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Full Details of the “Auto Industry Emergency Bridge Loan Act”
Automakers will have to submit their viability plans by December 2nd and Congress will decide whether to give them the funds on the week of December 8th. The loans will then be made within 15 days.
A statement in the bill of particular interest to us is that each plan must “improve the capacity of the company to pursue the timely and aggressive production of energy efficient advanced technology vehicles.”
The following summary is supplied by Senator Carl Levin (D):
Summary of the Auto Industry Emergency Bridge Loan Act
The Auto Industry Emergency Bridge Loan Act provides the necessary short-term assistance to the U.S. auto industry as it weathers the current economic downturn. The measure provides the following:
- $25 Billion in Bridge Loans. Directs the Secretary of Commerce to establish a program to provide up to $25 billion in direct loans to automobile manufacturers and component suppliers whose failure would have a systemic adverse effect on the overall economy.
- Funding. Any costs of the loans would be covered by funds previously appropriated for auto industry retooling loans under Section 136 of the Energy Independence and Security Act of 2007 (P.L. 110-140). However, Section 136 is left completely intact, which means the environmental standards, including strengthened fuel economy and emissions standards, are preserved.
- Replenishment. Loan repayments and proceeds from the sale of company stock will be used to replenish funding for Section 136.
The following robust oversight provisions are included:
- Plan to Ensure Financial Viability. Requires loan recipients to detail how they would use the funds to ensure their long-term financial viability and improve their ability to produce energy-efficient, advanced technology vehicles. Requires cost control measures and performance goals and milestones.
- Tough Oversight Board. Establishes Oversight Board comprised of the Secretary of Commerce, Secretary of Energy, Secretary of Transportation, Secretary of Treasury, Secretary of Labor and the Administrator of the Environmental Protection Agency. The Board will review and provide advice, and recommend changes, as necessary, for meeting the goals and milestones under the Financial Viability Plan. The Board also has authority to review significant company transactions and to give direction to the company with respect to such transactions.
- Taxpayer Protections.
- Warrants. Mandates the government get an equity stake in firms that get loans.
- No Dividends. Prohibits firms who receive loans from paying dividends to common stockholders for the duration of the loan.
- Terms of the loans. The companies will be charged 5 percent interest for the first 5 years and then 9 percent interest after that.
- Executive Compensation Limits. Requires companies that receive the loans to place limits on executive compensation, including prohibiting golden parachutes. In addition to all of the limits placed on EESA beneficiaries, prohibits bonuses to executives whose base pay exceeds $250,000 annually.
The full text of the bill may be downloaded here.
Source (Senator Carl Levin)
Press Conference Video:
[flash http://www.youtube.com/watch?v=U2-rRl8dYlQ]
Posted by: Lyle
125 Responses to “Full Details of the “Auto Industry Emergency Bridge Loan Act””
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November 21st, 2008 at 7:16 am
Glad to see that there is hope.
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November 21st, 2008 at 7:37 am
Well it is good to see that someone is trying to forcefully make them finally produce a fuel efficient vehicle.
Bet they really regret killing the EV1.
I don’t think Ford & Chrysler have any chance of getting a loan because they have nothing to prove they are able to make anything remotely fuel efficient.
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November 21st, 2008 at 7:41 am
This is got to happen or we are going to be in a world of hurt!
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November 21st, 2008 at 7:41 am
Just go back to the dynamics of the magical cars of the 50’s 60’s and early 70’s. The GM that Rocked.
No More UAW. New Management Phaleeeze.
This time at least share a $20,000 per flight corporate jet…or fly business class and get a reality check.
It’s really not that difficult guys. Do not let cheap oil fool you. It’s going back up.
Mass produce enough batteries to make them cheap. Share the platform throughout the US industry and knock out the non US companies. Is it really that tough to figure out people.
Foreign oil dramas quickly begin to go away.
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November 21st, 2008 at 7:44 am
Two weeks is a very short time, but it’s not like they haven’t had time to think about it leading up to this.
I say keep Caddy, Chevy and GMC. Purge the rest.
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November 21st, 2008 at 7:44 am
A whole tree of fig leaves is falling.
In return for a few billions we will get warrants of no value.
The congressional leadership is trying hard to throw money at the auto companies, if the auto companies executives can stop acting like auto company executives for just a few minutes. Please, they are ruining the TV show.
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November 21st, 2008 at 7:56 am
Most of the plans in this bill for oversight have been discused here in several threads.
Maybe someone in D.C. has been reading out posts, and they are finally going to use just a bit of common sense!!!!
Now I can hardly wait to see what GM, Ford, and Chrysler come up with in their “viability plans”…..
JMHO: This is your last chance guys. Don’t screw it up!!!!!
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November 21st, 2008 at 8:01 am
Trim the fat of these bloated companies starting from the Top. Yes, that means you Wagner.
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November 21st, 2008 at 8:13 am
Below are the names of the thirteen board members of GM. These names will go down in history as being responsible for bringing GM back from the brink of bankruptcy or…. for being responsible for the demise of the American auto industry and cementing in the great depression of 2009.
Percy N. Barnevik
Erskine B. Bowles
John H. Bryan
Armando M. Codina
Erroll B. Davis, Jr.
George M.C. Fisher
Karen Katen
Kent Kresa
Ellen J. Kullman
Philip A. Laskawy
Kathryn V. Marinello
Eckhard Pfeiffer
G. Richard Wagoner, Jr.
Heroes or Villains? Only time will tell. I won’t judge them, but a greater power will.
NPNS!
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November 21st, 2008 at 8:27 am
It lost me at “The Auto Industry Emergency Bridge Loan Act provides ….” (kidding)
================================
This might be a problem (just a little ‘might’ this time though):
“Automakers will have to submit their viability plans by December 2nd and Congress will decide whether to give them the funds on the week of December 8th. The loans will then be made within 15 days”
So lets say somewhere around the 11th of December this gets approved, and it takes them 15ish days to get the funds out, which would be the 26th, well thats Boxing Day, so lets say 23rd at the earliest, 27th at the latest.
I think you know where I am headed with this. GM is probably just under 12 billion now, I say that given the knowledge of their clearance sale of Suzuki, and putting of dealer incentive payments for 2 weeks.
I figure the 1st week of December (through the 5th), that puts them at about 11 billion…with another 300 million tapped to go out to the dealers. By mid month they are easily under 10, by Christmas we are looking at 9 billion (or less).
Now, this may or not be a issue because we don’t know how this working cash breaks down and to whom. Does the cash fluctuate wildly at any given moment, is it evenly dispersed across the various arms? (and many other mysteries)
The reason why I say this is a ‘little’ problem is because unlike previously, there is a expectation of a big sweaty bag of money being given to GM, so creditors are very, very unlikely to make any ‘run’ on GM.
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November 21st, 2008 at 8:28 am
Also of interest…if you believe this ‘tough oversight board’ will actually be looking at the various companies ‘viability plans’
The ‘big 2.8′ have to submit their plans for viability the day the November autosales drop. This is widly expected to be the worst month in the history of autosales.
In other words it is likely to assume that GM will be attempting to prove their ‘ long-term financial viability’ when they are simultaneously reporting year over year sales that start with a ‘6′ and is two digits long….all the while being several billion dollars under the minimum working capital standards, while still forecasting losing a couple billion a month.
/going to be a stretch…we will see what the Dems are made of when they make that call, I think it is going to be pretty tough on their credibility and they may regret making the automakers jump through what seems like a largely procedural hoop (really, who expects any of them to be able to put out a good plan anyway?)
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November 21st, 2008 at 8:29 am
This is a negotiation, a poker game at this point. The government should not have shown their hand. Yesterday’s comments were enough to motivate the car companies to do the “most” possible. This gives them a bottom. It has caps on perks but no caps on salary. It requires no action to have taken place before loans are extended. All actions that can be practically take now should take place before loans are initiated. Some of the harder, costly steps must be part of their plans and reasons for seeking the loans (these are addressed with this bill). I’m OK with the oversight commissions but there may be simpler ways to enforce this bills provisions.
The downside of this scenario is that they cannot force management change but perhaps it could be encouraged more.
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November 21st, 2008 at 8:30 am
“Automakers will have to submit their viability plans by December 2nd”…
Good luck getting Gettelfinger to crack by then.
