GM, Chrysler Want Billions More
Most of this happened yesterday:
General Motors and Chrysler FAX'd and emailed their viability plans to the White House and Congress late Tuesday afternoon (nice title for a Moody Blues song, no? Don't mind my references; I'm old).
GM says its Saturn division, Roger Smith's $10 billion (minimum) tribute to automotive mediocrity, will be killed, Pontiac as a division is probably history, though the name may remain on one or two models sold in other dealerships, Saab will probably be reorganized in some sort of bankruptcy (it's already being spun-off as a separate company), Hummer may be bought by a Chinese company (as we predicted here months ago) and Chevrolet, Buick Cadillac and GMC will be the company's core sales channels;
GM told the government Tuesday they'll need another $16.6 billion in loans, thank you, while Chrysler is asking for another $5 billion;
Auto industry suppliers in the US are asking for $18.5 billion in taxpayer loans;
Penske Auto Group reported its first quarterly loss in a decade (and where were GM, Ford and Chrysler when Roger Penske convinced Daimler to allow America to buy Smart cars only at his stores? Wouldn't Smart have been a nifty little profit center at, say, Chevrolet or Dodge dealers?);
(Smart Fortwo at the 2005 Tokyo Motor Show; I took this shot and didn't realize I had the date/time stamp in the 'on' mode - sorry).
Brembo, the Italian brake manufacturer which makes the pads, calipers and drilled and vented discs which no self-respecting Ferrari would be without, announced lay-offs of 1,800 people;
BMW announced cuts of 850 workers who build the Mini;
Delphi, the world's fifth-largest automotive supplier with over 22,000 employees, will lay-off 800 workers from their steering division;
Mitsubishi announced they will not have an exhibit at the 2009 Frankfurt International Auto Show due to "financial challenges;"
Much of that happened yesterday. I'm already pretty freaked-out about tomorrow.
(Above, BMW is laying-off 850 workers from their Mini division; bottom shot is a BMW radial aircraft engine - See how they got their logo? It's modeled after this type of engine; I took these at the 2007 Los Angeles Auto Show, just to give you some more unnecessary information, because that's the kind of guy I am).
Yes, yes, GM and Chrysler turned-in those viability reports, demanded by the government to justify the more-than-$17 billion in taxpayer loans given to the companies this year and also to explain how they plan to pay it back.
As usual, the United Auto Workers are giving up a hell of a lot more than white-collar execs at those companies. For instance, last time I checked, GM CEO Rick Wagoner took home about $26 million last year.
Incidentally, GM got another $4 billion Tuesday - yesterday - after turning-in their plan. Were you ever rewarded that much just for doing your homework?
Chrysler has received a total of $4 billion and their finance arm, Chrysler Financial, $1.5 billion.
Meanwhile, Ford officials announced a cut of 1,200 jobs at Ford Motor Credit, but continue to maintain the company can survive as an independent car maker through 2009 without federal help. We sure hope so; it'd be nice for one domestic car maker to stay in business.
According to the Detroit News, GM's plan calls for cuts of nearly 50,000 jobs worldwide in an effort to return to profitability within two years and to begin repaying the loans in 2012. Yeah, good luck.
While most of those job cuts will come from GM's overseas operations, GM is also increasing the number of US job reductions and plant closures. It now says 14 US factories will be shuttered, five more than it announced in December.
(I'm just wishing they could have somehow kept Pontiac as its own division, but really, when you have Chevy, why is Pontiac necessary? You want to buy a performance car, buy a Camaro; no need for a Camaro and a Firebird, though I know a lot of people would beg to differ, and I understand completely).
Chrysler's plan calls for 3,000 more job cuts and says it needs $5 billion more in the next few weeks just to stay in business.
But it said its most promising option was to form an alliance with Italy's Fiat. Yes, you read right: Chrysler's most promising option lies with Fiat. I get chills just thinking about it.
With a car czar now a dead issue, and Treasury Secretary Tim Geithner and National Economic Council Director Lawrence Summers tapped by Pres. Obama to chair the all-new "Presidential Task Force on Autos (and Lawnmower Repair," which is an old car biz joke on pretentious or too-long names), changes are afoot and a-wheel and by god they'll find somebody to take responsibility for this mess. That is, after they meet and hold hearings for a few years.
(Is this Pontiac Solstice coupe cool or what? Available with a 2.0 liter four-cylinder turbocharged engine which can make 260 horsepower, this kicks Miata's butt; but then again, the Miata will start every day...).
This all-new inter-agency committee, which has no members other than Geithner and Summers, as far as anyone knows, is already reviewing an urgent request from auto suppliers for at least $18.5 billion in emergency aid by month's end.
And don't those two already have pretty full plates, what with overseeing the near-$800 billion American Recovery and Reinvestment Act of 2009 and all?
