be closed wasn't available.

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GM needs up to $30 billion in aid to avoid failure

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Tuesday February 17, 2009, 6:11 pm EST
By Kevin Krolicki

DETROIT (Reuters) - General Motors Corp said on Tuesday it could need a total of up to $30 billion in U.S. government aid -- more than doubling its original aid -- and would run out of cash as soon as March without new federal funding.

The request for additional aid from the top U.S. automaker came in a restructuring plan GM submitted to U.S. officials on Tuesday.

The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.

The request came on the same afternoon that No. 3 U.S. automaker Chrysler requested an additional $5 billion from the current $4 billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years.

GM also said it had not reached deals with bondholders and its major union to reduce some $47 billion in debt but would work to reach those agreements by the end of March.

In response to signs of a prolonged slump in demand for new cars and trucks, the automaker also said it would step up cost-cutting, reducing its global workforce by 47,000 jobs this year and cutting five additional U.S. plants by 2012.

In addition, GM said it would cut its U.S. workforce by another 20,000 jobs by 2012 with most of those reductions coming earlier.

GM has been kept afloat since the start of the year with $13.4 billion in loans from the U.S. Treasury. Its expanded aid request for up to $30 billion includes a $7.5 billion credit line in the event that the autos market remains depressed.

Critics of the bailout of GM and its smaller rival Chrysler LLC have urged the government to consider financing a court-supervised restructuring for the two ailing automakers in bankruptcy.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100 billion in financing that could have to be provided by the U.S. government.

GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.

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GM Cuts Wagoner’s Pay, Auditors Give ‘Going Concern’

By Jeff Green and Mike Ramsey

March 5 (Bloomberg) -- General Motors Corp. Chief Executive Officer Rick Wagoner, working for $1 this year to keep U.S. government loans, had his total compensation cut to $5.4 million last year from $14.1 million in 2007 as the company said auditors question its ability to continue as a going concern.

Wagoner’s compensation included a salary of $2.1 million and he wasn’t paid a bonus, the Detroit-based automaker said in a regulatory filing today. The largest U.S. automaker lost $30.9 billion last year, the second biggest shortfall in the company’s 100-year history. GM shares fell 15 percent, the most this year.

“There’s no new news here,” Chief Financial Officer Ray Young said in an interview. “We talked about this last Thursday. We fully contemplated this situation in our Feb. 17 submission to Treasury. I’m surprised by the reaction.”

GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. Wagoner, 56, needs to convince the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive. GM is also closing or selling its Saturn, Saab and Hummer brands and seeking $6 billion in aid outside the U.S.

Because of GM’s reliance on government aid, auditors gave the company a so-called “going concern” ruling, meaning there’s substantial doubt about the automaker’s ability to survive, according to the filing. GM said it renegotiated terms with its lenders to avoid violating loan conditions with the designation.

‘Blatantly Obvious’

“It’s telling you what you knew all along,” Harlan Platt, a finance professor at Northeastern University in Boston, said of the auditors’ ruling. “They issued what was obvious, blatantly obvious, in November.”

The ruling doesn’t make a GM bankruptcy filing more likely, Platt said.

GM fell 34 cents to $1.86 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have fallen 92 percent in the 12 months.

The company has been in contact daily with representatives of President Barack Obama’s autos task force and is focused on executing the viability plan it proposed last month, Young said. He had no comment on talks to cut labor and debt costs.

“It’s a regulatory requirement for us to file this statement,” he said. “Other than that, nothing has changed today versus last week or last month.”

The drop in February U.S. auto sales is consistent with GM’s prediction that auto sales would fall below a 10 million annualized rate in this year’s first half, Young said. GM is monitoring the effect of tax cuts, the Obama stimulus package and housing support to determine whether those will result in a second-half improvement as anticipated, he said.

‘Not Unexpected’

The automaker said in a statement that the auditors’ ruling “was not unexpected” given the company’s public comments about its access to funding dating to the end of last year.

