RoswellGrey

Hmmmmmmm.... Interesting. Let's see. Bankruptcy protection is to hold off creditors. Would a warranty holder be considered a creditor?

Axel

Here's the latest for anyone who hasn't seen. Seems very temporary if Chrysler needs $7.5 billion to run the company. Update: It's actually $2.4. I was off a little, only $5.1 billion.


WASHINGTON (AP) - The Bush administration came to the rescue of the deeply troubled U.S. auto industry Friday, offering $17.4 billion in loans in exchange for concessions from carmakers and their workers.

"Allowing the auto companies to collapse is not a responsible course of action," President Bush said. Bankruptcy, He said that a bankruptcy was unlikely to work for the auto industry at this time and would deal "an unacceptably painful blow to hardworking Americans" across the economy.

One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.


(Copyright Associated Press, All Rights Reserved)

Albeeno

Ford says does it not need short-term loans from bailout

DETROIT, Michigan (AFP) – Ford Motor Co. said Friday it would not need a short-term loan from the government, but lauded the Bush administration's decision to extend aid to its cash-strapped competitors and renewed a request for a nine billion dollar line of credit.

"We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford president and chief executive officer Alan Mulally said in a statement.

Ford said it hoped to restructure its business without government assistance but requested the nine billion dollar line of credit as a "critical backstop or safeguard against worsening conditions."

The US government announced earlier Friday it would provide ailing automakers with 13.4 billion dollars in short-term financing in support of their restructuring, setting strict conditions to prove their viability.

"All of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler," Mulally said.

"The US auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened US economy."

Ford said that while it is working to aggressively reduce costs it will continue to invest heavily in product development, including approximately 14 billion dollars over the next seven years to improve the fuel economy of its vehicles.

Ford said the comprehensive restructuring plan it presented to Congress will allow it to return to profitability by 2011

"While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth," Mulally said

lear4406

Ford does not need a loan because they recieved a hefty loan just prior to the big crash of cash. So they are set for a little while and I hope they can hold out. Just luck of the draw, not superior managment. But they do have a plan and I hope Ford can make it work.

kramtrah

I hope they make it too. I want all the US Makers to indeed weather the storm. Heck, we built the auto industry, but man, the 50's, 60's, early 70's, heck what a hey day. Sure back in the day US car companies folded too, but that was due to superior US Design. I understand maintaining costs and I am all for it, but making cars that are both unique, good looking, and purposeful, that will save the day. The Challenger fills a purpose that drives interest for the company, but eyeing others means something too. I mean, SUV's have a roll, but do we need unteen from every company. Even Toyota has a bunch, but they have several car lines as well. Back when I was in manufacturing, I often used to think if they do not intend to be #1 in a segment, why make it? But hey, without effort how do you even know. I think the Challenger, 300, Charger, RAM, Liberty, and Cherokee are recent good examples for Chrysler. Ford and GM have good examples as well, even if not for me. But quality and customer service reign over that profoundly. I would like us to reestablish prominece in automobile manufacturing, but there's a way to go and I hold out hope[sm=americanasmiley.gif].

demort71

Quit worrying! The hard part is over, Ma Mopar and GM have bridge loan money coming after they sign on the dotted line Dec. 29. Trust me, the CEOs and investors are breathing a sigh of relief. Even Canada threw in $4 Bill on top of the U.S.'s dough. That is a good sign for us GM and Mopar collectors and lovers. I heard Germany was doing the same for GM's Opel division, but they were waiting until the U.S. got off their larthagic arses and got over the Republican protectionism of the South's foreign auto industry.

Closing the plants down for a month is a good defensive move for Chrysler. The econ is tanking right now and this protects their working capital. Why should they keep building inventory (and financing it) and then give it away in a few months, like they have with their left over 08 models? Doesn't make much sense does it? What they have to do is survive the rest of the 09 model year and get to next fall.

They will still make the Challenger next year. It should be clear to the Chrysler powers that be the Challenger is a hit and there is a demand for it. Do you think their dealers are whining about Chall. sales when most of them won't come off the sticker price and many demand above sticker? It's the hotest car out there right now. Think the new restyled Stang is going to set the world on fire-No Way Jose! The new Camaro will likely sell well, if people have enough balls to buy one given their job situations.

