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GM CEO: GM Needs Aid Before Obama Takes Office, White House Hints it Might be Possible

November 11th, 2008 | Posted in: Financial, Politics

In an interview with Automotive News, GM’s CEO Rick Wagoner specified just how dangerously close the company is to bankruptcy. So much so that they need government aid within the next 10 weeks. Some analysts believe GM’s cash reserve could go as low as $5 billion by December, making January’s bills unable to be paid.

Wagoner said regarding the aid that “this is an issue that needs to be addressed urgently,” and it was better to “overshoot” than “undershoot” in its degree.

He noted that in return for aid GM would be willing to exchange preferred stock, limits to executive pay, and rush more fuel efficient vehicles into production.

Wagoner didn’t think he should resign in exchange for aid stating “I don’t think it’d be a very smart move. I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served.”

He wouldn’t say exactly how much money he thinks GM needs but stated “the funding request that’s gone into Washington would cover us”. He expects that if car sales were to remain at their current level, “I’d question whether the U.S. industry as a whole could survive that without support.”

On Monday White House press secretary Dana Perino expressed some softening of the Bush administration in response to the recent letter from congressional leaders beseeching aid be released from the $700 billion bailout package.

Referring to the scope of the initial bailout bill, Perino said “there was not discussion of specific help to auto companies during that debate, and so the Congress’s intent was to help financial institutions.”

However, referring to the upcoming lame duck session, she said that “Congress is going to come back into town next week. If they decide to try to do something more on the auto industry we would listen to them.”

Yesterday as well President Elect Obama met with President Bush in the oval office. Aid for the auto industry was discussed between them according to reports.

Sources (RTT) and (Automotive News)

Posted by: Lyle

177 Responses to “GM CEO: GM Needs Aid Before Obama Takes Office, White House Hints it Might be Possible”

Spin Says:
November 11th, 2008 at 7:03 am

No Bailout!!!

Whats next, Circut City?

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Dave K. Says:
November 11th, 2008 at 7:06 am

hi Spin #1,

I understand it’s getting slow at the local golf course. They are cutting the greens half as often.

=D~

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Spin Says:
November 11th, 2008 at 7:10 am

Yea, it’s so slow here I might only play 9 today….

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William Hart Says:
November 11th, 2008 at 7:12 am

Let’s get the facts straight all Detriot Automakers need to go bankrupt which will destroy the Unions that has destroyed the hold unions have that has destroyed the industry in almost every other major city!

Problem with GM is simply, how will that affect The Volt.

We need the Volt though….We need to get off gas only problem and the only thing I worry about if them making cheap batteries making us replace them

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RB Says:
November 11th, 2008 at 7:19 am

If GM has $16B and they may need only $11B to keep operating, why is a federal bailout so urgent?

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Exp_EngTech Says:
November 11th, 2008 at 7:20 am

Mr. Goodwrench is getting his last pay check.

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carcus Says:
November 11th, 2008 at 7:37 am

Wagoner didn’t think he should resign in exchange for aid stating “I don’t think it’d be a very smart move. I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served.”

____________________________________________________

I don’t think I’ve ever read where Wagoner and team admit any mistakes. They’re all just victims.

Your company has been run into the dirt, buddy. And you take no responsibility. That’s why you need to go.

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carcus Says:
November 11th, 2008 at 7:43 am

He noted that in return for aid GM would be willing to exchange preferred stock, limits to executive pay, and rush more fuel efficient vehicles into production.

____________________________________________________

Wouldn’t limiting executive pay and rushing efficient vehicles into production be the plan even without aid?!

Is he asking for ransom money in exchange for the volt and plugin vue?

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Gsned57 Says:
November 11th, 2008 at 7:51 am

“He noted that in return for aid GM would be willing to exchange preferred stock, limits to executive pay, and rush more fuel efficient vehicles into production.”

The stock today is near worthless, The execs should be fired, whenever I hear we’ll rush something to market I think “I don’t want to own the first generation of that”.

What’s wrong with the picture of him? Just 3 days ago he was laughing it up with Pelosi and the gang. Now he has to come crawling to papa Bush to ask for more lunch money.

I figure Bush needs to keep them going until the pres swap. The country voted in Obama and even though he isn’t president yet you can’t let the worlds biggest automaker collapse when you’ve only got 1 month left in office. He should at least throw them 15 billion and let the new guy make the tough choices. On the other hand when you have an approval rating of just 25% there’s really nowhere to go but up.

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mmcc Says:
November 11th, 2008 at 7:52 am

Open question… Specifically, what would happen to the UAW if GM went bankrupt? Would GM then be able to rehire at lower wages and benefits? What effect would it have on retirees?

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carcus Says:
November 11th, 2008 at 7:54 am

The only thing more broke than GM is the U.S. Treasury.

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dc Says:
November 11th, 2008 at 8:00 am

This was a shock to see yesterday, the final admission.

The question is WHERE DOES THIS NONSENSE END? I have been against bailouts from the beginning of this mess and I do not let my Volt fandom get in the way of that. This is ridiculous. The US government should not be in the business of propping up every company that goes bankrupt. I know, let me guess, GM is “too big” and “too important” to go bankrupt. I know, lots of fanboys here that are bigger disciples than I am.

But WHATS NEXT? DHL, Circuit City – these companies employ tens of thousands of people as well. There are entire communities that are going to be virtually wiped out by their announcements. So why not them? Where’s the line? When do we finally draw the line and say, you, OK we’ll bail you out but not this company over here, they have to go. If GM goes bankrupt, its not as if there will be no cars on the road and no way for citizens of the United States to get around in vehicles. Other companies make cars.

As much as I love GM and have been here from the beginning, I cant buy into another 11 figure bailout package that my grandkids will be paying for.

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D Lo Says:
November 11th, 2008 at 8:01 am

#8 carcus Says:
“Wouldn’t limiting executive pay and rushing efficient vehicles into production be the plan even without aid?”

I can’t agree more. I hope this was taken out of context. A more appropriate plea might be “We have already limited executive pay and will produce more fuel efficient vehicles (Volt, Cruze, etc)…we just need short term financing to complete development and bring to market without further delay.”

I was totally opposed to the banking bailout and as close as I am to the auto industry, I say let them fail. I may be a Michigander but I am an American first. If I am going to buy American it is because America is about capitalism, not socialism. Keeping in mind that here in Michigan we have a socialist governor and the UAW–another socialistic relic–I guess GM has followed suit.

Barrack is about change; a bailout–that’s not change, that’s more of the same.

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Rashiid Amul Says:
November 11th, 2008 at 8:03 am

I am so tired of the Bailout crap. What happened to personal responsibility? Where is my bailout?! This is really the pits.

GM. File chapter 11 and come out of it fighting.
But first fire the people who dragged this company down.

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Eric C. Says:
November 11th, 2008 at 8:06 am

#5 RB said

“If GM has $16B and they may need only $11B to keep operating, why is a federal bailout so urgent?”
——————————————————-

I’m pretty sure they need $11B per month, hence the urgency due to their inability to maintain their $16B in cash.

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TCook Says:
November 11th, 2008 at 8:10 am

Circuit City filed for Bankruptcy, why can’t GM? The first thing they are going to do if they get this bailout is give a great big check to those that caused it. Apparently, they don’t know how to run a successful company. If demand is low, lower the output, slow production, make changed to the line. now i know most of the country doesn’t necessarly big trucks, but we use them everyday on the ranch. Stop driving truck for stztus and go back to what they are for. Working!!!!!

Rick Needs to GO!

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D Lo Says:
November 11th, 2008 at 8:10 am

#10 mmcc
“what would happen to the UAW if GM went bankrupt”
much would depend on the bankruptcy court to decide and the legal vehicles that have been deployed. Subsidiaries, where it is incorporated (despite clearly being a Detroit company, I would not be surprised if it is incorporated in Delaware or New York).
As for the UAW, they have GM so wrapped up that even if they declared bankruptcy and the contract was deemed null and void the UAW would still hold out for a new deal with few concessions.

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Jim I Says:
November 11th, 2008 at 8:10 am

OK, if we are going to give/lend GM our money, here are some ideas for the limits on the executive pay:

All golden parachute contracts are eliminated. No one should get a tip for killing a company when they decide to leave or are forced out.

All stock options are forfeited.

All company perks are put on hold or shut down completely.

No non assembly employee can make more than twice what the highest paid assembly worker is currently making, until the corporation has paid back all government loans and the company has again paid dividends to the stockholders for at least five consecutive years.

All managment workers agree to accept the same cuts in benefits as are asked for by the assembly workers.

It is really simple. If the company is in pain, ALL employees of the company have to feel that pain. When the company is again healthy, then you can get some of the rewards…..

I sure do not want to see D.C. hand over cash very quickly, and then management goes on a million dollar “retreat” like AIG just did! hey have to put in some penalties for any abuse like this. So our lawmakers have to slow down and think this through, before they hand over the cash.

JMHO

OK top management, do you still want to work for GM????

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D'Artagnon Says:
November 11th, 2008 at 8:19 am

DHL needs a bailout.

Circuit City needs a bailout.

Las Vegas Sands needs a bailout.

Perhaps these corporations should have done a better job of lining the pocket-books/campaign funds of certain select Senators?

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coach Says:
November 11th, 2008 at 8:26 am

obama is starting right already ….
go obama go.
go GM go .

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Van Says:
November 11th, 2008 at 8:29 am

America voted for change. America without GM is change. The only thing that needs to be protected is the UAW. They were the victims of greedy overcompensated corporate management that cut worker compensation to remain competitive. Lets nationalize the Big Three and supplement the wages and benefits with tax dollars. Change is good.

If you appreciated the irony in the above, thank your teacher. If you appreciated my right to voice my opinion, thank a soldier. Happy Veterans Day.

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statik Says:
November 11th, 2008 at 8:32 am

Wagoner didn’t think he should resign in exchange for aid stating “I don’t think it’d be a very smart move. I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served.”

He wouldn’t say exactly how much money he thinks GM needs but stated “the funding request that’s gone into Washington would cover us”. He expects that if car sales were to remain at their current level, “I’d question whether the U.S. industry as a whole could survive that without support.”

————————————
A) Good luck with keeping your job, you and ‘your team’ (ie-cronies on the board that have let you keep your job) are the worst management team in the history of the auto business.

The way I see it, we have two ways to look at it. You are either the most self-dellusional, market-ignorant and incompetant team ever, or you are the most dishonest and deceitful–either way, your not ‘the team’ the gov’t (or anyone else) wants directing taxpayer money (if it should come to that)

B) Whatever the funding request was, I guarantee it was not enough…I’m sure the number is only representative of what the ‘big 2.8′ thinks is the maximum they can suck out of the government. If they were honest (is that possible?) about what they needed, the number would be so high that it would cause massive revolt if the gov’t even considered it. Remember we are also talking about 3 of them.

“I’d question whether the U.S. industry as a whole could survive that without support.” — I question the definition of industry in this scenario. The US auto industry has not been able to support more than 2 auto companies in decades…this is just the incident to push one of the ‘big 2.8′ off the cliff.

Banks are bailed out because they feel they have too…if too large a institution goes out, that the ripple with infect the other banks, pushing them over the edge….which would cascade over the entire economy, putting everyone into the great depression relatively overnight. There is no such pressure with letting one or two ‘2.8′ go C11.

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Firefly Says:
November 11th, 2008 at 8:33 am

# 18 Jim I

…it’s wierd when you think something and someone says it exactly as you would’ve said it. Thanks, Jim. You were perfectly on point with that one. Kudos.

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Jason M. Hendler Says:
November 11th, 2008 at 8:40 am

When they say rush more fuel efficient cars into production, does anyone here believe that they mean the Chevy Volt?

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DonC Says:
November 11th, 2008 at 8:41 am

#14 Rashiid – “Where is my bailout?!”

The same place where you employ 3 million workers ….

I’ll make two points: one is that this bailout is such small potatoes it’s not worth talking about – it’s what we spend in a couple of years on nonsensical farm subsidies and a fraction of the indefensible tax advantages for oil and gas producers and I don’t see anyone here getting exorcised about these things; two is that you can’t let millions of jobs disappear as you try and prevent a serious recession from turning into a depression. All the yammering about “let them fail” simply reflects a failure to understand how serious this is.

These two points justify the bailout. But there’s more. A lot more. The simple fact is that in order to transform our economy from one based on foreign oil to one based on domestic green technologies we need fuel efficient and plug in cars. Alternative fuels will be there; cars that can use these fuels may not. Whether you like it or not, the fastest way to get the cars we need is to back GM. Seems like a small price to pay for increasing national security, growing the economy, and reducing environmental damage.

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Rashiid Amul Says:
November 11th, 2008 at 8:53 am

DonC #25

For so long, GM has made crap. This is either fact or perception.

It is my tax money that will go to bail them out.
I would either rather have my tax money back in my pocket,
or put into a Manhattan Project for battery technology and electric vehicles. If this were to occur, we can survive without GM.

I want the Volt. Other than that, GM could fold for all I care.

The bailout might be small potatoes, but it seems lately that every company is putting their hand out, along with some irresponsible home owners living above their means. They get help, but responsible people like me get nothing but more taxes to pay.

—————-
Note to Veterans: Thank you very very much for all you have done for us.

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Joe Says:
November 11th, 2008 at 8:54 am

William Hart Says:@4
November 11th, 2008 at 7:12 am

Let’s get the facts straight all Detriot Automakers need to go bankrupt which will destroy the Unions that has destroyed the hold unions have that has destroyed the industry in almost every other major city!

**********************************************************

Simply said but not simply done. If the GM workers lose their pensions, then the US government has to pay about 60% of the workers pension. I think it will be much cheaper and wiser to give them a low interest loan. Incidentally, it’s a loan they are looking for, not a hand out like most are saying. If GM can endure two more years, they will be in good shape with the workers getting getting half the wages and with all the other great products that’s in the works.

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Eclectic Dan Says:
November 11th, 2008 at 8:57 am

All good points. I have a problem with “artificially” keeping companies alive. Capitalism (in theory) should be a self-regulating system. A few days ago someone made the point to “Let GM fail… just not right now.” I think that sums it up. If the country, even the world, is scrambling to keep us out of an extensive depression, the dollars spent maintaining the satus quo at GM will probably go further than any other bail-out, type of loan or tax credit on the table. Sure it’s unsavory, but it’s probably the right move.

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Dave G Says:
November 11th, 2008 at 8:58 am

#5 RB said

“If GM has $16B and they may need only $11B to keep operating, why is a federal bailout so urgent?”
——————————————————-
I heard GM is losing about $2B per month. So in 3 months, they will be down to $10B. If Congress starts a new bailout plan after Jan. 20th, it would be Feb 20th or later before GM saw any of that money. That would be over 3 months from now.

So it seems like 2 things are necessary:

1) Immediate cash for GM of around $5B – $10B this year. This could be in the form of loans or preferred stock purchase, and would have some strings attached (executive pay limits, fuel efficiency, etc). This should keep GM running until at least June 2009.

2) Another auto stimulus package under the new administration that gets signed before June 2009.

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texas Says:
November 11th, 2008 at 9:07 am

It will be interesting to see what Congress does. They sure worked quickly to come up with 700 billion to bail out wall street. Will they do the same to save the U.S. Auto industry? Will our only manufacturers be Tesla, Zap and a few others? It’s hard to imagine. My guess is that they just might let the industry go into bankruptcy in order to reorganize.

