Major auto execs return to Hill to ask for aid

[thundley4]

WASHINGTON - The leaders of the top three U.S. automakers’ return to Congress Wednesday, appearing before a House committee to make the same plea for financial aid they made Tuesday to the Senate Banking Committee.

Appearing before a Senate committee Tuesday afternoon, the top executives of General Motors, Ford and Chrysler asked for a $25 billion “bridge loan” to avert layoffs and plant closings.

The plea met with some opposition. Sen. Richard Shelby, the senior Republican on the Banking Committee, said Wednesday he doesn’t believe there will be a turnaround in the troubled U.S. auto industry until its top management is ousted and the manufacturing model sacked.


“I don’t think they have immediate plans to change their model, which is a model of failure,” Shelby said. “I think a lot of it will be life support. I believe their best option would be some type of Chapter 11 bankruptcy ... These leaders have been failures and they need to go.”

Rep. Barney Frank, D-Mass., disagreed with that, saying choosing the bankruptcy option would like mean abrogation of labor contracts. “We already have too much union busting,” said Frank, appearing on CBS’s “The Early Show” with Shelby.

Link

Hey Barney, it's those contracts that are a big problem for the car makers. Many were made in better times.

[Wineslob]

The Big Gay One is off the mark. However I do believe the bailout is needed. Think about this, 1.5 to 2 million jobs would/could be lost. Worst case, 3 million. What do you think thats going to do to the economy?

[Uhhuh35]

I think they should get a bailout. That way they can continue to make the same cars that no one is buying.





 

[Eupher]

As I recall from a college class here and there, Chapter 11 bankruptcy doesn't spell the death knell for the company. It's an opportunity to compel the company to reorganize.

Sorta like cleaning out the cobwebs from under the bed.

Sounds to me like Rep. Fudgepacker refuses to acknowledge that there are dust bunnies on the assembly lines, foundries, and car dealerships and that they should be eradicated once every 50-60 years or so.

But he, like most people in the Rust Belt, still have this perverted notion that the United Auto Workers union is still needed the same way today like it was in 1935.

Where's Jimmy Hoffa these days? 

[Chris_]

I don't remember anyone talking bailout in the 70's when the gas crisis hit -- somehow they survived.

Sink or swim, just like real companies do.

[thundley4]

I think the chapter 11 would allow the companies to restructure nearly everything from what I've read.  Union contracts, dealership contracts and even the retiree pension/health benefits.  That is why the Dems are dead set against it. It further erode their hold on the unions vote.

[Wineslob]

A restructure is fine. They cannot be allowed to fold. It would be a disaster.

[Chris_]

[Scoobie]

Big Three CEOs Flew Private Jets to Plead for Public Funds

Auto Industry Close to Bankruptcy But They Get Pricey Perk

By BRIAN ROSS and JOSEPH RHEE
November 19, 2008 

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

Even as their companies fail, Ford and GM CEOs continue lavish lifestyles.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

 "We want to continue the vital role we've played for Americans for the past 100 years, but we can't do it alone," Wagoner told the Senate Banking Committee.

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company's dire financial straits.


<snip>

Link

Yup, they need that bailout money. 

[Chris_]

A restructure is fine. They cannot be allowed to fold. It would be a disaster.

[Wineslob]

You should listen to Tom Sullivan. Would you rather have a LARGE percentage of the workforce out of work, or hopefully stem it with 25B, which is FAR less than the losses projected?
What happens when GMAC folds up? GM's world-wide factories? Or how about the parts suppliers? The domino effect is mind boggling.

[thundley4]

There is a reason for calling it "re-structuring under chapter 11".  The laws are made to give them time to get their  together, to prevent their failing.  The main problem for Dems is the loss of those plush benefits for the unions.

[Chris_]

You should listen to Tom Sullivan. Would you rather have a LARGE percentage of the workforce out of work, or hopefully stem it with 25B, which is FAR less than the losses projected?
What happens when GMAC folds up? GM's world-wide factories? Or how about the parts suppliers? The domino effect is mind boggling.

I don't need to listen to Tom Sullivan or anybody else.