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November 21st, 2008 at 8:36 am
This is the final push by GM to do in the UAW.
I know many of you that post here are anti-union, I’m not looking to argue.
But this is a bad thing guys.
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November 21st, 2008 at 8:39 am
Bloomberg….
Obama Transition Said to Consider a ‘Prepack’ Auto Bankruptcy
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRfqFMhlj5lk&refer=worldwide
interesting……
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November 21st, 2008 at 8:40 am
The congress is probably the least likely crew to make a good financial decision concerning a business. These out-fo-touch lawyers have no idea how to run a business. This is demonstrated by their own financial management of our money which borders on criminal negligence.
GM will get the loan. This is a dog and pony show to demonstrate that as the congress is pissing away our money, they are holding people accountable and doing a good job.
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November 21st, 2008 at 8:41 am
More info on the board of directors http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/content/corporate/board.html
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November 21st, 2008 at 8:42 am
“Oversight Board comprised of the Secretary of Commerce, Secretary of Energy, Secretary of Transportation, Secretary of Treasury, Secretary of Labor & the Administrator of the Environmental Protection Agency.”
Does anyone still believe we have a free market economy?
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November 21st, 2008 at 8:46 am
They need to do a lot on the management side to save costs before cutting pay of the UAW workers. Take away company cars. May supervisors on the in plant level on up get free cars, insurance and their gas paid for. At my plant they are always getting Vettes, caddies and SUVs. These are all cars that use a lot of gas and would have high insurance rates. The cost of the plates would vary from state to state.
Also a article was written for the Wall Street Journal by Wagoner. In the article it was stated that the hourly work force has been trimmed to 62k people. In the next sentence it said the white collar work force was taken down to around 30k people. That means there is 1 salary paid worker for every 2 unionized employees.
There are many things that can be trimmed out of the union contract without taking away pay or health care or pension benefits. Most people complain that the union work force makes too much money. Guess what, at least 90% of the salary employees make more than I do. The floor supervisors are basically overpaid babysitters. a lot of the work they use to do is now done by union employees and this is done at managements request not the unions.
At my last plant they spent all kinds of money to train us in a new team concept. Sad thing was, we were already doing it. how many of you go to training for something you do now?
____________________________________________________
On another note, why an I typing on a GM Volt website and being forced to look at an advertisement for genuine Toyota parts? I am sorry but that seems wrong to me.
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November 21st, 2008 at 8:48 am
These measures seem appropriate on paper, but I am guessing this may hurt the auto industry more than it helps. We will see …
My only comment to the Dems is this – “Careful what you wish for …”
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November 21st, 2008 at 8:56 am
OK Kos # 12
I agree with you,
NPNS JC
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November 21st, 2008 at 8:59 am
How will GM prove they can build and sell $12,000-$25,000 cars at a profit? GM has an edge on future technology if they survive that long. GM needs to get much leaner and soon, to be able to be profitable. They need to re-organize as if in bankruptcy and that is what this loan from the Gov’t should be about.
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November 21st, 2008 at 9:06 am
“The Board also has authority to review significant company transactions and to give direction to the company with respect to such transactions.”
Does that tidbit strike anyone else as a concern?
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November 21st, 2008 at 9:06 am
GM makes over 30 vehicles that are sold in the USA that get 30 mpg or better. They also make vehicles in Europe that get high gas milage. I wonder if anyone within the government would consider laxing the emission standards for 3 years to allow GM and Ford to import these small higher mpg cars into the USA for sale. This would also include diesels that would get 40 mpg or better now. This 3 year window of importing would allow GM and Ford to redesign the next generation of these same cars that could meet the emission standards for 2012 when they could sell these cars.
Also with these loans there should be a stipulation that GM, Ford and Chrysler should reinvest in their US manufacturing. In other words, retool existing plants in the US rather than building new ones in other countries. This could be done easily and it would allow all three to bring in new workers at the newer lower pay rate if they had to hire anyone.
Another idea to help the 2.8 as everyone seems to be calling them is higher tariffs on non 2.8 (Toyota, Honda, BMW, MB, etc.) vehicles that get less than 35 mpg.
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November 21st, 2008 at 9:12 am
No Dividends.
Anyone want to buy some stock?
#18: Does anyone still believe we have a free market economy?
Does it really matter anymore? As Pat Buchanan put it last night on MSNBC’s Hardball ‘We are the only country that believes in that….’
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November 21st, 2008 at 9:19 am
J Man #19 and others about the USA as a free market :
“On another note, why an I typing on a GM Volt website and being forced to look at an advertisement for genuine Toyota parts? I am sorry but that seems wrong to me.”
No, that is one of many remains of a free market economy.
JC NPNS
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November 21st, 2008 at 9:22 am
Congress will require true reforms prior to handing out the purse just like the Ultra Capacitor will be in full production by Christmas. This is to give cover to enough Republicans whos votes are required to insure against a filabuster. The plans will look great but there will be no enforcement tool to insure they are implemented & enough cover will be provided for both the big 2.8 & UAW to point fingers at each other later as to why the plan was not implemented. The big 2.8 will survive until inauguration for the next big handout under a new Union friendly Administration and very little will change in the long term viability of the big 2.8 unless it is on the backs of the US taxpayer.
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November 21st, 2008 at 9:22 am
Auto Bailout Viability Proposal by Firefly
1) Within 6 months, CEO and board members must tender resignations commensorate with positive growth in 6 month intervals with proof in bearing of retooling, as well as efficient vehicle portfolio to be submitted to bailout subcommittee for approval.
2) CEO pay during said 6 month evaluation period limited to no more than $500k.
3) Board of directors pay not to exceed $350k for duration of loan.
4) Stock dividends not to be paid for 5 years or until viable profit margin allows GM to do so, except if at the expense of labor and tooling costs.
5) Shutting down of non-essential plants where vehicles are over-manufactured yet under-productive (as in slow selling gas guzzlers) commensotate with the sale or shutting down of the Hummer assembly facilities OR GM signs a binding agreement that repurposes the Hummer facility to manufacture vehicles ONLY for the purpose of use by the United States Armed Services active and reserve forces.
6) Vehicle line consolidation package-
Buick line is cancelled
Two pontiac vehicles, three Saturn Vehicles and one Saab vehicle to raise fuel economy rating within first 6 months and be absorbed into Chevrolet, secondary lines and vehicles shut down pending any excercises to either expand biofuel line up or conversion to E-REV or full Hybrid status within no more than one calender year.
7) UAW contract dissolved. New draft will state that assembler pay will be set at $44 per hour ($73 per hour is just a bit much), 2 weeks per year vacation and general BCBS health/dental/vision covered during that 5 year period until federal requirements are satisfied that efficient vehicle lines and proper retooling requirements have been satisfied.
9) Addendum to limits on executive pay-Balance of profits not gained by executives, Board members or dividends to be used for the sole purpose of efficient line, biofuel expansion and most importantly, domestic battery development. 15% of profits to be set aside in escrow for grid restructuring project to herald in electric vehicle production.
10) Free Volt for Lyle…I think he’s earned it by now…
11) Domestic vehicle production as well as tooling and parts to be conducted in the continental US (75%) and lower Canada (25%) ONLY, ensuring viable worker base for taxation and economic improvement by american labor.
I would say that’s my $.02, but AIG already spent it at the Sandals resort (SOB’s).
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November 21st, 2008 at 9:34 am
I just read an article about an Ohio town that totally relies on the auto industry. None of them (in the article) believed the big three should get bailed out. One of the factories that supports the town is owned by Honda. They are satisfied with the pay, the benefits, right down to the manicured trees in the parking lot. The point is this, Honda and Toyota have a business plan that works.
According to the big three, there’s a litany of reasons why it’s not their fault. Does anyone here get that if it’s not your fault you’re DOOMED to repeat yourself?
TOPIC:
The economy was bad.
BAD ANSWER:
It’s not my fault.
GOOD ANSWER:
We apologize for our double pay back bonuses (DOUBLING salary) for executives during the good times; in retrospect we should have been saving money for the cyclical pattern in the auto industry.
TOPIC:
Gas Prices
BAD ANSWER:
We have no control of the price of gas.
