Now that April Fool’s Day is finally done, I can report with confidence that GM CEO Fritz Henderson did, in fact, say the following [via Daniel Howes at The Detroit News]: “People ask, ‘What changes are you going to make in management, in the organization,'” he says. “None. That would be a waste of time. We don’t have time. There are mechanisms to get this done. You just have to drive them hard.” And put them away wet, I suppose. Only Danny isn’t buying it, ’cause there’s that pesky little matter of all the other GM “stakeholders.” “The constituencies Henderson needs to drive hardest have reasons to balk. United Auto Workers leaders, strong backers of the Obama administration, figure their allies will protect them. Bondholders operating in Bailout Nation figure the feds are more likely to help them (and protect labor) than force GM into bankruptcy and risk the collateral damage to the shaky economy.” And so the countdown to GM’s C11 continues, steady-as-she-goes-down style, with the company’s caretaker taking care . . . of his own.

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!

Ousted GM CEO Rick Wagoner is being posthumously hoisted onto a cross by Michigan’s Governor Granholm and the Detroit News, which is running a piece today entitled “GM Workers Upset That Wagoner Became Sacrificial Lamb.” Huh? Better him than them, right? “Here we got past all the bad media, all that fury during congressional hearings, and now they want him to resign,” says UAW Local 599 (Flint) Chair, Terry Everman. “It’s really a setback, because you don’t know what new direction GM will take.” And it’s not just the uncertainty that has workers in a kerfuffle over the Wagoner pink slip. “It just didn’t seem appropriate for the administration, rather than the board, to dictate,” says OnStar Manager, Bryan Bateman. “I think Rick was a sacrificial lamb in all this. I think he took one for the company.” Except that Red Ink Rick should have been dumped years ago, and the irresponsible board members that kept him around have been canned by Obama as well. Oh, yeah, and GM turned its fate over to the feds the second it took public bailout money. But, hey, one man’s sacrificial lamb is another man’s tasty entrée. To (you guessed it) more government intervention on behalf of the General. Of course.

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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.

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Ronald Reagan once said that the scariest words in the English language are “we’re from the government and we’re here to help.” For troubled auto suppliers though, there are scarier things than government assistance. Specifically, government assistance administered by GM and Chrysler. Automotive News [sub] reports that the the newest automaking branches of the federal government will be in charge of allocating the $5 billion in supplier aid, and that they’ll be using the money to settle old scores. According to AN‘s breezy prose, GM and Chrysler may “pass over” suppliers that have sought to protect themselves from OEM bankruptcies by demanding payment in fewer than 45 days or arguing that insolvency worries allow them to break contracts with the automakers. After all, the government didn’t think the supplier rescue money would go to the most in-need firms, did it?

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President Obama concludes his remarks on the auto industry:

“But there is something I want everyone to remember. Remember that it is precisely in times like these—in moments of trial and moments of hardship—that Americans rediscover the ingenuity and resilience that makes us who we are. That made the auto industry what it once was. That sent those first mass-produced cars rolling off assembly lines. That built an arsenal of democracy that propelled America to victory in the Second World War. And that powered our economic prowess in the first American century.

Because I know that if we can tap into that same ingenuity and resilience right now; if we can carry one another through this difficult time and do what must be done; then we will look back and say that this was the moment when America’s auto industry shed its old ways, marched into the future, and remade itself, once more, into an engine of opportunity and prosperity, not only in Detroit, and not only in our Midwest, but all across America.”

Ironic counterpoint courtesy of CBS News and several recently laid-off employees of a Western Michigan GM dealership.

Irony is the discrepancy between expectation and reality. Hypocrisy is the discrepancy between publicly stated intention and privately implemented execution. I’ll let you decide where President Obama’s statement on the federal government’s intervention in the “U.S. car industry” falls. No matter what you call it, there’s a huge disconnect between the President’s assertion that “We have no interest in running GM; we have no intention of running GM” and the fact that Presidential Task Force on Automobiles (PTFOA) is running GM. I mean, you can’t get much more interventionist than forcing the automaker’s CEO to resign and moving to replace the entire Board of Directors.

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The Presidential Task Force On Automobiles (PTFOA) came, they saw, they laughed. Well, maybe not laughed. But there’s a kind of humor in the fact that the PTFOA shot holes in every single one of the company’s assumptions. The quango’s “Determination of Viability Study; General Motors Corporation” is, to say the least, not kind to the automaker’s assertions. Looking forward, some of GM’s stakeholders have a lot to worry about. Dealers: “These underperforming dealers create a drag on the overall brand equity of GM and hurt the prospects of the many stronger dealers who could help GM drive incremental sales.” European ops: “The European business is seeking additional capital beyond the funds requested from the Treasury. These funds have not been allocated and thus represent a risk to the viability of GM’s current plan.” Strangely missing from this report: any mention whatsoever of labor costs. Nothing, save “legacy liabilities.” Huh.