Anybody who thinks that the Federal Government taking taxpayer money at gunpoint and giving it to the bloated, rotting, union-infested corpse of the "big-3" automakers is going to do anything more than forestall the economic pain that is to come, is fooling themselves.  This is like an infection: we've allowed quacks to treat this infection with stronger and stronger doses of antibiotics, but never KILL the infection.  Well, now the infection is resistant to all the antibiotics we have, and we're to the point where we have to either endure the pain of cutting off the infected area, or allowing it to continue to fester until it kills us.

[Wineslob]

^^^^^^^^^^^^^^

I agree, but I really don't like the idea of the US possibly becoming a corpse. Scary as hell.









Like my avatar?   

[Chris_]

^^^^^^^^^^^^^^

I agree, but I really don't like the idea of the US possibly becoming a corpse. Scary as hell.




Like my avatar?   

If we don't want the US to become a corpse, then we better get to cutting out the infected, rotting tissue while we have strength to do so.

[Miss Mia]

The Big Gay One is off the mark. However I do believe the bailout is needed. Think about this, 1.5 to 2 million jobs would/could be lost. Worst case, 3 million. What do you think thats going to do to the economy?

1 in 10 jobs are related to the car industry.  It's a lot more people than just those that work at the plants.  GM cannot go under.

[Miss Mia]

The cost of GM's death


Automotive News
November 17, 2008 - 12:01 am ET

If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure.

Let's be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.

No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.

GM's 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.

The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.

Criticize Detroit 3 executives all you want. But the issue today is not whether GM should have closed Buick years ago, been tougher with the UAW or supported higher fuel economy standards.

In the next two to four months, GM will run out of cash and turn out the lights. Only government money can prevent that. Every other alternative is fantasy.

The $25 billion in loans that Congress approved to partially fund improvements in fuel economy? Irrelevant. Dead automakers do not invest in technology.

The collapse of the global financial system has crushed the American car market, dried up revenues for the Detroit 3 and highlighted their weaknesses.

Each of the Detroit 3 is in crisis. But Ford, which borrowed big two years ago and thus has more cash today, may skip a bailout and the strings attached. Cerberus, which bought Chrysler last year, doesn't deserve money. Government cash might help sell Chrysler to a strategic owner.

Some Detroit critics want their pound of flesh: Throw the bums out and install a government czar. Treasury Secretary Henry Paulson won't use any of his $700 billion bank bailout money to help manufacturers. In any case, he'd need a guarantee that a bailout would make Detroit "viable."

Well, nobody -- not even AIG -- is insuring guarantees for viability.

The taxpayer needs protection and an upside. GM's top management may need to go. Government-as-shareholder deserves a big voice. Those details can be worked out.

The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are prepared to make.

But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing -- now.

Sorry, it's a subscription only site.

[Wineslob]

It's exactly the point I've been trying to make.

[Miss Mia]

It's exactly the point I've been trying to make.

Many don't understand that it's more than just the workers at the plants that will be effected. 

[Chris_]

And where does it stop?  What is the cut-off line, below which you're not "too big to be allowed to fail"?

This bail out crap is pure unadulterated foolishness.  Just like any other force of nature, market forces cannot be violated with impugnity.  The consequences for the violation of market forces cannot be forestalled forever, and forstalling them at all only magnifies the effect when they finally do hit.

How economically vital is this country going to be when the Congress bankrupts us trying to fill every corrupt hand from every corporate lobbyist that comes looking for a hand out.

Where does it stop?

[Chris_]

1 in 10 jobs are related to the car industry.  It's a lot more people than just those that work at the plants.  GM cannot go under.

That as been repeated over and over. 

The bottom line is if we want to prosper long-term we need to allow the body to reject infection.

Here is a recovery plan for GM: Make good cars that people want to buy.

[Toastedturningtidelegs]

Many don't understand that it's more than just the workers at the plants that will be effected. 

Yes! You would have alot of the tier 1 and tier 2 suppliers go under as well! Not just assembly!

[Chris_]

Yes! You would have alot of the tier 1 and tier 2 suppliers go under as well! Not just assembly!

I repeat again my last:  WHERE DOES IT STOP?  WHAT IS THE CUT-OFF LINE?

[Chris_]

I repeat again my last:  WHERE DOES IT STOP?  WHAT IS THE CUT-OFF LINE?

The last Union Employee, I guess.

[Toastedturningtidelegs]

I repeat again my last:  WHERE DOES IT STOP?  WHAT IS THE CUT-OFF LINE?

I don't know DS.