Our deadbeat automakers will turn in their viability plans today, but, according to a number of reports, these plans (like their predecessors) will be short on workable details. Which helps explain why GM and Chrysler will be turning in their plans after the close of the markets today. The Treasury will receive the “plans” electronically at 4 p.m. today, but a public press conference won’t happen until 5:30 p.m. Which is probably for the better. GM’s stock price has dropped by double digits today, despite reports that their second tranche of bailout cash has already been approved. But having “scored a trillion dollars” as Bowie puts it, there’s still plenty of panic in Detroit.
Barrons reports that key provisions of the plan have not yet been confirmed, as GM has failed to secure union or bondholder concessions that the plan calls for. Barron’s Bob O’Brien writes “without knowing whether auto workers will knuckle under to requests for job and wage cuts and benefit reductions, it’s impossible to know whether the auto maker will be forced to seek bankruptcy protection.”
MLive reports that GM’s latest round of buyouts is not being well received. “It’s nowhere near, not even close to the interest that there was the last time,” says a shop steward at Flint Truck Assembly. Yeah, because workers are “only” being offered $20k and a $25k car voucher to leave their jobs. Still, do they think the offers are going to get better?
On the asset sales front, Reuters reports that there’s little interest in buying GM brands and operations. Hummer, Saab, AC Delco, the Strasbourg manufacturing plant and medium-duty truck operations have been on the block for months now, yet no buyers have emerged. So even if Saturn is sacrificed to the gods of bailout in this latest plan, it is unlikely that a buyer will emerge to provide any tangible compensation for the brand.
At Chrysler, pathos-laden cost-cutting measures are hollowing out anything that might have been worth saving at Auburn Hills. The Freep reports on the sorry mess, revealing that ChryCo employees can no longer park on the roof of the campus parking structure in order to save the firm $100k by not plowing it. Chrysler has also closed its executive dining room, removed half of its fluorescent lightbulbs, removed clocks to cut maintenance costs and is auctioning off 32 works of art. According to a restructuring effort, these measures are about “sending a message that they’re serious.” Serious about squeezing more bailout bucks, anyway.
GM’s viability comes on the other side of Chapter 11, and Chrysler has none.
America will retain an automotive industry, but it will no longer be a guaranteed source of employment for the masses.
Once released from their contracts by Chapter 11 Ford and GM will probably be looking toward right-to-work states.
Detroit doesn’t need to panic, it needs to prepare for future industries, like biotec, as illustrated in this interesting video for an annoying song:
Is it really necessary to start this article, or any article for that matter, off with “Our deadbeat automakers”.? How about just our automakers or our struggling automakers, why do we have to make them look like bad guys, when everyone everywhere is suffering in this economy. These companies still employ Americans, have helped America for the past 100 years (have we forgotten about the taxes they have payed, the wartime efforts, the lunar rover for NASA), and still keep their money here in America. Yes I know Toyota and all the other transplants have plants here and employ Americans, but at the end of the day the bulk of the profits go back to their home country. I just think we should stop with the detroit bashing, not necessarily praise them, but there is no more reason to bash them, which is the same as bashing America itself.
And I agree with no_slushbox. However I feel like GM should absorb Chrysler when they both go into CH. 11, keep whats useful (rear wheel drive platforms and Jeep) then finish off the rest. Then Ford and GM should become involved in more industries, including ones that are up and coming, just like they use to back in their prime. (Such as railroads and frigid air, etc) This would help them quite a bit I think and it would keep whats left of Chrysler and whats still useful with an American Company.
@unseensightz: Uh, last I checked, this site bashes bad management decisions and badly managed companies, not so much the country of origin. If it really went down the way you say, I doubt there’d be so many people interested in what they have to say. One-sided commentary like that gets old, quick.
The bigger problem in Detroit isn’t that they are in a panic – it’s that they aren’t. People really aren’t worried. They think the gov’t will take care of things and this is just a bad patch. People here really believe that the Detroit 3 only have problems because of the bigger economic issue. It seems crazy, but that’s the reality.