Can the Big 3 reorganize the labor contracts, health benefits, retirement benefits, benefits already due better in bankruptcy or under normal corporate rules is the question. Nobody is buying autos now so the argument that nobody will buy a car from a bankrupt manufacturer is mute. Also, Americans are use to companies going into bankruptcy only to come out again. Look at the airliners. They had to go into bankruptcy and they came out fine. Maybe GM doesn’t care what American customers think. Maybe they care what global customers think.

It’s not like the auto industry is going to stop functioning. They will continue to produce cars, people will continue to not buy them and massive changes will be undertaken.

Can the new global marketplace support the old mix of brands and platforms? I don’t think so. I think we should transition as fast as possible to electric drivetrains. Can that happen as quickly under bankruptcy? I don’t know.

Continued

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Murray Says:
November 11th, 2008 at 9:08 am

Jim I #18 … love the thoughts and it would be so great if those mandates could apply across the board for ALL companies taking our tax dollars!

Statik #22…thats a tough choice, is Rick and ‘the team’ dishonest or incompetant ?? I’ll vote for a little bit of both I guess…

Rashiid Amul #26 …. I always liked your ‘Manhattan Project for battery technology’ references… agree on all points 100%

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texas Says:
November 11th, 2008 at 9:09 am

Thus, I think Congress should ask the following question: Will our auto industry be better off in 2 – 5 years if they go into bankruptcy and can it do massive reorganization including the labor unions or will it be better off if we start throwing billions at them every quarter for the next few years? Even if they go into bankruptcy we might have to throw money at them. What are the obligations to the unions under each situation?

Oh, just for reference. Japanese auto manufacturers have labor unions in Japan. They have the JAW and it has over 700,000 members. They are not the same of course but they do have them. Here are some articles talking about them:

Search Google for JAW or Japanese Labor Union – they have a main website. It won’t let me post a link here.

Continued

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texas Says:
November 11th, 2008 at 9:10 am

From JAW’s main website, here is a rough schedule of their activities:

JAW’s Decision-Making/Executive Bodies

Annual Convention :
The union’s highest decision-making body which meets once every year in September. Items on the agenda include union policies, annual budget, and election of executives. (service period of executives: 2 years)

Central Committee :
Meets once a year in February. The agenda covers the drawing up, discussion, and approval of policies for wage hike and lump sum allowance demands, etc.

Central Executive Committee:
As a rule, meets once a month and has executive authority and responsibility for daily activities.

The Europeans also have strong labor unions. So, it looks like we are stuck with unions. These are little clumps of socialism that happened because pure capitalism has no heart. Self determination and all that. Step on every throat to climb the ladder of success. Anyway, socialism is well and alive in the world. If the labor unions are smart they will work with the company to be competitive in the global marketplace. As the Japanese labor union states on their main website:

“Within a group, a car manufacture, parts makers, sales dealers and transportation companies enjoy an extremely close relationship one which can be likened to a communal relationship where members are bound together by a common fate.”

They understand that to beat the competition they need to have competitive labor costs. Funny how the JAW does not mind that every one of their auto factories in America are union-less. I guess it’s because the workers are not Japanese. Ouch. How the heck did this situation come about? What is the solution? Either we all go union-less or have equal labor rules. Perhaps the workers in foreign countries should enjoy the same contracts as those in the home country. Ooops! What am I saying? That would kill all of GM’s operations outside of the US. I guess that’s the barrel of monkeys we are stuck with.

I hope readers can now understand how things are all mixed and interwoven. If the solution was easy, they would have already done it. My guess is that GM is going to use our current financial situation to reduce operations in the U.S. After all, isn’t most of the losses from U.S. operations? As they already told us, their international businesses are doing great.

Continued

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texas Says:
November 11th, 2008 at 9:10 am

Now I think I have figured it all out… No wait… Maybe… Check this out. GM does not want to go into bankruptcy because they want to keep a good global reputation. I honestly don’t think GM cares about the home market anymore. Think about it. There is no way GM is going to be competitive with small cars being made in the US. They have to compete with the masters of small cars and their non-unionized factories. Impossible! You guys tell me how this can work and I will change my mind. I think Rick Wagoner has this all figured out.

The bright spot is the Volt. There is no competition for the next few years so GM can get a foothold into the electrification of the automobile. However, how long do you think it will take Toyota and Honda to catch up and sell a great, small plug-in hybrid car? The plug-in Prius? Too small of a battery? How long will it take for them to make a bigger electric motor and battery? One year? Two years? All made right here using non-union labor. Nice!

What will GM do next? Maybe just concede the home market and try to make it break even profit wise. Now that this financial crisis has crushed the union numbers the union will not have to power to dictate what GM does. Maybe it will become a window dressing operation only. Make a few cars for the home market but not so many that they lose control of the unions or loose any money.

Am I off my rocker here? Sure would explain many things. Any other theories? I love a good story.

The End

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Dave K. Says:
November 11th, 2008 at 9:10 am

hi Dave G #29,

“I heard GM is losing about $2B per month.”

____________________________

It’s easier to understand when presented as:

$66 million a day.

Or

$2.7 million an hour.

=D~

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DonC Says:
November 11th, 2008 at 9:14 am

#26 Rashiid

“For so long, GM has made crap. This is either fact or perception.”

Probably both. Though all cars these days are of very good quality, with a few exceptions I don’t believe GM equals Toyota or Honda for quality. Then again it beats Mercedes hands down. Go figure.

“It is my tax money that will go to bail them out.
I would either rather have my tax money back in my pocket,”

It doesn’t work that way but here’s a concept for dealing with this that may make both of us happy. I hate the farm subsidies and the war in Iraq. You hate the GM bailout. I’ll send my tax money to GM and you can send yours to agribusiness and Iraq. How’s that?

I do believe that GM has a reasonable chance of long term success if it can make it through the next year or so. It’s labor costs are going down and it may be able to jettison its health costs for retired workers. E-flex is a winner going forward. If GM finally sticks to reforms it should prosper. (We don’t however need three car companies). Consequently, unlike Iraq, I don’t see the bailout as throwing money down a rat hole.

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Nelson Says:
November 11th, 2008 at 9:14 am

Looks to me like GM is the perfect company for a venture capital take over. They have a future product line that will compete favorably and their stock is being dumped. Less than $2 Billion could buy the reins for GM, get rid of all the prima donnas and save the company without federal aid. If they stop all production of all vehicles except the Volt, they could get it on the roads and in show rooms in 2nd qtr 2009.

Hows “Toyota General Motors” – TGM sound?
or
“Honda General Motors” – HGM
or
The “Tesla Volt” ? hmmm

NPNS!

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DonC Says:
November 11th, 2008 at 9:23 am

#34 Texas – “However, how long do you think it will take Toyota and Honda to catch up and sell a great, small plug-in hybrid car?”

Quite a while actually. Having spoken with one of the chief architects of the Prius, at least as of last year Toyota seemed to truly believe that the Volt was not possible. Honda has actually publicly said the same thing, so that’s not conjecture. They’re too stuck on the additional cost, battery availability, and battery performance. In this regard, note that GM has been blown away by the latter. It was the big question going in and it has turned out to be a non-issue.

You’ll see a lot of parallel hybrids but not anything like E-flex. Unless of course GM has a winner, in which case maybe four or five years, or perhaps sooner given the new incentives for plug-ins. The Japanese do not move very quickly ….

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statik Says:
November 11th, 2008 at 9:40 am

I’ve been thinking a long time about how I (we) just complain about the situation rather than thinking about what the best options are for the business and the NA auto industry.

Here is my best take on the future. Please read through to the end before you pronounce me insane, lol. I’ve modified my stance somewhat and think the gov’t has to get involved…as cheaply and efficiently as possible.
—

The government simply does not have the funds/backing to bail out all three…and why should they, the US auto business has not been able to support three automakers in decades, even when the market was good. It is a new world now and someone has to die…now is as good a time as any.

The gov’t should ‘choose’ one of the big 3 to takeover (yes I said takeover…which makes us all cringe). I will list the makers from worst to first with pros and cons:
———-
WORST: General Motors
–massive debt/terrible equity( -60 billion+) and fastest cash burner
–bloated lineup/worldwide footprint
–incredibly complex
–need intervention RIGHT now…too quick for gov’t to react competantly
–have the most individual pieces that could be used to be a viable company

Second Place- Ford
–marginal loss atm on equity
–have the most disposable cash on hand
–no rush to infuse money, longer time to set up strategy
–current lineup is terrible
–couple ‘new’ items that seem like winners, Fusion Hybrid/KA

Best Choice – Chrysler
Holy Statik! Have you lost your mind. Chrysler lineup is crap (to not use a moreexplanative word)…stick with me, lol
–a lot less debt (had none on May 2007 when Cerberus got it)
–low cash reserves (although debateable on Cerberus kick in)
–walking dead-zombie lineup
–terrible pipeline
–hideous dealer network
–easy to understand, US based
———–

Explaination of choices:
Although Chysler’s lineup (compared to the rest of the big 2.8) is the one that should be thrown into the slag heap, from the gov’ts point of view, this is the one they should takeover. It is a straight forward, almost exclusively US based business (they can control the domestic components easily…whereas international parts are beyond their scope)…it is already packaged up to be taken over in a neat little package, it is easy to understand, and no idiot board or CEO that are trying to look out for #1. They get the straight goods with Chrysler.

Initially, looking at the cost to the taxpayer, Chrysler can be had for a $1..actually you get paid to take it. Daimler wants $1 for the 20% they own, and Cerberus is giving away 3 billion to ’sweetent he pot’. So the costing/bailout is only on a ‘going-forward’ basis. Saying that, lets pencil in 20 billion to make it debt free again, and another 20 billion to add to the 13 billion (10 on the books and the 3 from Cerberus)…giving it 33 billion in cash (which is very well funded).

40 billion to one automaker to make it debt free and give it at least 36 months worth of operating cash (assuming no improvements) is a relative bargin.

Now here is where the plan gets ‘exciting,’ because I know most of you are saying, “Eww yuck, keep Chrysler, let GM/Ford go?” The gov’t lets GM and Ford go bankrupt, one goes C11 the other C7…doesn’t matter which one. Whoever goes C7, Chrysler swoops in and picks the bones, absorbing the good brands/cars into their lineup, for virtually nothing (because the gov’t doesn’t allow ‘foreign investors’ to access ‘American insititutions,’ lol), and they get those brands without all the baggage…no obligations.

Now because everyone DETESTS the fact ‘Chrysler’ survived, the gov’t takes the name of whoever just went under and does the abbreviation thing. “GM-Chrysler” or “Ford-Chrysler”

Boom! You got the cheapness of the takeover of Chrysler, you have retained all their employees on the books now (which is probably more than all 3 will downsize to in another couple years if no one steps in), then takes the best pieces of the worst ‘other’ company virtually for free, to make Chrysler’s lineup not suck and saved those additional American jobs at the other company.

Think about putting Chrysler’s lineup of Jeep, Minivans/trucks, along with their EV program beside GM’s Volt program, Cadillac, Cruze, Malibu, etc., and integrating GM’s strong Asia/Pacific/Latin/Euro footprint…for 40 billion (no assuming debts or propping up suppliers and finance companies). That company is a winner…and because we hate, Hate, HATE the gov’t owning anything…the whole thing is spun off back to the market to the highest bidder in 5-6 years when the economy is theoretically better.

A streamlined, gigantic US based automaker, with no debt, that makes money…that is a beautiful thing…and also something that the gov’t can easily get all its 40 billion back for when they offer it back to the market…maybe even make another 40 billion for the taxpayer.

/best I could come up with. Feel free to pick it apart or suggest some other plan, seems better to suggest a way out then to keep pointing to defeat all the time

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Nelson Says:
November 11th, 2008 at 9:41 am

The Japanese auto companies will do what they do best. They will buy a Volt when it comes out. They will take it apart. Make changes to improve the technology. And they will do all that within a one year time frame.

Then they will sell their version of e-flex and call it e-synergy.

NPNS!

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Neutron Flux Says:
November 11th, 2008 at 9:50 am

I must agreee with 13, if GM is in such dire straights and they have not done all they can do before asking for a handout they have poor Mgmt. & it must go. In a way you can’t blame them as all other mismanaged financial companies like AIG keep getting handouts even after it was shown nation wide they were going on taxpayer expense retreats at Posh resorts but Congress still gives them more money and again they do their retreats. Everyone who had anything to do with AIG getting the second 40 or 50 billion needs to go as well. The Volt will survive regardless as whomever picks up the pieces from Ch. 13 will own the rights. It will probably be built in Tennessee or some Southern state where the UAW does not dominate or have influence. Heck I’ll bet GM could import auto workers for half the cost from these areas after filing Ch. 13. GM CEO & CFO must go, 20 % across the board pay cut for all execs and elimination of all golden parachutes for current & future Mgmt as a condition of continued employement. And banning from employment anyone cashing in on their golden parachutes from any company who has taken a handout from taxpayers. The Volt will survive but will GM?

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Aspherical Says:
November 11th, 2008 at 9:50 am

#39 statik

Wow. The $#%& has really hit the fan when this is a viable option… (and it probably is)

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sickup and fed Says:
November 11th, 2008 at 9:54 am

I am on the list for a volt, I think this is a great idea. but i could care less if they go down the toilet. Let them fail, im sick of the bailouts and them taking my money. the volt is too little, too late and too bad for them. but its not my problem.

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DonC Says:
November 11th, 2008 at 9:58 am

#39 Statik

Actually you make a lot of sense. If the issue was economic you’d be right on. But it’s not, it’s political. If it was economic we’d just combine the three into one, sell off the international bits, and be done with it.

Down the road that might be the end result but right now staunching the bleeding is the highest priority. All three will be bailed out because there isn’t enough time to figure out how to do the deal.

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statik Says:
November 11th, 2008 at 9:59 am

#5 RB says, If GM has $16B and they may need only $11B to keep operating, why is a federal bailout so urgent?
——————————
We have had a lot of misinformation on this one. And a lot of confusion…so if you don’t mind, I’ll take this one.
***clears throat***

Things we know:
GM loses 2 billion a month now.
GM needs 11 billion to survive.

***General Motors HAD 15.831 billion on September 30th, 2008…at the end of the quarter. Today is November 11th, 2008.
***That 15.831 billion was a month and a half ago…we can assume GM has now only has 12.8.

Using GM’s estimated cash burn (2billion/month) they will be at critical levels in another 1.8 billion…or 27 days.

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carcus Says:
November 11th, 2008 at 10:00 am

#39 Statik,

That’s an interesting piece of mental masturbation. I think you should call up Secretary Paulson and Chairman Bernanke to see if you can get it going.

If that doesn’t work, maybe Lex Luthor would be interested.

http://en.wikipedia.org/wiki/Image:Lex2000.jpg

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Marlon Says:
November 11th, 2008 at 10:02 am

Regarding the idea that it will take a while for the Japanese to catch up with the Volt:

There is no guarantee the Volt will work well. Lithium, like petroleum, is limited. So you have a problem right there. Unless we see true new forms of energy storage – like EEstor, which has never been proved to be real – I am not sure whether the Volt can be made to the masses. If they price the Volt at $35K or so, I doubt the Volt will save GM.

GM must go. No bail-out. It is going to be hard for the economy, but we will survive. Wagoner should be gone long ago.

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statik Says:
November 11th, 2008 at 10:10 am

#37 Nelson

Looks to me like GM is the perfect company for a venture capital take over. They have a future product line that will compete favorably and their stock is being dumped. Less than $2 Billion could buy the reins for GM, get rid of all the prima donnas and save the company without federal aid. If they stop all production of all vehicles except the Volt, they could get it on the roads and in show rooms in 2nd qtr 2009.

