The table of Motown’s CEOs facing Senator Christopher Dodd at today’s Senate Banking, Housing and Urban Affairs Committee Hearing looked more than a little like The Last Supper. If only. When Senator Bob Corker (R, TN) pressed Ford, Chrysler and GM’s top suits for a pledge that they won’t be back for more money– should they be granted $25b in taxpayer-backed loans– only GM CEO Rick Wagoner answered. And then Red Ink Rick waffled, pegging his promise to an economic upturn that no one believes imminent. It was the moment when Motown’s begging bowl brigade went seriously south, in that oh-so-public C-Span sort of way.
Which means, of course, that here in the realpolitik world, that the $25b “bridging loan” lives. To die another day? Given the weak support doled-out by Senator’s Dodd’s ostensibly rubber-stamp-equipped committee, yes. I mean, most of the Senators peering over their granny glasses at the captains of the automotive industry were Democrats. If the blue staters are questioning their union supporters’ right to suck on the federal teat, clearly there are political potholes the size of Manhattan ready to swallow-up Detroit’s last, best hope for survival. However temporary.
At some point in this televised debacle, Senator Corker asked United Auto Workers boss Ron Gettelfinger to rate the three domestic automakers in terms of likelihood of survival. With omerta-dismissing insouciance, displaying none of the political skills for which politicians are famous, Big Ron put the The Big 2.8 in their place. Surprise! Ford, Chrysler and then GM. Which was the exact opposite order in terms of who wants what from this $25b honeypot. Chrysler’s Bob Nardelli put his hand up (our hands up?) for $7b, Ford’s Alan Mulally saw Boot ’em Bob’s seven and raised it a bil (ish) and GM went all-in at $10b – $12b.
Oh, did the overpayment of CEOs man-up. as suggested by TTAC Ken Elias? When offered the chance by Senator Jon Tester (D-Mont) to pull a Lee Iaccoca (i.e. work for a $1 until the public “investment” in The D2.8 is paid back), only ChyCo’s Nardelli agreed. Woo-hoo! The failed exec who pocketed $210m for NOT working at Home Depot knows the value of PR. [Note to Tester: get it in writing.]
Yes, well, this is the same automotive CEO who’s finally been forced to reveal his employer’s financial health, and flat-lining just about describes it. Nardelli admitted that the ailing American automaker is on track to burn through $5b to $7b in cash in 2009. Or not. Deduct the $5b in readies that ChryCo’s consumed in the first three quarters of 2008, including $3b in the third quarter, and the company’s already below “keep the lights on” minimum liquidity.
More precisely, Nardelli said that Chrysler ended the third quarter with about $6.1b in cash. In other words, Cerberus’ automotive venture looks set to join GM in the “DOA by New Year’s” club. Nardelli almost winced when Corker suggested ChryCo didn’t have a pulse. But not quite.
Also in the doghouse: the D2.8’s new BFF Ron Gettelfinger. In his opening remarks, Big Ron made a big mistake: raising the issue of the “money for nothing and your checks for free” UAW jobs bank. The union boss said his brothers and sisters had sacrificed hundreds of goats 50 percent of their pay (not strictly true, it’s now a two-tier pay deal) and “virtually eliminated” (ipso facto not strictly true) institutionalized feather-bedding.
When Senator Corker asked Ronny G how much his members would be paid for not working at a closed factory, the union guy feigned ignorance (95 percent of full pay, BTW). “That’s incredible,” Corker said, providing a pregnant pause in which his outraged incredulity could mature.
After the committee called it a day, Senator Dodd met the not-so-adoring throngs called the Washington Press Corps. His words must’ve sent a chill up Detroit’s collective spine. “My sense is that between inaction and writing a (blank) check, there is a ground I think you can build a majority for. We’re not there yet. Trying to jam something through, I think, would be a mistake.” Or, as Chrysler and GM call it, “a life-saver.”
The bottom line: despite (because of?) its desperation, the Detroit “bridge” is still under construction. Republicans have enough votes to torpedo the legislation, and their constituents are plenty pissed-off at the rush to judgement on the $700b Wall Street bailout. So where’s Barack Obama stand on the bailout? After all, the president-elect is still a– no, wait. He resigned. So although he’s officially pro-bailout, Obama’s not stupid enough committed enough to waste waste his political capital rescuing Detroit from itself. What about the union votes that sealed the election? As another blogger put it, if you want a friend, buy a dog. Not, apparently, a president.
[Click here to read a copy of the Senate “Direct Bridge Loan” bill]
What? Where’s Alon Musk? Figured that since it was the comedy hour at C-SPAN that they could have used another joke.