GOOD ANSWER:
We were making great profits on SUV’s during periods of cheap oil. We blindly put all of our eggs in one basket. We recognize from the success of Toyota that diversifying our product line insures that all segments are satisfied as the market shifts.
Seriously, this is kid stuff. No game plan, no bail out. When executives (Bob Lutz) are quoted as saying they think global warning is “a crock of sh*t” who are the friends and consumers they’re targeting? The whopping 15% market share they lost in the last 10 years says they’re not winning any friends. Today the big three are money pits, why are we bailing out companies that don’t take responsibility?
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November 21st, 2008 at 9:41 am
New story regarding push towards Volt production – despite current problems. Summary: no cuts to Volt program. Still testing batteries from both comapnies. http://www.marketwatch.com/news/story/chevy-volt-production-moves-ahead/story.aspx?guid=%7B842807CF%2D7C3D%2D49AB%2DA509%2D4D2255BE1F27%7D&dist=TQP_Mod_mktwN
#25 Deveo – It is scary how much I find myself agreeing with Pat Buchanan.
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November 21st, 2008 at 9:45 am
Looks like a recipe for failure — if not catastrophe. Government intervention has worked so well, let’s do it again.
[eyecross]
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November 21st, 2008 at 9:48 am
#10 statik
The reason why I say this is a ‘little’ problem is because unlike previously, there is a expectation of a big sweaty bag of money being given to GM, so creditors are very, very unlikely to make any ‘run’ on GM.
===================================
Yes.
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November 21st, 2008 at 9:55 am
AP sources: GM to announce more production cuts
Friday November 21, 9:24 am ET
People briefed on discussions say General Motors informing workers of more factory cuts Friday
DETROIT (AP) — General Motors Corp. is telling workers that it will make further production cuts at several factories, according to people briefed on the discussions.
The people did not want to be identified because the announcements were still being made Friday morning. The extent of the cuts was unknown.
GM has announced thousands of factory layoffs so far this year and is cutting its salaried staff in order to pare expenses and conserve cash. The company has said it could run out of cash by the end of this year.
=D~
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November 21st, 2008 at 9:55 am
#11 statik comments on “… to submit their plans for viability…”
============================================
As we all know, no one thinking of investing their own money is going to believe any such plan. [All the one-time believers already have invested, and most have lost their money.]
People in congress know that. They are looking for a fig leaf, or maybe a fig tree. The issue is whether the auto makers can tell a good enough story that people in congress can repeat it to their constituents without the latter breaking out in laughter or anger. No one who thinks about the story more deeply is going to actually believe it.
So GM needs some good fiction writers, and as they have several already on the staff, and will, I hope, be intelligent enough to keep Mr Lutz or anyone else who might blurt out something truthful away from the congress, I am optimistic for them. (I’m especially optimistic if they fly coach class on the next trip, but that probably expects too much.)
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November 21st, 2008 at 9:58 am
I like it. GM its’ time to get your crap together and use common sense.
You guys better make the trip back to Washington via first class, don’t forget this time!
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November 21st, 2008 at 10:01 am
#27 Neutron Flux says — perhaps with tongue in cheek —
“… the Ultra Capacitor will be in full production by Christmas…”
============================================
Indeed it will. Yes, for sure. We mean it, too. And there’s no delay.
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November 21st, 2008 at 10:06 am
Tangentially related to the plan, but here’s an interesting bit of information from coverage of the bailout hoopla from yesterday. A worker in the “Pre Production” unit was interviewed (in a bar of course), and he said that he and his co-workers were concerned because GM had totally cut new production. The quote was something like “if it wasn’t for the Volt we wouldn’t have anything”.
So bad news generally but good news for Volt fans.
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November 21st, 2008 at 10:09 am
Exp_Eng Tech #15
“Bloomberg….
Obama Transition Said to Consider a ‘Prepack’ Auto Bankruptcy
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRfqFMhlj5lk&refer=worldwide”
Did anyone else read this article. The “prepackaged” C11 is basically what has been proposed here by Statik (and others, me too) as well as in Mitt Romney’s op-ed. I really like the concept as long as the agreements are well structured and provide sufficient belt tightening by ALL parties. Also, I think the bankruptcy period needs to be kept under 6 months.
interesting……”
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November 21st, 2008 at 10:10 am
#35 bradyb says “You guys better make the trip back to Washington via first class, don’t forget this time!”
===========================================
It is a measure of the gap between them and us when I know the congress is telling them to downgrade to first class, from the private jet.
But ordinary people, like me, never get to fly first class. We struggle to find the money to buy tickets in coach. Most people working for the government and most other businesses have to fly in coach.
Why exactly do I want to send GM money so that GM execs, now begging for public money, which is to say my money, [only] fly first class?
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November 21st, 2008 at 10:15 am
Sooo It now appears that those who suggested the Volt might be a smokescreen to get a govt. bailout may have been right after all. I don’t buy the the Congress-thives are really going to (or are even capable of) providing “tough oversight”. It seems clear to me that bailout or not the big three are headed for bankruptcy court and, given the current make-up of their board that clings to the need to maintain the high paid “talent” that has managed them into this state, it seems to me that it’s Chapter 7 liquidation not some re-organization or temporary bandaid that’s needed. Perhaps a new owner can avoid the errors in judgment that destriyed these three companies.
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November 21st, 2008 at 10:18 am
#28 Firefly says “..Buick line is canceled..”
==============================================
Why be anti-Buick?
Buick consistently has been GM’s best-rated vehicle, in terms of safety, reliability, and owner satisfaction. Read JD Power, or Consumer’s and see for yourself.
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November 21st, 2008 at 10:20 am
#29 Adam
I just read an article about an Ohio town that totally relies on the auto industry. None of them (in the article) believed the big three should get bailed out. One of the factories that supports the town is owned by Honda. They are satisfied with the pay, the benefits, right down to the manicured trees in the parking lot.
______________________________________________________
What town is this?
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November 21st, 2008 at 10:25 am
Response to #42 regarding my comment #29
Here was the article I was referring to:
http://www.cnn.com/2008/US/11/20/honda.town/index.html
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November 21st, 2008 at 10:26 am
I like Firefly’s ideas, especially #10. But I wouldn’t pay the execs so much, or the BOD.
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November 21st, 2008 at 10:27 am
J Man at #19 – Nice to hear an inside view. Please keep posting.
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November 21st, 2008 at 10:30 am
There was a fairly good story this morning on NPR about the viability of ER-EV’s. The nay-sayer’s argument was about the fear of lithium and cobalt supplies. Yes, cobalt is not used on the Volt’s batteries so it was a pretty weak argument, to say the least!
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November 21st, 2008 at 10:32 am
J Man, I wholeheartedly agree with MarkinWI. I’m sure you see some infuriating comments here (perhaps some by me) but your reasoned comments hold a lot of weight.
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November 21st, 2008 at 10:34 am
Adam #29
The only problem with your analysis is that according to the article, Honda is the ONLY carmaker with a plant that directly supports the town. They stand to benefit greatly from the Big 3’s woes. Not exactly unbiased opinions.
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November 21st, 2008 at 10:35 am
I kind of wish they had not used the term “Bridge” in the bill’s title. Reminds me of the “bridge to nowhere”. We have had enough of those types of bills going through congress.
I remain hopeful the three auto companies can recover as early as possible and become competitive again. Would certainly be nice if it could happen next year. But, it sure seems like GM is going to need additional help with all that it has going against it. Ford and Chrysler may be in just as much trouble. We haven’t been talking about or hearing much about their financial situation on this blog. What about these two, Statik? Are they better or worse off than GM?
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November 21st, 2008 at 10:39 am
#41 RB
Okay, amended comment-Buick line be absorbed into Cadillac.