“Once global automotive sales recover and GM’s restructuring actions generate the anticipated savings and benefits, the company is expected to again be able to fund its own operating requirements,” according to the statement.

GM reiterated in its regulatory filing that if it’s unable to restructure successfully and has to file for bankruptcy without government support, it may have to liquidate under Chapter 7 protection because of the lack of private debtor-in- possession funding. GM has said bankruptcy is more expensive than its current request for U.S. aid.

“The language that the auditors have used is pretty standard language,” said Jon Woods, a partner in accounting firm Plante & Moran PLLC in Southfield, Michigan. “It says they are not in a position to convince themselves that GM will be able to continue as a going concern. Given the problems in the company and the industry, that shouldn’t surprise anybody.”

Saturn Adviser

GM retained Stephen Girsky, president of Centerbridge Partners LLC, to advise the company and dealers on the spinoff or sale of its Saturn division, said Steven Janisse, a spokesman for the automaker.

The company also said it could see a significant loss that may exceed $1 billion on the separation of its Saab unit.

Saab, based in Trollhaettan, Sweden, filed for protection from creditors Feb. 20 after GM said it will cut ties by the end of the year and failed to win an agreement for aid from Sweden.

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The MSM Wakes Up to GM C11. Then Goes Back to Sleep.

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By Robert Farago
March 6, 2009

Despite General Motors’ epic slide into Chapter 11, or perhaps because of it, its defenders are busy re-writing history. It’s the Poseidon Adventure redux: a huge well-run ship overwhelmed by a sudden, terrible force of nature. Except, of course, the ship will eventually right itself. In truth, GM really is the Titanic: a badly built vessel run by men blinded by short-term greed and long-term hubris, headed for Davey Jones’ locker. GM CEO Rick Wagoner had the chance to return GM to dry dock, repair the company’s flaws and make it across turbulent seas. But then Wagoner is a GM lifer; his cowardice is both genetic and institutional. What’s the mainstream media’s excuse?

This is the day after GM’s auditors told the world that the automaker may not be a “going concern.” It’s also the day that the MSM has finally come to grips with the fact of GM’s utter ruination at the hands of its tacitly incompetent management team. Or not.

For example, Daniel Howes’ column in the Detroit News chastises “the skeptics, the deniers and the deluded” for not facing facts. As John McEnroe used to say (before CBS started signing his paychecks), you have GOT to be kidding me. Mr. Howes has been carrying the can/pouring the Kool-Aid/providing aid and succor/kissing the ass of these GM C11 deniers for years. And as recently as, let’s see, today.

To wit: although Howes’ columns have generally switched from enthusiastic cheerleader to horrified bystander, today’s minimum opus proves he still doesn’t get it. ”[The auditors' report] also should remind the White House just how perilous a GM failure could be for their friends in labor, voters in the industrial Midwest and a fragile national economy.”

So, an industry insider reckons the auditors’ report will help his hometown heroes face the reality of GM’s black hole bottom line– in order to avoid the reality of GM’s black hole bottom line. Get out of denial to jump back in. At the taxpayer’s expense. Without anything remotely resembling a coherent and believable “return to viability” plan.

It may arrive as a piercing glimpse into the obvious, but even after GM’s “we’re toast” SEC filing, the agenda-driven MSM continues to view GM’s death throes through the prism of their pre-existing prejudice.

NPR’s The Takeaway interviewed me this morning about the “automotive bubble.” Host John Hockenberry seemed more concerned with the Obama Administration’s electric car future than the fact that “big bad” GM (as opposed to naughty truck-building Toyota) is going away.

Sad but true: MSM’s failure to “move the needle” in its understanding and presentation of the scope, scale and immutability of GM’s perils has enabled the company’s outrageous call on the public purse. In fact, it’s increasingly clear that both GM and the MSM see down as the new up. The worse the news, the greater the justification for the feds to hang another multi-billion dollar bag on Motown’s IV pole.

