GM, Chrysler submit bailout plans to Congress

Yesterday, General Motors and Chrysler submitted to Congress their formal plans for restructuring to justify additional billions in taxpayer aid.

The final tally to maintain GM, Chrysler, and their suppliers: $56.5 billion

• GM had already received $13.4 billion and last night requested an additional $9.1 billion.
• GMAC, GM’s former captive finance company now half owned by the owner of Chrysler, received $5 billion.
• Chrysler, which has received $4 billion, says it needs another $5 billion.
• It also requested additional aid for Chrysler Financial, the company’s in-house financing arm, which received $1.5 billion in aid in mid-January.
• Parts suppliers to the industry, including GM and Chrysler have also requested $18.5 billion in federal aid. (If suppliers begin to fail, it would wreak even more havoc for the automakers, who couldn’t build cars without some of their parts.)

GM said it might need an additional $7.5 billion within the next two years if the market does not improve, and has asked for $6 billion in aid from foreign governments to support its operations in those countries. (The adding machine says that would bring GM’s total to $35 billion from the U.S. government, and it would bring the grand total cost of bailing out these two automakers to more than $45.5 billion, not counting their suppliers.)

The assistance given so far is in the form of loan guarantees, which the automakers would be scheduled to start paying back in 2012.

The restructuring plans released last night were given as a response to conditions in the original aid package passed Dec. 19, last year. These plans are supposed to lay out how the companies will return to viability.

GM and Chrysler, as well as Ford, were in the process of restructuring their businesses when the financial crisis hit in October. Ford was farther along in its restructuring and has said it may ask for $8 billion in aid but has not yet done so.

Since the bailout was first announced, General Motors has announced that it will sell or close its Hummer, Saturn, and Saab brands, will lay off 10,000 white-collar workers and cut managers’ pay. And it has closed two factories laying off an additional 3,800 workers. In addition, it is negotiating with the UAW to win other cost-saving concessions on work rules and company health-care contributions. The UAW has already announced the closing of its controversial Jobs Bank, in which laid off workers were paid salaries while they waited to find new positions. GM is also seeking concessions from its bond-holders.

In addition, in its plan last night, the company announced that by 2012 it would shutter 14 more factories--five more than previously scheduled.

Chrysler closed its Newark, Del., assembly plant in December that built Dodge Durango and Chrysler Aspen, including hybrid versions of the two full-sized SUVs. And it has announced a new partnership with Italian automaker Fiat, to develop some new small, cars that will meet new federal fuel-economy regulations. Since 2006, Chrysler has laid off 26,000 union workers as well as 26 percent of its white-collar workforce.

If that weren’t bad enough, the automakers were asked to examine the cost of bankruptcy, as well. Each company presented several bankruptcy options, which ranged from somewhat more expensive than the bailout money they are requesting to more than three times as expensive.

As auto sales continue to fall, the outlook for automakers worsens. GM’s plan says the company could be profitable at an annual industry sales rate of 11.5 to 12 million vehicles. Chrysler’s is based on just 10.1 million units. If sales don’t improve, based on sales in January 2009, the industry may sell just 9.5 million cars this year.

The companies say without federal aid, they will not be able to meet payroll and other obligations by March.

And while GM and Chrysler are in the worst shape, it isn’t just Detroit that’s hurting. Toyota posted its first loss in history in the last quarter.

It seems a bleak day in the automotive world, indeed.

—Eric Evarts

Comments

[Frank Hummel]

Folks who would participate in ANY sort of economic/political discussion these days about the Economic "stimulus" should be generally aware of a number of basic realities regarding ALTERNATIVE-ENERGY matters --- which in reality SURELY enter into any comprehensive (or even casual!) discussion of the subject. I submit that all the political blather notwithstanding, we will not ACTUALLY begin to see the end of this recession / depression unless and until a WHOLE NEW TECHNOLOGY begins to ACTUALLY emerge and TO BE TAKEN SERIOUSLY by ALL of us, in general --- and the now-shrinking industrial sector actually EMBRACES it and begins to re-tool all those plants that are now being shuttered and starts to ACTUALLY BUILD products that GENUINELY IMPLEMENT concepts outlined in the following:
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“Our” ADDICTIVE DEPENDENCY ON OTHER PEOPLES’ OIL?? After all, we in this country NOW KNOW FOR SURE --- originally by means of Hubbert-inspired statistical analysis of patterns of past discoveries of the stuff, now CONFIRMED by many years of rather exact EXPLICIT MAPPING OUT of reserves (applying sonographic and other techniques), that we have at this point USED UP (indeed rather PROFLIGATELY!) about 70% of our OWN Providential endowment of raw oil --- and specifically the “easy” stuff! The remainder (which the “drill, baby, drill” crowd is now so hot to go after), is at this point only to be found in low-capacity “stripper” wells, or under water, or somewhere north of the Arctic Circle, or WAY DEEP --- SO THAT IT IS VERY EXPENSIVE TO “PRODUCE” --- which means that it would NOT be possible to shave very much (if anything) off the “price at the pump” by aggressively exploiting such declining resources.

