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Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: pf_flyer (Dec 06, 2008 6:08 am)  Congress nears accord on Detroit 3 bailout Funds would come from previously approved environmental legislation Harry Stoffer Automotive News | December 5, 2008 - 12:15 pm EST WASHINGTON -- Democratic leaders of Congress indicated this evening they have reached agreement on a bailout plan for the Detroit 3. The accord is designed to provide short-term loans to General Motors, Ford Motor Co. and Chrysler LLC to prevent an industry collapse and allow a comprehensive restructuring of the companies early next year, House Speaker Nancy Pelosi, D-Calif., said in a statement. Congress is scheduled to vote on bailout legislation next week. Democratic leaders also have reached agreement with the White House on the plan, a senior congressional aide told Reuters. The package totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity. Pelosi suggested she was willing to fund the emergency loans out of a $25 billion package already approved to help automakers retool for fuel-efficient vehicles. Pelosi and Senate Majority Leader Harry Reid, D-Nev., had previously opposed that approach, which is favored by the Bush administration. Under the agreement, Pelosi said she would demand "a guarantee that those funds would be replenished in a matter of weeks" and that automakers would not delay work on improved fuel economy. The loans would allow the Detroit 3 to maintain operations until President-elect Barack Obama takes office Jan. 20. Taxpayer protection At hearings this week, GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli said that without a combined $11 billion in emergency loans by year end, they would not have enough money to meet their financial obligations. That funding was part of a $34 billion request for loans and credit lines. Pelosi said that "Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected." The New York Times quoted Reid as saying he expected House and Senate "votes next week on a responsible plan to help the millions of Americans who rely on a healthy auto industry for their livelihoods.” But Reid added: “We will need support and cooperation from Republicans to determine what that vote happens and whether it will succeed." Ford said in a statement Friday night that it is "encouraged" by the promise of congressional votes next next week. As recently as Thursday, Pelosi and Reid had insisted that the Bush administration make the emergency loans to the Detroit 3 out of a $700 billion rescue fund for financial institutions. The administration said it did not have that authority. Consensus built for an interim rescue package after more than five hours of testimony today before the House Financial Services Committee. Committee Chairman Barney Frank, D-Mass., said he was “more optimistic than before” that GM and Chrysler would get enough federal loans to live until next year when the Congress and the Obama administration can take up a more complete rescue measure. That package could be completed with stringent government oversight, milestones and possibly equity rewards for the risk of lending the money, Frank said. He said failure to act immediately would be an “unmitigated disaster” for an already-fragile U.S. economy. Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive. The Detroit 3 CEOs and UAW President Ron Gettelfinger testified to Congress for a second consecutive day Friday. Responding to lawmaker questions, Chrysler’s Nardelli said a $4 billion interim package would suffice for his company. Wagoner said GM needs about $4 billion by January and up to $10 billion through March. |
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Replying to: joel0622 (Dec 06, 2008 6:17 am)  Ford's pretty well along on their reorganizing and "right-sizing." GM's still trying to decide what size is right (instead of creating a flexible infrasructure), and Chrysler is still trying to decide to put the Viper engine in the 300c or in the Charger.  Ford WILL have a supply problem if one of those others goes belly-up...they'll probably need the money to keep enough suppliers afloat long enough. Personally I like the idea of giving suppliers a bailout if GM or Chrysler fails, rather than giving it to GM or Chrysler. That opens the field for any car company to survive on their own merits (Ford), a newcomer to come in and start up (say Tesla, just as an example) AND for parts to still be available if GM and Chrysler fail (face it, we're gonna need those, which means we'll end up paying to keep the suppliers afloat anyway).
