Yes, bailout watchers, President Bush was under pressure to make an announcement today on the possible use of TARP funds to rescue the domestic auto industry. And by the looks of things round Chrysler way, waiting even until today was probably a stretch. But Bush has juked expectations (and not for the first time) by failing to make any kind of announcement by close of business today. And this mysterious defiance of the media-proclaimed deadline has ABC News wondering “What’s Taking So Long?” No, seriously, that’s the headline. Not being the kind of news source that asks a question with no convenient answer, ABC quickly reveals that “some of the GOP senators who killed a congressional bill to save American carmakers last week have written to the president to say they don’t believe ‘any amount of money’ will save the struggling car companies without major changes to how they operate.” The letter was signed by senators Jim DeMint; Jeff Sessions; John Ensign; Tom Coburn; John Cornyn; Mike Enzi; and Saxby Chamblis as well as more than two dozen Republican members of the House. The White House responded through spokesman Tony Fratto, who told ABC “it’s a huge industry, and both the problem and the potential solutions are complicated. Congress is leaving the administration with suboptimal choices to deal with the issue.” Meanwhile, for Chrysler and GM the choices become increasingly “suboptimal” with every passing hour.
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Perhaps the Adminstration actually *did* take a hard look at GM’s books. What thinking man could approve a loan after that?
Pan Am dies, America lives
explains on basis of Pan-Am’s demise why D3 bankruptcy can be a healthy solution for America – in fact the only one
A couple of things to worry about;
1. The use of the word “if” by Dana Perino as reported by TTAC.
2. The use of the words “disorderly” when describing the bankruptcy they want to avoid. I’m leaping ahead and guessing that means C7 is disorderly while C11 is not.
3. Corker having been in more-or-less constant contact with the Administration, yesterday saying that “a loan package …. tailor-made to address each company’s situation”. That means at least one of GM/Chrysler in C7 or C11.
I hadn’t seen Corker’s comments yesterday. Regardless, the Administration is really couching its position on the bailout with its words – and these are people that fully understand the meaning and significance behind each word they say. Considering this is probably the last major act of Bush’s presidency, I’m sure they want to get it right.
CNN quoted at 1800 hrs that Chrysler is shutting all plants as of 1700 hrs this Friday Dec.19th for a month or longer!
Is this a way to get President Bush moving on the “Loan” or is it the end of Chrysler?
Of course the UAW head said that the workers would be covered by some sort of insurance as long as the States involved where not broke, here in Canada they are covered by Unemployment Insurance plus money from the Employer so they get 65% of there wages, and here they dont need to worry about Health Coverage either.
I see this going one of two ways (at least for GM) – just enough money to get them to Jan 21st, or a swift, full-on Ch11 with DIP by the govmt. The time that has passed leads me to believe they WON’T go with something similar to what the House passed.
Announcement comes this week. It will be just enough to appease the market and hand GM and CER to Obama. Consolidation is inevitable regardless.
Jim DeMint; Jeff Sessions; John Ensign; Tom Coburn; John Cornyn; Mike Enzi; and Saxby Chamblis
Demint – BMW
Sessions – Mercedes, Hyundai, Honda, Toyota
Coburn – GM (closed)
Cornyn – Toyota, GM
Chamblis – Kia, GM, Ford (closed)
Seven foreign owned plants, two domestic, two closed domestic.
Perhaps their sponsors from Toyota et al should explain to them what a supply chain is.
Meanwhile Honda will lose money this half year and has cut production at their Alabama plant, as has Hyundai. Toyota is probably now in the red and has stopped work on their plant in Mississippi now that Prius sales are down 50%. Mercedes is offering buyouts and will shutter the plant for half of January.
What’s that you say, Sen. Shelby? The “new American auto industry” in your state is doing just fine, making cars people want to buy, not like Detroit?
Anyone want to try and convince me that the transplants didn’t locate in the South in order to gain political power in the US?
@ Ronnie Schreiber
What’s the surprise? Aren’t they STATE representatives?
“What’s good for Detroit is good for the nation” maybe that just isn’t true any more, if it ever was.
Maybe their run of influence and importance is over.
Maybe there is some hope that money will not be thrown out the window.