Indeed, THAT is actually what has given rise to the whole “business” of AGGRESSIVE EXPROPRIATION (or very expensive ATTEMPTS to do so) of the endowments of OTHERS elsewhere in the world, and then transporting that “booty” thousands of miles to be refined, distributed, and marketed (with, of course, endless opportunities for “profit” and “taxation” at every step along the way) --- all the while PRETENDING to each other and “our”selves (by ARTIFICIALLY EXCLUDING FROM EXPLICIT CONSIDERATION all those “ancillary” --- e.g. all the “military” --- costs that ACTUALLY DO ADD IN to its OVERALL TRUE cost) that the end result is somehow “cheaper” than the alternatives would have been! People may not WANT to “connect the dots” --- but $10 BILLION A MONTH for the care and feeding of all those Iraqi Sunni Militias in order to “keep the lid on and the OIL flowing” REALLY IS A “HIDDEN” PART OF THE COST OF THAT OIL!

Now of course, the “Oil Industry” is NOT going to just GO AWAY. Its products are used as the CHEMICAL FEEDSTOCK for a GREAT MANY things that we produce and use every day --- especially many different PLASTICS and plastic-like materials, such as ASPHALT, and polyvinyl-chlorides used in water and gas pipes and electrical conduit, and all that SIDING used in building. But “we” DESPERATELY need to QUIT BRAINLESSLY BURNING THE STUFF UP as a MERE FUEL! So now we are STILL going to have to pursue the alternatives ANYWAY --- even AFTER having FOOLISHLY BLOWN the economic advantages that we not so very long ago had enjoyed --- which could have substantially EASED what will surely be a very DIFFICULT transition! --- BRILLIANT, people!!
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So what, then, might the alternatives actually BE?? Well, FOR INSTANCE:

GM’s forthcoming Chevy VOLT is an ELECTRIC car with a battery that will carry it about FORTY miles. Thereafter, an INTERNAL COMBUSTION ENGINE kicks in. But that engine is NOT coupled to the wheels MECHANICALLY; rather, they are powered (only) ELECTRICALLY. Instead IT DRIVES A GENERATOR that supplies ELECTRIC motors at the wheels. And if you erroneously imagine that no “electric” vehicle can get above 30 miles per hour or get out of the back yard --- well, be advised! On the RAILROADS, all modern MASSIVE LOCOMOTIVES, and also the VERY LARGEST SHIPS, are (and have been for many years now already!) actually driven by ELECTRIC motors. And the speed record for ELECTRIC-powered cars out at the Bonneville Speedway is somewhere north of 400 Miles per Hour last I heard.

Now the thing is, statistics show that fully 75% of all automobile usage is “short haul” runs that would “fit” within the 40-mile “power budget” of that battery --- SO MOST OF THE TIME THE GASOLINE ENGINE WILL NEVER OPERATE! Ici voila!-: THREE-FOURTHS of all petroleum consumption to power automobiles SIMPLY, STRAIGHTFORWARDLY ELIMINATED!

The battery would be charged from the power grid, or (better yet, eventually) YOUR OWN PHOTOVOLTAIC ARRAY or WIND-POWERED-GENERATOR low-voltage auxiliary system, when the vehicle is not in use. Using ELECTRICAL power in such a way could render it PRACTICAL to DIRECTLY harness the abundant but intermittent / highly variable FREE energy that rains down on us perpetually from the sun --- which we “traditionally” WASTE! (The car battery DOESN’T “CARE” if it is charged intermittently or at a variable rate AS LONG AS IT GETS CHARGED UP!) Or absent such FREE power, about 80 cents worth of "grid" power would “fill the tank”. (Eight such charges, or $6.40 worth, would yield 320 miles --- about the equivalent of a tank of gasoline THAT COSTS ABOUT FOUR TIMES AS MUCH!) Beyond that, fuel consumption would depend on how the car is used --- but for ORDINARY usage the internal combustion engine WOULD BE AT MOST ONLY MINIMALLY ACTIVE!

And one ALSO simply DISPENSES WITH (!) the whole elaborate TRANSMISSION and DRIVE TRAIN --- utilizing simple, relatively UNbreakable MAGNETIC-force (rather than complex, fallible mechanical) drive elements. (There is NO TRANSMISSION on a Diesel Electric locomotive --- we could not BEGIN to build a sufficiently heavy-duty clutch! That is why the whole ELECTRIC MOTOR paradigm was developed for very HEAVY loads in the first place.) So now, think of all THOSE savings too!