Even if Rick would work for $1, that’s too much. The guy doesn’t know what to do, or lacks the balls to do what is needed. Either way, he’s no good. Who cares if he’ll work for a dollar. Same goes for the guy in the Home Depot smock.
Gotta wonder what a guy like Herb Kelleher would do if he was leading GM.
Watching the last few senators (Corker, Tester) give them a proper lashing revealed some interesting character traits. Nardelli – unexpectedly seemed very compliant and matter-of-fact… which probably means he’s completely full of sh*t. Wagoner had nothing more than the same, convoluted, regurgitated PR “blame everyone else” bullsh*t that’s been emanating from GM since he set foot in the RenCen, and only got heated when Corker charged him on the C11 front (of which he promptly regurgitated more PR figures). Mullaly came off as a cagey character, trying desperately to guard his hand… the end story being he had no real reason to be there begging.
My favorite moment was when Gettelfinger was asked to pick favorites, and then promptly got grilled for the inane contract rules stating 95% pay for idled plant workers. It’s too bad nobody took him to task on the claims of “productivity” and how 50% of the UAW workforce has to pull the other 50% of dead weight imbeciles that can’t even put a screw in a hole like they’re told but get paid anyway… but then again – not one of these pols has ever done more than face time in a plant. Which explains the softie Casey (D) giving ol’ Ron a pat on the back for supporting all those jobs (eyeroll).
Who knew C-SPAN could be so entertaining??
At least they called out the Jobs Bank, which is about the most absurd institution ever created by any business or industry.
That Wagoner feels that GM can be profitable under its current business model says much about how clueless he is…
I watched the entire program on Cspan
…Larry, Moe and Curly.
I thought Todd did a good job.
I think you saw a circus. I believe that Todd is quite willing to give them the cash.
This is very common corporate behavior. Have anyone notice how multi year projects get delivered? Or not. But moneys are allocated for the next year and past non-deliverables are forgotten. No one remembers what money were wasted on what in the past. Our creative auto leaders want to play the same game with taxpayers money as with investors.
If Chinese companies want to buy them, it can be the best revenge to commies (Chinese) unions and million bucks execs. They all deserve each other.
Edit Dodd, not Todd.
Jimal, I heard him say it, too. I’ll bet dollars to donuts that for the next two years rather than the next six months vehicle sales will be at best at a rate of of 12 million a year for everyone. That’s at best.
I watched the last hour by chance and thought it was the most interesting TV I have seen in a long long time.
C-SPAN Rules!
And I hope Ford is the only one standing when all the dust settles in the magical year of 2010.
So, why was Ford there? Moral support? I thought they had $15 B in credit lined up . . .
I watched all the 4 hours plus of this dog and pony show and thought, these guys were not prepared very well for what they were asking for.The high point for me was when Senator Bob Corker ask Big Ron Gettelfinger how long would a worker get payed in the job bank if a plant closed down,Ron said he did not know and would have to look at the contract!Say What?this is the head of the auto workers union?I think the answer would have been worse then playing dumb as he did.Rick Wagner looked Like he had been beat like a red headed step child,It will be a long 63 days around that part of the country waiting for the life line to come,and then the sky will open and our new God will bail them out and all will be well in Motown again!and Death Watch goes on.
Wonderful wordsmithing, RF.
Immigrants who are learning English must be puzzled by the oddities of our language:
— life insurance pays off when you’re dead;
— health insurance pays off when you’re sick;
— a “jobs bank” is a bunch of people without jobs; and
— a “sales bank” (Chrysler term from the 80’s) is acres of cars that can’t be sold.
You know, Detroit’s problem is that it pretended too long that they were OK. If they’d pleaded for help back in August, when poor sales could be blamed on $4 gas, they’d have beaten the banks to the raid on the Treasury. A lot of politicians are taking heat for the $700 billion giveaway; now they must pretend to be guardians of the public purse.
Now, here’s the sneaky way to help the D3: quietly enact legislation to provide big new incentives for purchases of “commercial vehicles” that will “get American industry humming again.” What’s a “commerical vehicle”? One that can tow 1,500 pounds or more–the bigger the towing capacity, the bigger the subsidy. Buy a Ram or Escalade; it’s good for America’s economy!
When Senator Bob Corker (R, TN) pressed Ford, Chrysler and GM’s top suits for a pledge that they won’t be back for more money
Definitely a ‘are you seeing someone else?’ moment; silence, or even a slight hesitation, and you are dead meat.
I watched the whole show as well and the Big 2.? would have been much better served to send one of their underlings up there…CEOs and the like are just NOT used to being asked questions….they are used to being the ones asking the questions-they simply do not do well under fire. The only one up there who looked like a leader was Mulally and I thought he conducted himself quite well and conveyed a sense of urgency without conveying a sense of desperation.