Either way, too many vehicles, especially considering the platform sharing. I can see sharing a platform globally, but oversharing it in the same market? I’m not anti-Biuck. Have you seen the concept Riviera in China? (that we’ll never get…) Or the Velite? No, RB. I’m not anti-Buick. I just wish that the Buicks that look fabulous wouldn’t have been mothballed by beancounters. They got GM into this mess. The designers should have been given more leeway to see beautiful GM concepts become reality instead of some ass in accounting say “cost too much. We’ll go with this cheap alternative. Saves on cost.” when we really know that means “It’ll take too much money out of our executive bonuses so Americans are retardedly patriotic that they’ll buy it because it’s american. That way, I get my bonus.” The problem is that financially, the Big 3 is way too top-heavy. I never understood how you can lay off a guy who makes $20/hour but find it essential to keep overpaying an idiot $750k per year. And they wonder why they’re in trouble. Robert Nardelli said in congress that he’d accept a salary of $1 if it would help. Rick Wagoner makes, what, $14 million per year? Why won’t he work for $1? I know he has some of that $14 million saved up somewhere. He ain’t going broke any time soon. So why the big issues? Yeah. Keep the guys who screwed us, but fire the guy who actually BUILDS the car. If that’s the kind of common sense these guys got, then let them go.
If you truly want to know what I think, I say GM should follow Toyota’s model. Not just because it works, but because it sets class standards. I believe that GM should only have 3 divisions-
Chevrolet-mainline cars that would have some of the Pontiacs and Buicks in it.
Saturn-for all of the small cars (Aveo, Cobalt, etc.) Make it the american equivalent of Scion
Cadillac-All luxury, all technology (except Volt, which would be Chevrolet-Caddy would get E-REV equivalent). Higher-end Buicks would go here.
But who am I kidding? I mean it’s not like GM’s gonna listen to me anyway…
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November 21st, 2008 at 10:40 am
Firefly @ 28,
Good suggestions but you missed:
#1 Selling off of company jet and all other WORTHLESS perks that cost billions.
#2 Volt production moved up to January of 2010 (or some other time much sooner than November 2010)–that loan needs to make money…this is how.
#3 As much as a free Volt for Lyle is a nice gesture…bankrupt companies can’t afford to give out free cars (truth hurts).
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November 21st, 2008 at 10:41 am
HEY LYLE, HOW ‘BOUT WE TAKE A POLL AND MAKE OUR OWN PLAN FOR GM. THOUGHTS ON THIS???
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November 21st, 2008 at 10:44 am
#44 Daveo
I only took basic guesses of rate of CEO and BOD pay based on how much they make as a whole for all divisions. I know my numbers are not 100% accurate but then again, I’m no auto executive. Then again, I don’t think I’d have messed up that bad if I were. I don’t need $14 million per year to live comfortably. Millions of people don’t have $14 million and they were getting along just fine…until the banks, car companies, mortgage lenders and politicians screwed us.
Isn’t that nice? They screw us, without protection and now we’re giving birth to a bailout. Does that sound like planned parenting to you?
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November 21st, 2008 at 10:46 am
Koz #48
I get what you’re saying, I apologize if it appeared I was comparing American and foreign companies in one town, I was not. To clarify the sentence “THE factory supporting that town”, not “one of” regardless, that was not my point.
Simply stated Honda and Toyota are not in this pickle. Whatever reason you come up with it, the American auto industry has not stated it as ACCOUNTABILITY.
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November 21st, 2008 at 10:48 am
I am working on something along those lines Dave B. stay tuned.
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November 21st, 2008 at 10:49 am
# 51 Dave B
Thanks for adding the things that I forgot…and you’re right about the corporate jet part.
And about Lyle getting a free Volt, I know that they don’t just give cars away when in financial trouble but Lyle and this site are the reason that the Volt has been getting as much exposure as it has. For that, I do believe he’s entitled. It is this site’s waiting list and blogger input that has given GM a reason to pursue a vehicle that we’re all waiting for. Finally they do somethign right. For that, I do think Lyle deserves one. Just my opinion.
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November 21st, 2008 at 10:53 am
Check out this JD Power Study released today….
http://www.jdpower.com/corporate/news/releases/pdf/2008250.pdf
Look at what brands rank above the industry average and wich brands rank below….
Now try to tell me that GM and Ford don’t make cars people want/like and shouldn’t get the money as a result! People are happy with the sales process and the cars. The government should support them with conditions…
….however chrysler does need major improvement.
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November 21st, 2008 at 10:54 am
#28 Firefly
1) Within 6 months, CEO and board members must tender resignations commensorate with positive growth in 6 month intervals with proof in bearing of retooling, as well as efficient vehicle portfolio to be submitted to bailout subcommittee for approval.
Sounds like a good idea but the replacements could be worse.
2) CEO pay during said 6 month evaluation period limited to no more than $500k.
Too generous in my opinion
3) Board of directors pay not to exceed $350k for duration of loan.
See above
5) Shutting down of non-essential plants where vehicles are over-manufactured yet under-productive (as in slow selling gas guzzlers) commensotate with the sale or shutting down of the Hummer assembly facilities OR GM signs a binding agreement that repurposes the Hummer facility to manufacture vehicles ONLY for the purpose of use by the United States Armed Services active and reserve forces.
This is being done presently. Moraine OH, Janesville WI, as well as truck plants in Mexico and Canada are all truck plants being shut down due to overcapacity. That leaves 1 plant for 1/2 tons, one for 3/4 and 1 tons and 1 for SUVs. H2s are built on a Tahoe chassis in TX or WI, H3s are built on a Colorado/Canyon chassis in LA so there is no need to repurpose a facility. H1s are actually still built by AM General and GM only supplies the Diesel.
6) Vehicle line consolidation package-
Buick line is cancelled
Two pontiac vehicles, three Saturn Vehicles and one Saab vehicle to raise fuel economy rating within first 6 months and be absorbed into Chevrolet, secondary lines and vehicles shut down pending any excercises to either expand biofuel line up or conversion to E-REV or full Hybrid status within no more than one calender year.
Saabs are imported, could easily be taken out for US market. I would restructure differently
Chevy- Economy cars and family sedans (Exception being the Vette) 30 mpg minimum for cars and 26 mpg for crossovers
Pontiac- performance based cars that would get a minimum of 25 mpg
Caddy- leave as is
GMC- all the trucks and truck based SUVs (drop trucks from Chevy line)
Buick- drop/sell
Saturn- either drop or make like Chevy
Hummer- drop/sell
Also need to bring a diesel over from Europe
7) UAW contract dissolved. New draft will state that assembler pay will be set at $44 per hour ($73 per hour is just a bit much), 2 weeks per year vacation and general BCBS health/dental/vision covered during that 5 year period until federal requirements are satisfied that efficient vehicle lines and proper retooling requirements have been satisfied.
This is a touch subject with me. There are many other negotiated benefits that can be taken away without touching our hourly pay (no where near $73). Our health care all ready sucks compared to what it used to be, the only difference is that we would actually have to pay for some of it. Also they should reduce the Salary pay at all levels to match ours, including CEOs.
All of their V8 gas trucks and Iron car V6s are E85 capable. Diesels can run on biodiesel. This may not total the 60% but is a big chink of their cars. I have found that the Aluminum block motors seem to shy away from E85. If they can get the E-REV affordable for the regular person they could actually get 50% or higher.
9) Addendum to limits on executive pay-Balance of profits not gained by executives, Board members or dividends to be used for the sole purpose of efficient line, biofuel expansion and most importantly, domestic battery development. 15% of profits to be set aside in escrow for grid restructuring project to herald in electric vehicle production.
As long as the company does not make a profit, no one should make more than the assembler wage, including the CEO. No bonuses until profits are maintained for 5 years and loans are repaid in full.
10) Free Volt for Lyle…I think he’s earned it by now…
How about at cost, if they keep giving cars away the will never turn it around.
11) Domestic vehicle production as well as tooling and parts to be conducted in the continental US (75%) and lower Canada (25%) ONLY, ensuring viable worker base for taxation and economic improvement by american labor.
100% agree here!!!!!!
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November 21st, 2008 at 10:58 am
Hey Lyle,
How about you give us maybe one post a week about the Volt, just for old time’s sake.
I know the Volt might not happen, but it might be interesting to see if the design team is still at work and if they are making any progress or breakthroughs.
Such reports could be a refreshing diversion in these dire times.
I also want to say again, you are doing a fantastic job with this website. Thanks!!!!!!!!!!
LJGTVOTR
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November 21st, 2008 at 10:59 am
Well now, those responsible for securing any bridge loans or a possible bailout. should be rewarded with a nice bonus….