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Replying to: joel0622 (Dec 06, 2008 6:17 am) NO Problem Pelosi, just keep those printing presses rolling. You have an ironclad retirement for life with your fancy pension plan. So it should be a MERRY CHRISTMAS for Detroit, with a $15 billion handout from the struggling tax payers. It will be interesting to see how they repay our generosity. Will management and the UAW pull in their belts and put their greedy tendencies on hold? |
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Replying to: bpizzuti (Dec 06, 2008 6:31 am) PARTS is PARTS. Where would any automaker be without parts? That makes a lot more sense than giving cash to a parts assembler that has proven they do not know how to build cars that are wanted or make money. |
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Replying to: morin2 (Dec 05, 2008 6:58 pm) Whatever Congress or the Executive branch have done last week or 5 years ago, is irrelevant to the present and deciding what is right and fair? To add to errors by committing the same errors/biases is not correct. These few companies happen to be doing the right thing - both to their employees and to the taxpayer who saves the cost of paying those benefits. They were forced into a contract by the unions. How the Big3 and their unions use their money is their business - they decide. If they wish to give it all away in pay, bonuses, stock options, Job Banks, and excessive pension pay and benefits that's they're business. They have made those choices over many years. Now that that they have burned thru all their money, they want taxpayer $ to continue on!  THAT is the problem I have with it. They screwup, and everyone else (on average) who does not make as much or expect that sort of pension is being asked, or should I say forced to pay for them! I'd rather see my tax dollars used to help companies that make something than companies that sell paper. You mean your Social Security funds and your descendants lower standard of living w/higher taxes. Because any $ loaned that is not repayed is tacked onto our $11,000,000,000,000 national debt. The federal government does not have limitless $; it is funded by people who invest in Treasuries and such. If the government continues to act like the Big3 and use it's reserves in give-aways to people and corporations, the U.S. government ends up in a similar position as the Big3 today. When the government is so far in debt, and the average consumer is so far in debt, there will be no recovery for many, many years. That may be now. We need to end bailouts and giveaways; and STOP using the jealousy arguments of "they got this last year and were wasting $ in Iraq, ... ". We need to stop government spending anytime we can. |
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Replying to: joel0622 (Dec 06, 2008 6:17 am) Ford Motor Co. CEO Alan Mulally said his company doesn’t immediately need loans but is supporting GM and Chrysler to prevent a failure and the consequential collapse of the domestic parts supply base. Ford says it may need $9 billion if one of its rivals doesn’t survive. It's like an options package where all you want is Bluetooth but you need to pay $4,500 for the Premium Package with all the other goodies. If GM or C goes, you pay. If you pay them the $25B, I'm good! Get it? He does not have to take the $1 compensation because the taxpayers keep everything alive. Regards, OW
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Replying to: berri (Dec 05, 2008 5:15 pm) This is a very unlikely scenario, that has been thrown out by proponents of the bailout, who have $34B to gain - may I add, to scare the general public who has little business and market understanding. It is thrown out so the common man polls in favor of the loan, and Congress is pressured into a bad decision. The fact is that GM or Chrysler might go bankrupt first. Say if that's GM; the result is that GM loses it's market-share of 25%. The other manufacturers have spare capacity as their sales are down about 30-40%. What happens? The business is transferred to the other manufacturers, and this HELPS THEM, and they may become profitable again. Suppliers to Ford and Chrysler would see an increase in business, and would hire additional shifts, or bring back any laidoff workers. IF GM, Ford and Chrysler get loans they still will layoff many hundreds of thousands of people, simply because either way customers are going to buy 10M vehicles next year. The auto industry will employ enough people to make and sell 10M people next year, no matter if it's corporate entity A, B, C, and D or owned by stockholders W, X, Y, and Z. That means either a few companies and suppliers go out of business, or everyone cuts back some. Either way you have to cut suppliers and plants, and employees in the entire auto industry to get from 16M to 10M vehicles. It's just your choice to waste $34B to keep jobs at A, B, and C instead of spending $0 letting the market decide which corporations survive. |
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Replying to: circlew (Dec 06, 2008 8:10 am) They could all never hit another lick for the rest of there lives and never be worried about money.
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Replying to: joel0622 (Dec 06, 2008 8:24 am)
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Replying to: berri (Dec 06, 2008 8:53 am) Because the UAW has contracts, you can't just lay off the ones you need to. So you go get concessions. Everybody keeps their jobs in the near term, but their benefits are reduced. Much of the costs are retiree costs which are not the issue with the Wall Street crowd. |
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