Click here for the Presidential Task Force on Automobiles’ “Restructuring Fact Sheet.” Perhaps the most relevant statement: “The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe.” I guess branding isn’t the PTFOA’s forte, as that’s about as generic a description of a car as you can get. Hey guys, pick one. Of course, they can’t say that. So we have to assume that the first on the list is considered the most important; it certainly fits in with the ruling party’s political priorities. And, as TTAC’s Best and Brightest point out below, it would be easy enough for the feds to make fuel efficiency THE key sales determinant: just hoik the gas tax. See how that works?

The Presidential Task Force on Automobiles (PTFOA) has seized control of Chrysler and GM, the latter more completely than the former. As part of their Monday manifesto, the PTFOA has laid the groundwork for Chrysler’s liquidation and GM’s entry into Chapter 11. They’ve created a new Warrantee Commitment Program that will guarantee Chrysler and GM vehicle purchases, even if (when) the automakers go belly-up. TTAC’s Ken Elias calls ChryCo’s final approach. “To do the Chrysler–Fiat deal, the secured bank lenders need to write off their loans. Why would they? They get more in a Chrysler liquidation. And even if they make a ‘deal’ with Fiat, so what? How does it solve the problems for the next several years before any Italian technology (small cars, small engines) shows up in Chrysler products? So Chrysler goes to liquidation.” As for GM, even the neophytes at the PTFOA know it can’t do what it needs to do outside of bankruptcy. Given that the automaker will now have the full backing of the federal government, controlling everything from car “warrantees” (warranty?) to the Board of Directors, why not? Who wouldn’t trust American Leyland?

Students of history may recall the Works Progress Administration (WPA). Born in the heart of the Depression, 1935, the agency created some three million federal jobs, sucked-up $11 billion worth of taxpayer money (back when $11 billion was a lot of money) and built hundreds of roads, bridges and buildings That said, the WPA did sweet FA to decrease unemployment figures. And its inefficiency was legendary (nicknamed the “Whistle, Piss and Argue”). But the WPA was an integral part of a sea change in federal government power and scope.  And now, it’s back! The Detroit News mentions, almost in passing, that Presidential Task Force on Automobiles (PTFOA) is creating a “Director of Auto Recovery for Auto Workers and Communities.” The man tipped to spread the love: Edward Montgomery, a “top labor economist” and former deputy labor secretary. Eddy’s tasked with “working to leverage all resources of government to support the workers, communities and regions that rely on the American auto industry.” His official PTFOA remit after the jump.

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The Presidential Task Force on Automobiles (PTFOA) has given Chrysler 30 days to tie-up with Fiat or it will recall federal loans and throw the company into bankruptcy. If they DO do the deal, they get a $6 billion “loan.” I’m no corporate negotiator, but the move seems to give all the power to Fiat, an automaker with its own share of troubles. Well, not ALL the power, according to The Detroit News:

“Chrysler’s deal with Fiat has been restructured, a government official said, to reduce its initial ownership stake down from 35 percent. Fiat wouldn’t be able to obtain a majority of Chrysler until the new $6 billion in government loans were repaid, the official said. The fact sheet also notes that there are guarantees of U.S.employment in the plan. “After extensive consultation with the administration, (Fiat) has committed to building new fuel efficient cars and engines in U.S. factories,” the fact sheet said.

Press reports confirm that GM CEO Rick Wagoner’s hand-picked successor Fritz Henderson will succeed him—temporarily. According to The Wall Street Journal, the Presidential Task Force on Automobiles (PTFOA) sent GM a memo mandating that the company replace Wagoner with Henderson as interim CEO and elevate Board Member Kent Kresa as interim chairman of the board. The clear implication: the PTFOA is now in control of GM at its highest levels and fully intends on restructuring the automaker according to its own strategy. To justify this wholesale assault on free market capitalism, the PTFOA ripped GM’s viability plan to shreds. The Journal reports the ultimate condemnation: “While the Company has made meaningful progress in its turnaround plan over the last few years, the progress has been far too slow, allowing the Company to continue to lag the best-in-class competitors.”

Reuters reports that the Presidential Task Force on Automobiles (PTFOA) is taking a “hard line” on the next round of federal bailout bucks for Chrysler and GM. As we’re in the political realm, “hard line” means taxpayers will fund the automakers for the next 60 days while the PTFOA rolls up its sleeves and takes greater control of Chrysler and GM’s business. The implication: they’ll force the unions and bondholders to take a buzz cut and accept a government mandated debt-for-equity swap. Oh, and re-org GM’s Board of Directors to better suit their, uh, tastes.

“We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested,” said a senior administration official, who asked not to be named. Read More >