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November 21st, 2008 at 11:03 am
Looks like the jobs bank may go.. .FINALLY!
this is good news. (along w/other concessions)
http://www.freep.com/article/20081120/BUSINESS01/311200023
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November 21st, 2008 at 11:08 am
#38 Koz said,
Exp_Eng Tech #15
“Bloomberg….
Obama Transition Said to Consider a ‘Prepack’ Auto Bankruptcy
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRfqFMhlj5lk&refer=worldwide”
Did anyone else read this article. The “prepackaged” C11 is basically what has been proposed here by Statik (and others, me too) as well as in Mitt Romney’s op-ed. I really like the concept as long as the agreements are well structured and provide sufficient belt tightening by ALL parties. Also, I think the bankruptcy period needs to be kept under 6 months.
interesting……”
=======================================
My pet name for it is ‘Government Sponsored Bankruptcy” or the everyone’s favoUrite thing to do to phrases like that on these boards –”GSB” (…which as I said before, ’sounds like a official, real entity…but it isn’t, I made it up’)
Also, don’t forget about the part of the plan that has them merging with Chrysler before they go C11, lol…after all, they have to merge their big sweaty bags of US government money and form a bizzaro American institution.
I’m not sure my plan (even at this point) is palitable right now by many, but I think after listening to GM sing its sad tune for the next couple weeks, then seeing the results of November sales on Dec.1st it will be a different story.
/high drama
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November 21st, 2008 at 11:08 am
#58 J Man
I know that there were going to be some areas of my “proposal” that would fall short. I appreciate your input AND corrections. This is why this forum was created in the first place. I do agree with you (to say the least). As a former welder/machinst, I’m not saying all unions are bad. Nor am I saying that all of the UAW is bad, but I do think there should be some reconsideration of compensation on the part of both parties. You are right abotu one thing that I inexorably agree with. There should be absolutely NO REASON WHATSOEVER that a board member who sits on his butt making crap decisions should make more than the assembler building the product. Hopefully someone will wise up.
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November 21st, 2008 at 11:11 am
Firefly #28
Close enough for gobment work for me
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November 21st, 2008 at 11:13 am
In order for the “Big” Three to regain profitability, ALL pay should be merit based with a MAJOR component being profit sharing with a cap at $250K/yr.
When the company wins, we ALL win.
When the company loses, we ALL lose.
There are no kings sucking the capital out of the business and everyone enjoys success or failure TOGETHER. This is NOT socialist redistribution but profit sharing! Pofit Sharing is capitalism at its best and the ONLY way to properly motivate throughout the ranks to produce a corporate culture of inclusiveness instead of the current management vs labor divisiveness that’s destroying America’s productivity.
Dividing into classes by race, gender, age, economics etc. and pitting these classes against each other while you plunder all is a liberal-socialist Keynesian tactic. We must NOT tolerate this any longer if America is weather this economic depression and regain (via manufacturing) our now squandered wealth.
A HUGE part of the future success of American manufacturing is each company willingness to gather and implement ideas from ALL of their employees regarding how best to increase productivity and quality while reducing costs to maximize profitability FOR ALL to share. This will give ALL employees a sense of ownership and PERSONAL responsibility in the success or failure of the business.
None of this is possible without (1) sound money based on a commodity, a small (and inexpensive) central Gov’t, a Humble (and inexpensive) Foreign Policy and (4) Obeying the rule of law (The Constitution) instead of thier constant reinterpretation of the written law. A law that can be interped to your own ends is NO law at all.
The Four-Point Plan
1) Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes.
2) Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels.
3) Monetary Policy Reform: Expand openness at the Federal Reserve and require the Fed to televise its meetings. Return value to our money.
4) Regulatory Reform: Repeal Sarbanes-Oxley regulations that push companies to seek capital outside of U.S. markets. Stop restricting community banks from fostering local economic growth.
All of this reform is IMPOSSIBLE as long as Congress is controlled by Democratic and NeoCon Socialists who embrace central planning, ignore the Constitution and only disagree on which programs they put us in debt for or inflate the currency to fund. Inflation is a TAX because everything costs US more so these socialists can redistribute to THEIR special interest supporters!!
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November 21st, 2008 at 11:16 am
Adam #54
No probs. Agreed that the Big 3 autodudes have a long way to go to get to reality.
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November 21st, 2008 at 11:20 am
Firefly #56 (and before) and others who made suggestions
Thanks to all of you, may I have a suggestion from the other side of the Atlantic Ocean ?
16) GMNA pays its debt of more than 2 billions $ to Opel GmbH (Source Der Spiegel : www. boursorama.com/forum/ message.phtml?file=380184554&pageForum=1)
Be well,
JC NPNS
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November 21st, 2008 at 11:25 am
“Dividing into classes by race, gender, age, economics etc. and pitting these classes against each other while you plunder all is a liberal-socialist Keynesian tactic. We must NOT tolerate this any longer if America is weather this economic depression and regain (via manufacturing) our now squandered wealth.
A HUGE part of the future success of American manufacturing is each company willingness to gather and implement ideas from ALL of their employees regarding how best to increase productivity and quality while reducing costs to maximize profitability FOR ALL to share. This will give ALL employees a sense of ownership and PERSONAL responsibility in the success or failure of the business.
.
.
.
All of this is IMPOSSIBLE as long as Congress is controlled by Democratic and NeoCon Socialists who embrace central planning, ignore the Constitution and only disagree on what programs they put us in debt or print more money to fund.”
I’m a schitzophrenic and so am I! So…no finger pointing and idea bashing unless unless it comes from you. What you want MUST start with the man in the mirror by EVERYBODY.
(stepping down from soapbox)
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November 21st, 2008 at 11:25 am
#61 kdawg
Looks like the jobs bank may go.. .FINALLY!
____________________________________________________
I and many others actually thought it was going to go when they negotiated the current contract.
GM needs to prove that they can turn things around, keep their obligations in regards to pensions (I know a lot of you don’t agree with that) and properly fund the retiree healthcare for the union to take it over. If they prove they can do this and offer a new round of buyouts for the older seniority employees (I am sure someone will complain about this) they will be able to shrink the company down to the manageable and profitable size they need without the need for the job bank and without having to lay off anyone.
I am going to bed now for a little sleep(3rd shifter). I will be back later to share more of my thoughts for anyone who cares to read them.
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November 21st, 2008 at 11:27 am
I heard last night that GM is slowing down production. So I googled it and found this from Nov 7: http://www.freep.com/article/20081107/BUSINESS01/81107074?imw=Y
Now, knowing gas prices in June was atrocious and sales were already going down even lower and was forcasted to continue from April on, wouldn’t it have been more prudent to have done this “slowdown” bigger back then in April or May or June?
Now they’re going to try and prove to us that with the 25billion divided by 3 will be spent wisely?
lol……
Who are they trying to kid?
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November 21st, 2008 at 11:27 am
Jean-Charles Jacquemin #67
Dohh! Add another 2 bils to GM’s tab.
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November 21st, 2008 at 11:30 am
#19 J Man
“On another note, why an I typing on a GM Volt website and being forced to look at an advertisement for genuine Toyota parts? I am sorry but that seems wrong to me.”
—————–
I agree. Lyle, could you ask the people who are signing up advertisers to limit vehicle advertisers to at least GM, Ford and Chrysler products? It would be even better if it was only GM branded products.
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November 21st, 2008 at 11:31 am
My personal thought is that the the Govt should take care of the health care of their retiree’s and their pensions. Then the big 3 can have what’s left over.
I don’t like the Union in any way but if you have paid your dues to retire, I think you have deserved it and deserve it to be secured.
IMHO
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November 21st, 2008 at 11:36 am
@N Riley #72 or Lyle….
Put the Budweiser ladies as a banner!!!
lol…..
Oh yeah, and have them posing next to the Volt.
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November 21st, 2008 at 11:36 am
N Riley #72
Yikes! that’s starting on a slippery slope toward unfair protectionism.
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November 21st, 2008 at 11:38 am
#67 JC
Firefly #56 (and before) and others who made suggestions
Thanks to all of you, may I have a suggestion from the other side of the Atlantic Ocean ?
16) GMNA pays its debt of more than 2 billions $ to Opel GmbH (Source Der Spiegel
——————————————-
#71 Koz
Dohh! Add another 2 bils to GM’s tab.