Am I cynical? Not a bit.
But, I'll try again: Throw all the money they want at this "Detroit problem;" unless and until senior- and most of middle-management is broomed from these companies, things won't, nay, can't change.
How does the administration think Detroit got into this mess in the first place? I'll tell them: same way Wall Street and the banks did; being run by people who were focused on nothing other than their own ambitions, summer homes at the lake, inter-office politics, with the loyalty of Hollywood agents, and the bottom line and next quarter their only real connection to the actual business of making cars.
Detroit has the same problems as Wall Street and the banks, except in Detroit, on occasion, they actually build something.
(Is this a scary crew or what? Imagine if they were still running things ... or if Social Security had been privatized ...).
And, in spite of how thrilled I am with Obama and much of his team, this Geithner character is scary. As President of the New York Federal Reserve, he's the guy who oversaw George W. Bush's and Hank Paulson's bequeathing of 350 billion then-unmarked and now-unaccounted for dollars, the biggest rip-off in the history of the world (apart from, you know, Mitt Romney).
Masters of the Universe, my ass.
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I was interviewed on the matter earlier this week by Bloomberg: Obama Rejects ‘Car Czar’
http://www.bloomberg.com/apps/news?pid=20601103&sid=aQHVRdBzyUxI&refer=news
A Proposition to Save our Auto Industry - Andrew Gross, Chairman & CEO, Automotive Consulting Services, LLC.
To unclog inventories of new vehicles at dealerships and factory lots in the US:
1. Offer direct federal access to funds to franchised new vehicle dealers for the purpose of accelerating loans for qualified consumers and fleet operators.
2. Accelerate Special Offers for Fleet Operators to cycle their vehicles
3. Auto Manufacturer and Parts Supplier Shareholders' Guaranteed Value Plan
4. National US Auto Industry "Super Sale"
As space here does not permit all the supporting details, please contact me to receive same and/or interview further.
Regards,
Andrew Gross (The "Car Czar")
Chairman & CEO
Automotive Consulting Services, LLC
(An Oregon Corporation)
www.autoconsult.us
503-701-6003
andy@autoconsult.us
Cars last a long time, and now that easy credit is gone, people will not be able to waste money buying a new car every three years. The demand for cars will be much less. That goes for all makes from all companies.
The only way for the Big 3 to survive is to cut costs.
1. GM/Ford/Chrysler need to publicly endorse and lobby for H.R.676, the Medicare for All bill that's before Congress right now. If the Big 3 don't have to pay for the health care of hundreds of thousands of current employees and retirees, costs to manufacture cars will go WAY down.
2. The Big 3 need to publicly endorse and lobby for H.R.25, the FairTax Act that's before Congress right now. This bill eliminates ALL federal taxes (payroll, income, capital gains, etc.) and replaces them with a inclusive sales tax. With all of the taxes removed from the components of cars and removed from employee labor, costs to manufacture cars will go WAY down.
My father who fought in WWII in the Pacific would only buy American cars. I only buy Camry's as they perform best. The new generations will outgrow the feelings of our parents who went to war with Germany and Japan.
The fact is GM is a poorly run company that has a failed business plan. They lost a billion a month last year. This year they will lose 2 billion a month. They failed and should be in bankruptcy. We can give them billions and billions but they need to sell off their assets and move on into smaller more efficient companies that make economic sense.
The same may be said for CITI Group and maybe BankAmerica.
Everyone please be reminded that the Japanese (like Mitsubishi) were the ones who killed our grand parents and great grand parents. That may be ancient history for most of you but I urge you to visit Japan. Count how many american products you see. Japanese buy their own products not ours and it has nothing to do with quality. Also I was asked to leave certain establishmnents while their due to the fact that I was American (maybe it was because I was not Japanese). South Korea is very similar. So just keep sending your money (profits of sales) to these countries.
I will always buy American Made products whenever possible. Have a little pride in YOUR country and stop kissing the butts of the Japanese.
Show me a more balanced, fair, realistic and effective partnership strategy between corporations, the workers and the taxpayers and there might be some room for future discussions. Unions are and unfortunate yet still necessary drain on the system but, then so are misanthropic overpaid corporate managers and their army of squabbling lawyers. Eliminate those and streamline the product line providing higher quality, safe, fuel efficient vehicles and we have the beginnings of a workable plan. That so many need a new car they can't afford relative to increasing their personal savings so they can feel better about themselves is also a symptom that needs to be addressed, not just on an individual level but on a societal one.
I don't think unions are the problem,it's who's running these companies and government.As for the Japanese car companies,they been getting money from there government for years,I know people who lived in Japan.It's well known there that the car and other companies get money from the government.