Hows “Toyota General Motors” – TGM sound?
or
“Honda General Motors” – HGM
or
The “Tesla Volt” ? hmmm
————————————–

The issue is not the cost to acquire GM, currently trading at $2.85 or 1.6 billion in market cap. Sure there are about 10,000 individuals or companies that could ‘takeover GM’

The problem is you have to assume GM’s debts and liabilities as well. Anyone want to buy 200 billion in debt for a billion dollars? Unlikely. Plus, who wants to spend 2 billion to lose 2 billion a month.

GM is worthless, it has been for a long time. The stock only trades with any value because of a possible bailout. If the gov’t said today, “we will not assist GM,” the shares are trading at .10 cents…maybe lower, but you get the idea. It is a pure speculation play right now.

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KUD Says:
November 11th, 2008 at 10:16 am

My GM Bailout Plan

45000 people on the waiting list TIMES $1000 = $45,000,000

That should keep GM solvent

17000 Americans on the waiting list TIMES 1000 = 17,000,000 still a lot of money

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RB Says:
November 11th, 2008 at 10:24 am

#45 statik ==> Thank you. That’s direct enough I can understand it.

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D'Artagnon Says:
November 11th, 2008 at 10:26 am

#49 KUD Says:
November 11th, 2008 at 10:16 am
My GM Bailout Plan

45000 people on the waiting list TIMES $1000 = $45,000,000
_________________________________________________

$45 million is 1/355 of what GM needs in order to stay open for a single month. It won’t even cover a single hour of operating business.

Best regards,

D’Artagnon

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Exp_EngTech Says:
November 11th, 2008 at 10:30 am

# 38 DonC wrote:
“You’ll see a lot of parallel hybrids but not anything like E-flex.”

I’m going to make a prediction here.
BYD (series hybrid) will partner with Sam’s Club soon.

In the next couple years, you’ll be able to order and pickup one of their “dual-mode” series vehicles at your nearby Sam’s Club.

Warren Buffett see’s the future and has put some money there.

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statik Says:
November 11th, 2008 at 10:31 am

#44 DonC

Statik, Actually you make a lot of sense. If the issue was economic you’d be right on. But it’s not, it’s political. If it was economic we’d just combine the three into one, sell off the international bits, and be done with it.

Down the road that might be the end result but right now staunching the bleeding is the highest priority. All three will be bailed out because there isn’t enough time to figure out how to do the deal.
———————–
Hehe, your right. The right thing to do and the popular thing are rarely the same. I know politically it is not ‘kosher’ at the moment… but might be a more realistic scenario of where we end up, given the right economic circumstances

It is not possible to just ball them up into one big ‘thing’ outside of three-way bankruptcy…because combining three losers, just makes a big loser I think. Can you imagine the debt/obligations of that thing? Wow, I shutter. It would also definitely get put into the ‘too big to fail, but impossible to sustain’ category.

I think you are right, there is likely some interm attempt to ‘bailout’ all three…or as you say, at least buy the gov’t some time to get their thick heads around the situation. This would actually not be a bad thing, just to teach them a lesson…if they gave them 50 billion to split up and do with as they please with, the gov’t would learn very quickly how far 50 billion goes in the auto business…not far.

To ’save,’ or at the very least, guarantee the ‘big 2.8′ another 5 years to get them through this economy (if thats what they want to do), I think they need a package near to the size of the current banking bailout (which is probably only a 5th the size it needs to be)…600 billion-ish. I think ‘politically’ that would be a hard thing to pass. And at the end of all that, you still have one company too many…you’d have 3 companies that still can’t make money, lol.

Regardless, it will be exciting to watch. (Not fun…but exciting).

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Spin Says:
November 11th, 2008 at 10:35 am

In my view, Ch 11 is the only viable option. The question is who pays for the mistakes made by GM management, the US taxpayers or the GM creditors. Since I am a taxpayer and not a creditor, my choice is clear.

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Cautious Fan Says:
November 11th, 2008 at 10:39 am

#25 DonC

Is this what you’re arguing….Since we waste money on farm subsidies, we should also waste money on other industries too? Isn’t this akin to saying 2 wrongs make a right? How about door #3, none of the above.

On your second point, that Rashid fails to “understand the severity,” I’d say you fail to appreciate the power of free people, making their own free decisions, with their own money; and you overestimate the ability of the gov’t to more wisely invest other peoples money.

The problem is, a Representative isn’t really motivated to make the whole economy better, they’re motivated to make people THINK they’re helping. Businesses on the other hand are motivated to make sound fiscal decisions because if the don’t, they fail (or at least they should fail). So if businesses say that something is a bad fiscal idea, and gov’t says it’s good, who are you going to trust? I’ve said this before, but I’d trust a business to act in it’s own interest, far before I’d trust the gov’t to act in mine.

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voltman Says:
November 11th, 2008 at 10:40 am

Where are the layoffs, the massive cutbacks? They should be laying off half their workforce instead of begging for change.

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Starcast Says:
November 11th, 2008 at 10:47 am

Question

Honestly would YOU buy a car any car from a Company in charpter 11? Think about it would you?

Chap 11 would be the end of GM and the end of the Volt.

I hate the whole idea of bailouts.

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texas Says:
November 11th, 2008 at 10:57 am

#40 Nelson, You mean like they did with the Prius? Oh, I mean like what Ford did with the Explorer hybrid? Oh, I mean. Wait? What the heck?

I think the only thing that matters is a good battery. If we get that then the EV and EV hybrids will do great. If the battery turns out to be too expensive (even when mass produced), short lived (even when pampered with expensive electronic controls) or underpowered then it’s just not going to fly. People will just buy tiny VW Golf-like cars or smaller Smart clones.

We get a good battery we are home free. Well, that’s assuming the resources to build the batteries are abundant.

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Van Says:
November 11th, 2008 at 11:00 am

I would buy a car from GM if the reorganization plan addressed the fundamental problems with GM – lack of quality, no Volt, no Cruze, management that thinks being vague is being transparent, and oh yes, the UAW strangle hold.

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Dave B Says:
November 11th, 2008 at 11:00 am

How come nobody is saying “fast track” the Volt even faster? Who here things we really have to wait until November 2010 to actually have a production vehicle? I do not…

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nitpicker Says:
November 11th, 2008 at 11:03 am

“Whitehouse” in title of post should be “White House” which it is.

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RB Says:
November 11th, 2008 at 11:05 am

#57 starcast asks “Honestly would YOU buy a car any car from a Company in charpter 11? Think about it would you?”
===========================================

Yes, for the right price. No confidence in warranty, but plenty of people who can provide service independently.

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jbfalaska Says:
November 11th, 2008 at 11:12 am

I just hope the outrage over union wages, which amounts to about $18.00 an hour on average for the new union employees (two tier system put in place last year), extends to CEOs getting a bailout. Where is the outrage by those of you above slamming union wages over the CEO pay for those getting a bailout? Have you ever studied how CEO wages are set – the board members vote to establish one another’s pay – Phil taking care of Bill and Bill taking care of Phil. Why did the CEO of Exxon make one billion dollars for one year’s work – and then retire after one year! He did nothing but collect the money his friends voted him, in return for voting for their egregious compensation. The end of capitalism isn’t coming from the bailouts as disgusting a need as they may prove to be, the end is coming from the Captains of Capitalism robbing the poor and middle-class to pay for the rich.

Guess what – it never trickles down. Ooops. It does – I mean the bill to the taxpayer does while the CEO’s head of to their European chateau. Less than 100 American CEOs in line for the bailout were caught by the British media (when trying to buy these firms stock) in finding ledger adds taking $70,000,000,000.00 of the bailout money – 1 in 10 dollars – for their personal executive pay and bonuses. That’s more money than ALL 200,000 union members made in three years total. Filter through a political lens against unions, but the time of the overpaid CEO needs to end in equal measure if done to one. We American taxpayers have been robbed.

I wrote my Congressman and Senator to vote no on the bailout. Not answering my call, but both voted no. A bailout standard should be those bailouts that help American wages and products which turn into returned tax dollars. CEO pay at $70 billion hardly counts for that message.

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Schmeltz Says:
November 11th, 2008 at 11:14 am

One thing I was thinking about…Could/Should the Gov’t give the 3 Detroit Automakers a sort of “Tax Vacation” for say a year or 2 or 3? Hear me out. The taxes these 3 companies pay in a year to the Fed gov’t has to be in the billions already right? Maybe someone here even knows how much that is. Instead of giving the Automakers money the gov’t already has such as in the form of a bailout, why don’t we allow them to forego their taxes for an extended amount of time (to be determined by people smarter than me), and hopefully that would amount to “just enough” to get the automakers to 2010 when their VEBA and adjusted union contracts kick-in as well as Volts start appearing on the road. Get the picture? Is this idea viable, stupid, or none of the above?

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CDAVIS Says:
November 11th, 2008 at 11:19 am

______________________________________________________
Kick em when they are down:

It is easy to kick a guy when he is down. I think it is important to recognize that the GM management team has made some very smart moves over the last three years, including the VOLT Program, and that they do deserve credit where it is due.

Keep in mind that it was Rick Wagoner that brought Bob Lutz back into the GM fold and gave Lutz the support Lutz needed to quickly implement the VOLT Program. Wagoner is an unsung hero in being a key person responsible for the VOLT Program. Anybody that has dealt with a large organization will tell you how improbable it is for an organization the size of GM to advanced the VOLT Program as quickly as they have. Also Wagoner strongly supported the significant portfolio shift into new more fuel efficient cars that GM is currently manufacturing and that GM has far along in development.

So what went wrong with GM?

The perfect storm hit GM:
1. GM is two years late on its portfolio shift to more fuel efficient cars.
2. GM is handicapped by a significant UAW legacy overhead.
3. GM has additional organizational overhead that requires shedding of which GM has not as of yet voluntarily shed.
4. The credit market has tightened which has killed all car sales.
5. Consumers with cash are hoarding their cash because they are uncertain about the future.

20/20 hindsight gives us the means of being clever cynics and critics. There are things each one of us would have done different in our own personal lives and businesses had we the benefit of 20/20 foresight. On one hand there are many things that GM could have optimally done different in the past but it is undeniable that the GM of today is doing a lot of the right things.

I would think that it would be optimal for GM to find a mechanism to make some very difficult organizational restructuring in cooperation with the UAW to rescue itself. I fear that government intervention may in the short term buy GM time but that the added time will be at the expense of GM not making some of the difficult re-structuring that GM needs to make to be a viable long term competitor.

______________________________________________________

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Jeff M Says:
November 11th, 2008 at 11:22 am

Talk about a giant ego on that Wagoner… he doesn’t think he should resign because GM should “have the best management team to run GM”… ie. he’s calling himself part of that best management. The same management that got GM into this situation!

GM stock down 16% today, below $3/share, lowest in over 60 years. The dividend yield is over 33%! Of course if anyone expects dividends to be paid should be crazy… if GM hasn’t already done so, they should suspend their dividend… they don’t have the cash anyway… and any bailout should require the dividend to be suspended until the loans are paid back.

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statik Says:
November 11th, 2008 at 11:24 am

#60 Dave B

How come nobody is saying “fast track” the Volt even faster? Who here things we really have to wait until November 2010 to actually have a production vehicle? I do not…
———————————————————-

No money to “fast track,” there is no money for anything. The Volt as it stands is not coming in 2011…it is not coming at all.

That is the bottom line. How come people are even assuming the Volt will be made at all is a better question? The Volt, right now…is dead. Only massive government intervention in the next few weeks…and a expressed desire/rider by the gov’t to build the Volt specifically, will save it.

If GM goes C11, a judge very likely could decide that this is not the time…or rather GM is not the company, that should be taking a gamble on a electric car…that by GM’s own admission is not going to make money.

If GM goes C7, another company ‘could’ pick GM’s bones and build the Volt…however, the likelyhood of that decreasse each day we move further into this economy. How many companies out there are looking for a highly speculative project that will cost billions of dollars, with no outlook for profit, in arguably one of the worst segments of the economy?

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Amex Says:
November 11th, 2008 at 11:26 am

Here’s the solution…
Just convert to a bank!

Yesterday American Express, a credit card company, was approved to convert into a bank (or more technically a “bank holding company”). I don’t see American Express changing their business model, to primarily taking deposits / making loans, they will still be a credit card company.

When it comes to being irresponsible credit card companies are way further up my list than GM. After all I don’t receive multiple pre-approved applications in the mail from GM per week. Indeed credit card companies are the almost the poster child of irresponsible and predatory lending. So how about Uncle Sam loans them money and then jacks up their interest rate to 28.9%.

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Matt from Mich Says:
November 11th, 2008 at 11:29 am

Statik,

I have grown to like your posts over the past 20 months. (As a software supplier to GM, I didn’t like the doom-and-gloom at first, but I have seen how prescient you have been.) In fact, the current U.S. Congress should fly you to DC and pay you as a consultant!

Now that the niceties are out of the way…there are two things that really bug me about your posts:

1. Why is it when I read your posts, I feel like I’m looking over my daughter’s shoulder while she’s texting…lol, hehe? We are adults here (well, most of us) and there are more clever ways to make your point. I will concede that it might take a few more key strokes.

2. Do you own Microsoft Word? It has a spell checker, ya know. You could do us a favor by typing your posts in Word first and then cut-and-paste them into this forum. (OK, I’m anal about grammar and spelling!)

I just had to get that off my chest. Nothing personal. I feel better now. Did I say that I love your posts?

All my best,

Matt

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Rashiid Amul Says:
November 11th, 2008 at 11:34 am

DonC #36 says,
“It is my tax money that will go to bail them out.
I would either rather have my tax money back in my pocket,”

It doesn’t work that way but here’s a concept for dealing with this that may make both of us happy. I hate the farm subsidies and the war in Iraq. You hate the GM bailout. I’ll send my tax money to GM and you can send yours to agribusiness and Iraq. How’s that?

——

LOL. Good one. But like you, I am not too fond of farm subsidies and I have hated the Iraq war since before it started.

=======

You also say, Consequently, unlike Iraq, I don’t see the bailout as throwing money down a rat hole.

We agree on this as well. Given these two choices, I will send the money towards GM. But I would really like that Manhattan project the most.

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statik Says:
November 11th, 2008 at 11:34 am

#57 starcast

Question

Honestly would YOU buy a car any car from a Company in charpter 11? Think about it would you? Chap 11 would be the end of GM…

——————————
Sure I would. As with the Volt, cost of warranty is factored into the MSRP of each vehicle GM sells.

If I had the choice of buying a ‘Malibu’ with a 5 year/100 mile warranty and a ‘Malibu’ at 10% less MSRP with only a 60 day warranty. I would chose the 10% less one every time, regardless if the company I was buying it from was solvent or going bankrupt.

Now if we are talking about the Volt specifically…no way. Too many custom components and special skills needed to repair it. Pretty easy to see the problem with needing a battery replacement on a limited/low run car, 5-6 years after GM went bankrupt.

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DonC Says:
November 11th, 2008 at 11:37 am

#55 Cautious Fan

“Is this what you’re arguing….Since we waste money on farm subsidies, we should also waste money on other industries too?”

The point would be that it’s silly to say I don’t want my tax dollars going for X. It doesn’t work that way. You don’t get to pick and choose the programs you’re willing to pay taxes for.

“The problem is, a Representative isn’t really motivated to make the whole economy better, they’re motivated to make people THINK they’re helping. Businesses on the other hand are motivated to make sound fiscal decisions because if the don’t, they fail (or at least they should fail).”