@Ronnie Schreiber:
When the transplants hemorrhage money by the billions, you will have a point. So far, it’s only the D3 with their hands outstretched for $$.
From AP today:
“[Bush] said his administration is continuing to look at options for helping the Big Three automakers and that it needs to get done “relatively soon.” He said a “disorganized bankruptcy” of one or more of the automakers could cause great harm to the economy “beyond that which we’re now witnessing. That concerns me,” he said. “And the other point is that I—I’m not interested in—in really putting good money after bad.”
There is that “disorderly” word again. What are the odds that once the White House looked at GM’s (and Chrysler’s) books, they decided that these two are toast and are going to come out with a pre-pack with Government DIP money?
“What’s good for Detroit is good for the nation” maybe that just isn’t true any more, if it ever was.
The actual quote from Charlie Wilson, GM CEO, who headed the War Production Board during WWII and was Eisenhower’s Sec’y of Defense (so he knew a thing or two about what was good for the country) was, For years I thought what was good for the country was good for General Motors and vice versa.
Wilson’s usually misquoted to make it seem like GM came first as far as he was concerned. When he’s misquoted, he’s rarely identified as a former Sec’y of Defense or his role during WWII but his connection to GM is always mentioned. The subtext of how his quote is misused is that GM is greedy and self-centered.
You know with all of the Big-3 having such an enormous backlog of unsold vehicles and Chrysler completely shutting down production for a month or so…Bush, Congress AND the Big-3 could take Corker up on his amendment ideas and have a package very similar to what Corker and the Senate proposed that RonnieG and ‘The Boys Down at the Union Hall’ found so offensive last week and tell them ‘Here’s the Deal, take it or Leave’ because what can the UAW do? Go on strike? Uh-huh…so what Ron, for the most part we have 100-200 days worth of unsold vehicles sitting around…and believe me, the Big-3 could train a whole bunch of unskilled workers how to do UAW jobs at Transplant-level wages with 200 days to train ’em….Way to go Nardelli, you may have just removed RonnieG’s only bargaining chip…Go ahead Ron, go on strike, see what happens-Man Up!! Try it Ron…use that bargaining chip that you still think has value.
It never ceases to amaze me that the Big-3 still cannot seem to get it through their heads that The UAW Are The Employees…They work for you, not the other way around-remember?!?!
As for replacing the skilled workers, that would be a lot harder to do but not impossible, but a large percentage of the unskilled or lower-skilled UAW jobs you could train someone how to do in 2-3 weeks, or months, let alone 200-plus days…
Mr. Gettlefinger, meet Mr. Corker…Mr.Corker, meet Your Destiny.
I don’t disagree with your idea, but I think because there are existing contracts between the companies and the UAW/locals, GM, Chrysler and Ford would have to lock out their workers and are probably prevented by law from hiring replacements.
When the transplants hemorrhage money by the billions, you will have a point. So far, it’s only the D3 with their hands outstretched for $$.
Well, Honda will lose $1.4 billion in the second half of ’08. While it might not be “hemorrhaging”, it’s certainly over a billion dollars.
If you look at how Honda and Toyota and other foreign automakers have canceled programs and cut production, they are terrified about the current market. Honda’s CEO, Takeo Fukui, who earlier this year said that there wasn’t a recession, now says, “The situation is worsening by the day, and there is no prospect for recovery, is our understanding.”
As for outstretched hands, while they’re not asking Washington for money, automakers in France, China, Germany, Italy and Sweden have asked those governments for financial aid. And of course, the Japanese government’s MITI has never, ever, ever assisted their automakers.
@ Ronnie Schreiber
I appreciate the context of the actual quote, thank you.
I think the pro-bailout side is mis-using the quote too.
The furious subtext of pointing out that Corker et al voted for their state, is that somehow they doomed the national interest. How dare they! How much must they be paid to doom the nation. Don’t they understand?! What’s good for Detroit is good for the nation.
I think the pro-bailout side is mis-using the quote too.
The misquote actually dates to his original testimony, which was behind closed doors and a staff member or congresscritter paraphrased Wilson’s remarks to a reporter. Since then it’s taken on a life of its own.
The furious subtext of pointing out that Corker et al voted for their state, is that somehow they doomed the national interest.