Just this morning, GM admitted that its request for an additional $30b federal “loan”– on top of the $13.4b already pissed away– won’t be enough to dig it out of its hole. You heard right. Please sir, can I have some more? (As spoken by Frank L. “Bobo” Marrapese Jr.) There’s no way GM could have gone public with this admission without a mostly complacent MSM. In a world with a properly informed and skeptical media, they would have been ripped to shreds.

I repeat: where is the media reporting on this fresh, unsustainable assault on taxpayer largesse? In the Detroit Free Press’ case, they’re chewing the fat with GM’s CFO. The Freep reports that Ray Young claims to be “monitoring the situation closely.” not to worry; he’d “planned for a weak first quarter.” Oh really. So why did GM low-ball their first suckle?

CNNMoney’s otherwise occupied, repeating PR spinmeister Steve Harris’ Fastlane Blog defense of the company’s long term future. The New York Times isn’t interested, declaring that “The announcement does not mean bankruptcy is imminent. But it underscores how difficult it will be for G.M. to successfully complete the restructuring plan that it filed with the Treasury Department last month.” Hang on; didn’t GM just say they can’t complete it as written?

Meanwhile, the Wall Street Journal continues its descent into the journalistic abyss. Once again, after screwing the pooch on a GM - Chrysler merger, they’re quoting “a person close the matter.” This time he’s saying GM’s open to a government-sponsored C11. How… nice.

When GM finally files for C11, the MSM will continue to spin the story. They won’t even blink when GM asks for tens of billions for debtor-in-possession financing. The tough questions– which should have been asked five years ago, three months ago, and today– will once again go unasked.

Too big to fail? As far as the media’s concerned, the answer’s yes. Even when it’s no.

The MSM is simply a tool for the powers at the top to push their agenda. People need to wake up and stop drinking the kool-aid.

Opel 'should consider insolvency'

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Page last updated at 11:49 GMT, Friday, 6 March 2009

There are concerns about the German government taking a stake in Opel
German carmaker Opel should consider entering insolvency, the country's interior minister has said.

Modern insolvency law was "not set up for the destruction but for the preservation of economic assets", said Wolfgang Schaeuble.

The comments came as executives from Opel and its parent General Motors (GM) met government officials and promised more details on a restructuring plan.

Opel has calling for a cash injection from Germany to help its survival.

But Mr Schaeuble said that insolvency was a better option for Opel than relying on a state handout - and that such a move would not mean that it would have to go bust.

"The public perception is that insolvency is associated with going bust or bankruptcy," he said.

"But that is wrong. We must grasp that to survive such a crisis, modern insolvency rules are a better solution than the state taking a stake."

'No business plan'

Like most global carmakers, Opel is suffering from a slump in sales.

The company announced last week that it needed the money to avert plant closures and job losses among its 26,000 employees in Germany.

Media reports suggest that the German government was angry that the bail-out proposal - which asked for 3.3bn euros (£2.93bn; $4.16bn) - was simply a glossy 217-page brochure which read like an advertisement, rather than presenting any viable business plan.

Finance minister Peer Steinbrueck said the plan was "no basis" for the government to make a decision on whether to grant state aid.

However, after an hour of talks on Friday, which German economic minister Karl-Theodor zu Guttenberg said were "open, good and constructive", the government said it was ready to review proposals.

GM Europe's president, Carl-Peter Forster, who is also head of the Opel supervisory board, said GM and Opel would endeavour to supply all the information which the German government had requested.

Cutbacks

German media have also reported MPs saying, off the record, that they were "shocked" to learn that Opel did not have any assets - with all factories being owned by GM in the US.

Separately, there is confusion about whether Opel owns the intellectual property (IP) information about its vehicles.

Deputy economic minister Dagmar Woehrl told parliament on Wednesday that GM had pledged the IP of Opel as security against capital injections it had received from the US government.

Trade union leader Armin Schild, who is on the board of Opel, said that both firms could use the IP without having to pay royalties.