If more people could be ‘woken up’ to the reality that the current automotive mess is largely self-inflicted then real panic would set in. After that, things could really change for the better. Until then, we’re going to stay in zombie-land.
unseensightz: I calls ’em like I sees ’em. And I couldn’t disagree more with your assertion that “bashing Detroit is the same as bashing America itself.” America became great because these firms once competed tooth and nail. Now they can’t even get their shit together enough to fulfill the terms of their government handout. What are we even saving?
unseensightz:
“Deadbeat” is the term historically used for a bankrupt, but I agree that it is a bit harsh here. There have been horrible management mistakes, but since at least the early 2000s the current situation has been inevitable.
[Insert name of whoever you think the most brilliant manager ever is here] could not have prevented the Detroit automaker failures. The state laws protecting the dealers and the UAW contracts have made it impossible for the Detroit automakers to reorganize into viable companies outside of bankruptcy.
The real “deadbeats” are the politicians that let this dog and pony show to continue because they do not have the political courage to allow the necessary bankruptcies to happen.
Because it has been kept out of bankruptcy, instead of letting go of parasitic dealers, redundant brands and unnecessary line workers, GM is laying off engineers and designers and selling off its foreign presence in future markets like China.
Forcing Chrysler on GM is not a good idea; it will ruin any hope that GM has. GM already has superior RWD platforms, and the Wrangler is a small niche.
Merging two companies that already have too many union (i.e. cannot be laid off) employees, to many brands, too many dealers and too many products is an idea so insane that only a CEO greedily trying to expand his empire or a politician could endorse it.
Ignoring the short term pain from suppliers, do you guys think that if Chrysler goes away, GM wiould be saved? That is, let’s assume that Chrysler goes poof and nothing of value remains (in the real world, somebody will probably buy Jeep and their minivan plants and tooling). Would deleting a Chrysler-sized chunk of supply increase demand for GM products enough to keep them on life support?
Yes I know Toyota and all the other transplants have plants here and employ Americans, but at the end of the day the bulk of the profits go back to their home country.
Yes, they do. But the profits are only a small slice of the price of the car. The costs, which are the bulk of the sticker, stay here.
How about just our automakers or our struggling automakers, why do we have to make them look like bad guys, when everyone everywhere is suffering in this economy.
Bzz. Wrong. This is an incredibly wrong-headed and pernicious thought, the idea that somehow it’s just this economy dragging them down, and that the automakers are suffering just like everyone else.
The automakers were on the path to bankruptcy long before the economy was struggling. Just see how long the GM and Ford Death Watches have been on TTAC. They are not suffering just like everybody else. It’s true that a bad economy hurts everyone, but this has only slightly hastened the inevitable.
It was clear before that GM, Ford, and Chrysler were trying to drag out their deaths hoping for a miracle. The current state of the economy is actually good for them. They were going to need bailouts even if the economy were very healthy, but only in the present situation does it look like everyone’s getting bailouts and the numbers look small.
I guess they fooled people like unseensightz, so, yay, strategy worked.
@johnthacker:
Up here in Canada the CAW and the local news organs keep bleating how the issues with the D2.8 is related to the economy and not to longer term systemic issues with the companies themselves. I’ve had several discussions with people on how long this has been going on. I point them to this site and the GM death watch series was a huge eye opener for them. It just goes to show that if you lie long enough and BS enough you get people thinking it must be the truth.
@netrun
I disagree and believe that Detroit really is in a panic, save for Ford because they know what to do and are doing it. GM is in a panic, it just isn’t obvious because they can’t do anything with what they have. I agree they need to go into CH. 11 to make a real difference, but without doing that, how can they break the dealer franchise laws to close brands? (they certainly dont have the money to do that unless the government gives them more) and how can they break the UAW without going into CH. 11? That is why they don’t seem urgent and I think they would rather wait until CH. 11 is forced upon them rather than choosing it.(why I’m not sure) And GM did make profit in 2006, although that profit went out the door becasue of their restructuring plans. So the financial crisis has played a role in the downturn of these companies, specifically GM.
