Full report now available at GM Media (pdf) (summary html).
Automotive News [sub] is reporting that GM’s new viability plan includes a request for an additional $22.5B in government funds. Without this money GM would run out of operating cash by sometime March. GM’s plan also calls for cutting 47,000 jobs globally by the end of 2009 and shuttering five unspecified US factories by 2012. GM CEO Rick Wagoner just thanked government officials “around the world” for “their openness.”
As Farago noted earlier, GM received tranche deux of its already-approved $13.4B loan today. They also request $4.6B per their December 2 request to round it all out to an even $18B. There’s also a request for $4.5B to pay of a revolving credit line that comes due in the fall of 2011. And then there’s the request for a $7.5B line of credit GM could tap “if” sales worsen over the next two years. This would bring GM’s taxpayer butcher’s bill to about $30B dollars. Incredibly, GM expects to begin repaying these loans by 2012.
GM also predicts that its North American operations will break even at an annual market rate of 11.5m to 12m units. Interesting. “The operating and balance sheet improvements outlined in GM’s viability plan are forecasted to result in a significant enterprise value and positive net present value, positive adjusted EBIT in 2010 and positive operating cash flow for its North American operations in the same year.”
I believe GM actually asked for $16.6 billion. [sarcasm on] See, that extra .6 is very important. It means it’s a good plan, not an estimate or haphazard guess. If Gm was guessing it might mean they’d be back for more, which will not happen! [sarcasm off]
So we are somewhere north of $30B total?
If we just divide this up among all the current GM USA employees (executives excepted, please) and call it quits what will it come to?
What is the cost of “saving” these jobs?
And all this does is reset the clock to, what, October ’08?
Aaaaaaaaaaaaaargh!
Still the same fouled up company hemorraghing market share with no real future.
Bunter
Watching the press conference…Fritz Henderson basically just said that a pre-packaged C11 would cost the gov’t about $50bil MORE than just giving them their $30bil. I hope that’s just creative massaging of the numbers, but jeepers cripes, if that’s the cost of C11 with the gov’t assuming debtor-in-possession financing, is C11 still the best option for us taxpayers?
No. C7: out of business! Bankrupt! No re-org.
Honestly, the current business model for North America is not substainable.
Chapter 11 is the only hope that GM might become profitable in the future. No guarantees here, other than it will be wrenching and disruptive in the short term.
GM has more (useless) brands than the Muppets has characters.
These guys have no shame. They make Octo-mom look like a paragon of self-sufficiency.
As a second thought, Wagoner mentioned that they are also looking for Canada’s money as well (even though GM Canada just a few weeks ago said “no, thanks” to Ontario’s government’s offer). Given that the GM is now asking the US Feds some $10b more, I assume that here in Canada we will have to put $2b more on top of the original $4b… Total, $6b and counting from Canadian taxpayers.
This is just getting better and better…
should have listened to me.
RickCanadian:
I remember a discussion some time back about GM not willing to accept the strings that would come with Canadian bailout money (job guarantees and such). Meaning GM would like to pull out of Canada relatively easily and couldn’t do so if they took loonies.
I have family in Oshawa, including some GMers, so I’m interested in that discussion.
The people on the local news said that GM filing Chapter 11 would mean that they will “fail” and that the government won’t allow GM to “fail”. Wow, I am 16 and I know more about economics than those idiots.
(I live in Detroit, so everybody in the media here has their lips glued to the big three’s ass. They literally can’t do ANY wrong according to the media here.)
Check out pp 75-78 of the PDF. It says that salaried workers’ compensation at GM is significantly less than that at the transplants.
(Being a former GMer I’m not surprised to hear that.)
But if compensation parity with the transplants is a prerequisite of keeping the loans, I say that the salaried workers should get a raise (rather than take a pay cut in May.)
I’m only partially joking, here. You really do have to pay the engineers and designers a competitive wage if you want to have more than a fart’s chance in an EF5 tornado of getting out of this mess.
Jesus…. please just let them fold. The fact they they are attempting to extort money by claiming chapter 11 BK would cost even more is icing on the cake. Force them into chapter 7 and lets get this over with. They are bottomless pits of need.
Please stop giving these fools money.
Damn I am mad. And other thing. Just saying they are thinking about cutting jobs, factories, and brands doesn’t mean they actually will. Talk is cheap. I think this is a total snow job. This is like an drug addict promising he will go clean… “But I mean it this time!”
Yea. Right. Sell it someone else.
How about this? Cut the jobs and brands and trim yourself down to a size that reflects your market size. Then ask for money.
Oh! You can’t make the needed cuts? Then chapter 7 for you.
I can’t believe they were so shy about asking for what they really wanted. Why not go the full 9 and ask for a cool trillion? Sad part is, they would have gotten it.
We are close to a breakthrough in political science here. I think the US is figuring out how to combine the worst aspects of socialism and capitalism into one bankrupt package.
…break even at an annual market rate of 11.5m to 12m units.
Pixies and Unicorns are real.
BREAK EVEN!!! GM crack me up.