You need to recognize that business is great for what it does but free markets can’t provide all kinds of things. Want to fight a war? How about build highways? Schools? How about such basic things as sewer and water? You can believe in market economies without making the mistake of thinking they’re a solution for every problem. They’re not. All great economies depend on collective action which we call government. Without government there is no such thing as a functioning “free market” as we know it. This is the bit that Grover Norquist doesn’t get, probably because he’s never travelled outside NA and Europe. (Other than maybe going to some conference or other).

Don’t get me wrong, governments can royally screw things up when they do the wrong things in markets. Look no further than farm subsidies or tariffs on ethanol or the mindless subsidies for petrol in China and other countries. On the other hand, governments can also royally screw things up when they don’t regulate the markets. Look no further than the current fiscal meltdown for how that works. Much like in medicine, you need to figure out what’s needed, and that’s not always the easiest thing.

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Tony Gray Says:
November 11th, 2008 at 11:39 am

The issue from the cheap seats seems to be what GM will do to regain profitability if they ARE provided the loans/gifts from the treasury. Will they take immediate action to reduce the number of models or platforms or even brands? Handing over 25B without some concrete restructuring plans is just bad policy.

And what about the other parts of the industry? Are we going to bail out components suppliers? Dealers? Where does it end?

I wonder if it wouldn’t be a better idea to take that 25B and give it as a direct tax credit of $10,000 if you buy a new GM/Ford/Chryser made in USA vehicle. This way the consumer gets a huge benefit and the auto companies start selling NOW. You’d have to figure out how to handle the cars made in Canada and Mexico of course. And some folks will whine they can’t get the money to buy a made in USA Honda or Toyota.

This is truly one tough nut to crack. I still say go Chapter 11, jettison everything but Chevy and Cadillac and move forward from there.

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Jeff M Says:
November 11th, 2008 at 11:39 am

CNBC just reminded us that GM’s market cap is below $2B…. here’s a thought… instead of loaning them billions… we (the Feds) just buy GM outright! It would be a lot cheaper… and we (the American people) could very well make a profit by selling it after we whip it back into shape.

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kdawg Says:
November 11th, 2008 at 11:40 am

#47 Marlon wrote:

Lithium, like petroleum, is limited. So you have a problem right there. Unless we see true new forms of energy storage – like EEstor, which has never been proved to be real – I am not sure whether the Volt can be made to the masses.

———————————–

I thought the “lithium-shortage” myth had been dispelled, but it appears not. There is no lithium shortage, there wont be one. Lithium is abundant and batteries are recycleable. I’ll find some links/info for you if you ask.

PS: Lots of theories flying around. I dont feel like chiming on the bean counter threads (right now). There’s so much that is blasted as fact that is completely off base its overwhelming. Also, i think everything that can be said has been said. No new information here. If you think typing your opinion in a blog is going to change someone else’s mind on something, it probably wont, but I hope it at least makes you feel like you got something off your chest.

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N Riley Says:
November 11th, 2008 at 12:00 pm

I have been for the bail-out before I was against it. You can call me the John Kerry of the current financial crisis. One thing I have learned reading all of your comments over the last several days is that I am not well enough informed to make a correct decision. I don’t understand all the ramifications of doing nothing or doing everything the financial markets and the automakers say they need. It is not an easy thing to make those kinds of decisions. Anybody that says they know the right answer is not being honest with us or to himself.

So, put me on the fence with all the splinters sticking me in the ass. It’s a very uncomfortable place to be and one I have never really found myself in. I have always had a solid opinion about things, whether good or bad. This time I just don’t know. I bow to others who apparently know more than I. May God bless us all and the U.S.A.

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noel park Says:
November 11th, 2008 at 12:04 pm

I feel a bit like a minor member in the rear rank of the chorus in a Greek tragedy. Except that I am speechless in the face of this particular thread, so I guess I’ll get fired.

“God bless us, every one” said Tiny Tim. Thanks Tim, we’re gonna need it.

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N Riley Says:
November 11th, 2008 at 12:06 pm

#26 Rashiid Amul

“Note to Veterans: Thank you very very much for all you have done for us.”

———————-

Thank you, for that. As a veteran, I appreciate your comments and I want to echo them to all other veterans. Yesterday I celebrated the Marine Corps’ 233rd birthday. I am proud to be a Marine (1962 -1966) and a veteran.

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statik Says:
November 11th, 2008 at 12:10 pm

Statik,

I have grown to like your posts over the past 20 months. (As a software supplier to GM, I didn’t like the doom-and-gloom at first, but I have seen how prescient you have been.) In fact, the current U.S. Congress should fly you to DC and pay you as a consultant!

Now that the niceties are out of the way…there are two things that really bug me about your posts:

1. Why is it when I read your posts, I feel like I’m looking over my daughter’s shoulder while she’s texting…lol, hehe? We are adults here (well, most of us) and there are more clever ways to make your point. I will concede that it might take a few more key strokes.

2. Do you own Microsoft Word? It has a spell checker, ya know. You could do us a favor by typing your posts in Word first and then cut-and-paste them into this forum. (OK, I’m anal about grammar and spelling!)

I just had to get that off my chest. Nothing personal. I feel better now. Did I say that I love your posts?

All my best,

Matt

——————————–

These are all good questions.

Ok, let me address the spelling first. I try to be as accurate as I can the first go around…but I seem to be long winded and I make some mistakes. As for not using a Word, well, I’m lazy. I use it for my business when necessary, but that is about it.

Secondly, the ‘lol’s and ‘hehe’s. This actually was born of convenience and necessity. Originally, I did post in a more professional manner, but I found I ran into a big problem. Specifically, when someone would base a opinion that I did not agree with, I would come straight at it in a direct/detached fashion (or I would defend my own opinion as concisely and directly as I could). When I did so, the tone of my retort was not being interpreted the way it was intended, to being open to discussion or light hearted, but rather it was being interpreted as that of anger, or being pompous. I was trying to invoke a discussion in many cases, but only arguments seemed to ensue.

If you go back to my earlier posts, you’ll see I was pretty much widely hated because not only did I have a opinion contrary to the majority of the forum, but because I could not also figure out a way to deliver those posts clearly without sounding like a ‘know-it-all or pompous’…many times I know I was dismissed out of hand because of my image.

Therefore, you’ll find that whenever we are talking about a ‘hot button’ issue, I pepper my dialogue with ‘heehs’ or ‘lols.’ It is not something I do with any other part of my daily life, (although I have been guilty of doing some MMORPGing and using it in the past), but I have found it to be the most widely understood way of displaying levity here, and the quickest way to display it.

Honestly, it bugs me to put them into my dialogue. It does undermine my own position to be taken seriously in some cases (and with some people…perhaps yourself), but that is the tradeoff I have decided to take for being more widely accepted here, or at the very least less hated. I enjoy the comradery of the board a lot more than always being perceived as the villain.

I can assure you I can write coherent sentences without the usage of internet colloquialisms.

Hope that helps. I am actually glad you brought it up, I really have had no opportunity to express the nature of my postings until now.

PS) I spell checked this one for you.

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Cautious Fan Says:
November 11th, 2008 at 12:23 pm

#72 DonC

I agree 100%, there are COMMONS where the gov’t is needed. Wars, education, judiciarcy, roads, etc. These are things that, if left to themselves, wouldn’t happen but are necessary (well, not always ;D). And I don’t see how GM poses a “commons” problem. If there is value in GM, valuable employees, our Volt (token Volt comment), businesses are better then gov’t at exploiting it. If there isn’t value, businesses are quicker to dismember it and reallocate those resources where they’re more profitable. The poor British are still stuck subsidizing their precious BBC. We’re still stuck subsidizing Amtrak. The gov’t is TERRIBLE at efficiently allocating resources.

The current crisis puzzles me as an example of additional regulation. Countries that have far more regulation still had the same problems the U.S. did, so I doubt more regulation, given the available information, would’ve prevented this. And the gov’t involvement was part of the problem here, not the solution. Gov’t encouraged these bad loans when many businesses knew better. Finally, investors have just lost TRILLIONS of dollars. I doubt they need someone to tell them not to do that again. Their intense selfishness has that covered fairly well. I’ll concede, you seem to have a better understanding of the financial system then I, so if you could be more specific here I’d respect that and look into it.

I agree that figuring out what’s needed is difficult. I’d trust a business to act in it’s own interest sooner than I’d trust a politician to act in mine.

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Dave K. Says:
November 11th, 2008 at 12:28 pm

The U.S. government is in the drivers seat in dealing with GM’s calls for assistance.

Let’s make this simple. The U.S. government and the incoming administration has made a statement they will support clean energy systems and fuel efficient cars.

GM has a few vehicles that truly fit this formula. The Volt, the Cruze, and the plug-in Vue. You can argue about the other hybrids and the 30 mpg Malibu (so on…), but these are all commonplace in today’s international pool of available cars.

The U.S. government can step forward and say, “GM, you have three vehicles of importance to the future of America. We would like to get involved in the specific goal to produce these three.”

I feel most American’s would support a focused effort to not only lift GM in this manner, but to quickly bring to market a needed part of an energy efficient future.
_________________________________

Anything above and beyond this specific aid agreement is both wasteful and foolish. And the U.S. government should follow through with a credit/rebate built into the no haggle sticker price of the cars. It’s time to get serious or get out.

=D~

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nitpicker Says:
November 11th, 2008 at 12:35 pm

Lyle —> Thanks for fixing White House

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Ray Says:
November 11th, 2008 at 12:45 pm

Let GM go Chapter 11 but first let them offer Toyota all their Volt technologies and all of the mules ,, research and development..
I will bet that there would be a Toyota VOLT out by 2011 with more improvements and better MPC…
Toyota and GM are working hand in hand for a number of cars now (Pontiac Vibe for one)…so what is the hardship there ?
Why not let Toyota carry the ball for GM… Get the Volt out there ASAP and then … If GM can recover from its self induced wasting of moneys…. buy back the Volt division fromToyota… or.. Toyota could offer to buy out a stream lined GM…

Toyotas are being built in Canada and the US now so it should not be difficult to use a Toyota 1.5 L engine and marry it to the GM Volt power assembly..

GM… I want the Volt… early release ?? Great..! I have deposit in hand… Warranty… I guess I will take my chances…
Third party parts seem to pop up out of the wood work within months of any new car release anyways..

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statik Says:
November 11th, 2008 at 12:46 pm

#77 noel park

I feel a bit like a minor member in the rear rank of the chorus in a Greek tragedy. Except that I am speechless in the face of this particular thread, so I guess I’ll get fired.

“God bless us, every one” said Tiny Tim. Thanks Tim, we’re gonna need it.
—————————

I feel for you noel. A lot of people, myself included, came here solely with a passion solely to drive a electric car, and had little interest in the solvency of GM.

As such, the majority of discussions were about the Volt on a technical basis and how much we liked/disliked particular features of it…or often in my case,(as I’m sure you recall), how I just didn’t believe they could produce the car they showed us at all, on time or on budget.

Over time, the focus has changed, it is no longer just me carpet bombing/hijacking random threads about GM’s health (which I did stop doing after it got excessive…I apologize again about that Lyle) You just can’t ignore the 800lb gorilla now. GM’s health is Volt issue number one with a bullet. We should be so lucky to return to the old days.

I echo your sentiment though, good luck to us all. Try to protect yourself as much as possible, and not get burned.

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dennis Says:
November 11th, 2008 at 12:50 pm

Where is the government getting all this money from?
Stimulus Checks, mult-BILLION dollar bailouts, TRILLION dollar defecits, Stock market is dropping…where is it all coming from?!?

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Cal Says:
November 11th, 2008 at 12:54 pm

Let’s have the wasteful government who can’t run anything give money to a wasteful company that can’t compete, has a failed business model, a failed CEO, and a spoiled overpaid union workforce. Throwing money at something without fixing the problem has always worked so well in the past. Just look how well it has worked with the educational system. All you have to do is scare people with some doom and gloom emotionally charged rhetoric and the money is yours.

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THOM Says:
November 11th, 2008 at 1:00 pm

What happened to the quote “backrupcy is not an option”??? Maybe it should have been stated “if we get a government bailout, bankrupcy is much less likely”.

Get rid of wagoneer and the “top brass”. Paris hilton could have managed the company as good or better!

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Brian T Says:
November 11th, 2008 at 1:07 pm

With the stock in the 2 buck range now, the market cap is only 1.5 billion. Pocket change for someone to step in and buy. But then they would own GM and who would want that?

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Murray Says:
November 11th, 2008 at 1:17 pm

Statik #45….only 27 days left !

Is it ironic or is it fitting here on Veterans Day that 27 days from today ends up being the day that will live in infamy…?

December 7th, 2008 (if you count today)

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N Riley Says:
November 11th, 2008 at 1:28 pm

#39 Statik

If I understood you correctly, you are saying that the government should buy Chrysler, that Ford should declare chapter 11 and GM should go chapter 7 so that the government could pick up the choice pieces to create a new auto company. I know you said that either Ford or GM could go either way to chapter 7 or 11, but the gist of the solution is for the chapter 7 nominee would be GM.

Maybe you are correct in your assessment. I don’t know. It could work as you say. The biggest problem with GM not going into bankruptcy (7 or 11) is that they would not “rid” themselves of the union obligations and such. Bankruptcy would allow them to un-fetter themselves and come out stronger (assuming chapter 11 in your solution).

I pretty well agree that one of the three should be broken up into pieces and picked apart by the other two for what they need. Don’t want the two remaining companies to get into a bidding war over the pieces. Too expensive. Let them put the “pieces” in a drawing, choose who goes first and start picking out the pieces one at a time.

I would use Chrysler as the “chosen” one to be purchased by the government and then used to be divided between GM and Ford. The government could issue low interest loans to both surviving companies to get them through the rough patch of the next 18 to 24 months. They would be responsible for paying back not only the loan they received but the purchase price of Chrysler.

The “government” run Chrysler, as you suggested, would be unable to pick apart a global company like GM or Ford. Just no way for the government run company to function with enough skill without terrible waste of taxpayer dollars. Government run anything is wasteful to the extreme.

In any case, the government should require that the auto maker(s) left receiving taxpayer funded loans should hold down executive salaries, along with all other pay, and eliminate all bonuses and golden parachutes type plans. All executive level and management level “cushy” programs should be eliminated. They should not receive any benefits not received by the assembly plant workers.

I hope the congress and our new president will go a step further and eliminate all grants and subsidies to agriculture and petroleum companies. We need to start purging the waste from our spending bills. We have a good reason now to use as an excuse to demand this be done. Maybe one day we can get back to a financially responsible government. Then, maybe, business follow suite. Maybe.

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Freemon Sandlewould Says:
November 11th, 2008 at 1:35 pm

The question is WHERE DOES THIS NONSENSE END? I have been against bailouts from the beginning of this mess and I do not let my Volt fandom get in the way of that….

……I can not improve on this fellows comment so I repeat them….

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Mike-o-Matic Says:
November 11th, 2008 at 1:39 pm

@85 Dennis,

>> Where is the government getting all this money from?
>> Stimulus Checks, mult-BILLION dollar bailouts, TRILLION dollar
>> defecits, Stock market is dropping…where is it all coming from?!?

They’re printing it. And soon, the dollars in your pocket (and what used to pass for savings and investments) will be worth far less in real terms.

<bitter> Inflation is under control, my left arse-cheek… </bitter>

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tBay Says:
November 11th, 2008 at 1:45 pm

No matter what, Americans are going to pay for GM.
No matter what.