http://jalopnik.com/cars/news/breaking-gm-finally-releases-2006-financial-results-showing-profits-and-not+so+much-profits-244072.php
@Edward
“What are we saving?” We are saving America’s manufacturing base. If you think America’s manufacturing base will be saved solely by transplant companies, I think you are mistaken. We need American Corporations employing American people. And I feel more plants would be here if it weren’t for the greedy UAW, which a CH. 11 would solve. But I still feel calling them “deadbeats” was un-needed and unwanted. I have been pleased with all of my domestic vehicle purchases, a 1977 Camaro all original with 150,000 miles on it and a 1996 Buick Park Avenue with 200,000 miles on it and a 1995 Chevy Caprice wagon with 250,000 miles on it. I have had no major issues with any three of them and I am quite pleased with all of them in their perfomance, quality, and design. And by no means am I an elderly person that remembers the pride and glory days of the Big 3……I am currently enrolled in college and am 19, about to be 20, years old, and currently I feel the Big 3 have more desirable vehicles for sale than any of the foreign car companies, atleast in my price range. But then again “soft touch plastics” on the interior have never been a big issue for me so my options for cars is greater than some others.
@psarhjinian
But how much of those costs come from domestic products/suppliers. More than before but not as high as some of the domestic content in the Big three vehicles. Granted I am unsure of the numbers, but I do know it is higher, maybe not by much, but higher none the less.
As for Chrylser, they were the MOST PROFITABLE AUTOMOTIVE company in the world before they were overtaken by Daimler, so I blame this on them.
And I wouldn’t force Chysler on GM, I would just give GM the minivan section, Jeep, and rear wheel drive technology to further their rear wheel drive programs.
@johnthacker
They have NOT FOOLED me and I take offense that you even suggest that without even knowing me or knowing my background. My grandfather worked for Delco Moraine, my father is the service manager for a Buick, Pontiac, GMC dealer and I am working on a degree for Mechanical Engineering to hopefully work for one of the Big Three. I take pride in my country and its car companies, and I have NEVER ONCE been let down by any of the Big Three’s product. Look above to see taht I own three GM vehicles and have had no problems. I have however driven a 2001 Toyota Avalon that was noisy, rough riding, had many hard interior plastics, and was just plain bad compared to my park avenue. So I go by what I feel is a better quality product, and so far that has been the Big Three. Just so you dont think I’m a Detroit fanboy, I also like pre-2007 Honda’s, any mazda, some nissan cars, and all European makes, and my father owns a 1969 Jaguar E-type.
And I do realize the CEO’s have had a lot to do with the shape the companies are in today, they have had blunders in product and management, but the economic downslide cannot be overlooked in their situations and I think people give them less credit than is due, but maybe this is because I have never had any problems or issues with their products.
But how much of those costs come from domestic products/suppliers. More than before but not as high as some of the domestic content in the Big three vehicles. Granted I am unsure of the numbers, but I do know it is higher, maybe not by much, but higher none the less.
That’s true, but it’s getting less true as makes globalize. JIT and the paranoia surrounding inventory makes is much less sensible to source and produce from within, and more so to outsource parts (if not assembly, as some are not doing) to local firms.
Put it this way: if you care about keeping money in your community, buy locally assembled, not nationally branded. And yes, this means buying a US-built Camry instead of a Canadian Impala or Mexican Fusion.
As for Chrylser, they were the MOST PROFITABLE AUTOMOTIVE company in the world before they were overtaken by Daimler, so I blame this on them.
Yeah, that’s true. What Daimler did comes close to criminal incompetence. If the directors of DCX had anything remotely resembling a spine, there would have been some suits.
Of course, if GM’s directors had a spine, they wouldn’t be where they are today, either.
Netrun said….The bigger problem in Detroit isn’t that they are in a panic – it’s that they aren’t. People really aren’t worried.
That is the most retarded thing I have yet to read on this site! Are you even from Detroit or SE Michigan? Do you really know what’s going on here besides the biased stuff you read on the 4 main car-themed blogs?