GM just killed their high-performance division. It's like learning that my father died.
http://www.thetruthaboutcars.com/gm-kills-performance-sub-brands-ss-v/
You mean the cars for the 50 year old teenagers are gone? Darn. Who wouldn't want a poorly designed car that looks like it came right out of a wet dream of the 1950s?
Well, the Crapette is still there... so the losses are not complete.
Yeah, and Toyota has great, fun-to-drive cars like...
.
...I need some help here...
... I have nothing.
KTM, you just hate anything remotely fun-to-drive, eh?
I'm confused why they seem so adamant about keeping Buick. If there was something that they could afford to lose, it's the Buick nameplate. Of course, I thought this back when they closed Oldsmobile's doors. Buick hasn't produced a model I'd even consider buying since the Grand National in 1987. Right now, they're about as relevant as Mercury is for Ford. They already have passenger/family cars in Chevrolet, they have luxury/tourers in Cadillac. Buick is just the ignored middle child that doesn't really know what it wants. While I agree most Pontiac models are identical to Chevrolet models, I certainly hope they see the sense in keeping a small sports car in the line up, namely the Solstice and/or re-badge the Saturn Sky as a Chevrolet, because not all of us can afford a Corvette, and it is a very nice little car.
GM's policy towards Buick has finally taken shape with the launch of the Buick Enclave and the upcoming Buick Lacrosse. Buick is being steered towards Front Wheel Drive (FWD) luxury for the everyday person who doesn't care about ultra excessive performance (like Mercedes/BMW/Audi/Cadillac) but wants an attractive, well built, efficient luxury car (for a good price). Cadillac is being built as a direct competitor to the Germans (and Lexus/Infiniti). GM has done a good job of showing this in their recent launches.
If this were a few years back with the lackluster Buicks of old, I would agree with you about getting rid of Buick, but as of now, GM is doing a good job of steering Buick & Cadillac in their respecitve directions.
Driving a Buick is like the proud admissions that one does not have a sense of form. The cars look like the word "Buick" sounds. Something like a blob thing, like as if a giant had taken a well designed car body and then had blown into it until it almost burst, blowing it up like a balloon... removing all meaningful edges that gave the original proportion and character. Maybe their design strategy is just that... take a good looking car and add six inches in all directions... done!
The automakers biggest mistake was when they flooded the markets with too many models of cars. The market can only support a limited number of models,and brands so why didn't limit their production to one compact, one full-size, one truck and one SUV, and making sure they produced a quality product that is full efficient and that runs well and is easy to upkeep?
Right now people can't afford to buy cars, but hopefully in the next few years they will, but will the automakers be prepared? When people do have money to again buy a new car, by limiting their choices could ensure increased car sales. It's all about supply and demand. Right now there is no demand and the supply of choices too large.
Please let me know which American car I should chose if I want 48mpg fuel efficiency and superior quality.
:-)
Why would you want superior quality now? You drive a Pious, so yoi obviously are happy with inferior quality and a plastic deathtrap.
Heck, even acceptable quality would be a step up from the Pious.
Sir,
judging by your "superior quality" remark, it is somewhat evident that you know little about automobiles. I drive an American and German car, and I can say without a doubt, American cars of the past few years are incredibly well built and efficient.
If you want a well built, affordable, efficient car, go buy a Cobalt or Focus and quit complaining. It a better value than a Civic or Corolla and the intangible value to American industry, technology and economy is incalculable.
If you do actually own a Prius, you've been duped by Toyota. The Prius IS an interesting, high-tech, fuel efficient vehicle, no doubt. What 99.9% of Americans do not think about is the fact that Toyota does not have a gasoline-only Prius. Think why they don't..... just think about it. If you have any technical knowledge, the answer is quite simple.
At this point, who even cares what kind of cars they're gonna build? We can't buy them anyway. Where is all this going to end? If somebody, anybody, could have stopped this freight train a while back, maybe there would have been some hope.
I wanted the stimulus plan to pass. We needed it to pass. We have to start somewhere. I know many, many, many businesses and people are dependent on these major businesses. But I just don't see how we can save these two.
PS-
I am NOT Anti-union. I BELIEVE IN UNIONS! I am anti-BIG S#iT!
You are mistaken about us not being able to buy cars. I can buy five cars with cash today if I want to and many people could buy at least one, if not two. The problem is that not that many people want to buy an American car unless it comes at a price below cost. Last week the family of a friend of ours bought two cars. Needless to say, they were not American. They would have bought at least one Prius if it hadn't been beyond their current financial means. They settled on two other Japanese cars that offer the utility they need at a price they can afford.
Especially with guarantees like Hyundai's new "if you lose your income, you can return the car" program, which every manufacturer will undoubtedly have in the very near future. I've been in the market for a new car for a few years now, but haven't found something that appeals to all the things I want in a car... and if I'm spending >25k, I'm damn well going to get what I want without making heavy compromises.