The only thing is how will we pay for them?
We could pay for them NOW through innocent taxes to bail them out.

Or we could pay for them psychologically when we realize just how HUGELY their bankruptcy will affect our economy and our lives.

“According to a new study by the Center for Automotive Research, the failure of one or two of the domestic automakers would results in the loss of 240,000 automaker jobs, 795,000 supplier jobs and 1.4 million related jobs.”

“The suppliers that would be left after the fall out would struggle to supply the foreign automakers that have factories in North America, meaning companies like Honda and Toyota could face some very dire straits.”

“There is no question that a Chapter 11 filing would be detrimental to GM and its employees, but the failure of the nation’s largest automaker would spell disaster for the U.S. economy.”

Forget ‘American Capitalism’ and ’survival of the fittest’; this is a joke. If Toyota went bankrupt, don’t you think Japan would help them out? And don’t you think that Japanese citizens would be thankful?

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brad Says:
November 11th, 2008 at 2:05 pm

Unions are a scapegoat when its really bad management that caused the problems. UPS has a very strong Union and some of the best management. If unions were the major problem and they were causing extreme hardship for the automakers then I would expect the whole industry to be much more automated than it is. That is not the case.

I believe they do need to file bankruptcy just like the airlines did and restructure.

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statik Says:
November 11th, 2008 at 2:09 pm

#90 n riley

Nice post, wordy and long…just the way I like them. I think what you are saying is have the gov’t take over Chrysler and cut them up to GM and Ford. That would indeed be better than just bailing them all out. It would reduce the domestic automakers by 33% and also give the remaining two a more viable product line.

The only problem with that, is the continuation of incumberances GM and Ford face now, debt, VEBA, unions, supplier insolvencies, etc.

Does GM (with Jeep) and Ford (with Grand Caravans and ENVI) gain enough of Chrysler’s market share (and efficiencies) to prop up sales to a level high enough to pay their bills now? I doubt it…but with additional cash infusions from the gov’t to stabilize them for awhile, it could be in the future. They would have a real shot at viability.

It is a interesting idea, I do like the direction, and having Chrysler as the lone survivor does ‘feel’ wrong.
—
You mentioned that in my plan, GM/Ford (or various equities inside them) would not be able to rid themselves of all obligations when reassembling into Chrysler out of C11/C7. This is true to some extent/areas of C11, moreso than in C7.

However, this is where the advantage of having the United States being the puppet master is handy. They can basically do whatever they want inside their jurisdication and just put a fancy name on it, like ’special measures’

That was a big reason why I chose Chrysler (over Ford) as the gov’t controlled survivor who avoids bankruptcy. Chrysler’s biggest liability right now is that it is not a global brand (which has led to more big, clunky NA type vehicles that no one wants), but it could be a great asset in a US takeover scenario.

Basically, I don’t really want Chrysler at all, I just want the shell. I want the built infrastructure, supplier lines, I want the few pieces that are good. I think they are a better fit because Chrysler has relatively no debt, the smallest worker comittments and have a simple business to run/manage. Cerberus has already done all the work of streamlining/purging all the corporate BS out of it since they acquired it August 2007.

I want to strip down all the good parts of GM (or Ford), and place them inside a lean, efficient conduit. Chrysler is the best option I feel for that plan. Then because every hates to see GM or Ford go under (and Chrysler survive), we change the corporate name to make everyone feel good.

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brad Says:
November 11th, 2008 at 2:10 pm

I would buy the Chevy Volt even if the company is bankrupt.

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Rog Says:
November 11th, 2008 at 2:11 pm

What GM needs to do is fire the people that are driving it into bankrupcy. The leadership has done the following. Sent a car to
America the Opal Astra as the Saturn Astra. Problem is the Opal gets 45 MPG, but the Saturn gets 30 MPG. What is wrong with this
picture?

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N Riley Says:
November 11th, 2008 at 2:12 pm

#65 CDavis

I agree with most of what you said. Things have come together that has caused much of the problems we face today. But, at the same time, GM has known for decades that they should be producing fuel efficient vehicles. I can’t fault them for wanting to produce what we as consumers were demanding. Very few of us were demanding fuel efficient vehicles, we all wanted large pickup trucks and SUVs. But, it was and is GM’s business to know what the automobile market is like not only today and next year, but in 10 years and more. They, along with Ford and Chrysler, failed to do so. Their failure has led to today’s situation more than any other factor. I can remember years when the UAW would announce that they were going to negotiate first with GM, or Ford or Chrysler. If they did not get their demands, they said they would strike. Once one company caved-in, the other two would be easy targets. The UAW looked at negotiations as a kind of war against three opponents. Knock off one and then proceed to the next one.

I kept wishing that just one of the automakers would stand up to the union and say strike if you want to, but we are not going to give into your demands. But, it never happened that way. I wished GM, Ford and Chrysler would get together and come up with a list of their own demands and what they would give the unions. But, it never happened that way. The unions were not alone in causing the problems faced by GM, Ford and Chrysler, but they were certainly not innocent bystanders. Government played a role also. But, the largest problem child in the group was the companies themselves. They should have known what they needed to do to prepare for the future. They did not lead. They just wanted to make as much money for the stockholders as they could each year. Then it was too late. The game was too far gone. They could not out run the clock. And there are no more time outs. Too bad. It could have been done much better. I blame all parties – management, unions and government. We need to place a portion of the blame on ourselves, also – the consumer. Now we, the taxpayers, will probably pay all the bills. They have come due. Somebody’s got to pay the piper. But, just who?

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GXT Says:
November 11th, 2008 at 2:23 pm

38. DonC,

It would take Toyota next to no time to put out a Prius plug-in. They already have prototypes. It could be argued that they are way ahead of GM, and they certainly aren’t behind.

The reason that Toyota (and especially Honda) have resisted this route is because the Volt makes so very little sense economically; both for the consumer and for the manufacturer. This is especially true from a cost/benefit perspective when compared to Toyota and Honda’s hybrids.

GM has not shown battery longevity. IIRC, they only have a few prototypes that haven’t yet passed 4(?) years worth of testing. However GM was already willing to ignore whether the vehicle was economically viable. Battery longevity unknowns and design limitations (that, absolute best case, force you to purchase and haul twice as much battery as you will use) appear to have pushed the cost of a plug-in hybrid like the Volt to $40K or $50K. That is such a horrible proposition that it is a virtual non-starter for responsible companies that have good alternative product like Toyota or Honda.

Luckily(?) for the Volt, GM neither has good alternative product nor are they responsible.

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noel park Says:
November 11th, 2008 at 2:31 pm

When you think about it, people flew every day on airplanes operated and maintained by bankrupt airlines. That seems a lot more risky to me than buying a car from a bankrupt company for fear of the warranty issues.

Maybe each car could come with an insurance policy against warranty default. Wait a minute, we could call them “Warranty default swaps”. I hear that AIG is in pretty good financial shape right now. Maybe they could provide them. Think of it a whole new multi-billion product for Wall Street to sell. Where’s my bonus???

Also, don’t you think that consumers have “discounted” the possibility of bankruptcy in their car buying decisions already? Maybe that may factor into the “Big 2.8’s” sales performance these past few months?

#84 statik:

Thanks. You may remember that I nominated you for CFO of GM several months ago. Another piece of my good advice which they ignored, LOL.

As to spelling and punctuation, we have had that discussion many times in the past. This is the blogosphere. People need to get over it. For about the 10th time, my two sons both have very expensive post-graduate degrees, and are pretty literate and well educated, if if do say so myself. Their e-mails would make you weep. Typos, misspellings, ZERO punctuation, you get the idea. Sometimes I swear that they go back and edit some of the above IN, just so that they aren’t seen as “square”. It’s high speed communication, as much like talking on the phone as it is like writing a formal letter. If we proof read our telephone conversations, I bet we would find a few gramattical error from time to time. Like a GWB speech, LOL.

I would say that the average age of GM-Volt bloggers is betrayed by the very polished quality of the comments, yours included for sure. If it was a bunch of twenty somethings, your eyes would cross.

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Exp_EngTech Says:
November 11th, 2008 at 2:39 pm

“Warranty default swaps”.

Now that’s funny.

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DonC Says:
November 11th, 2008 at 3:00 pm

There is a very interesting “Backstory” on the NY Times business page which talks about the UAW agreement to take a one time payment and stock in return for abrogation of health benefits for retired workers. Look for the slider right under the print story headline.

http://www.nytimes.com/pages/business/index.html

GXT – “The reason that Toyota (and especially Honda) have resisted this route is because the Volt makes so very little sense economically; both for the consumer and for the manufacturer.”

Actually in talking to the Prius designers it’s clear Toyota miscalculated both battery performance and availability — they believed, and may still believe, that, among other things, there isn’t/wasn’t enough lithium. As for what makes sense, the Volt is a winner, no question. If you want to talk about what makes sense economically then everyone would drive an econobox and no one should buy a Prius.

It is BTW not that easy to change the Prius to a real plug in. It wasn’t designed that way and you simply can’t stick a larger battery in there. (Well you can but the longevity and performance isn’t what you want).

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Matt Says:
November 11th, 2008 at 3:05 pm

#1 Spin Circuit City went bankrupt yesterday.

And I agree, No Bailout. We are not a socialist country. If they cant survive on their own they need to rework their business model. They need to file chapter 11 bankruptcy and cut all the excess. GM needs to make cars people want to buy. I want to buy a Volt. They need to cut the excess so they can become profitable.

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kdawg Says:
November 11th, 2008 at 3:06 pm

FYI – we are getting more Hamtramck refurb work. GM still spending $ to set up for the Volt.

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kdawg Says:
November 11th, 2008 at 3:08 pm

This is interesting… slap a Nissan sticker on a Dodge?

——–
CANTON, Miss. — Nissan soon will begin a $118 million expansion and retooling of its plant in Canton, Miss., to prepare for the production of a light commercial vehicle.

Nissan is expected to unveil its new light commercial vehicle in two months at the North American International Auto Show in Detroit.

Nissan Motor Co. will cut production of its slow-selling Titan pickup in the middle of 2010, a couple of months after workers launch the first LCV. It has an agreement with Chrysler to sell Nissan-styled and badged versions of the Dodge Ram pickup.

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bruce g Says:
November 11th, 2008 at 3:16 pm

Lyle should be congratulated on his choice of the Volt as a blog.
It has the technical interest of the Apollo mission combined with the drama of “Dallas” and the humour of the “Beverly Hill Billies”
Or perhaps the other way around.
I need a cup of coffee….

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N Riley Says:
November 11th, 2008 at 3:29 pm

#79 Statik

Damn! You do know how to structure sentences, don’t you. Way to go, man. I had wondered many times if you were putting on a front with your style of answers. I did not join this blog until several months after it was started and never took the time to go back and review the earlier posts. So, I did not know you commented in any other style than what I have come to know (and dare I say, love). Keep on telling us what you think and use any style you want. As long as you get your message across, we can take it. And, thanks.

P.S. I never worried about the spelling anyway. You certainly are not alone there. Even with a spell checker built into Fire Fox, I still let some slip past because I don’t always look before hitting enter.

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Tagamet Says:
November 11th, 2008 at 3:34 pm

I couldn’t let Veteran’s Day slip by without a HUGE “Thank You” to everyone who has served/is serving our country. Their families also deserve our gratitude. Their service should put GM’s plight (and our quest for a Volt), in perspective.
Be well,
Tag
PS The Volt will be released on 7/4/2010.
-Paulianna-

“LJGTVWOTR!! NPNS”

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Casey Says:
November 11th, 2008 at 3:38 pm

Pelosi is doing it again, says to give the auto makers the bailout.

She wants to save the unions

Let them go, let them renegotiate with the unions.

no more bailouts

bankruptcy is not going to stop the Volt it will save it

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Casey Says:
November 11th, 2008 at 3:40 pm

also, bankruptcy will not cost millions of jobs just a few

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Casey Says:
November 11th, 2008 at 3:42 pm

Also, Pelosi needs to retire, quit, be fired, loose her job, not come in monday morning, get lost, go away

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jefro Says:
November 11th, 2008 at 3:45 pm

Jefro the only UN-American with cash on hand, no debts, never filed bankrupcy, lives within his means, built his house with his own back and material from torn down buildings.

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old man Says:
November 11th, 2008 at 3:55 pm

I have noticed that many talk about bankruptcy for the auto industry and compare it to the airlines. BIG DIFFERENCE Did any of you borrow $20-40,000.00 to prepay for tickets over the next 5-8years. Nope, and you certainly would not from an airline in bankruptcy
I can see no upside to the U S auto industry in bankruptcy.

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N Riley Says:
November 11th, 2008 at 3:56 pm

#95 Statik

Kind of a corporate “slight of hand” situation as you explain it. My biggest problems with your re-structuring plan was centered on two problem areas with me. One, I, like you, hated to see Chrysler being the survivor. Two, the immense structure of Ford or GM across the global stage would be a daunting task for anyone in government to visualize or conceptualize. I am not sure government is able to manage that type of organization skill set and produce any decent, viable product that anyone would want to purchase.

Definitely, something needs to be done and very quickly. The best solution with such a short time line to consider is to give all three a fast access to government money up to a certain limit in chunks (maybe 10 billion at a time). Access in this case means low interest loans with strings attached concerning salaries and benefits. Management should continue with a possible re-evaluation after 6 months. No improvement equals no current management could survive. We need to start somewhere to clean things up. After we get these things cleaned up, we need to clean up our government by not re-electing the same scum-bags election after election.

But, I can see where your plan is one to consider. A truly good solution to the big three’s problems is not something to be accomplished very quickly and probably not at all by government intervention. Maybe after all the dust settles, GM could purchase Chrysler and let Ford take some parts of it also. My personal opinion would be for Ford, GM and Chrysler all three to merge and rid themselves of their current intanglements where possible. Maybe rename the new company U.S. Auto, LLC or something like that. Maybe pick up an old name like American Motors Corporation. With Toyota, Nissan and Honda such large footprints on our market, there just isn’t enough left over for three large American auto companies anymore. It is sad, but true.

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N Riley Says:
November 11th, 2008 at 4:05 pm

Statik, one thing that has been going through my mind of late is the question of what about the Canadian government’s involvement in a bail-out? There is a lot of auto production and employment in Canada. What is Canada doing or even talking about? Anything? It isn’t just a problem associated with the U.S.A., is it? I know they are American companies, but with plants in several areas of Canada employing many thousands of Canadian workers.

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Paul-R Says:
November 11th, 2008 at 4:09 pm

A Few Obvious Differences Between Circuit City and GM:

1) During WWII, GM manufactured war planes to help fight Japan. We need GM’s manufacturing base as a matter of national security. When WWIII breaks out, we can’t count on Japan to build our war planes. Circuit City doesn’t matter in this respect.

2) We need GM to build the electric-drive cars that will make us energy independent. Japan is competing with the US on the world market, so we cannot rely on Japan to make us energy independent.
Circuit City doesn’t matter in this respect.

3) It’s no big deal to buy a TV from a bankrupt Circuit City. However, most people would think twice about buying a car from a Bankrupt GM. Bankruptcy will destroy what’s left of GM’s brand value and trust, just as they are starting to make great cars again.

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N Riley Says:
November 11th, 2008 at 4:24 pm

As far as the suggestion made earlier by someone about selling GM to Toyota: First off, Toyota or probably Honda, also would shut the Volt program down completely and you would not see it for at least 10 years. When you did see it, you would not recognize it for what it was. We would be better off selling GM to Ford or, heaven forbid, Chrysler. I say “heaven forbid, Chrysler” not because I hate Chrysler, but because I think it is the much weaker of the “Big 3″. I have purchased several Chrysler Corporation vehicles in my life time and thought they were pretty darn good value overall.