They have NOT FOOLED me and I take offense that you even suggest that without even knowing me or knowing my background.
I judged you entirely on the basis of what you wrote. “How about just our automakers or our struggling automakers, why do we have to make them look like bad guys, when everyone everywhere is suffering in this economy.”
Anyone who brings up the “everyone everywhere is suffering in this economy,” line sounds like he’s being fooled by the idea that the Detroit problems are only due to this economy. If the economy were great, they’d STILL be heading for bankruptcy. Their cash burn rate was ALREADY too great, as TTAC has long-documented.
Blaming the economy for slightly bringing forward the day of reckoning is like blaming the economy for Bernie Madoff’s crimes being exposed or any of a host of housing frauds being exposed– all those things were just a matter of time.
If you don’t want to be judged as a fool, don’t write foolish things.
I said not one thing about the D3s quality of vehicles, or about anything else, so I don’t understand why you’re bringing that into it at all. I was talking simple economics and accounting, simple burn rate. They could make cheap crappy cars that sell in high volume to stay alive, expensive nice cars in low volume, high labor costs, low labor costs, it doesn’t matter to me. (So long as they aren’t stealing money from me via the government, of course.) I wasn’t trying to assign blame to management, labor, engineering, marketing, or competitors. I don’t care nor did I bring up trying to “keep money in your community” or buying local, or “US company makes cars in foreign locations versus foreign company makes cars in the US” or where the money goes or anything. The very fact that you bring all that up certainly doesn’t make you look anything less like a fanboy.
I don’t care about any of that. Just the simple numbers; they weren’t making money, they were burning cash and selling off stakes in subsidiaries to barely keep afloat for years before the financial crisis and economic downturn hit. Anyone who blames their problems on the economy is either a fool or a liar, or just someone who wants to be fooled.
@johnthacker
I brought up all of that other stuff in response to other’s comments here, and because you can’t take into account everything that is going on without looking at all that has and can effect what is going on. Quality, management, competitors, money staying here, it all effects how well GM and Chrysler succeed and how quickly the economy turns around, in regards to keeping money here. And I do admit I am a fanboy for American vehicles, aka the Big 3, but I also appreciate the other makes I mentioned. And I did post a link to Jalopnik where they cite a profit for the 2006 financial year for GM, but that profit went into their reorganization. If they had been given enough time I believe they could have righted the ship, but only the people inside GM know the actual numbers behind their situation then and now.
Also I wasn’t blaming their problems on the economy. I was stating that the economic situation did not help them in their restructuring in any way, shape or form unless you feel that it will help them and us if they go into bankruptcy, which I feel it might, but am uncertain depending on the details. Either way we dont know if they would have needed government money if the economic situation hadn’t happen, no one knows what an alternate scenario would end up like. And I don’t believe everything I read on any of the autoblogs, including TTAC, because I need to find the information myself objectively. TTAC, which is a great site, has shown some biases I feel against the Detroit 3, even though in today’s market many of their vehicles are better designed, more exciting, and just as reliable as other manufacturers.
And I don’t understand how you feel they have stolen money from you via the government. Do you feel the same way about the banks? I differ in opinion on this because I would much rather support GM and Chrysler before I would the banks, and every other major country in the world is looking to loan money to their automakers to help them, so why shouldn’t we? You’re taxes haven’t gone up, unless you are above the middle class, so how has it really effected you? I’m just lost on why and when people lost pride in their country and helping it out, especially when every other country still has this mindset of national pride.
And I never called you a fool for your beliefs, I just pointed out that I disagree with them.
unseensightz :
You make some valid points and there’s nothing wrong with supporting your country’s manufacturers. However, I think many people here would be less reluctant to bail Detroit out if they felt Detroit was more deserving of support. Based on the decisions and attitude I’ve seen from GM and Chrysler, I don’t think they’ve earned that kind of goodwill. By contrast, I think Ford has done a lot of things right (at least from a PR perspective) and this is the only American automaker I wouldn’t mind supporting, be it through a bailout or purchasing their products.