==============================================
From Reuters–Fri Nov 21, 2008 10:59am EST
GM does not owe Opel any money-Opel chief
http://www.reuters.com/article/marketsNews/idINLL67880220081121?rpc=44
FRANKFURT Nov 21 (Reuters) – General Motors (GM.N: Quote, Profile, Research, Stock Buzz) does not owe its German unit Opel any cash, Opel’s head Hans Demant told German newspaper Frankfurter Rundschau’s online edition.
Money transactions from the U.S. parent were so far unchanged, the newspaper cited Demant as saying in an article published on Friday.
The statement contradicted comments made recently by Klaus Franz, top labour leader at GM’s European operations, of which Opel is a part.
Franz said that Detroit is sitting on over 1 billion euros ($1.25 billion) in fees it owes to Opel, which had dimmed the German carmaker’s financial prospects as GM scrambles to get a bailout from the U.S. government.
Demant told Wirtschafts Woche magazine in an interview to be published on Monday the German government need not worry that its financial backing could trickle over to GM’s coffers.
“Guarantees don’t translate into cash flows. They would just be a foundation for loans that we could then obtain,” he said.
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November 21st, 2008 at 11:52 am
A bit off topic from the gov. bailouts, but note worthy I believe. Who was it that said EV won’t work… Japanese? Don’t tell the Germans that.
http://content.zdnet.com/2346-9595_22-251226-1.html
Of course, the Minicooper EV will suffer from the same issues as other
EVs, re, range rage. But, for commutes only this may work.
Go Volt. GM still has the lead if they can really survive until 2010 and
beyond.
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November 21st, 2008 at 11:52 am
Last night the network news reported that the CEO of Toyota, which recorded over $5 billion in profits last year, was paid $1 million.
Wake me when it’s over.
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November 21st, 2008 at 11:53 am
#58 J Man – “(disputing Firefly’s suggestion) New draft will state that assembler pay will be set at $44 per hour ($73 per hour is just a bit much)”
This $73/hr. figure that gets brought up seems dubious on its face, and in fact it is quite misleading. After checking it out, it was derived by taking the all direct and indirect labor costs and dividing by the number of hours needed to produce all the cars. Of notable importance is that it includes pension and health care costs of retirees. So we should be disabused of the notion that the workers on the line are taking home $73/hr.
Having said that, the big issue is health care costs. Firefly can come up with a plan involving symbolic things like corporate jets, but all his cost cutting doesn’t begin to address the labor cost differential between the Detroit automakers and the transplants, roughly $1500 of which is attributable to health care costs. So Lyle, if you have some ideas for cost cutting, unless health care costs are on the table, the exercise is meaningless.
Taking a broader view, it’s also important to note that the US system, which requires employers to provide health care, is in large part responsible for the long term decline of manufacturing in the US. Health care reform is thus an important component of a revived manufacturing sector.
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November 21st, 2008 at 12:04 pm
#79 noel park said, “Last night the network news reported that the CEO of Toyota, which recorded over $5 billion in profits last year, was paid $1 million. Wake me when it’s over.”
======================================
Did you also see that on Wednesday they are proposing that all the driecters/execs take pay cuts right now as well, in response to tough times?
“Toyota Motor may cut directors’ pay in FY09″
—Toyota Motor Corp. will consider cutting the pay of its directors in fiscal 2009, it was learned Wednesday. Observers said the decision by Toyota, one of the domestic economy’s leading companies, to reduce directors’ salaries will greatly affect the business decisions of other manufacturers.
http://www.yomiuri.co.jp/dy/business/20081114TDY08309.htm
(stole this link from TTAC…so credit to them)
======================================
It must be really hard right now for some people to keep animosity high for Toyota. It seems like they are always making the right move…whether it be it a business decision, or a PR one.
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November 21st, 2008 at 12:06 pm
RE #15 reports on Bloomberg
Reuters has a counter report – says Bloomberg report is not true.
http://www.reuters.com/article/newsOne/idUSTRE4AK3VM20081121
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November 21st, 2008 at 12:08 pm
#77 CBK -”Who was it that said EV won’t work… Japanese? Don’t tell the Germans that.”
The mini is a very bad example. It uses the same lame battery as the Tesla and doesn’t have a range extender, which means the battery pack is very expensive and has a very short life. It’s a huge loss leader even at a lease rate of $800/month (no buyout).
The only thing it has going for it is AC Propulsion and a nice body.
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November 21st, 2008 at 12:09 pm
Comrade DonC.
More central planning and socialized medicine is NOT the answer.
Why? The post office, the military, the congress, the DMV, and hundreds of others that prove beyond a doubt why you don’t REALLY want these socialist central planners providing your healthcare.
You’ll die while they fill out the paperwork…
Why is it that every country that has socialist healthcare as citizens that come HERE for BETTER care?
If you REALLY want to provide lower healthcare costs, limit the awards to the ambulance chasers and stop inflating our currency while paying for endless socalist programs.
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November 21st, 2008 at 12:10 pm
I’m at least glad to see congress not rushing this “as fast” as they did with the $700B “bail out” bill, and that they hopefully won’t be giving anyone a blank check. However I still hope they learn from history…
A British Lesson on Auto Bailouts
http://www.nytimes.com/2008/11/18/business/economy/18car.html?_r=1&th&emc=th
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November 21st, 2008 at 12:14 pm
Jeff M (#84) said:
“I still hope they learn from history…”
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH.
good luck with that…
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November 21st, 2008 at 12:18 pm
Two things missing:
There is no requirement or authority to restructure UAW contracts which makes the whole thing meaningless.
And or course there is no requirement that the public must actually buy cars………….. soon.
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November 21st, 2008 at 12:35 pm
#83 Tim
Comrade DonC.
More central planning and socialized medicine is NOT the answer.
Why is it that every country that has socialist healthcare as citizens that come HERE for BETTER care?
If you REALLY want to provide lower healthcare costs, limit the awards to the ambulance chasers and stop inflating our currency while paying for endless socalist programs.
===============================
I’m not coming to the US for your healthcare. (Canada)
/I know what you mean…but you maybe ‘every’ wasn’t the right word
(=
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November 21st, 2008 at 12:48 pm
Why do you think they can’t get regular financing? mostly they don’t have good credit, so do you really think the government (us) should give money to them? “LENDERS DON’T THINK THEY CAN PAY THEM BACK”
Do you really think they can pay the government (us) back with money from car sales? the car sales they don’t or won’t have now or in the future?
So don’t you think the best thing for them to do is to go into chapter 11 ? then the government (us) can just let them have enough money to keep their creditors away while they downsize, make new contracts with the UAW, restructure the CEO’s, and retool for fuel efficient cars and then =D~~~~ GET US THE VOLT !!!!!! NPNS JGTVWOTR
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November 21st, 2008 at 1:03 pm
SCRAP THE SO CALLED VOLT!
http://www.autobloggreen.com/2008/11/20/miles-ev-highway-speed-sedan-first-official-rendering/
Same price, 4x the range, and ON THE ROAD NOW!
What are you waiting for??
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November 21st, 2008 at 1:15 pm
#74 CaptJackSparrow:
Budweiser is now owned by Imbev, so that’s out. I can’t drink Coors because I can’t stand the family’s politics. Plus aren’t they owned by Molson now? Or is it vice-versa? The !@#$% beer industry is as globalized as the car industry, LOL.
So who makes a USA owned/brewed beer that we can drink now? Miller? Do they have any Miller ladies? What to do, what to do???? Maybe I’ll have to buy a kit and make my own in the garage.
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November 21st, 2008 at 1:27 pm
GM to return two leased jets amid criticism
http://news.yahoo.com/s/nm/20081121/bs_nm/us_gm
DETROIT (Reuters) – General Motors Corp(GM.N) will return two of its leased corporate jets amid intense criticism in Washington this week on the luxury travel arrangements of its chief executive even as the company pleads for federal aid.
CEO Rick Wagoner was in the capital to testify on the company’s dire financial situation but his testimony was overshadowed by irate lawmakers who blasted him for flying on a private jet to ask for public funds and failing to make personal sacrifices in exchange for federal assistance.