We need American manufacturing to be in American hands as much as possible. I know that if war were to break out and it was a big, long and costly war where we had to call on American manufacturing, we would just take over any foreign owned manufacturing that was held by an unfriendly country’s business. But, still, we need American owned and operated manufacturing.

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Paul-R Says:
November 11th, 2008 at 4:25 pm

I think the blame for all this falls equally on the US auto industry and the US government.

Until very recently, the US auto industry has executed very poorly and made many bad decisions. Meanwhile, Toyota and others have executed quite well.

Likewise, the US government has failed to protect the US auto industry from world domination, whereas Japan has done an excellent job protecting the Japanese auto industry (and many other industries).

So, basically we need some honest politicians (oxy-moron?) in Washington, and we need some competent management at GM. Is Obama honest? Hard to say, since the evidence goes both ways. Is Wagoner competent? Hard to say, but usually people unwilling to accept responsibility are also the ones most guilty.

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Grant Says:
November 11th, 2008 at 4:29 pm

I thought we were going downhill when we contracted an Italian company (Beretta) to make our official military issue pistol. Glocks, which most of our PD’s use, are Austrian. Both are GREAT guns, but I’d like to see our critical items be made here.

On the other hand, we’ve been very good at drivign our critical businesses out fo the country, I could see it happening with GM, too. Don’t forget, for those who think anything is too big to fail, there’s the one word rebuttel:

“Rome”.

If American tax money is used to do this, it should come with a mandate to benefit American interests, such as use the first five to ten years production at the tax-subsidized cost to do a replacement of current 20-or-under-MPG cars operating on our roads. Many would be traded in (and profitably sold overseas, needs be) as we convert our commuter-population to intermediate E-REV’s, which due to their gas/electric natures will not be as prone to problems in case of a realistic gas shortage.

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statik Says:
November 11th, 2008 at 4:30 pm

#108 Tag

I couldn’t let Veteran’s Day slip by without a HUGE “Thank You” to everyone who has served/is serving our country. Their families also deserve our gratitude. Their service should put GM’s plight (and our quest for a Volt), in perspective.
Be well,
Tag
PS The Volt will be released on 7/4/2010.
-Paulianna-

“LJGTVWOTR!! NPNS”
————————————–

I echo your sentiment Tag…and I am glad to see you are still out there lurking.

You ‘be well’ also,
Stat

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shane zimmerman Says:
November 11th, 2008 at 4:35 pm

I am German and I think Americans have the worst patriotism. In Germany we have pride of our products. In Germany we have great respect for American products and in fact are worried about the new Cadillac products actually being better than our BMWs and Mercedes.

There are so many spoiled brats in American now. Oh I will get a foreign car because it’s in style.

Last time I looked GM makes better cars than the competition.

Snobs who drive foreign cars. People who don’t know how hard there grandfathers have worked to build us industry.

Amercian solider who have fought to protect it.

People who make comments that say let GM go under need to live in another country maybe move to Japan.

GM represents Americans largest industry. If you let GM collapse you will see major issues with not only unions, workers, parts layoffs.

Stop being selfish oh my taxes will go up 10 dollars if we bail out GM.

IF you don’t not only will your taxes drop, your way of living, your kids future!

People stop being stupid.

Listen to Obama those advisors who support him are educated and are smart to back GM. People who write that GM should go under on this form are idiots.

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throop Says:
November 11th, 2008 at 4:36 pm

I’m against any and all bailouts.

However, just a note, I’ve been reading some opinions where people do not think chapter 11 (reorganize, get loans and continue) would be an option, but rather, chapter 7 (liquidation).

The reason is that since GM is losing so much money, and with the credit markets so tight, there is a good chance GM would not be able to secure the funding to emerge from chapter 11 and continue operations.

I don’t think a bailout would work either. Its looking like lights out to me.

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Paul-R Says:
November 11th, 2008 at 4:37 pm

Here’s a thought …

Maybe the US government should impose a 10% tax on all Japanese cars sold in the US. This tax money would be split among the US automakers, based on how many cars they manufacture in the US. This would continue until Japan opens their auto market to the US. Ditto for the closed auto markets in other countries.

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Adrian Says:
November 11th, 2008 at 4:37 pm

The Federal (or any government) should not be part of funding a public company. That is my consersative (Reagan) opinion. Socialists (Obama) would tend to lean to having the government have a more active role in the economy so they would bail them out.

Fact 1. The government started this mess by letting the hens run the hen house in the 90’s until today (both Republicans and Democrats at fault) after Carter got this going in the 70’s.
Fact 2. This bailout money is not even our money. The government is going further into debt borrowing money (or printing more) to pay for all this. There was no cut in psending elsewhere to pay for this (or even the stimulus package).

I would love for the Volt to live on, but this is a tough decision for a bunch of lying, back stabbing politicians to make. Do you let every business in the USA suffer because of very poor government decisions over the years? ‘Let them all fail’ seems a bit cold, and I would love for the Volt to make it to the light of day, but…

I can’t let the government (specifically the Fed) swallow up more power. It is by the acquiring of power and the sure fired poor decisions by our elected officials that got us into this in the first place. I disagree anyone would not buy from GM. If backruptcy allows GM (or Ford-Chrysler) to rebuild the company with sane employee wages and benefits, then so be it.

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Paul-R Says:
November 11th, 2008 at 4:44 pm

Shane Zimmerman (#121), you hit the nail on the head!! Thank you!

My USA has become a nation run by too many crooked greedy politicians pandering to too many lazy selfish unpatriotic whiners.

US cars are now pretty damn good, but you won’t hear that from many US citizens. They’d rather own Toyotas and disparage US cars that they’ve never even driven.

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statik Says:
November 11th, 2008 at 4:47 pm

#115 n riley

Statik, one thing that has been going through my mind of late is the question of what about the Canadian government’s involvement in a bail-out? There is a lot of auto production and employment in Canada. What is Canada doing or even talking about? Anything? It isn’t just a problem associated with the U.S.A., is it? I know they are American companies, but with plants in several areas of Canada employing many thousands of Canadian workers
—————————–

There is a similar discussion here about additional aid, and the government says they are on board. Additionally, there has been a lot of additional government payouts, compensations, grants etc. to prop up the viability of building cars in Canada lately.

Although, I will say that it is tricky to know how to fund this sort of thing, as the automakers are US based. It is hard to funnel cash to those companies directly and maximize the valule in Canada at the same time.

Obviously, the Canadian government’s share/ability to chip in would be dwarfed by that of our neighbours to the south, but I assume it would/will be proportional.

Here is a ditty from today:
Harper (Canada’s PM) said a failed auto sector would cause a tremendous dislocation in the Canadian economy, but that he doesn’t want a sector that would be permanently supported by government or not viable without government help.

“We are all aware of the deep problems of some of the major companies in the auto sector. We are also aware of some of the actions that are taking shape in the United States,” Harper said. “The government of Canada will examine all possibilities. We haven’t ruled anything out or anything in.”

http://www.iht.com/articles/ap/2008/11/10/business/NA-Canada-Auto-Sector.php

I don’t usually touch on economics from here in Canada, as I think people are getting their fill with just US news, but there is the same public concern about auto manufacturing jobs, especially here in Ontario.

I would wager the Canadian government would prefer to step in and help out large Canadian owned suppliers of GM/Ford/Chrysler who are in trouble, or subsidize plants and employees located in Canada directly. Keeping something like Magna solvent for example is as important as keeping Detroit automakers solvent. (FYI-just using Magna as a example of a large part maker…to my knowledge they are in pretty healthy shape atm).

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N Riley Says:
November 11th, 2008 at 4:53 pm

#121 shane zimmerman

Well, you certainly nailed us to the wall with the comments about Americans. We are certainly all that you described. And I have always thought American cars were better than European cars. We all have plenty to be proud of and plenty to be ashamed of. None of us, American, European or whatever can claim to be right all the time. We all make mistakes and sometimes we have to suffer some pain for those mistakes. Thanks for your comments. It nice to hear from someone outside the States. You are not alone in that respect. We have several people from outside of the States on this blog and they contribute very well to the discussion.

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Ed M Says:
November 11th, 2008 at 4:59 pm

Paul-R #116

Thanks for reminding us about GM’s contribution to the war effort over the years on this special day.

The unions are largely responsible for the mess that GM is in and the first order of business is to bring in the right to work legislation that would permit replacement workers if the unions don’t want to work

We have blamed GM for their situation but it was never really in their control. Big labor and bad government has pretty much caused most of the mess. GM built the only vehicles that could compete in todays market, big trucks and SUVs and still pay the bills.

Because many of us are in unions and have voted in these governments we tend to blame everyone but ourselves. Even if GM survives to live another day the unions in there present form must go.

And more people must prepare themselves for retirement rather than expecting the hard pressed work force and companies to do it for them.

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N Riley Says:
November 11th, 2008 at 5:01 pm

#126 Statik

Thanks. That does help answer my question. I felt certain that our sister to the north was not just sitting on the sidelines watching what was happening to the south of it. There is too much at stake to Canadian interest to do that. But I was not informed of anything happening. Your comments helped. Our two countries are too closely tied together (in many ways) for something happening to one without it affecting the other. I hope we continue being close knit “communities” with many national interest shared and supported.

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N Riley Says:
November 11th, 2008 at 5:12 pm

For those of you who are blaming the unions for the automaker’s problems, you are not completely wrong nor are you completely correct. It is some of all. The unions did contribute, yes, but so did management and government. It took all three to get where we are today.

Another thing, if the union supporters in congress has it their way the “card check” law will be passed and union membership will explode in this country. It will be an easy thing for the unions to have over 50% of workers at a plant to check off that they would like to see a union at their workplace. It can be done under the covers, so to speak, and the company will not know it until the required percentage is gained. No time limit and once you check off, you can not change your mind. Not only that, but it is not a “secret” ballot. You don’t get to have a vote and you do get the opportunity to have your arm “twisted” by the organizers away from the plant where you could at least expect some relief if not protection. No more elections. No more secret “ballots”. No more real choice.

The Right To Work law is next on their agenda. No more right to work provisions. All workers will be unionized and their dues will be used to support liberal causes around the world. Just how hard of a time do you think a “conservative” or “moderate” politician will have of ever getting elected when the unions will pour in hundreds of millions of dollars, and even more if need be, to support your opponent. It will make Obama’s fund raising look like chicken feed.

Isn’t this a great country we live in or what?

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kert Says:
November 11th, 2008 at 5:19 pm

Chris Paine will have ample material for his next movie. Who cares about all the electric cars running about ?

The question is, who killed General Motors ? Greed ? Arrogance ? Leadership as dumb as brick ?

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CDAVIS Says:
November 11th, 2008 at 5:23 pm

______________________________________________________
Nationalize both the Auto Industry and the Oil Industry?

http://www.youtube.com/watch?v=PUaY3LhJ-IQ
______________________________________________________

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J Man Says:
November 11th, 2008 at 5:38 pm

#10 mmcc

Open question… Specifically, what would happen to the UAW if GM went bankrupt? Would GM then be able to rehire at lower wages and benefits? What effect would it have on retirees?
_______________________________________________________

The UAW represents other than just the auto industry. Nothing would happen to the UAW. Bankruptcy would just allow GM to open up the national agreement and renegotiate wages and benefits. As fr as retirees, they would loose their pensions and health care through the union and then the federal government (aka. YOU) would have to pick up the tab and start paying it.

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chevonly Says:
November 11th, 2008 at 5:56 pm

Since most of you hate GM so much I guess I better increase my workouts so I can buy another Honda and end up having to push the pile of crap once in awhile. If our crooks in washington can give trillions to the wall street crooks I cant figure out why you guys are down on GM for asking for a paltry 20 to 50 billion. Granted GM has made lots of mistakes but they helped raise the standard of living in this country. And the Yoshi manufacturers dont have to pay the health and pensions that GM does, anyway this country is not free market anymore anyway Bushco took care of that capitalism is dead they have nationalized everything else why not the car companies too. GOOD LUCK COMRADES FEARLESS LEADERS BUSH AND OBAMA WILL SAVE GREAT COUNTRY FOR MASSES DAS VE DANYA.

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statik Says:
November 11th, 2008 at 6:50 pm

#10 mmcc said, “Open question… Specifically, what would happen to the UAW if GM went bankrupt? Would GM then be able to rehire at lower wages and benefits? What effect would it have on retirees?”
______________________________________________________

#133 J man said, “The UAW represents other than just the auto industry. Nothing would happen to the UAW. Bankruptcy would just allow GM to open up the national agreement and renegotiate wages and benefits. As fr as retirees, they would loose their pensions and health care through the union and then the federal government (aka. YOU) would have to pick up the tab and start paying it.”
——————
Well, actually that is not exactly true for the retirees pensions. GM’s pension fund was very underfunded in 2002…to the tune of about 17ish billion. Then GM did that massive bond issue in 2003 and shoved it in there (about 18 billion), all the while they got more aggressive with asset allocation and it ballooned to being one of the most overfunded plans in America (by about 17 billion).

There is some question as to how it is doing now, because the allocation at the end of ‘06 was about 30% stocks/50% bonds/20% ‘other’–that other was real estate and alternative investments, like hedge funds (eww). Hopefully, they adjusted risk down. There was supposed to be a report soon, or recently with more up to date numbers, I have not seen it.

As far as anyone knows, US GM retirees have no problems with their pensions, whether GM is alive, in bankruptcy…or dead.

The supplementary benefits like the new union run medical benefit plan are another story. VEBA is very, very underfunded. The union has allowed the ‘big 2.8′ to defer payments and final balloon payments seem very much in doubt. This is why Pelosi and the gang wants the next 25 billion to go directly to fund these plans, obviously the automakers would rather use the cash to keep the lights on.
——–
In Ontario, where the bulk of GM work is done in Canada, the pension story is a much different one. The provincial NDP gov’t decided to allow auto companies to ‘defer’ payments to pension plans back in the ‘92 recession…and unfortunately it was a loop-hole they never closed (under fear of backlash from the automakers). They did set up guarantee fund, but the pension itself is underfunded by a whopping 44%

Therefore the equation in Canada if GM dissolved would be GM retirees would receive the first $1,000/mth or $12,000 a year regardless….then the remaining portion of the pension over that amount would be cut by 44%.

Side note: This issue is actually one of the things that I believe N Riley inferred can not be discontinued in Chapter 11. A company’s prior obligation to fund retirees pensions can’t be dissolved.

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DonC Says:
November 11th, 2008 at 7:09 pm

#135 Statik

When a company goes 7 the pension plan folds and payments are picked up by the Pension Benefit Guaranty Corporation. I believe this would be the case with GM. It’s discussed briefly in the Backstory I cited earlier on the NY Times page, where the reporter estimated that the payments would be cut by 2/3. But maybe you’re right and the pension is over funded.

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If U Fly the American Flag Says:
November 11th, 2008 at 7:23 pm

Everyone is waiting for the CAMARO!

http://www.chevrolet.com/camaro/?evar10=DIVISIONAL_HOMEPAGE_LEFTPROMO1_CAMARO

Remember to be Patriotic and get a better vehicle-buy American.