But it has raised concerns that it could be sold on by GM.

GM Europe proposed last week that Opel should be partly separated from its parent company's US operations.

Such a move would require financing that GM is unable to provide.

The US carmaker, which was toppled by Toyota as the world's top-selling car firm earlier this year, is trying to wind down some of its European operations as part of a massive cost-cutting exercise.

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The more I read about this, the more I feel sick. It really is sad to see, but at the same time, they really deserve it. ALL vehicle manufacturers have been over-producing for years, and it has caught up to them. It would be like OPEC just producing as much oil as possible every month and not expecting the price/barrel to drop due to inflated supply.

I was hoping one of the 800 levels of executives would have forecasted this problem before it was a reality.

Bernanke Willing to Revisit TALF Program to Provide More Auto Industry Relief

By Jennifer Reed, Auto Group Editor
March 05, 2009

WASHINGTON, D.C. — SubPrime Auto Finance News obtained a copy of a letter several members of Congress sent to Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Timothy Geithner yesterday that requests more auto industry relief from the Term Asset-Backed Securities Loan Facility.

More specifically, 13 congressional members addressed the need for more accessible floor-planning securitization assistance. Many media reports have come out about dealers having to close up shop due to their inability to finance inventory.

The letter states, "As you know, the ongoing global financial crisis has had a particularly damaging effect on the American automobile industry. We applaud the joint efforts of the Federal Reserve Board and the Department of Treasury to promote liquidity in consumer loan markets through the Term Asset-Backed Securities Loan Facility. However, we are concerned that the program may not sufficiently address the problems facing the domestic automobile industry.

"Unlike many other Federal Reserve facilities which allow any investment grade collateral to be pledged, the TALF program is currently limited to only AAA-rated assets," the Congressional members continued. "In light of the uncertainty facing the automobile industry, it appears that the major rating agencies are reluctant to deem any portion of a loan to an auto dealer as AAA. Unfortunately, this means that the domestic auto finance companies are unable to use the TALF program to accommodate dealer floor-plan financing."

The 13 members of Congress went on to highlight the fact that this is a "critical issue for the domestic automobile industry."

"We appreciate Federal Reserve Chairman Bernanke's recent statement that he is willing to revisit this issue. Given the urgent nature of the crisis in the motor vehicle industries, we encourage you to consider finding a way to ensure adequate financing for dealer floor plans as soon as possible," they concluded.

The Congressional members who added their signatures to the letter include Gary Peters, Thaddeus McCotter, Barney Frank, Paul Kanjorski, Brad Miller, Donald Manzullo, Emmanuel Cleaver, Ron Klein, Mary Jo Kilroy, Joe Donnelly, Andre Carson, Dan Maffei and David Scott.

Their statement echoes that of the American Financial Services Association. In particular, AFSA said that it believes the TALF program must be expanded to permit eligibility for securities beyond those with an AAA rating. Without additional changes, lenders will continue to face funding challenges — and many potential borrowers may still find themselves unable to buy or lease a car.

Chris Stinebert, president and chief executive officer of AFSA, said, "Of particular concern is the effect on floor-plan financing, which auto dealers use to buy their inventory. Without an expansion of TALF's eligibility requirements, 50 percent of floor-plan ABS will be shut out of the program, creating a domino effect that will impact all lenders and dealers.

"Going forward, AFSA will continue to emphasize the important role played by the auto finance sector in any type of economic recovery program. We call upon the Treasury and Federal Reserve to expand TALF's eligibility requirements beyond those that are AAA rated. These modifications are urgently needed for the TALF program to be successful for auto-backed ABS and to avoid systemic risk for the entire auto finance market," he added.

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GM shares hit lowest point in 75 years

Mar 6 01:00 PM US/Eastern

NEW YORK (AP) - General Motors Corp. shares on Friday fell to their lowest point in more than 75 years, as investors fretted that despite government help the ailing automaker may still be forced to file for bankruptcy protection.
GM shares hit a low of $1.27 in late morning trading Friday, before rebounding to $1.45 in midday trading.