Robert Schwartz :
Fascism is more like it.
@Robert: I was trying to say that I think what we’re headed toward is fascism. I was trying to put the Wikipedia link in but I got it wrong and the message got a spam flag.:(
Robert Schwartz :
We are close to a breakthrough in political science here. I think the US is figuring out how to combine the worst aspects of socialism and capitalism into one bankrupt package.
This is a great comment, Robert. While you and I are pretty different in terms of political views, I agree with you 100% that this “worst of both worlds” mix is, well, real bad.
At this point I’d rather see the US with a political economy philosophy I don’t agree with — one which is at least internally consistent — than this garbage hybrid.
$22,500,000,000.00
47,000 workers.
That’s $478,723.40 per fired worker. What a deal.
Is this a company or a black hole?
I’m really fucking tired of the billions this company claims they need to prevent the world from ending. It’s their world that is ending not mine. I’ll take the fallout from a C11 of GM compared to 30 billion of tax revenue.
Justin, Robert,
“‘Cause what they’re doing down in Washington / They just takes care of number one /And number one ain’t you! / You ain’t even number two…”
-Frank Zappa
We should rename the death watch series to:
“GM Winding Down Watch”
Each time they come back for more, it will be a for a little bit less.
The one condition of the govt giving them additional funds each time is that they must “downsize” (due to lost market share bien sur!). That is just to make sure that over time they can wound down very gracefully.
I’m not suggesting of course that we change the Death Watch series name since it’s why I came here in the first place :)
GM has many years left and it will be ever more entertaining chronicling each inevitable return to the trough.
$100B in bailout aid would be cheaper than the alternative. Give the companies the money; just replace the fools.
Phil
I remember a discussion some time back about GM not willing to accept the strings that would come with Canadian bailout money (job guarantees and such). Meaning GM would like to pull out of Canada relatively easily and couldn’t do so if they took loonies.
That’s likely true, especially if you look at how GM is winding down every Canadian operation worth a damn. Oshawa Car now makes the Impala alone (lost the Allure/Lacrosse this year, and the Grand Prix the year before) and Oshawa Truck is scheduled to close, as is St. Catharines Powertrain.
That leaves… what? CAMI in Ingersoll? Suzuki funds part of that, and I’m fully expecting the next Equinox, as well as the Terrain, to move to Mexico.
With all the government bailouts going on lately, the term ‘billion’ has lost most of its meaning… but if GM ends up getting 30 billion dollars, 1.2 million cars could be sold at 25,000 dollars for that enormous price tag. A GM car for every homeless person? This is really obscene.
There is a fact that now, must be obvious to even the most hard headed of us.
Note to Farago: The GM DeathWatch Countdown has stopped. They’ve won.
In its place I propose a “GM Owes me $ (fill in ever increasing blank). Even if they don’t keep asking for money the interest on this nut must be incredible.
I just noticed at the top right-hand corner of my monitor, at the beginning of this piece, there’s an advertisement with a bold headline: “FREE GOVERNMENT MONEY” The ad goes on to explain “The US government gives away $10 billion a month in grants, funded by your tax money. Learn how you too can get a free government grant that never has to be paid back.”
There’s no need to be envious of insolvent auto manufacturers. Folks, apply for grants and get into the game!
MikeInCanada:
Do you consider British Leyland to be alive? Otherwise each bailout is just bringing GM closer to its death. GM isn’t winning, the parasites that leach off it are.
forgive me for not understanding this , As a european
I sort of understood that the point of the federal government
bailing out GM with gazillions of public money was to
keep Americans in jobs and the factories open !
Well maybe I was wrong !
Let’s say that the government decides to dole out money… when do we say screw GM and Chrysler and invest that money in the suppliers to protect the automakers with U.S. operations that have a shot at survival – the Hondas, Fords, Toyotas, Nissans. The $18.6B additional requested would fill what suppliers have asked for. In return, GM and Chrysler can go bankrupt without taking out everyone except the UAW – which at this point just needs to die.
Sound like a plan?
The Muppets video is perfect btw…
This is starting to stink – Wagoner (Way-goner?) seems proud that he’s receiving government money to cut jobs and close plants.
Maybe he should have spun it a little more positively, but at this point it’s a total crap-shoot as to how many jobs these billions will save…
I find it interesting that GM’s main arguement against C11 is the example of Deawoo. Ironic?
Mr. Waggoner stated last night that GM was a bit underfunded in their pension contribution obligations.
Oops! Today this shortcoming was stated to the tune of $18 Billion due by 2014.
Let’s see, $22.5 B + $18B – aw, forget it.
What’s wrong with this headline: (2.26.09) “GM needs $16B to make it through 2009”
Carmakers are leading the manufacturing downturn. Detroit- based General Motors Corp. yesterday reported the second-biggest quarterly loss in its 100-year history, as Chief Executive Officer Rick Wagoner asked the Treasury for $16.6 billion more in loans (just) to survive through 2009.
Opinion
Have we all lost our minds!? Stop this madness now in all matters.