PS
Toyota’s are rust buckets just like the 60’s again.
I live in New Hampshire and bought a new 2005 Quad Cab Tacoma in September 2005. My truck has only seen two very mild winters worth of salted road conditions. I wash the under body of my truck frequently. This spring I noticed that surface rust is breaking out all over my truck’s frame, at the weld joints, on the flat surfaces of the frame and anywhere something is bolted to the frame. I have talked to the service department at Toyota of Nashua, NH where I bought the truck and they state that no other customers have brought this problem to their attention as yet. I am a mechanical engineer and I design and work with metals, undercoating and painted finishes all the time. Based on my experience, it is my opinion that a properly paint two-year-old truck frame should not have this much rust breaking through the paint on the frame as mine does. All Toyota advertisements I have always seen, stress the durability and extremely long service life expectancy of their vehicles. The entire reason I bought my Toyota was based on their long-standing track record of high quality and customer satisfaction. Working with the dealership we escalated this situation to the New England District Service & Parts Manager trying to get Toyota to repair the rust break through problem. I presented the idea that there may be a Toyota design problem with the undercoat and paint system specified for the 2005 Tacomas and or that the coating materials were not applied correctly to my specific truck. The New England District Service & Parts Manager is basically stating that all frames start to rust eventually and that Toyota has no obligation to repair the frame rust even thought the truck is only two years old. My local dealership is now saying this problem is in the hands of New England District Service & Parts Manager and if I am not satisfied with their response I may have to go through the arbitration process with corporate Toyota USA to get this rust problem addressed and corrected. Is anyone else experiencing similar frame rust problems with their 2004 or new Tacoma’s?

Jokes on you..next time buy a Silverado!

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Jim in PA Says:
November 11th, 2008 at 7:46 pm

New York Times today reported that the condition Bush is demanding before he agrees to a Detroit bailout is that Congress pass the Colombian Free Trade Agreement. So he wants to hold a huge part of American industry hostage over another lousy free trade deal. What an A-hole.

Sorry – This is the first political comment I have made on this website. I don’t normally like seeing political comments here, but:
1.) It is central to the topic, and
2.) It blew my mind when I read it. Bush’s position is not a conservative or liberal one; it is an infantile and selfish one. Good riddance to him.

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RichardG Says:
November 11th, 2008 at 7:47 pm

This thread has probably run its course; but just to add a few thoughts:

1. Lithium is the 22nd most abundant material in the world; lots of it in the oceans as well as in the ground around the world.

2. Corporations virtually run the US Government through the funding of lobbyists. I don’t see how we will ever regain control of congess although, here in California we just passed a “redistricting measure” that will allow an independant group to redraw political lines and quit the Republican/Democratic gerrymandering.

3. When I was in high school, we did not have a TV. I read alot. I read both volumns of Karl Marx’s Das Capital. His was a purely economic treatise and was later distorted to become a political disertation by Russian Politicos. The main weakness in Karl Marx’s theories was the advent of labor unions. He thought that Capitalism would self destruct because the worker had no voice. There was some mention of labor organizations, but he never thought for a moment that unions would succeed.

History goes on.

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NZDavid Says:
November 11th, 2008 at 8:11 pm

Tagamet
I couldn’t let Veteran’s Day slip by without a HUGE “Thank You” to everyone who has served/is serving our country. Their families also deserve our gratitude. Their service should put GM’s plight (and our quest for a Volt), in perspective.
Be well,
Tag
PS The Volt will be released on 7/4/2010.
-Paulianna-

“LJGTVWOTR!! NPNS”

Thanks for the use of your couch today, Tag, I needed it. I have been pretty depressed lately with all the news. It is good to have things put in perspective.

I feel like I’m in a car with no brakes headed for a sharp corner, no way to stop, and wondering if the guard rail will hold.

Statik:
Good positive post.
I would limit wages to a max of one million per year, for any employee.
Currently oil imports are running approximately 350 billion per year. So any govt involvement should be to reduce this. All new investment to go towards PHEV’s BEV’s of various flavoUrs.
Anyone going C11 to get a govt. guarantee for future warranties. Five years from C11 on PHEV’s BEV’s only.
Ditch the two fleet CAFE standard.

If you’re going to interfere, do it in a big way!

Re yr syntax post. I remember the hatred you used to attract, I like the softer you, but the ’song remains the same’ to borrow a line.
I care about the result, not so much the procedure.

PS: To everyone complaining about build quality, do you think Volvo has build issues? Their heavy truck sales were off 99.7% last quarter.
Or over 41,000 to 115. Toyotas share price is off over 50%, its not just US production suffering, this is worldwide.

LJGTVWOTR
NO plug, NO sale.

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kent beuchert Says:
November 11th, 2008 at 8:17 pm

I feel sorry for GM that it has such a wimp as CEO. Wagoner should be pounding the table and demanding cessation of all UAW contracts and start furloughing workewrs. I notice that the union enriched Dems never once mentioned their cohorts as the underlying problem. And exactly why in’t Bush demanding union wage cuts as a condition for any loans? His administration didn’t ming requiring financial companies dump poorly performing CEOs as necessary conditions for those loans. How about a poitician with the guts to call a spade a spade and quit pretending that unions
aren’t an insuperable obstacle to the profitability of any corporation that has to compete against non-union shops. The ultimate non-solution – force taxpayers who have fled from union auto wages to cough up the money to pay for the losers.

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NZDavid Says:
November 11th, 2008 at 8:25 pm

Going by this Bloomberg report C11 is NOT an option for GM.
So how much is the Volt programme worth?

Analysts said only federal aid can prevent a collapse for GM, and reorganizing in bankruptcy may not be possible because the credit crunch has dried up financing.

“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.”

Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=azEnfDF7aB0s&refer=home

Jim: from the above article
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 today with Bush in New York.

She denied a New York Times report that Bush tied 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.

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Lurtz Says:
November 11th, 2008 at 8:55 pm

#141 Kent Beuchert

With all the Maverick points you’re earning, are you gonna get a 4-piece Chicken Fingers Happy Meal with the honey mustard sauce, or the Cheeseburger Happy Meal?

Make sure you ask for the “under 3″ toy.

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Dave K. Says:
November 11th, 2008 at 9:51 pm

hi Jim in PA #138,

“New York Times today reported that the condition Bush is demanding before he agrees to a Detroit bailout is that Congress pass the Colombian Free Trade Agreement….What an A-hole.”

…Bush is demanding?????

____________________________

It is apparent that Barry Obama has correctly identified the problem:

The D.C. establishment is standing in a big circle with their hands in each others pockets. And the dinosauric idea of gross executive pay rates along with golden parachutes need to be exlaxiated and flushed.

The bind is that current multiple bail out payments have left the honest working American public with the duty to don rubber gloves, get on our knees, and esponge the over spray.

Q> What’s that smell?
A> It isn’t Colombian coffee.

Let’s hop in our EREV Volt and get out of here. Yes, Big Oil, that’s triple digit daily driver MPG we’re talking about.

=D~

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Craig Says:
November 11th, 2008 at 9:52 pm

Ok — Full disclosure here … I work for GM at our HQ in Detroit. I came to the company 8 years ago after a decade-long stint in the airline business — so I understand what happens when a business model fails and labor gets too expensive for the market.

But what’s happening on Main Street in the US today is something that impacts us all. The US auto industry stands to shed nearly 3 million direct and indirect jobs if the Detroit 3 stop working. This isn’t about ‘punishing’ us for the sins of our fathers — or serving a market that demanded big trucks and SUVs in the 1990s — it’s about the reality of today and how we restart the economy. When we ‘Kept America Rolling’ after 9-11, we were praised for doing what others wouldn’t. Now, we are simply asking to be provided a helping hand to restructure in times that are historically challenging for many industries. Consider:

• The U.S. auto industry has been hard hit by the credit crisis.

-Carmakers can’t get credit to complete their restructurings and put new advanced technology vehicles into production.

-Customers can’t get credit for new cars and other purchases, and consumer confidence has fallen to an all-time low.

-Suppliers are losing business and can’t get credit to keep them afloat until the industry recovers.

-Dealers can’t get credit to finance inventory and other routine business needs.

• Prior to this crisis, the U.S. auto industry was aggressively and successfully restructuring.

-The industry has invested $10 billion in U.S. plants and equipment each year.

-U.S.-based companies have closed the productivity gap with leading imports.

-GM has all but closed the quality gap with Asian carmakers.

-New labor agreements will make U.S. manufacturers’ labor costs competitive with the transplants by 2010.

• GM has been in the process of building a winning auto company for the long term. These efforts are threatened by a severe downturn in sales and a sharp drop in revenue caused by a widespread economic and credit crisis.

-GM is focused on building sustainable success, not short-term results.

-New GM vehicles such as the Saturn Aura, Cadillac CTS, Chevy Malibu and Buick Enclave are getting great reviews from the experts and enthusiastic support from customers.

-GM is committed to leading in the development of advanced propulsion technology, including breakthrough technologies like the Chevy Volt extended-range electric car.

-At the same time GM has been creating these award-winning vehicles, the company has been taking tough action to cut costs. In fact, since 2005, GM has reduced structural cost in North America by over $9 billion. And more recently, GM has outlined plans to enhance its liquidity position by $20 billion through 2009.

GM has been streamlining its U.S. operations. It has reduced its U.S. salaried workforce from 44,000 in 2000 to 32,000 in the fall of 2008, and its hourly workforce from 132,000 to 64,000 during the same period.

In response to the recent economic crisis, GM is further tightening its belt. The company recently took additional actions to reduce salaried employment costs by 30 percent, eliminate raises and discretionary bonus for executive and management employees, and suspend the 401k match for salaried employees.

The long-term security of the U.S. requires a strong auto industry and strong domestic R&D programs.

The auto industry will play a critical role in diversifying our energy sources away from imported petroleum.

The U.S. should not trade its dependence on imported oil for a dependence on imports of critical technologies – batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells.

The U.S.-based auto industry is second only to the semiconductor industry in R&D spending — $12 billion last year alone.

• Federal assistance to help the U.S.-based carmakers through this historic downturn is a good investment in America’s future.

-Potential cost for supporting loans to the industry would be a fraction of one year’s lost tax revenue should the industry collapse.

Because of pent-up demand, the industry should recover quickly once the economy improves, implying a fast payback for loans and interest.

A healthy auto industry is an engine for creating the jobs, the new technologies, and the global business growth that America needs if it is to remain a great power.

• What happens to the U.S. auto industry matters on Main Street.

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.

U.S.-based companies have 105 assembly and component plants in 20 states, including such “non-auto” states as California, Texas, Kansas, Louisiana and Maryland.

The three companies purchased $156 billion in parts, materials and services, supporting jobs in all 50 states.

The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million.

• Automotive manufacturing is a 21st Century growth industry, and the U.S. needs to earn its share.

A strong U.S.-based industry lets America benefit from global growth of one of the largest, most important industries.

Less that 15% of the world’s population owns a car, so growth potential is significant.

The industry sold 70.6 million vehicles globally in 2007, an increase of 13 million units from 2002.

U.S. companies can compete: GM’s now sells 61 percent of its car and trucks outside the U.S., and continues to set sales records overseas.

CYTD, GM sales in LAAM are up 13 percent, while sales in Asia-Pacific are up 7.6 percent.

Motor vehicles and parts are the single largest export from the U.S., topping aerospace, medical equipment and communications.

The collapse of the U.S.-based auto industry would be devastating. In just the first year: Direct, indirect and spinoff employment would drop by 2.95 million people; personal income would drop by $150.7 billion; government transfer payments would increase by $14.3 billion; social security receipts would drop by $21.1 billon; personal income tax paid would drop by $24.7 billion

• This is an auto industry crisis, not just a U.S. industry crisis.

The Center for Automotive Research assumes that a 50 percent drop in production by U.S.-based carmakers would cause a 50 percent drop in production at the transplants due to supplier disruptions and bankruptcies.

A complete shutdown of the U.S.-based carmakers would also shut down the transplants for at least one year.

So — Let’s take a cold look at the facts and make a clear-headed judgement on what’s best for everyone.

Can we do better? Absolutely, and we need to be held accountable to do so. But let’s not misunderstand what the consequenses would be if the Detroit 3 were to fail. As Jim Cramer said on his show last night — if we want an economic recovery, we need the jobs to go with it.

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vincent Says:
November 11th, 2008 at 9:57 pm

Rick get a life. Your the worst Manager in the auto industry. What in the world have you accomplished.

Want a bail out from Us???

Your gone and so is the union!

It’s crystal clear the technology was always there for electric cars.
GM only built it for a hand out.
What a joke.
Where is Lee Iacocca when you need a REAL Manager.
Get his brain in there or hire 12 of us for 1M annually.
We will amaze you!

Hey Rick…go run Petsmart…now that Wal Mart is going into pet care lets see if you can handle gold fish and turtles.

(Quote)
Dave K. Says:
November 11th, 2008 at 10:01 pm

A. A billion seconds ago it was 1959.

B. A billion minutes ago Jesus was alive.

C. A billion hours ago our ancestors were
living in the Stone Age.

D. A billion days ago no-one walked on the earth on two feet.

=D~

(Quote)
Dave B Says:
November 11th, 2008 at 10:03 pm

Craig @ 145,

Well said. I fear a bailout is necessary for all of us–although most of us will not benefit DIRECTLY. Vincent @ 146, it is frustrating watching Lutz and Rick fly their private jets around while we pay for their jet fuel… salary caps for all execs.

(Quote)
Dave K. Says:
November 11th, 2008 at 10:37 pm

hi Craig #145,

So — Let’s take a cold look at the facts and make a clear-headed judgment on what’s best for everyone.

________________________________________

I give you credit for saying your piece. And without going into aggressor mode I will say this:

Money helps get things done. The question is not having to give money to someone to get something done. The question is determining the correct spending route for the potential to be derived.

I had mentioned 1000 new 400 bed hospitals be built with the money. This will employ 1000’s of construction workers and result in 1000’s of permanent American jobs. And will result in 1000’s of tax payers getting high grade medical services.

If we plow this same amount of money into a business which is mortally wounded, would this be in our best interest?

=D~

Happy Veterans Day ~ God bless the troops

(Quote)
jkh2000 Says:
November 11th, 2008 at 11:09 pm

Now let’s stop and look at any business that we might own. If it is not making money, then someone has to be layed off. Why should we bail out anyone, when the top dogs will just rape it to death anyway. Cut the top executives and let the workers keep building quality cars that will sell and the company keep going. I can hardly wait to get my hands on a Volt, but not at the taxpayers expense. Look at the banks and what they did. No new loans going out to comsumers and yet the stock holders got their share. AIG and there fancy trips and spa treatments. More top people smiling all the way to the bank.

(Quote)
statik Says:
November 11th, 2008 at 11:09 pm

#136 DonC

Statik:
When a company goes 7 the pension plan folds and payments are picked up by the Pension Benefit Guaranty Corporation. I believe this would be the case with GM. It’s discussed briefly in the Backstory I cited earlier on the NY Times page, where the reporter estimated that the payments would be cut by 2/3. But maybe you’re right and the pension is over funded.
——————————-

Yes, you are exactly right about Chapter 7…it is a whole new ballgame there. That was actually my point about the Canadian pension situation if GM dissolved. Because it is underfunded by 44% (at last check). Therefore, there is a 44% haircut on the portion above the first $1,000 which is guaranteed.

As to the NY Times article about the payments, I don’t know. The fund has had some wild swings from being underfunded to overfunded in early 2007. The asset allocation of 50% bonds, 30%equities and 20% real estate/hedge could certainly have pushed it way down if it was being managed poorly. (Although, it was touted as being managed one of the best with its aggressive positions on the way up).