I work for the world's largest construction equipment manufacturer in Peoria, IL. They have been enjoying a five year run-for-the-profits and sales (enjoyed record profits and sales year after year) thanks to growth of the world's econ and infrastructure. Their orders suddenly went down in November (and were cancelled) and they have a few indefinite lay-offs in their manufacturing facilities and temporary dept. shut downs. They are in great shape financially compared to GM and Chrysler, but does that mean you won't be able to buy a D10 dozer in 12 months? Heck no. They are cutting inventory by temporarily curtailing production, same as Ma Mopar. I am right there on their factory floor, running CNC machines.

What we need is for the econ to bottom out (layoffs stop). Get the new administration and congress in place and put them to work on the econ. It's going to take time to get it started the other way, but it will if we remain proactive as a country. It really sucks that our econ is where it's at today. Lack of oversight in the banking industry is the big culprit and stupid people borrowing too much money is another culprit. Guess true capitalism was a failure.

epegasus

So THAT's where the 'dem' in your name comes from. I bet you're a Labour Un10n man, too. There are a number of things I could counter you on with a lot of facts and figures that would just bore the pants right off of you and everyone else on this forum but why waste all that typing. Hey, just buy that Challenger as soon as you possibly can and I'll bet if there are any forum members who live close to you they'll happily buy you a round or two at a Challenger Meet & Greet.

But, if you'd like for me to point out where your perspective is off, I'd love to oblige.

RLSH700

That loan doesn't guarantee anything. Why all of a sudden do you think that if they just get a lump sum of money that the problem is over? The bailout of the banks are already being proven to have failed because the core problem hasn't been resolved. The same thing is true here as well. The big three have underlying problems and this could potentially make things worse by not dealing with the problems now when the costs and damage done by doing possibly what needs to be done will be less now than later. Also, you need to remember that the U.K. tried this back in the 70s and it didn't work.

I'm not going to bother getting into the politics of everything because I have better things to do with my time than to start the blame game and I encourage all of you to avoid getting into an endless debate full of personal attacks, poisoning of the well, class warfare, and all other distractions which sadly is what our political discussions in our country consist of these days. The thing I will say is that history shows us that there ARE ALWAYS going to be times when people make poor decisions that lead to problems, but to say that a downturn automatically equals failure is just illogical. In my view, the failure is people letting fear control them into ADDING to the problem that caused all of this and believing somehow that a group of people who cannot get rid of a debt that has been around for a long time and been consistently growing no matter who is incharge and on top of this cannot eliminate corruption, cannot be transparent themselves, cannot keep hardly any promises that they make and continue to make more of them, cannot do anything quickly and efficiently, are consistently showing they are NOT above influence by contributors and buddies, and to top this all off have ignored the people who warned us about the dangerous of this kind of world who had to go through this before in Europe who gave us the foundation for our freedoms to prevent this kind of disaster. The failure is people believing that these people can possibly do a better job of taking care of them than they can take care of themselves. These people live in a different world than we do and will never understand what is good for us or good for an economy.

demort71

The following is in response to your post to my post, which was as follows:

So THAT's where the "dem" in your name comes from. I bet you're a man, too. There are a number of things I could counter you on with a lot of facts and figures that would just bore the pants right off of you and everyone else on this forum but why waste all that typing. Hey, just buy that Challenger as soon as you possibly can and I'll bet if there are any forum members who live close to you they'll happily buy you a round or two at a Challenger Meet & Greet. But, if you'd like for me to point out where your perspective is off, I'd love to oblige.

Thanks for the insulting and condescending reply. I can infer quite a bit about you from your first two sentences, but none of it would too flattering in my book.

I am sure you could give me all kinds of facts. You forget that facts are things that have already happened, not events that haven’t occurred or might occur. What we are talking about is the future and trying to predict it and there are can be no real facts out there to accurately predict something of this magnitude that hasn't happened! So your facts probably don't mean a whole lot.
How about telling us all something about your own work and educational background? Maybe then your facts might gain more credability.

Even if you feel you have a good inside track on the situation, such as talking to Chrysler employees, that doesn't even mean a whole lot, unless it's someone of Nardelli's stature or who serves on the board of Cerebus. Talking to lower or mid-level Chrys. mgt. employees (unless notice of something has been given) is simply stiring the rumor mill around. I'm sure most Chrysler employees have plenty of rumors to pass around right now, but not very many facts. It is pretty scary to be a Chrysler employee right now and I really do feel for every last one of them-white or blue collar, Democrat or Republican.