I think Corker acted responsibly in trying to broker a deal, other than the kabuki dance over the UAW wage cramdown, which was more symbolic than an effective way to get Big 3 costs in line with the transplants. Everyone acknowledges the problem isn’t hourly wages but rather legacy costs.
Shelby, on the other hand, is a crooked mouth lying hypocrite. He perpetuates an image of Detroit circa 1985 as though it’s reality and he lies that the transplants are doing just fine.
Assuming GM does go bankrupt, there will be no immediate change in the 2007 UAW bargaining contract. It stays in effect “as is” until the union and the company agree to a new contract, or the company files a motion to terminate the existing contract and outlines terms of a new proposed contract. Even then, it usually comes down to a negotiated agreement – and this is what happened at Delphi.
Quote Lichtronamo : ” I don’t disagree with your idea, but I think because there are existing contracts between the companies and the UAW/locals, GM, Chrysler and Ford would have to lock out their workers and are probably prevented by law from hiring replacements.”
You are absolutely right…there are such laws-yessssss indeed but in this anti-UAW, pro-Bob-Corker, let’s-tear-everything-up-and start-all-over-again mindset the U.S. public finds itself in right now….them there laws could be modified just enough to git-er-done.
Seize the opportunity Big-3 and be done with letting the workers tell you what you can and can’t do…You blew your chance to be rid of the UAW in 1998….you probably don’t have the spine to do it now either but Corker does…Bush does-who’s he gotta please? What is he running for in 2012? Nothing….C’mon…Seize the Day D.C.!! Show some leadership for once!!!
If Chrysler is about to “tank”, then best to have 100% of the plants closed when its announced to avoid ‘problems’. I also find it telling that not one plant had any production value for the Company within the next month, and the ominous “any sooner than” in their announcement. Therefore, I don’t see any specifics coming from the White House until Saturday at the earliest. Also I think they need to announce when the markets are closed as well as have enough time for interviews etc. and for it to sink in before they open the following week.
@ dougjp
I think you’re spot on about the after-hours announcement. The clues however will be given by the juiced-in insider traders before close.
I for one will believe it fascinating to see the activity in GM stock pre-announcement.
Is there not the ability to suspend trade in US stocks? I thought there was. I would have thought GM should be suspended now pending any announcement surely.
It certainly would not be allowed in Australia.
GM could just declare itself a “government” and turn it’s factories into jail cells (It is not a car company anyway…It is a nursemaid/welfare provider company) then arm it’s employees and threaten everyone else around them to hand over their money.
Farming the violent work out by giving money (calling it “campaign contributions”) to an existing criminal gang called “government” has not been very lucrative…Yet.
It is very strange that the administration has been actively leaking word of a bailout any day now for nearly a week while holding off on actually announcing anything.
Something strange is going on behind the scenes.
Using Lagrangian analysis, this system has but two outcomes.
1. UAW is eliminated. It has bit off the hand that fed it. Work rules + excess costs make their workforce unable to compete.
2. UAW, Chrysler, GM, and Ford are all eliminated. They can’t compete with 5000 pages of work rules that prevent competitiveness.
There is no future for the UAW unless taxpayers get so totally ripped off that they rebel.
Free of UAW, management must quickly produce competitive work environments viv-a-vis Honda et-al.
@Ronnie:
“And of course, the Japanese government’s MITI has never, ever, ever assisted their automakers.”
Yes, and Michigan gave away hundreds of millions of dollars to GM for that new engine plant in Flint that was supposed to build Volt engines, but has been put on hold.
This still comes down to sales. Everyone is hurting right now, but the weakest players in the US market are likely toast. As it should be. Government, err, tax payer funded bailouts will only delay the inevitable.
Yes, and Michigan gave away hundreds of millions of dollars to GM for that new engine plant in Flint that was supposed to build Volt engines, but has been put on hold.
Actually, the incentive plan was primarily in the form of tax abatements, some new and some extended. It’s not like the state government just handed GM the money.
The city extended an existing abatement of 100 percent of the personal property taxes until 2033 and granted GM a 50-percent, 15-year abatement of real property taxes.
The City Council also approved a GM redevelopment plan for the proposed engine plant that makes GM eligible for state tax credits.
Since GM isn’t profitable, they’re not likely to get any tax credits any time soon.