The low point matched a record set on May 4, 1933, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

GM released a statement Friday saying that it had not changed it position on a possible bankruptcy protection filing, and that an out of court restructuring remains its best option.

"As a prudent business measure, the company has analyzed various bankruptcy scenarios," GM said in its statement.

"However, the company firmly believes an in-court restructuring would carry with it tremendous costs and risks, the most significant being a dramatic deterioration of revenue due to lost sales."

Even if the automaker doesn't file for bankruptcy protection, analysts have said that a government bailout of the automaker will also dilute its shares to the point that they are nearly worthless.

Friday's stock drop comes as members of the Obama administration's auto task force continue to meet with GM's stakeholders and weigh their options.

On Thursday, members of the task force met with representatives of General Motors' bondholders, along with the chief executive of Fiat Group SpA whose company wants to form an alliance with GM's fellow ailing automaker Chrysler LLC.

The news came on the same day that Detroit-based GM released its annual report in which its auditors said they had doubts about whether GM can overcome its staggering losses and generate enough cash to stay in business.

GM said in the report that it's on the edge of bankruptcy and won't be able to avoid it unless it gets more government money and successfully executes a huge restructuring plan.

The automaker lost $30.9 billion last year, is living on $13.4 billion in U.S. government loans, and is seeking up to $30 billion as it tries to survive the worst auto sales climate in 27 years.

GM is also hoping to get help from other countries. The automaker's Adam Opel AG subsidiary wants to secure at least $3.8 billion from the German government.

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Bailout Nation Must Die

By Robert Farago
March 8, 2009

Remember the old Fram filter ad? “You can pay me now or you can pay me later.” THIS is the justification behind Bailout Nation. We should bailout Detroit (and everyone else) NOW or the whole economy will go to hell and we’ll WISH we’d made the “investment” in our future. Like any Big Lie, it’s the truth– provided you accept the supposition’s supposedly “inevitable outcome.” Oh hell. You don’t even have to accept it; you just have to be afraid of the possibility that it’s true. As GM goes, so goes America? Are we all really that stupid?

It’s ironic that the president who did more to engender big government began his first term assuring Americans that the only thing they had to fear was fear itself. In psychobabble parlance, FDR was telling Americans to “surrender ownership of their fear.” Guess what? In today’s Bailout Nation, fear owns you.

Cravenly, disgustingly, unforgivably, to their eternal shame, GM and Chrysler went to Washington with their begging bowl Framming their failure. They testified (under oath no less) that we should hand them $19.4b of American taxpayer’s hard-earned money because if we didn’t, things would fall apart. The “ripple effect” would kill the U.S. economy dead.

No! Worse! Letting GM and Chrysler fail would destroy our industrial base! Foreigners– foreigners!– would steal our strength and turn us into their bitch. The pols and the public bought it. Literally.

And now the zombie automakers are back, begging for more bailout billions. And they’re singing the same funeral dirge (in their own entirely belligerent way) that loosened the public purse strings the first time ’round. And our elected pols are relying on the same flawed logic which obviously, catastrophically, nearasdammit immediately failed the first time we proffered the federal teat to forestall the “inevitable.”

The new old thinking: we can pay them MORE now and we can pay them MORE later so we don’t have to pay them MORE later.

Well, I’ve got a different idea. How about we pay them NOTHING now so we don’t destroy the entire United States economy later? I’m serious. Forget debtor-in-possession financing. If the markets won’t embrace Chrysler and GM’s C11 turnaround plans– and why would they?– why should Uncle Sam?

If America wants to clean up Detroit’s mess by creating a new health care, pension and unemployment safety net, if John Q. Public feels sorry enough for displaced auto workers to spread boondoggle billions over the bankruptcy blighted landscape, go ahead. But for God’s sake, let these automakers die. The U.S. economy– as a more or less capitalistic system– can take the hit. It’s gonna be ugly, but the mistakes were made years ago, long before the current economic crisis. More to the point, there’s no avoiding the consequences of that inaction. None.

