The Detroit News has secured GM’s 17-page “progress report” to the U.S. Treasury (link anyone?). Somewhere within that riveting document’s revelations: “GM’s hourly employee costs in 2003 were $18.4 billion in 2003, including its so-called legacy costs. Last year, hourly costs fell to $7.6 billion and the company projects they can be further trimmed to $6.5 billion this year, and to $4.8 billion by 2012.” Sorry, guys, a billion dollars ain’t what it used to be. For comparison, yesterday, GM CEO Fritz Wagoner—I mean, Henderson just kinda glided over the fact that GM will need somewhere between $2 billion and $4.1 billion for the next sixty days. Oh, and by the way? “GM also disclosed it has now sought a total of $10.3 billion in Energy Department loans from the government’s $25 billion low-cost loan retooling program.” The News is non-plussed. “But because the Obama administration said GM’s viability plan isn’t currently viable, and rejected that proposal Monday, it’s unclear if the Energy Department can legally go ahead with any loans to GM.” Sure! Why not!
Detroit’s “last man standing” has taken another one in the chest, as March sales stats reveal a 41-percent drop compared to last year. The Blue Oval Boyz are in full spin mode, proclaiming an enlarged (if unspecified) retail market share, “growing awareness and consideration of Ford and its high-quality, fuel-efficient products” and, oh, yes, have you heard about Ford’s Advantage Program? Still, there is a bounce here, as dead cats GM and Chrysler take it on the chin (exact facial damage to follow). “Ford sales increased 30 percent compared with [a thoroughly miserable, unprofitable] February 2009 with retail sales up 34 percent [compared to February’s thoroughly miserable, unprofitable stats] and fleet sales up 22 percent [compared to February’s thoroughly miserable, unprofitable stats]. As incentive spending is also up, those numbers don’t do much for that whole viability thing. High profit SUVs’ 73.2-percent nosedive can’t help the bottom line, either.
Yes, it’s a palindrome. No, it’s not my favorite. (Do geese see God?) But as a history buff—as in that’ll buff right out—I’ve always considered this palindrome something of a prose poem. The Panama Canal was certainly not the vision of one man. In 1534, Charles V of Spain contemplated a man-made waterway between the Atlantic and Pacific oceans. In 1880, after completing the Suez Canal, French Vicomte Ferdinand de Lessepss rose to the challenge. Nine years later, disease (amongst other things) put paid to the entire engineering endeavor. American President Theodore Roosevelt picked-up the cudgel. Crucially, the plan in question eventually changed from a sea level passage to a system of dams and locks. The Canal opened on August 15, 1914. As for Panama, it received control of the Canal in 1977. So what does this tell us about the U.S. car industry? The simplest ideas may be the greatest, but all great ideas take time; and time is money. What’s so great about rebuilding GM, and do we really have the time to do it?
The racing biz has been trying to go green for nearly a decade now, realizing that sheer horsepower and derring-do don’t conform to the temper of the times. The new mantra: race on Sunday, save the planet on Monday (after breakfast on my yacht). So the idea of a one-make Tesla Roadster race series makes perfect sense: from a political point of view. As Tesla never met a trail balloon it couldn’t inflate with hot air, it’s no surprise that Tesla communictions manager Rachel Konrad gave the [we swear it’s not an April fool’s] idea her tacit support. “The Roadster’s acceleration certainly makes it competitive against other premium sports cars, so it’s not surprising that some customers are interested in competitions.” Yes, well, as Pistonheads points out, racing Roadsters would require a bit more development work. “However, there may be a few barriers to this new form of ‘green motorsport’. Continual hard driving may force the Tesla’s motor to overheat, causing a loss of power that wouldn’t make for very exciting racing. Races would also have to be kept to short sprint events, as a Le Mans-style 24-hour race would no doubt be made up of more battery charging than racing.” Oh, sure, NOW they piss on them . . .
In their recent Determination of Viability Summary, The Presidential Task Force on Automobiles (PTFOA) dissed, dissected and dismissed GM’s last next big thing. Not to put too fine a point on it, they called the plug-in gas/electric Chevrolet Volt a misbegotten turkey. The words fell with a thud over at the Volt fanboy site, gm-volt.com. Publisher Lyle Dennis picked up the battery powered cellphone. The Boy Wonder (secret identity: GM spokesperson Greg Martin) answered. “As the White House has said, they do not intend to run a car company, much less make product decisions. They recognize the Volt for the game changer it is. And, yes, no kidding, that costs money up front. But this is a long term play for us. Not to fear, the Volt is safe.” “Put the Batman on the god damn phone,” Commissioner Lyle replied. “Thanks for your concern,” The Caped Crusader (secret identity: Bob Lutz) assured. “Volt will survive and prosper. We know the numbers better than the Government … we furnished them! First-generation technology is expensive, but you can’t have a second generation without a first generation. Common sense and intelligence will prevail, here!” Holy truer words were never spoken, Batman!
Most auto industry observers have lauded President Obama’s decision to defenestrate GM CEO Rick Wagoner and his Board of Bystanders. Their logic is as simple as one, two, three. One: U.S. taxpayers have “loaned” The General billions of dollars. Two: GM’s management failed to provide a viable viability plan to return the money. Three: the presidential putsch protects America’s “investment” in General Motors. Yes, well, protect THIS. When GM files for bankruptcy 59 days hence, $17.4b to $19.5b worth of taxpayer money will disappear down a rathole, never to return. That’s a conservative estimate of the total amount of federal “loans” and grants and God knows what that will be wiped out the moment the judge signs GM’s C11 papers. Oh, and after we kiss that cash goodbye, U.S. taxpayers will provide the cratered carmaker with debtor-in-possession financing. In other words, more money. And who’s to say that money will ever be repaid? What’s the end game? Is there one?