If you are simply pulling news releases off the internet, that isn't exactly first-hand knowledge or evidence either, is it? It's the "present" official word is all. Visiting Republican web sties and feeding on their propaganda doesn't do much for me, though it might get other Republicans excited.

I suggest you start typing. I reviewed your more recent postings on this question and there was nothing earth-shattering in any of those posts. I will be more gracious than what you were to me and say that your post were well-written. However, all you did was post official press releases from Chrysler and make a few comments. What I did was share my thoughts, which are based upon actual life and work experience and (hel yes) being a member of the UAW. Since you evidently don't give much credit to working class people, I hate to tell you that I most likely have way more formal (yes college degrees) and informal education and experience than what you have in business and/or manufacturing.

You challenged me, now either put up or shut up! Foregoing that, make an apology or explain exactly what your terse comments meant.

P.S. demo-rt-71 Get it?

demort71

Good question about "why is the problem suddenly over because they got a govt. loan"? The loan only takes them through the next fiscal quarter, which isn't long enough to solve the problems. Maybe I was a little too positive in my original post.

You are right in that one loan doesn't solve the problems the Big 3 face, but it does buy time for them to work on some of the problems. I think the next congress will be more supportive of their efforts to restructure and organize and yep, that does have something to do with politics, but I think it's an accepted point regarding the issue.

Maybe we should explore the issues then and make constructive comments about those issues, rather than make "he said, she said" accusations. That would be in keeping with the country working together and Americans acting like we all love our country and fellow countrymen. Though I posted a somewhat scathing reply to Epagusus, I would rather keep politics out of the discussion. I think there are enough forum members who can stay focused on something we all agree on; we want to see Chrysler go on, as well as GM and Ford. I don't like to get bushwacked for what I am and I felt Epagusus was doing that. We all have the right to choose to be what we feel is right and I think we should respect that right.

Maybe we should identify all of the major problems facing the U.S. auto industry that you allude to?

First, the negative hourly cost difference between the Big 3 and the foreign makers is primarily due to legacy costs for their U.S. operations. In Europe and Canada, where they have operations, there is national health care for the Big 3's workers.

Second, I don't believe the actual hourly production cost for assembly workers is that much greater for the Big 3's people versus the foreign makers' people. Possibly it is though when comparing non- plants in right-to-work states (to Midwest UAW plants) where there is no . I do know that the UAW in 2007 agreed to a two tier wage scale for their workers with GM. What one U.S. maker gets, the others soon gets in their next negotiation. The UAW has been working with manufacturers to try and help make them competitive regarding hourly costs. As more senior workers retire or get bought out, the hourly average wage costs would theoretically go down as the work force is replenished with lower paid workers.

I work for a manufacturer which has a two tier wage scale and whose hourly workers are represented by the UAW. The two tier scale is very unfair to the workers on the lower scale, as they are doing the same work as people on the upper scale. Workers on the upper scale at my employer last received a true raise about 15 years ago. Since that time lump sum COLA payments (amounting to a few hundred dollars per year at most) are agreed to in contracts for each year of the next contract period. Our second tier employees make $18 an hour and less for all grades of jobs and these jobs would be comparable to the jobs at the Big 3 involved in the manufacture of autos. They don't have a pension plan for these workers, just a 3% match of their base pay into their 401Ks.

We hear about the big money that U.S. auto workers make and a lot of people are envious of that. What those workers on the upper scale at the automakers experienced in pay raises (through the years) is far more in-line with the actual inflation rate, more so than what most other workers have experienced in other industries and occupations in the U.S. In that case the UAW has represented their members well. What I suggest here is that there are tens of millions of Americans who have been screwed. Wages didn't increase with inflation for them. Their benefits were cut, jobs were outsourced, no health care was offered, pensions dropped, etc. We all know that scenario. Is it really the UAW workers' faults that they were treated more fairly by their employers, than the rest of the population was? I don't think so, but the envy remains and spills over to this bailout issue.

Frankly, an average wage of $17 an hour for a blue collar worker, for a 40 hour work week comes out to a gross of $35K a year, which isn't going to make anyone rich and in most regions won't even pay the bills. The way most factory workers make a much better living is through over-time, but that puts a strain on the worker's mental and physical health after awhile, as well as an emotional strain on their family.

