I’ve started to get emails from more ex-GM employees. Here’s one, with details omitted to protect the correspondent’s identity… “I’ve worked for GM nearly 9 years. No barfing in the toilets that I saw (at least when they weren’t closed for cleaning during the day–you know, after they did away with nightly maintenance to cut costs). But I did break down in tears in the parking deck. This was after fighting for 3 years to get a lateral move that was necessary for career development, getting resisted by management who told me I had to find own my replacement, only to have my director (a long-timer, my-way-or-the-highway type) move me to a completely different group during the 2006 layoff/reorg without bothering to ask me first. Fortunately I did pick up skills to qualify me for my current job. But too little, too late — that’s essentially been GM’s problem for the last 30 years, in fact.
Posts By: Robert Farago
In the course of tearing the D2.8 CEOs a new NSFW, Senator Corker (R-TN) told the auto execs that Sam Bodman, Energy Sec, has rejected– so far– all the 136 requests for access to the $25b “retooling” loan fund. We have no other information at this time. But Holy frijoles, Corker is after Motown CEOs’ collective Nardelli. “There is not a person alive who thinks Chrysler can make it as a standalone automaker,” Corker asserted. Although the Senator raised the central issue for Chrysler– why the Hell should the U.S. government bail out the ailing automaker if deep-pocketed owner Cerberus won’t do it– Senator Dodd threw the deer-in-the-headlights ChyrCo honcho a lifeline. He changed the subject. Now Corker is sticking it to UAW boss Gettelfinger by trying to get him to agree to swap health care VEBA payments to equity, relieving GM of a big pile of debt. Another squirm. And Corker’s time is up. NSFWs are unpuckering.
The Mustang Blue fragrance is the definition of confident, sexy and powerful for the Mustang man. Fresh, aquatic ingredients infused with sage, basil and sandalwood combine to make a clean, clear and compelling fragrance. Mustang Blue evokes a desire for adventure, which makes this fragrance the perfect blue sensation.
Eddy and I are watching the live-stream of the Senate Banking Committee hearings on the bailout. We’ll provide updates as and when. Meanwhile, Automotive News [AN] gets tense. AN reports that GM CEO Rick Wagoner said (read: is going to say) oops, sorry, yeah, I know, we fucked-up [paraphrasing]. “We made mistakes,” Wagoner said in testimony prepared for delivery to the Senate Banking Committee today. GM made many decisions that were ‘right for the times,’ Wagoner said. But the company failed to build enough flexibility into its operations and did not move fast enough to invest in smaller, more fuel-efficient vehicles for the United States, he conceded. Wagoner said the Detroit 3 learned a lot from last month’s “difficult” congressional hearings on their aid requests. For GM, he said, that process accelerated ‘a healthy internal review.'” I’m not going to say it. I’m not going to say it…
As part of TTAC’s emphasis on the human side of the Motown’s meltdown, we’re keeping our editorial eye out (ouch) for stories on the human impact of this debacle. After all, whether or not the Big 2.8’s CEOs succeed in liberating Uncle Sam of enough money to live to die another day, hundreds of thousands of people are going to suffer [NB: the blame belongs with the bailout brigade]. And so, “at the invitation of Cardinal Adam Maida, archbishop of Detroit, 12 Christian, Jewish and Muslim leaders will gather at Sacred Heart Major Seminary on Thursday, December 4, to share how their faith communities are responding to the economic crisis in metro Detroit and discuss possible future initiatives.” We put in a call to the group for more info, but they’re too busy to schmooze or spin. In any case, we salute Detroit’s religious community for recognizing the scope, scale and pace of this reckoning. They have their work cut out for them.
“These cufflinks feature a beautiful little 20mm long sculpture of the Type 35 which, being in the art metal’s essence of form house style, displays no more fine detail to readily demonstrate the beautiful aerodynamic lines of the 1924 Bugatti Type 35. The miniature sculptures are cast in EX-T35 bronze and patinated to take on the dark brown color associated with true art bronzes. The sculpture is then mounted upon a stylized T-35 radiator shaped back plate, the latter plus cufflink arm being cast in solid EX-T35 solid aluminum. A limited edition of 350 cufflinks. Each piece is engraved with its limited edition number and accompanied by a certificate of authenticity.”