Above all, though, note that the VOLT is merely an adaptation to a MUCH LIGHTER application of very OLD, WELL-ESTABLISHED, HEAVY-DUTY technological concepts. The battery-powered car has been around since the EARLIEST days of the automobile, and the Diesel-electric LOCOMOTIVE (and similar systems --- for example, on the largest ships) have been around for ABOUT 60 YEARS NOW ALREADY! There obviously has been no TECHNOLOGICAL reason why the adaptation to the mere AUTOMOBILE could not have been accomplished MUCH SOONER --- had “we” but mustered the wisdom and the wit to do so! (People really should now be thinking about the FALSE “economic” reasons why the alternative was NOT pursued earlier, and how the rationales for not doing so now prove to have tragically MISLED “us”!)

I submit that it would now be appropriate for "Government" to fund GM (at BARELY above subsistence levels) to sustain ONLY those "life functions" of the moribund "patient" that genuinely COMPEL RAPID evolutionary progress AWAY from the currently FAILING "business model"! That support needs to be VERY SPECIFIC, being purposefully directed toward ACTUAL IMPLEMENTATION, BRINGING INTO PRODUCTION, and more generally PUBLIC POPULARIZATION (through EDUCATION, and indirect tax-forbearance SUBSIDIZATION!) of such initiatives as the VOLT (and its sure-to-soon-follow derivative progeny) --- and ALSO, more broadly, such OTHER "outside-the-box" initiatives as the Toyota / Hyundai / Ford pioneering of REGENERATIVE-BRAKING ENERGY CONSERVATION technology.

Indeed, it ALSO needs to begin to dawn on people that it will be advantageous to MARRY THE "REGENERATIVE-BRAKING" AND "ELECTRIC CAR" TECHNOLOGIES: doing so would about DOUBLE the RANGE of any battery-powered system, just as it doubles the efficiency (and hence also the range) of the all-gasoline-powered Toyota Prius (which has a 21.5 miles-per-gallon engine that ends up achieving around 45 mpg!). Maybe THAT initiative is what CHRYSLER should be "funded" to focus upon. (A little good-old-fashioned, " "capitalistic" COMPETITION could be a very good thing!)

So: eliminate perhaps FULLY SEVEN-EIGHTHS(!) of all the importation of oil to supply gasoline to fuel "our" automobiles. And while "we" are at it, lets also CONVERT all those heavy TRUCKS to NATURAL GAS --- which “we” have (for now) IN ABUNDANT SUPPLY --- per the proposals being advanced by famed “oil”man T. Boone Pickens. Now THERE is FOREIGN OIL INDEPENDENCE for you! And it really COULD (and SHOULD!!) have been done MANY YEARS AGO NOW ALREADY!!

SUCH are the sorts of initiatives now needed to ACTUALLY IGNITE the "GREEN-COLLAR ECONOMIC REVOLUTION" which, if generally embraced, could INTELLIGENTLY, CONSTRUCTIVELY restore the economic health of this society (and would SURELY be preferable to any cockamamie WAR like the one whereby "we" "escaped" from the so-called "Great" Depression!).

Now if my ideas come across as "HERETICAL", then so be it. But you DON'T successfully treat a patient who is DYING OF LUNG CANCER by BUYING HIM OR HER MORE CIGARETTES! It appears that the OBAMA crowd is indeed smart enough to "get" that. EVIDENTLY THEIR PREDECESSORS WERE NOT!

[bill in Milford, CT]

Great Idea ! Bail out the same folks that have robbed America for so long - but since they have been so kind the the millions that have suffered hard financial times before them , it makes sense. Make sure to ask the families whos lives have been ruined by these bastards how they feel about the bailout. Unfortunately, the automakers have been living a dream. those at the top could care less, their rich already. The workers who are being fired have done the best they can with what they've been given for so long, they could do anything forever with nothing, but - For companies that have been so financially irresponsible to get a cent of tax payers money is appalling.

[Warren Dutton]

All I know is this...I have tried to be faithful and loyal to the GM brand my whole life; from my 1985 Chevy Monte Carlo, my 1989 Chevy Beretta, my 1990 Pontiac Grand Am, my 1992 Pontiac Sunbird, my 1994 Pontiac Sunbird Convertable, my 1997 Pontiac Grad Prix, my 2000 Chevy Cavalier, my 2005 Saturn, and my 2007 Saturn - and every single one of them has had engine problems, transmission problems, computer problems, and has had to be towed for one reason or another. 2 weeks ago, I have settled yet another buyback suit with GM on my 2007 Saturn - in 14 months that car left me stranded 8 times, and has been repaired 31 times.

I will never by another GM product, and for that matter, have no trust in American branded cars any longer! Honda, Nissan, or Toyota - here I come.

[anonymous]

this is booty why are we just now hearing about this stuff if its so old we should have had recognition earlier.