Today’s ‘precious moments’:
1:When Corker asked Gettlefinger: ‘Well if your 2010 new UAW agreement is so helpful to your partners in the Big-3 up here with you Ron then why are you waiting until 2010 to enact it? Why not 2009? Why not now right here in 2008?‘…MAN I wish Corker had asked Gettlefinger to pledge the 2010 contract be eneacted next pay period-screw waiting until 2010. Corker got him good!!
2:When Tester cornered Mulally: After Mulally had bragged on how Ford was able to make money overseas and bring it into the US budget…’ Well, Mr. Mulally, I have to ask…IF you are so successful at making money overseas then I have to ask IF you do indeed NEED the money?‘… Ouch!!
There were more, but it’s getting late …but one thing I could not figure out-Why didn’t anyone, save for a vague reference by Stabenow mention to the esteemed panel of arrogant do-nothing Senators…‘ Uh…have y’all figured out that if we and our suppliers bite the dust that y’all will be suddenly missing about $150 Billion a year in Tax Revenues for at least the next 3-5 years?‘…Put me up there, I’d crucify half of those Senators for voting against saving American jobs and replacing said tax-paying jobs with a new $150Billion deficit with 2-4 Million Americans on Unemployment, Welfare and Medicare…which will cost ALL of us a lot more than $50Billion.
Once again folks, if the Big-3 go down you will find yourself in the middle of an economic tsunami that you will well wish you could solve with a ‘mere’ $50Billion….
I have a great idea for a new game show, begging for Billions with your host Rick, Bob,and Alan,THERE IS HOPE FOR THESE GUYS!
Definitely a ‘are you seeing someone else?’ moment;
lol, and then lol again… RF’s article was hilarious, but that was priceless…
And all the while Detroit has to face the grilling over a measly $25 billion, $700 billion was authorized with no hearing from any Wall Street types that caused the mess. It was a bums rush that had to be done quickly. No questions allowed on why or will it work or not.
And hundreds of billions for Iraq are spend with barely a second thought. Oh, that’s right, they are not Americans so they deserve it. Just pour more money down a rat hole. There’s plenty more if needed. Mission accomplished.
But when auto companies get themselves in a fix, they are given the third degree. Go figure.
Nice picture Robert, actually reminds me of the three monkeys and not Stooges.Larry, Moe and Curly had far more creditability.
Call them Mizaru,Kikazaru and Iwazaru.You pick who is who.
I just wrote both my senators and my house representative and boy do I feel better. Not sure what good it will do, but my conscience is clear.
Everyone on this site should contact their senators and congressmen.
The US is becoming a colony of China and Japan. Once we lose auto manufacturing, it will never come back. The Japanese assembly and parts plants here would not give us the ability to make cars on our own even if we nationalized the plants. So keep on cheering for Detroit’s demise. We ship soybeans, coal and lumber to Asia, they maybe build some cars for us.
As we become ever more indebted to Asia, guess who funded our wars in Iraq and Afghanistan. we cannot even fight wars without funding from Asia.
Loss of auto manufacturing is just another nail in the coffin of losing our sovereignty.
They looked pathetic, the three companies who are in bed with the UAW with the contracts from hell (as TTAC calls them “suicide pacts) now begging for the taxpayer to bail them out. What a joke.
Stu Sidoti: You say this will be solved with a “mere” $50 billion? I believe $50 billion is only the start, these companies will want/need far more than that, once the taxpayers start funding them, I doubt it will end. $50 billion to these clowns is about six months of losses.
Matt51: Don’t disagree the U.S. is headed to bankruptcy, but government bailouts is only hastening the demise. Let’s say we give the the three companies $100 billion and that still isn’t enough (it won’t be), at some point the U.S. economy is really going to tank (probably pretty soon). The amercian public won’t be able to buy cars anyway as the economy will be so bad, and the Detroit Three will go down the tubes anyway. All of these bailouts is just accelerating us to the day of reckoning.
Where is the outrage about the so-called 700 billion bank bailout which will prove to be more like 2 trillion bailout for people who have 100-150K expense accounts which is about the size of a Detroit worker full compensation?
I really hope the Chinese can somehow buy the 3 Detroit stooges and do so with the monkey-man still in the White House so that he can go on National Television and preach again how “Socialism bad” “Capitalism good” speaking to a Chinese-made microphone and being driven around in Chinese company built limousine.
I did write my congresscritters about the bank bailout….against.
lot of good it did.
I’m not wasting the paper for this one……
@ra_pro
Why so negative? When was the last time you made a coffee with your of course non-Chinese coffee machine? Or washed your pants in your of course non-Chinese appliance?
Try to sustain your everyday life without non-Chinese products and you will see how far you will get.