The AP reports that “Senate Majority Leader Harry Reid says the Democrats’ plan to tap the Wall Street rescue fund to save U.S. automakers doesn’t have the votes to pass. One day after Detroit’s Big Three sent survival plans to Capitol Hill in an urgent plea for $34 billion in government aid, Reid said there’s still not enough support in Congress for using some of the $700 billion bailout to help the teetering carmakers.” So it looks like the plan to tap Tarp has tapped-out. Plan B: modify the terms of the Department of Energy’s $25b retooling loans, as suggested by President Bush. Only Detroit is now asking for $34b, and the rest (bailouts for the automakers’ credit divisions). Plan C: new “emergency legislation” to top-up the Big 2.8 until Barack Obama administration can ride to the rescue (or not). Only CNNMoney says 61% of the voting public opposes that plan, and 70 percent it won’t do a damn bit of good for the U.S. economy (sorry Detroit). Plan D: pre-packaged bankruptcy, as suggested and outlined here on TTAC by Richard Tilton. And lo and behold, Bloomberg reports General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout.” Volte-face.
Ken Elias just emailed me, asking why I’d neglected to blog Peter DeLorenzo’s Wednesday rant. Ken was irked by Sweet Pete’s claim that a 20 percent decline in car-related California sales tax proves that America ought to bail out his pals in Detroit. DeLorenzo writes: “‘This is very bad for states,’ Donald Boyd, senior fellow at the Nelson A. Rockefeller Institute of Government told the Times, who went on to point out that sales taxes are the first or second most-important revenue source in almost every state. And to think there are people still out there who suggest that the collapse of the domestic automobile business somehow ‘won’t affect them.'” I also thought that passage was a pan-Pacific-sized stretch. But its was the self-styled Autoextremist’s “the fat lady done sung” triumphalism that caught my attention. “In just this past week, the true value of the domestic automobile industry is coming to the fore, and people all across this country are starting to take notice.” You bet they are—but not in the way that Pete fervently desires and hysterically promotes. A new CNNMoney poll suggests that 61 percent of Americans are opposed to a federal bailout for the AutoExtremist’s hometown heroes. And that’s not all . . .
• GM’s liquidity situation is dire. According to the company’s restructuring plan that was submitted to Congress on Tuesday, it looks like GM burned another $7 billion in October and November, and should be about cash flow neutral in December; making Q4 another $7b burn quarter.
• As such, GM requires $4 billion of government loans immediately, with another $4 billion in January and an additional $2 billion by the end of 1Q09.
• At the end of 1Q09, GM will have drawn $10 billion under its base case assumption, and possibly as much as $15 billion under its downside demand assumption.
• The $18b in requested funding ($12b in loans and a $6b credit line) is in addition to the estimated $8.3 billion that GM is anticipating in Government loans under the ($25b) DOE program for fuel efficient powertrain technology investments.
• One of our primary concerns here is that the downside scenario is not much worse than the current run rate of sales (about 10 million units) and would still leave GM in the liquidity danger zone (with about $13 billion at the end of March) despite having drawn $15 billion in Federal funds.
• And what happens after that? If US sales remain in the 10-12m range and GM burns another $7 billion in 2Q09 it could see its liquidity drop to only $9 billion, even after drawing the final $3 billion in Government money (maxing out at the requested $18 billion). In this case, the Government may have to write another check before the end of 2Q09.
“There is very little in the way of new initiatives/efforts/changes to improve the cost structure or profitability of the company, in our view. Most of the document submitted to the Congress is an outline of the company’s existing ‘Plan’ and actions that either have already been taken or are slated to play out over the next couple of years (especially as it relates to new product development). Ford is now calling for its existing plan to deliver profitability of at or above breakeven by 2011 at both the corporate level and in North America. On a cash flow basis, the plan is to be breakeven or above on a Corporate basis by 2011 (no mention of North American cash flow). Ford’s base case US sales assumption for 2011 is 15.5 million total vehicle sales. Following are some things that we think are lacking in the plan:
In all this talk about GM’s financial health, the most important element of any potential turnaround has been woefully neglected: the company’s corporate culture. GM’s is so utterly dysfunctional that it makes John Wayne Gacey’s home life seem like Peter Brady’s. There is no way– no way whatsoever— that GM can recover with its current management. Be that as it is, I’ve been contacting recently “liberated” GM employees to get a glimpse of life inside the belly of the beast. And pretty it’s not. “I remember walking my dogs and literally dropping to my knees and praying to God I would get out of GM,” one ex-exec told me. “I’ve seen people throwing-up in the bathrooms because of the overwhelming atmosphere of fear, terror and panic… It’s the most warped and bizarre thing I’ve ever seen in my life.” This from an employee with over 20-years of industry experience in several large companies.
Recent Comments