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November 21st, 2008 at 1:31 pm
#50 Firefly says “Either way, too many vehicles, especially considering the platform sharing. I can see sharing a platform globally, but oversharing it in the same market? I’m not anti-Biuck. Have you seen the concept Riviera in China? (that we’ll never get…) Or the Velite? No, RB. I’m not anti-Buick. I just wish that the Buicks that look fabulous wouldn’t have been mothballed by beancounters. They got GM into this mess. The designers should have been given more leeway to see beautiful GM concepts become reality instead of some ass in accounting say “cost too much.
========================================
It saddens me to agree with this statement, but I do. Unfortunately, the company lost its way. I think it has improved a lot in the last few years, but gee-whiz what a hole to start from.
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November 21st, 2008 at 1:33 pm
#90 noel park
#74 CaptJackSparrow:
Budweiser is now owned by Imbev, so that’s out. I can’t drink Coors because I can’t stand the family’s politics. Plus aren’t they owned by Molson now? Or is it vice-versa? The !@#$% beer industry is as globalized as the car industry, LOL.
So who makes a USA owned/brewed beer that we can drink now? Miller? Do they have any Miller ladies? What to do, what to do???? Maybe I’ll have to buy a kit and make my own in the garage.
——————————————-
Hey, I didn’t know that had been approved…I’ve been pretty distracted with other things lately to keep up.
Did they agree to sell of Labatt? I thought they couldn’t retain it because of market share issues in places like New York.
/I would hate to have to sell a really good asset like Labatt in this environment…someone is going to get a steal if that is the case
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November 21st, 2008 at 1:38 pm
#19 J Man said “They need to do a lot on the management side to save costs before cutting pay of the UAW workers. Take away company cars. May supervisors on the in plant level on up get free cars, insurance and their gas paid for. At my plant they are always getting Vettes, caddies and SUVs. These are all cars that use a lot of gas and would have high insurance rates. The cost of the plates would vary from state to state.”
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An aspect of “free cars” is that it means that supervisors on up never have the opportunity to deal with car dealerships. It is as if Sam Walton never went to a Walmart. (He tried to go to every one.) There are a lot of (well run) companies where the corporate officers are in the stores every day.
The consequence is that the management level of GM is cut off from directly seeing the most visible part of the company, for all the rest of us. No wonder GM management levels seem so out of touch, so often.
Management living in the luxury closet was an issue pointed out by the always colorful Ross Perot. Nothing changed. Making the changes that J Man suggests would actually help the company financially and operationally even as it was good symbolism.
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November 21st, 2008 at 1:44 pm
Lyle @ 55 and Firefly @ 56
How about our waiting list, huh? We can incorporate IT into the plan. If we could confirm, and GM says it will take deposits (orders on the Internet or whatever) of the Volt….40,000 units would say A LOT. Add that to the plan… GM is willing to enter new territory (like Tesla) and accept and honor GM-Volt.com’s waiting list. It should read something legalease like:
GM shall honor the waiting list at GM-Volt.com, accepting $500 deposits in the order of the list up through a date certain to take delivery of a Chevrolet Volt in the correlating order in which they are produced upon payment.
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November 21st, 2008 at 1:59 pm
oragotto and ohio to the fuji car companies, they are starting to begin the layoffs in the land of the rising sun, they are not selling any cars either. Japan and Korea make it next to impossible for anyone to buy an American car in there own countries, lets us hope that the port of Longbeach Ca. can come up with more than 160 acres to store the fuji cars that nobody is buying, maybe they can bring in some barges to store the overflow, it is time for them to suffer, to what goes around comes around, Nissan has been downgraded and Mazda soon will be too. Its to bad the people in congress don’t know how to read the paper to see what in the world is going on.
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November 21st, 2008 at 2:00 pm
Casey #88
“So don’t you think the best thing for them to do is to go into chapter 11 ? then the government (us) can just let them have enough money to keep their creditors away while they downsize, make new contracts with the UAW, restructure the CEO’s, and retool for fuel efficient cars and then”
How much do you think this way would cost?
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November 21st, 2008 at 2:13 pm
Take away company cars.
Penny-wise, pound foolish. Don’t you want your employees to have lots of exposure to your own company’s products?
Sure, you could save a buck or two. In the short term. IMO, you want to give almost everyone in your company a subsidized 6-mo or 1-yr lease on every model you make to have a “real world” experience with the things you make. You catch mistakes quickly that way. Inferior materials, bad fit and finish, inconvenient placement of things, excessive vibration, excessive noise, sluggish at certain RPM ranges, etc.
BTW, a “used” company car still has value in the secondary market. The only “expense” is the depreciation.
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November 21st, 2008 at 2:13 pm
RE this business plan :
How on earth are they going to begin to estimate sales over the next year, 2 years, and even out 3 years ? We still have not found a bottom to this recession. Despite the trillion dollar infusion, credit is still pretty frigid if not frozen. These are pretty significant unknowns in the equation; and who knows ? We could be in for a very long recession here.
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November 21st, 2008 at 2:16 pm
Lutz :
Good point. In fact my mother just picked up a former company car last summer. (2008 Pontiac Grand Prix) Just like new, except for the nearly-bald front tires LOL.
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November 21st, 2008 at 2:16 pm
#97 Koz
Of course the cost would be great, but the cost of a bailout or loan is not known, it will just keep coming and coming, one bailout after another until they finally just desolve or go bankrupt then it will be too late and millions of jobs gone forever
The problem IMHO is the sale of cars right now is (according to Wagoner) ten million nation wide and it will decrease in the near future, they need to downsize and there is no way to do it without help, (bankruptcy help) not bailout help
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November 21st, 2008 at 2:18 pm
What happens if the car makers come back and say they aren’t willing to jump through the hoops in order to get the loans?
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November 21st, 2008 at 2:32 pm
Then it will be all Bush’s fault…
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November 21st, 2008 at 2:33 pm
100: DB Cooper
I’m actually LuRtz… apologies for the similarity to Bob-the-pink-tie-executive’s name. I don’t intend to confuse … I’ve used that nom-de-internet for years.
(”Lurtz” is a monster from the lord of the rings movie, played by Lawrence Makori)
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November 21st, 2008 at 2:43 pm
lobbying for strings to be attached to bail out:
http://www.pluginamerica.org/
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November 21st, 2008 at 2:44 pm
#91 Lurtz:
So what does that leave, 9 jets? Boy, they’re really going to have to tighten up on the scheduling!
#93 Statik:
Yes it did go through and, yes they do have to divest Labatts.
#102 Nixon:
If that happens, cue “Dandy” Don. “Turn Out The LIghts, The Party’s Over”. TOTLTPO
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November 21st, 2008 at 2:44 pm
Lurtz :
My apologies. Dyslexia strikes again LOL.
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November 21st, 2008 at 3:30 pm
Wait a sec. Didn’t the stock holders of Disney get rid of their CEO Michael Isner? As I recall the Disney stock holders were lead by Roy Disney who was disgusted at the way Isner was running the company.
Couldn’t the stock holders of GM led by someone with a lot of stock like Kirk Kerkorian or Edward Lampert force Executive pay cuts with enough votes?
I’m running out of ideas.
NPNS!
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November 21st, 2008 at 3:41 pm
#108 Nelson:
Not to worry. As my Dad used to say, “It’s self regulating.”
They either do it voluntarily now, or their pay gets cut to zero when they finally TOTLTPO.
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November 21st, 2008 at 3:55 pm
#106 noel park
#93 Statik:
Yes it did go through and, yes they do have to divest Labatts.
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Good to know, thanks.
Can’t believe I missed that.
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November 21st, 2008 at 3:58 pm
chevonly:
Must not be too bad buying a GM in the Asian-Pacific market. Their sales were up 15%.
http://www.industryweek.com/ReadArticle.aspx?ArticleID=16897
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November 21st, 2008 at 4:01 pm
Adam @43
Good info, but let look at the other side of the coin. Honda brough the town. Now, Honda left the town in shamble cause of no car sales. Some people got the wish cause they think of themself, not the whole U.S. Without manufacture that support US will not able to keep economy afloat. Honda will moveout US if it does not make sales. Ford, GM, and Chrysler won’t be able to go anywhere or been move out of US from support another country. So far it look like banks won’t take any risk to help any companies that support the US manufacture that can created something it can be put good use for the people with fiat money. So far the 700 bailout have done is trade fiat money with another form of fiat money, nothing have been created.