If we continue to bail out Detroit, and extend that largess to automotive suppliers, dealers, etc., we’ll screw-up the economic fundamentals that made this country the world’s greatest economic power: minimal government intervention in fair, free and open competition. We’ll be stealing food from the tables of those companies and workers that didn’t end up in D.C., using threats, bribes and extortion to avoid the consequences of their own actions. And we’ll running-up the price of transportation for the average consumer.

Bankruptcy was specifically designed for exactly this situation. Do we really have so little faith in our existing institutions that we want to create some special exemption for a gang of bombastic millionaires that somehow got the idea that they deserve a pass that we, the people, would never receive?

What’s wrong with Chapter 11 anyway? GM and Chrysler are afraid of that no one will buy a car from them in bankruptcy. And they wants us to “take ownership” of their fear. With our cash.

Someone needs to stare these fear-mongering whiners in the face and tell them to man up. If it’s true that consumers won’t buy your products after you’ve declared bankruptcy, it’s your fault. Not ours. YOU killed your brands, not US. Instead of holding a gun to our head, why don’t use your valuable– make that expensive time devising a way OUT of bankruptcy. Some way to come back from the dead that doesn’t steal money from the mouths of productive citizens and taxpayers?

Yes, we’re afraid for our economic survival. Yes, we feel for others who will suffer for their boss’ incompetence, arrogance, short-sightedness and greed. But we must not abandon who we are as Americans, and what we believe in. Faith, hope and charity are wonderful noble ideals. But they’re not what makes America strong. That would be independence, creativity, hard work, determination and a deep-rooted belief in fair play.

Now is not the time to abandon our principles. Now is the time to embrace them, come what may. Yes, we can pay them now. But we will pay for it later.

Congress Should Stop Giving GM Funds, Republican Lawmakers Say

By Nadine Elsibai

March 8 (Bloomberg) -- Republican lawmakers said Congress should stop providing General Motors Corp. with federal aid and let the company file for bankruptcy if necessary.

“The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on the “Fox News Sunday” program today.

The automaker could reorganize and renegotiate its labor contracts to come out “stronger, better, leaner,” McCain, from Arizona, said.

GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. GM’s Chief Executive Officer Rick Wagoner is seeking to persuade the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive.

The largest U.S. automaker has lost $82 billion since its last annual profit in 2004 and has been fending off speculation about bankruptcy for more than two years.

U.S. auto sales plunged 18 percent to a 16-year low in 2008, affecting GM, Ford Motor Co. and Chrysler LLC.

Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that “subsidization of anything for very long never works.”

“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.”

A Viable Company

House Minority Leader John Boehner said the government shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term.”

“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation” program today.

A voicemail left seeking comment from GM today wasn’t immediately returned.

The Federal Reserve’s Term Asset-Backed Securities Loan Facility program, or TALF, may help struggling automakers raise cash to make loans to consumers.

TALF’s aim is to bring investors back to the market for bonds backed by auto loans, credit cards, student loans and small businesses.

The Fed will start disbursing TALF funds March 25 to prop up the market for consumer and small business loans, the central bank said on March 3. The program was originally set to start in February.

‘Not Life Support’

“Any money we give to the auto industry must be a lifeline, not life support,” House Speaker Nancy Pelosi told reporters at a weekly press briefing March 5, saying the ultimate decision remains with the administration. “This isn’t endless. But there has to be a sign of viability. And this needs to happen, and it needs to happen soon.”

In a statement released two days ago responding to a Wall Street Journal report, the automaker said that “GM has not changed its position on bankruptcy.”

“As we’ve demonstrated through a series of actions, GM is moving quickly and aggressively to restructure the business, and achieving that outside of court remains the best solution for GM and its constituents,” spokeswoman Renee Rashid-Merem said in a March 6 interview.