If it wasn’t clear before, it is now: GM will use the next 60 days to prepare itself for a Chapter 11 filing. Freshly-minted CEO Fritz Henderson told a suited and booted press Detroit press corps that he wouldn’t have taken the job from Rick Wagoner if he wasn’t prepared to do “whatever it takes” to return GM to profitability. Henderson spoke of his distaste for “messy” bankruptcies, but indicated his willingness to be the new broom. (Dream on, Fritz.) Meanwhile, despite repeated requests by the friendly press flacks, Henderson refused to be drawn out on how much GM will draw out of the taxpayer’s purse while it gets ready to file Chapter 11. He skated over the point faster than a duck landing on a frozen pond, saying that GM might scarf the $2 billion that it didn’t take this month, or the $2.6 billion it requested for April, or both. At the beginning of the conference, Fritz touted GM’s new “Total Confidence” program. TC is designed to protect GM buyers from losing their wheels after they lose their job, and insulate them from [some] negative equity at trade-in time. It doesn’t, however, protect TTAC’s Best and Brightests’ finely honed sensibilities by the unintentionally humorous irony implicit in the program’s name. If you know what I mean.
Big Brother could actually be her indoors, to use the British term for a female spouse. The Sun [UK] reports that a snooping wife was doing the electronic version of twitching curtains (Googling her friend’s house) when she spotted her hubby’s motor parked outside. “The love cheat is not the only husband trapped by Google’s controversial new 360-degree photo search which covers 25 cities and towns throughout the country. Top media lawyer Mark Stephens said: ‘I was talking about the Range Rover case when another divorce lawyer came up to say his firm was dealing with the same sort of thing. People are getting caught out on Google.'”
Mega dittos from our neighbors to the north. The Globe and Mail reports that the Canadian government is also playing hard man re: GM and Chrysler’s call on federal bailout bucks. Yada, yada, yada, restructure, union concessions, new plans, bankruptcy. And then, this:
Chrysler was unable to meet its Canadian payroll today without a $250-million advance on a $1-billion bridge loan from Canadian taxpayers. To qualify for up to $4-billion in long-term aid, Chrysler has to conclude now-stalled negotiations with the CAW on a cost-savings contract and complete the Fiat deal.
To stave off an immediate crisis, the federal and Ontario governments offered the bridge loans—including up to $3-billion for GM—to allow them to continue operating while they work to satisfy U.S. and Canadian government demands.
The Blue Oval Boyz are launching the curiously named, Hyundai-trumping Ford Advantage Program. The deal—which runs from today to June 1—offers new car buyers 12 months of “payment protection” (leg breakers need not apply) up to $700 per month, zero percent financing and, of all things, a donation to a local charity. Strange times when it’s considered an “advantage” to know you won’t lose your car for a year if you lose your job. Hang on; I’m looking for the fine print now . . . nope, can’t find it. Will update ASAP.
Yesterday, GM’s new boss (president Barack Obama) announced he was firing The General’s CEO and six members of GM’s Board of Bystanders. The new chief executive in chief also elevated BOD member Kent Kresa to the top slot. Kresa, who came to GM from the world’s least consumer-focused industry (unless you count killing them), replaces Rick Wagoner as GM’s new Chairman of the Board. You may remember Kent from from last May, when Kresa told the Wall Street Journal that Red Ink Rick was good to go. I mean, stay. “Management has a handle on the situation.” At the time, I wrote that the former Northrop CEO’s faith in Wagoner’s unspecified turnaround plan reflected “Kresa’s seat-of-the-pants, high stakes poker management style, and faith in political influence peddling.” But really, who IS this guy? Why is Kresa sitting pretty after sitting schtum? A little help from TTAC’s Best and Brightest in the Google department, and some thoughtful analysis, would be most appreciated.
GM CEO Rick Wagoner promised to reveal the fate of the HUMMER brand today. Old Sparky was warmed-up and everything. Of course, that was before the President of the United States fired Wagoner’s ass. And so the maker of pseudo-military SUVs will spend its eleventh month on death row—sorry, “under strategic review.” Automotive News [sub] reports that GM will now postpone a decision “for a few weeks as it works to complete a sale.” No, they don’t mean “a” sale; they mean the sale of the entire brand. Wait! Does that mean . . . ?
“Our efforts to sell Hummer are proceeding, and there are several parties interested — and I would say really interested — in the brand,” Troy Clarke, GM’s president of North America, said during a call to dealers today. “We’re still very much in the process, although that process is maturing.”
WTH is a “maturing sales process”? Does GM have a buyer for the world’s most politically incorrect automotive brand or not?
ABC News reports that outgoing GM CEO Rick Wagoner will walk away with a $20.2 million retirement package, not including the usual perks bestowed upon The General’s generals (e.g., free air travel, secretarial services, cars for life, etc.). Also standard: Wagoner’s pension is insured. In other words, if/when GM eventually files for Chapter 11 protections, even if the company ends up in liquidation, Wagoner’s pension is safe. And as the money is not a “bonus,” it can’t be stopped by the federales. In an email to ABC, GM spokeswoman Julie M. Gibson pointed out that it’s actually only $5M or so paid out over five years. (It’s my money and I want it now!) In a subsequent “clarification,” Gibson said the terms of Wagoner’s final compensation were not yet hammered out. “Specifics on any compensation entitled to, or actually paid to Mr. Wagoner are still being reviewed.” Could that mean he actually INCREASED his pay-out to piss off? Anyway, if Rick decides to take GM to court, guess who pays for the lawyer? Not that he can’t afford one: Wagoner’s already banked over $60,000,000 in salary. As for the value of Wagoner’s stock options, well, I guess there is some justice in the world.
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