I felt I had to comment because of all these republicans born with silver spoons in their mouths and people who forgot what is was to work and "Have theirs" in retirement have nothing better to do all day but type on websites about how bad Unions are and bailouts for american citizens are. Auto bailout = Loan........Bank Bailout = a gift that will never be repaid. Too bad regular americans will mostly not see this because they are working or looking for work right now and dont have the luxury to sit around and read news sites. So republicans, retirees who have forgotten, silver spooners, people who move money around on computers all day thinking its working hard, flame away.
People have a point in not wanting to reward failure. If you as a union member can stand for nothing else than government subsidies for your failed employers, you are not part of the solution but part of the intellectual cancer this country suffers from. And the smartest people know that cancers need to be cut out and a good portion of healthy tissue with them or they will return and spread.
It always amazes me to read all the anti-union comments. People are either ignorrant about this country's history or they are just born rich. Without unions there would not be a middle class. If you are not middle class maybe your parents were. You and they could thank unions for all of the benefits you enjoy because of unions. Maybe you are in a job that is not unionized. Well similar jobs that are unionized have helped your job increase benefits and wages being that they are competively paid. If you are rich or run your own business why would you not want potential customers able to afford your products and put their disposable income in your pocket? Unions have fought hard so that people are not taken advantage of at their workplace and have basic rights like child labor, 40-hour workweek, vacation time, etc. If you are or ever work as an employee for someone else you can thank unions for these and many other benefits. If you think unions are bad then take a job in the northern United States and then travel to the south where unions are mostly nonexistant and take the same job. You will see the reason why regular everyday americans need unions. The pay and benefits in the south is sorely lacking compared to their equal counterparts in the north.
ignorrant?
You need to learn more about history. There was a middle class centuries before unions ever saw the light and it was clearly separated from the upper class (and still is to this day). Unions were not created to help middle class people but to lead the working class out of virtual slavery.
The political (ab)use of the term middle class for upper working class people is a modern development. It sounds better in political ads and speeches if you appeal to middle class people than to the working class you are really talking to. For one thing it makes you less suspect (in the US helping the working class is called "communism") and it makes your working class voters feel better if you call them "middle class".
If you are unionized, you are for sure not middle class. It means you are so dependent on your employer that you have to show up in force to get your rights.
Reality is: if you belong to the working class, you are screwed. Always were and always will be. Unions make it slightly better but they don't make it right. People who are proud to be working class are basically working into the arms of the establishment of real middle and upper class people who (falsely) believe that letting the working class advance to their level would threaten them. In reality this class warfare leads to nothing but a race to the bottom for everyone.
The anti-union comments are a bandwagon thing. Most people don't even know what they're railing against when they complain about unions... but you know what, if they got laid off from their job because of an injury, or want their company to give them health insurance, or better working conditions, I bet they'd enjoy what unions can do for them. Simple fact is, unions aren't perfect - the fundamental human flaw of greed is inherent in their process, but that doesn't mean they don't do some very good things for workers, and even for companies. Repeatedly people have moaned about how UAW people are paid too much, ignoring that non-union auto workers are not exactly getting minimum wage either.
At this point the bailouts of Wall Street and Detroit have merged. I'm no longer seeing a difference between either one. Throwing bad money after bad? All players keep getting money, all players are making lots of promises, all players keep shedding jobs and closing offices/plants, same management is in place, and there is no talk of nationalization, which may be the only way unless Congress decides to grow steel ones this time around and make demands for draconian changes at the top and middle managements, as others have suggested.
The next Congressional Outrage Show will feature the CEOs of Wall Street and Detroit together. I'll repeat what I said in another comment: Zombie banks and zombie car manufacturers. I feel bad for all the workers because they're going to get screwed no matter what.
Why should the USA bail out Chrysler? Maybe better to ask Germany and Dalmer still owns a big chunk of the company. Why bail out a private investment firm that owns the rest? Oh, that's right, it is a union bail out.
German auto companies are having some rough times themselves, it's unlikely anyone would stand for their tax payer money going to prop up Chrysler either. Even Fiat's agreement with Chrysler sets no promises for monetary reinforcement for Chrysler, now or any time in the future, and the Italian government has flat out said that no tax payer money will go to Chrysler. They're really floating off on an island all by themselves, and it'll take a minor miracle for them to pull through.
Daimler had a rough time ten years ago when its attempt to enter the aerospace industry flopped. Nobody ever seemed to be able to make sense of what Daimler hoped to get out of the Chrysler deal except for a black eye the size of a pancake.
I say we let Cerberus take care of Chrysler. They wanted it so bad, now they have it and they should take care of it.
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