Given the often hard physical labor and/or poor workplace ergonomics that most factory workers endure, many of them are physically worn out by the time they are fifty and they are about dead by 65! Sure, you can say that is their choice to work in those kind of conditions. However, I guess those workers could say to those envious of them for their wages or benies that it's their choice to work in less demanding and lower paying jobs with no retirement!

Third, rising health care costs in the U.S. have exacerbated labor costs for all employers. We should commend the Big 3 for sticking by their workers and retirees all these years. They haven't dumped on them during their retirement years, as some companies have done. Niether have they discontinued health insurance for current workers and dumped their workers' health care costs on the rest of society and the system.

We know that large groups of American voters don't want nationalized health care and they don't want to see the health care and drug industries reigned in. Both the UAW and the Big 3 have gone to Washington together in the past to address the health care issue and as I have inferred both parties have promoted or sought a potential national health care system. Such a solution would actually put the U.S. auto makers on a more even keel with foreign competitors whose home country governments subsidize their employees' health care (ie management and factory workers in the home country).

In 2007 GM and the UAW negotiated a lump sum payment to a VEBA fund in 2010. The fund is for the administration of health care benefits to retirees. It will be a payment of several billion $ to the fund (which was mentioned on network news channels). This allows GM to wash its hands for health care costs for its retirees then. Make no mistake that the other two manfacturers could make the same deal with the UAW if they wanted. The VEBA fund is not a good method to protect retiree's health care benies in the long run, as it is difficult to keep up with the high inflation rate that has been experienced in the last decade in health care.

Fourth, foreign makers don't suffer from the same legacy costs as U.S. makers. Their plants are fairly new and so their worker pool is younger. In cases where the plants are not represented by s (typically the UAW), workers have no retirement program except for a 401K program and likely have no promise of health care after their retirement. Unfortunately this is the retirement situation for millions of other workers-no retirement or health care upon retiring. It really bites in my opinion. I was a white collar worker during my younger years. Frankly I didn't realize how bad I actually had it as a white collar worker until I became a blue collar worker protected by a contract. I think we all deserve a safe retirement and health care when we need to retire due to age or health conditions. If you want to work till you're 75, that's OK by me. If you want to be self-employed, more power to ya!

The above points are internal sticking points for the Big 3 in making a profit. Folllowing are some outside points concerning the economy and (sorry, but they are part of it) politics.

Our trade agreements suck and terms are not enforced, so the agreements are only one-way for the other party (we lose!).

Poor inforcement of labor laws involving illegal aliens working in our country (probably affects other industries more than the auto ind.)

Weak govt. regulation and oversight in the finance and investment industries, which really hurt the Big 3 and all consumer products industries (including those poor factories in China who enjoy Americans' dollars) when it came time to finance consumer purchases.

Southern state governments subsidizing foreign auto makers to entice them to locate new factories in their states.

State government protectionism on behalf of foreign auto manufacturers to maintain right-to-work laws in their jurisdictions, in order to keep the labor market cheap and deny workers the right to organize a . Toyota in my experience is probably the worst perpatrater in this arena. They have a reputation for keeping the UAW out of its factories, though at least one is represented by the UAW.

NOTE: Organizing a in a plant doesn't mean the workers' wages are going to go through the roof, making $40 an hour, plus benefits. It will probably mean their pay will increase somewhat and their benefits will improve, as well as working conditions and relations with mgt. Hourly laborers will likely take a more pro-active role in areas like plant safety, improve ergonomics in work areas, improve production methods that increase productivity, etc. Few members actually want to go out on strike, fire-bomb the place they work in, etc. They are there to work and make a living like any other worker and you can't do that on strike or if you destroy your work place, or make shoddy products. s protect both the company's and workers' rights, giving them a common procedure to work out differences. I have heard many stewards warn off a disgruntled worker about filing a grievance against the company because they are pissed about something. I have also seen the company try to abuse the contract for their own gain on some point.

The economic shock of the collapse of the Big 3 or any part thereof, would really devastate the commerce of smaller communities in America. Car dealers are the biggest generators of sales tax dollars in states that charge sales taxes (are there any that don't?). Further new car dealers typically employ more people than any other small business in smaller towns, except for low wage retailers like Wal-mart. Even in larger cities the loss of sales tax dollars would hurt, even after the foreign manf. move in to take up the slack.

OK, discuss this and let's be nice about it. I will if you do.