I’m not saying this development is any good, but let’s gets realistic. Nobody cried foul when most of the electronics/appliances/clothing etc. businesses went to China-why now?
All the people that lost their jobs in those industries are not worth the attention that the now almost defunct auto industry is getting?
I call this behaviour industrial racism where one sector seems to mean more than the other-this is bull.
And blaming this development on one legislation is very nearsighted.
I wrote both my Senators and my Congressman yesterday. And I’m glad to see that at least one of them (Corker-TN) has a spine!
Yeh, let’s all go bury our heads in the sand, and eat dirt while we complain about the asian economies eating our lunch. Our Ivy League corporate MBAs’ miscalculated hugely for short term gains, (driven by shareholders, (read 401Ks, pension plans, and state retirement funds))to inflate our economy to unsustainable levels based on cheap credit. The warnings started years ago, but who cared when we could have it all? Make Warren Buffet the car czar, and some common sense might return to the industry.
Stu Sidoti : CEOs and the like are just NOT used to being asked questions….they are used to being the ones asking the questions-they simply do not do well under fire.
This is a keen observation. I have seen this too in other situations: those at the top feel they do not have to answer to anyone consequently when the questioning becomes tough they end up not looking so good. Even their level of preparation seems poor and you end up wondering “This guy (or gal) runs this huge enterprise???”
I am sure each guy who testified had their courtesans with them who all said “Great job Rick!” or “Great job Bob!”
I fully agree: the consequences of GM going down will be very very bad.
25 billion isn’t going to save a damn thing though. It’s a drop in the bucket.
Here’s my question to bailout supporters:
1) Do you think this 25 billion will be enough to save GM?
2) If not, how much are you prepared to spend to keep GM on life support and how many years are you prepared to keep them up?
3) Give concrete steps GM would follow to achieve profitability regarding the following issues:
a) 7000 dealers vs. 1500 for Toyota.
b) The 30 billion or so still due to the VEBA
c) Labor Costs & Work Rules & Overproduction
d) Upper management, execute compensation, and corporate culture.
e) The uphill fight GM will have to regain its credibility as a quality automaker, which would be hard enough in the best of times, but doubly so when it is suckling from the government teat.
f) Product development: GM may have all kinds of great products coming down the pipe… but now it doesn’t have the cash to pay for this. Do you think the bailout will allow GM to restart all those programs, or do you propose to give them more money to pay for the R&D.
Sorry to go on so much, but the bailout supporters want to pretend this is a simple matter of cutting a check. They need to answer all of that, and probably more, before I will think they are acting out of anything besides panic.
Once again folks, if the Big-3 go down you will find yourself in the middle of an economic tsunami that you will well wish you could solve with a ‘mere’ $50Billion….
I love listening to the pro-bailout group. “It’s 3 mil jobs, it’s American manufacturing, yadda yadda yadda.” Meanwhile the 2.8’s market share keeps slipping and sliding down to nothing. These companies are contracting bailout or not. Keeping GM and gang afloat does nothing to “help” other than prolong the inevitable.
Back in the 1970’s Detroit employed one heck of a lot more people. Conversely nobody was employed in the Internet buiz. Companies like Microsoft were tiny by today’s comparison. I have no doubt that something will come along to fill the gap left by a Det 2.8 implosion. Granted, high wages for a HS education and 95% pay for doing nothing will probably die, as it should, but this isn’t the end of America like I keep hearing.
Mr. Mulally needs to stop palling around with terrorist dead car companies…
Ford should run screaming away for GM and Chrysler to avoid being sucked in to the bailout press vortex (too late).
Hanging out with unsavory sorts can cause you political troubles.
97escort, the way you keep mentioning Iraq, it must be your bete noire. Allow me to clarify things.
“And hundreds of billions for Iraq are spend with barely a second thought.” No, the authorization to go in and the subsequent appropriations were all extensively debated in Congress.
“Oh, that’s right, they are not Americans so they deserve it.” Apart from the fact that most of the money went directly to or for support of the men and women who fight our wars, Iraq “deserved it” because a stable and non-threatening Iraq was judged important to US and global interests.
“Just pour more money down a rat hole. There’s plenty more if needed. Mission accomplished.” The war in Iraq has been won, so in that sense, yes, mission accomplished. The objective now is to keep threats from re-emerging (mostly from Iran and its ally/proxy, Syria) while Iraq’s new governmental and defense institutions mature. That process has been followed in many places where our military was engaged.
Buying a new car and having problems with it is like having your spouse cheat on you, you never forget,The years of cutting corners has come home now, it is vary hard to get back the trust once you have lost it.So for all you bleeding hearts out there, send your checks to Motown and feel that you did your part.I will never buy a UAW built car again.And for the one’s that think that is unamerican,well how many foreign made products do you have in your home?