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Obama auto task force members to drive GM's Volt

By KEN THOMAS and TOM KRISHER

DETROIT (AP) — Members of the Obama administration's autos task force will test drive the Chevrolet Volt rechargeable electric car and tour a Chrysler LLC pickup truck factory when they visit the Detroit area on Monday, an administration official said Sunday.

Task force members, led by Wall Street financier Steven Rattner and Steelworkers union official Ron Bloom, also will meet with United Auto Workers President Ron Gettelfinger and other top union officials, and they will sit down with senior General Motors Corp. and Chrysler executives, said the official, who asked not to be identified because the schedule has not been made public.

GM and Chrysler are living on $17.4 billion in government loans approved by the Bush administration last year, and they have asked for a total of $39 billion. Obama appointed the task force to review the automakers' viability plans and decide if they should get additional aid.

Task force members apparently will begin their day with a tour of GM's sprawling tech center in suburban Warren, Mich., followed by a tour of Chrysler's nearby Warren Truck plant, where the new Dodge Ram pickup is put together. The tech center houses GM's U.S. design and engineering operations, as well as a special facility for the Volt.

It was unclear where members will meet with the executives or the union officials, although it's likely to take place on the GM tech center grounds north of downtown Detroit.

The Volt, a battery powered plug-in electric vehicle, is being tested at the tech center, where GM has a studio dedicated to developing what the company is betting will be the car of the future.

GM is working on advanced lithium-ion battery packs for the Volt, which the company has promised will be able to go 40 miles on a single charge from a home outlet. After that, a 1.4-liter internal-combustion engine will kick in to generate electricity to extend the car's range.

Struggling GM has promised to have the car in showrooms late next year.

For Chrysler, the revamped Ram is an important product that executives hope will lead the company to profitability once the U.S. auto market recovers from the worst sales slump in 27 years. Chrysler points to the Ram as a sign of its improved quality and upgraded interiors that will spread to the rest of its model lineup.

The White House said Friday it was trying to determine "how to be the best partner" for the struggling auto industry.

Cabinet-level members of the panel, led by Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers, met at the White House for 90 minutes to review restructuring plans from GM and Chrysler as well as discuss the plight of auto parts suppliers.

Many suppliers are nearly out of cash and could go into bankruptcy protection soon without government aid.

The government can recall its loans to GM and Chrysler they fail to sign deals for debt restructuring and other concessions from stakeholders including the UAW by March 31. GM and Chrysler are seeking $21.6 billion in additional financing to execute turnaround plans submitted last month.

Last week GM said in its annual report that auditors raised serious doubt about the Detroit automaker's ability to continue operating. GM has received $13.4 billion in federal loans and is seeking an additional $16.6 billion. Chrysler has received $4 billion in federal loans and is asking for $5 billion more.

Some Republican senators in Washington are pushing for GM to enter Chapter 11 bankruptcy protection. Sens. John McCain of Arizona and Richard Shelby of Alabama said Sunday that they want the automaker to seek bankruptcy protection, which would allow for reorganization.

GM has said the restructuring can be accomplished without bankruptcy and said Chapter 11 would scare off customers who would be fearful that the company wouldn't be around to honor warranties or make replacement parts.

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I think a big problem with GM going into Chapter 11 is that it WILL scare off a large number of potential customers. The population is generally stupid and believes whatever the media tells them (all 6 companies because outside sources don't exist on TV and looking for them on the internet requires work). They also don't understand the difference between Chapter 11 and Chapter 7. All they see is BANKRUPTCY, and the only form of bankruptcy they understand is "oh no, I have no money and can't pay for anything so I have to go out of business".

I'd say there are a number of factors that went into fucking shit up this bad. Government forcing banks to make bad loans to people that couldn't pay them back while simultaneously making it damn near impossible for the automakers to be profitable, the media praising import brands for reasons I can't understand, and the collective stupidity of the entire nation. I think a healthy dose of education, along with leveling the playing field (not tilting it the other way), are the best solutions to this problem.