I know one thing for sure. If I was a GM employee, I’d be digging deep into the matter and shoring up my finances if there was a shortage.

/Our new friend Craig in HQ could probably get access to current info on the subject, if he doesn’t already know…he seems to have a lot of numbers floating around at the top of his head. *wave*

(Quote)
Dave K. Says:
November 11th, 2008 at 11:25 pm

hi jkh2000 #150,

Is a pay rate of $100 per second really that high?

=D~

(Quote)
statik Says:
November 11th, 2008 at 11:52 pm

#136 DonC…and others interested in US pension funding

Ok, it was driving me nuts, so I dug it up from GM’s supplemental pdf charts:
————————————–
Pension Funding
• GM’s U.S. pension funded status has declined due to recent initiatives:
– 2008 Special Attrition Program for U.S. hourly employees
– Flat pension benefit in lieu of healthcare coverage for post-65 salaried retirees effective January 2009
– Salaried retirement window program
– Delphi 414(L) transfer

• GM has also recognized additional pension liability following the court approval of UAW Settlement Agreement

• After recognition of increased pension liability from these initiatives and negative asset returns year-to-date, Hourly plan was $0.5B underfunded, Salaried plan was overfunded, and plans were overfunded on a combined basis
– Based on September 30, 2008 remeasurement of Hourly plan and July 1, 2008 remeasurement of Salaried plan
• GM does not expect any minimum funding requirements for both Hourly and Salaried plans in the next 3-4 years
———————-
So there you go, ‘the plans are overfunded on a combined basis,’ sounds like everything is still on track and the fund has re-aligned the asset allocation.

Source: (page 35)
http://media.corporate-ir.net/media_files/irol/84/84530/chartset/Q308_Earnings_Chart_Set.pdf

(Quote)
DonC Says:
November 11th, 2008 at 11:55 pm

#145 Craig

Regardless of how anyone here looks at it, the Obama team is on board with your analysis. Seems like we’ll get the Auto Rescue Bill in return for the Columbia Free Trade Agreement. This is sort of a no-brainer. A lot of Dems aren’t really opposed to the Trade Agreement but don’t want to cross the labor unions, and the labor unions really want the bailout.

#151and #153 Statik

I think the reason the pension fund goes kaput is that you have a very large group of employees who are vested but not eligible to draw on the fund. When you add them to the mix the fund is way short of the mark since it’s based on the company making payments until those people are eligible to draw. IOW the plan is overfunded based on the assumption that the company will continue to make contributions on behalf of all employees who are vested but not otherwise eligible for pension payouts. Add those claims without further contributions and you can put a fork in the plan. That’s a guess based on what I know about the pension plans of other companies which have gone 7.

(Quote)
Nelson Says:
November 12th, 2008 at 12:10 am

Why does everyone keep saying “If the big 3 fail”? Seems to me if when one of the big 3 fails, the other 2 will reap greater sales opportunities. Is that not the case.
Survival of the fittest?

NPNS!

(Quote)
Dave K. Says:
November 12th, 2008 at 12:17 am

hi vincent #146,

“Hey Rick…go run Petsmart…now that Wal Mart is going into pet care lets see if you can handle gold fish and turtles.”

_________________________________

Almost every time I bring a fish home from the store and add them to my tank within a few days not only do the new fish develop Ich, but several of the other fish as well. Very frustrating. Please help me.

=D~

(Quote)
CptnJackSparrow Says:
November 12th, 2008 at 12:55 am

No matter how you look at this bailout it’s CRAP. One person said earlier. If GM goes down, business will pick up for the others as well as jobs.
Obama will not bring change for JackChit. He’s already said he’s onboard with this bailout. This isn’t change. It’s the same thing the Bush admin followed. So tell me again what the definition of change is? GM gone? That’s change. Sure jobs will go but don’t ask me for my money to help keep a negative income busines just to keep jobs here. I’d rather they go on welfare. That way they can do something like go get additional education to help “Better themself”. But dump money in a pit like this? That’s just ludacris!

(Quote)
Mehdi Says:
November 12th, 2008 at 1:39 am

Let GM sink. It can’t swim. Why should the taxpayer be encumbered with this stinking corporation?

When they could have chosen American A123 batteries for the Volt, they backstabbed USA and went with cheaper explosion prone LMS batteries from LG Korea.

Now they extend their begging hands to America. No shame with these executive suite stiffies?

Let GM sink. That is how evolution advances. Any number of companies can produce a Volt. GM is the least competent.

(Quote)
greg Says:
November 12th, 2008 at 1:50 am

I totally agree with a 10 % tax on all foreign cars no matter where they are made until japan allows a free trade.

When the foreign car companies make comments like made in the USA or US parts is such a load of crap of deceptive advertising. The profits are going over seas along with the engineering jobs and hi tech. So they are turning the US into a big factory?

We need to start taxing every country that does not allow us to sell in there country.

I would make it a nice 20% actually. Give the money to the US auto and us research.

That way they cant drain our money.

Detroit issues have come from overseas where other countries are greedy and dont allow us to sell in there country.

Also paying off consumer distorts. I heard toyota is consumer distorts largest donor

(Quote)
Gary Says:
November 12th, 2008 at 2:33 am

I don’t understand why so many people make the sweeping comment that that all GM’s executives should be fired. People are on a witchhunt, and need a person to point fingers at. GM was on a huge product upswing until in the last 6 months or so when the perfect storm of gas prices shooting up and then the credit crisis hit.

GM execs can’t be blamed for not forseeing crude and gas prices shooting up by nearly 100% in a short period of time. 10-20%? Maybe. 50%? Doubtful. 100%? Unthinkable.

GM execs also can’t be blamed for the public being so foolish as to buy into real estate that they couldn’t afford.

(Quote)
NZDavid Says:
November 12th, 2008 at 2:54 am

DonC 154: See my 142.

Craig at 145. I feel for you, but 200 Billion to refloat its a big ask.

greg 159. You the man. It really upsets me the way the US protects its farmers from our exports. Let me know when we can start with the 20% tariff on US goods. Thankfully, my Volt is to be made in Melbourne, Australia, and we have a free trade agreement with them.

A better way is to set high standards, such as, you can only sell PHEV’s or BEVs here after 2015. Fund the US research program, then sit back and watch the fuel import bill drop away, pollution go down, respiratory diseases decline etc. Make the bailout count. I quite like Statiks idea of getting, caugh, you know who, and grabbing the best of the rest.

(Quote)
Gordon Green Says:
November 12th, 2008 at 4:17 am

GM Union wages/benefits are nearly double those of the average American worker.

Until that issue is addressed, GM can never be competitive.

If company management won’t resolve this issue, then Chapter 11 will.

The government should step in to guarantee Chapter 11, doesn’t turn into Chapter 7. We need to salvage as many jobs as possible, but at wages nearer to those of the rest of America.

We need a competitive American auto industry.

(Quote)
NZDavid Says:
November 12th, 2008 at 4:46 am

Gordon See my post 142 C11 not possible it seems.

(Quote)
Dave K. Says:
November 12th, 2008 at 5:32 am

hi Nelson #155,

“Survival of the fittest?”

___________________________

Nuff’ said.

=D~

(Quote)
Dave K. Says:
November 12th, 2008 at 5:45 am

November 11, 2008

Ratigan brought up General Motors (GM). He said the stock is at 66-year lows and a bailout appears to be certain. Jon Najarian said one thing General Motors, Ford (F) and Chrysler can do is sell clean diesel cars in the U.S. like they do overseas. He says “they can have these cars in this country in months, but they need to relax on crash testing and EPA.” Finerman said we need to fix the union and labor problems at General Motors, or the bailout will not work. Najarian told viewers he is coving his short position in names such as Cummins (CMI) and TRW Automotive (TRW).
_______________________________

November 12, 2008: 04:38 AM EST

NEW YORK (Associated Press) – General Motors Corp. plans to increase its stake in its thriving joint venture with Chinese automakers SAIC and Wuling Automobile, media reports said Wednesday, citing a senior SAIC executive.

Spokesmen for GM and partners SAIC and Wuling refused comment on the reports in China Business News and other state-run newspapers citing SAIC Motor Corp.’s chairman Hu Maoyan as saying that GM was seeking to raise its 34 percent stake in the joint venture. Hu, who was speaking at an industry forum in the northern city of Tianjin, did not give any details.

It was unclear how GM, which says it needs U.S. government help to weather current hard times, would finance such a move, or even if it would be able to convince either of its partners to sell.

_________________________________

GM will spend it’s potential bail out money in China?

=D~

(Quote)
Tom Harwick Says:
November 12th, 2008 at 6:07 am

I don’t think I’ve ever read where Wagoner and team admit any mistakes. They’re all just victims.

Your company has been run into the dirt, buddy. And you take no responsibility. That’s why you need to go.
========================================
Can you not grasp the concept of structural problems within an industry? Every single US carmaker is facing bankruptcy. Do you really think this is due to the coincidence of all three of them appointing dummies as CEO at the same time?

Do you really think GM would be making money if they had a different CEO?

(Quote)
Tom Harwick Says:
November 12th, 2008 at 6:16 am

With Democrats controlling Congress and the Whitehouse, you can be sure of one thing. A year from now the UAW members will be making as much money than they do now, and will have lost no benefits.

Obama has the opportunity to make many choices, but to fail to dance to the unions’ tune is not one of them. The Democrats may talk about their love of equality, but they are in the pockets of the unions, and will make sure the UAW members remain the royalty of the American workforce.

(Quote)
statik Says:
November 12th, 2008 at 9:20 am

#154 Don C

I think the reason the pension fund goes kaput is that you have a very large group of employees who are vested but not eligible to draw on the fund. When you add them to the mix the fund is way short of the mark since it’s based on the company making payments until those people are eligible to draw. IOW the plan is overfunded based on the assumption that the company will continue to make contributions on behalf of all employees who are vested but not otherwise eligible for pension payouts. Add those claims without further contributions and you can put a fork in the plan. That’s a guess based on what I know about the pension plans of other companies which have gone 7.
——————————————
I was considering that as well. And does this last quarterly report status reflect the newly minted ‘retirees’? I’ve never seen anything like this go 7…at least I don’t remember a situation like this. I guess we would have to know the amount of the plan now, and its provisions for future funding.

I’m smart enough to know, that I don’t know from the information we have here. If I was a GM employee I’d probably try to ’suss’ it all out, or at the very least plan for the worst and be happy if it turns out better. I think that is the only way they can look at it.

(Quote)
Joe OBrien Says:
November 12th, 2008 at 2:58 pm

I wonder if it was still worth it to kill the EV1? Huh GM. Don’t think the oil sheiks are helping you out any now that you are in trouble.

Even if you lost some oney on each EV1, the advancements from 11 years of manufacturing evs as of today would have revolutionized the auto industry and made you #1 in sales.

But look where you are now, all because of your refusal to evolve.

Hopefully you make it and have another chance with the Volt.

(Quote)
drG Says:
November 12th, 2008 at 9:55 pm

Does anyone still care what Wagoner says?

He is the most boneheaded CEO in history. He has destroyed billions of shareholder value. Yet he still has the nerve to steal millions a year while the real workers get downsized?

Greed at its worst. I will never buy anything from a company with a man like him in charge. Simply disgusting.

(Quote)
Crows Says:
November 12th, 2008 at 11:12 pm

Ive been saying all along that Wagoner and Lutz are complete idiots now we have the evidence to back it up….

GM kept on pushing those GAS HOG Suv’s,now no one wants them any longer…

I love the volt but I see GM crashing and burning within six months!

This is what happens when idiots are left in charge…

pretty damn sad if ya ask me!

(Quote)
jbfalaska Says:
November 13th, 2008 at 12:41 am

Kent Beuchert is a shill for the right-wing Republican lunatic fascists. The idea that Bush insisted on CEO departures and maintaining union wages is absurd. The only thing the Bush Administration insisted on for the bailout was no caps on CEO wages and golden parachutes – NET RESULT: CEOs at the bailout banks caught with their hands in the cookie jar – successfully taking one in every ten dollars of the bailout money – $70,000,000,000.00 this quarter for a room full of people – a grand total of more than all 75,000 GM union employees made in 5 years. Nice job – good riddance Right Wing lunatics. Thanks for selling out America and the middle-class. I’m writing to my Congressmand and Senator to help GM and main street. At least there we can find American obs.

(Quote)
storm Says:
November 13th, 2008 at 5:58 pm

If Wagonner had the class or intelligence of Lee Iococca, he would have offered to work for nothing until he worked out GMs problems. He should have enough of last year’s $16 Million to carry him for a little while.

(Quote)
GM-Volt: Save The Chevy Volt! : A Fag And His Hag Says:
November 14th, 2008 at 7:54 pm
TOMMY 159 Says:
November 17th, 2008 at 3:49 am

did wagoner realy make as much as a football or baseball player last year,that is sick,nobody is worth over 400,000 a year because if they do make more than that,someone else is getting screwed all the way up the street with no grease,no bailout,let them go bankrupt and re start smaller 10 models at most,close buick,oldsmobile,chevy,keep GM and cadillac of course you would have to keep cadillac for football and basketball other great sports figures and actors that make millions a year and get rid of those dam pensions,those that fought for the 40 hour week and fair wages should be forgotten like all the others that had their jobs sent to china and india,to be competitive and of course pay ceo more and raise prices on cheaper products that have designed obsolescence also more lead toys and poison dog food,so jobs are good but it seems 10 billion a month in IRAQ is ok dont look kbr,blackwater halliburton,doing great no bailout needed when you have no contract bids for jets that bid 200,000 mil then go over budget to 400.000 mil so go buy some season tickets you stupid sunday QB mongoloid rednecks,go out of your office and stop harassing the women and get a nice job in the cold whimps,who do you think built this country,ceo’s no not bankers that charge 1400 interest a month on 1500 dollar loan,they own on paper ,wow bankers can only push paper in a circle so many times before they realive it is worthless unless someone that actually works pays the dam mortgage,AIG have another party life is good for them,and BUSH IS A LITTLE BITCH,BYE EXCEPT LEE ATWATER BIT#h BYE

(Quote)
TOMMY 159 Says:
November 17th, 2008 at 4:11 am

IF YOU DONT LIKE UNIONS,THEN DONT JOIN ONE,GO WORK FOR WALL MART,AND TELL ME WHY AN AUTO WORKER IS NOT WORTH AS MUCH PAY AS A GARBAGE MAN,[NO DISRESPECT TO GARBAGE MAN] OR CITY EMPLOYEE IN NEW YORK ,PAID MEDICAL,HOLIDAYS,SICK DAYS,NO CONCEPTION OF TIME AND SPACE,TRY ENDING UNION JOBS AND ENDING THE MIDDLE CLASS,AND SEE WHAT RIGHTS YOU HAVE LEFT,YOU WILL BEG FOR A RAISE AND THE BOSS WILL SAY,I WILL THINK ABOUT IT .UNITED WE BARGAIN,DIVIDED WE BEG.THE GUYS ON THE YACHTS,WITH VACATION HOMES WILL BE OK THEY ARE IMMUNE TO DEPRESSION,GOOD LUCK AT WALL MART NON UNION,NO MONEY FOR LUNCH IN A FULL STORE ,MUST SUCK.

(Quote)
Heathcock Says:
August 23rd, 2009 at 12:07 am

great post, thanks for providing so much. Keep up the good posts.! http://www.hoover-f5914900.com

(Quote)

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GM CEO: GM Needs Aid Before Obama Takes Office, White House Hints it Might be Possible

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