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November 21st, 2008 at 4:33 pm
This is a UAW dictated arrangement. Bankruptcy allows the abrogation of union contracts, which is why they can’t compete in the world marketplace. Without a bankruptcy filing or some other method that would allow the overbearing union contracts to be voided, nothing will change. Arlington, tx plant has 2500 employees and has a payroll of $308 mm!! That’s $120k+ PER EMPLOYEE on average. There is no manufacturing entity anywhere that can operate under that kind of payroll pressure. I am a GM shareholder and I understand that my investment in this company, though small, might actually survive. But if it does, it’s not the best thing for the country……….
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November 21st, 2008 at 6:20 pm
SEE CASEY’S RIGHT
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November 21st, 2008 at 6:32 pm
#113 Keith
Arlington will be the only plant in the US building full size SUVs for GM as of Jan 1st. They will run 2 full shifts with overtime if needed to keep up with demand.
That 2500 employees I would assume includes the top heavy salary workforce. Payroll would consist of just the hourly wage, not benefits (I am guessing) and I know for a fact that they do not make $120k per union employee. They are obviously paying the salary workforce a good chunk of money and I am sure the plant manager and other salary GOBs are not living poorly.
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November 21st, 2008 at 6:43 pm
#79 DonC
#58 J Man – “(disputing Firefly’s suggestion) New draft will state that assembler pay will be set at $44 per hour ($73 per hour is just a bit much)”
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I actually consider it making modifications. Firefly had a lot of good points, I just wanted to expand on it a bit.
I honestly would be more than happy to take $44 an hour. but I would want that to be my actual hourly wage. I could take the difference from what I make now and buy my own health care through my wife’s work (it is better than what GM provides for me now) and invest the rest for my retirement and would actually end up with more money than if I got a pension. That would still keep me under Obama’s $250k tax rate for our household income. A part of that would be that GM would have to give me a lump sum for the pension time I have already built up since I have worked for the company.
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November 21st, 2008 at 6:49 pm
Regarding the developments with the American Automobile industry – I hope for the disintegration of the BIG THREE, and the Unions and a re-birth of the Automobile industry. I see a plethora of companies – small start ups that will build new visionary electric and hybrid vehicles where the lines blur between E – Bikes, Motorcycles, and Cars. I see whole worlds of opportunities opening up for all of us and a time of re-birth which will bring the U.S. back to having U.S. products designed here and made here by smaller, leaner, more agressive companies who won’t be flying around their CEO’s in Gulfstreams (begging for money) while supporting more retirees than employees.
America will always be the leader in design and marketing for the world and it’s time to show the world that we can creatively destroy what’s now become a failed business model ! I am in favor of dumping the trash and keeping the good stuff and starting all over again. This time we design the vehicles we want to have, and we make these vehicles here in smalller factories without any Union contracts that crush productivity, and we institute “profit sharing” plans. The U.S. government takes on more of the Health Care provisions, so it’s not a millstone around the neck of this new breed of company, who will design and manufacture the next wave of personal transportation vehicles for the U.S. and the global market.
I like to drive on the sunny side of the street !
Don Harmon
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November 21st, 2008 at 8:03 pm
#16 Nuclearboy
You nailed it!!!
These out of touch lawers are the last peole I would like making financial decisons with my money.
They are surrounded by spinless yes people and have no clue about what it takes to run a company.
I’m scared and frightened. Good old fashion capitaism has been redfined.
We should chang the last 4 words of our national anthiem from home of the brave to home of the hand outs!!!
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November 21st, 2008 at 8:16 pm
This may have been mentioned; in today’s WSJ:
GM to return two leased corporate jets!!!
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November 22nd, 2008 at 10:15 am
The big three auto execs need to get a big dose of reality. With $20+ mill. salaries and company jets to take them anywhere they desire, all from companies loosing billions, how can we expect them to wake up and right their gross mismanagement. The automakers need new leaders who will stand up to the UAW and either get rid of them or produce a contract that will let them get profitable. They are so deep into bad union rules, if they shut down all of their plants today and manage to sell all of the cars they have siting on sales lots, they will still loose money because they have to pay their workers 80% of their salaries wheather they are building cars or not. The unions will not accept changes to the contracts until the companies are out of business. If we give them loans it will only delay their demise. I say don’t give them loans, let them file chapter 11, reorganise, get rid of the UAW, and emerge as a far better campany.
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November 22nd, 2008 at 12:53 pm
#120 Drew
Please get your info right before posting. If GM shut own all of their plants and laid off all the union employees it would not cost the company anything for the next 48 weeks. The state would pay the unemployment and the union pays out the sub pay to get it up to 95% of the employees take home pay.
Under your senerio people would not be off that long as there is not the stock built up to maintain that kind of lay off. Also they would still keep the salary workers in the plant, at least that is what they are doing these 2 weeks at my plant. Depending on what the plant does or car they build there would be places working to keep up with the cars that are selling (Cobalt, Malibu)
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On another note, I know a lot of people complain about the job bank. When that is enacted at a plant, it is mutually agreed to by the plant management and the local union. The company does have the option to bring back the laid off employee after the 48 weeks agree to in the national contract and lay off other workers. At another plant I worked at they asked for volunteers for the lay off. It was given based on seniority from the top down. They had to be called back before their time was up due to other employees taking the first buyout that was offered.
Also I want to remind everyone that GM, Ford and Chrysler all have to agree to what is in the contract with any union before it is sent to the membership for a vote. They may not like it but they have to agree to it.
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November 22nd, 2008 at 5:14 pm
They need to put up a tariff to foreign oil or else as Obama reduces our oil demand the price of oil will drop and cause domestic production to drop faster than the reduction of demand and thus make us more dependent on foreign oil.
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November 22nd, 2008 at 10:59 pm
J Man
You just help make my point. GM shuts down a plant because it is not profitable and you keep 95% of your salary for 48 weeks!!! Then you must be rehired. Maybe you have been in the union too long, but normal people in normal jobs don’t have anything close to that type of protection. That is just one of the reasons that the total union package averages more than $70 per hour, and why the big three can’t be competative with non union companies. And yes, like you said the big three “had” to agree to this package that is putting them out of business. Utherwise there would have been a strike and they would have been put out of business by the resulting walkout. The unions will never back off of these benifit plans enough to save the car companies. The only way to get out of these contracts is to file chapter 11 and start from scratch. I think that the big three can make very good cars but they will never be competative with the nonunion companies. As long as their is competition, they will be undersold in price or out marketed with more and better features for the same price.
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November 23rd, 2008 at 1:34 am
The 95% that we gat paid does not come from the company, the state and the union pay that.
When a plant closes buyouts are offered, or at least have been the last few years. This gets the people with enough time to retire to do so and gets others to walk away from the company. Many are given the chance to transfer to another plant. This allows the employee to stay with the company if they so desire. The one issue if you continue to transfer is that there has to be an opening at a plant for you to go to. Just so you know, salary employees have the same ability to transfer.
Just curious has anyone taken the time to see what the package for a salary employee is? I am sure it is pretty comparable if not more.
On another note, Back when Bill Clinton was in office and the economy was good and people were buying cars, GM was making money and they had around 4x the number of employees than they do now (union and non union). If the economy was not ruined by the moron that took his place (Bush), people would still be buying cars and GM would not have to be looking for loans from the government. Back in the ’80’s when Chrysler needed help we were in a recession, so I am told, I was still in elementary school. Check and see how much GM wasted on Fiat. The union had nothing to do with that. It would have given the company two more months to survive. I am sure you can find other ways GM has wasted billions without any help from the unions.
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November 24th, 2008 at 8:14 pm
GM needs to trim the number of models it sells if it is ever going to move forward again. Look at the other companies like Toyota, Nissan, and others. They basically make 2 small cars – two mid size cars, and two SUV’s and trucks (1 small and 1 larger). They have been successful with this concept.
GM makes too many models of small cars, too many models of the other cars – I don’t know how many models of trucks it makes and too many models of SUV’s. Ford is getting more like GM with too many models of SUV’s.
Both companies need to trim the number of models they make and concentrate more on quality.
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