Back when we TTAC didn’t have Ronnie Schreiber doggedly defending the D2.8, I contacted former GM PR spinmeister Gary Witzenburg to post an ed on the pro-Motown perspective. Big mistake. Despite– or because of– his exposure to our Best and Brightest, Gary went off the rails faster than the Polar Express. Other than an ex-girlfriend, he remains the only person I’ve ever blocked from my email. Let’s just say the man has “anger issues.” Actually, let’s not. Let’s revel in his vituperation and wonder if Autobloggreen is regretting letting him into their compound. “Here is what I’ll bet those long-suffering auto CEOs wanted to say, but couldn’t: You ignorant morons! How dare you accuse us of building cars nobody wants? We sold 8.5 million vehicles in the US last year and millions more around the world. GM still handily outsells Toyota here, Ford outsells Honda and Nissan, and Chrysler sells more than Nissan and Hyundai combined. How many of our new cars have you driven lately?” Personally, I think Gazza should have gone for the post-modern, hat tip to SNL approach, and begun with “Jane you ignorant slut.” More highlights from Gary’s take on “How to Win Friends and Influence People” after the jump.
Category: Bailout Watch
There are two ways to look at this. First, Ford CEO Alan Mulally “gets it.” He understands that he screwed the PR pooch when he flew into Washington to beg for bailout billions in a big ass corporate jet. Alternatively, someone somewhere needs to get a grip. The guy gets $25m a year, Ford burned its way through $7.7b during the last financial quarter, FoMoCo wants at least that much from your taxes in addition to its share of the $25b already allocated for retooling and we’re worrying about his travel arrangements? Yup. So, Big Al’s driving from Motown to The Big Sleazy. And down the rabbit hole we go. “Ford spokesman Mike Moran said Monday that Mulally will make the roughly 500-mile trip on the road in an undisclosed Ford vehicle,” The Detroit News reports. “Moran declined to say if Mulally would actually be behind the wheel, but noted that Mulally does have a license to drive.” Help me out here. Is Detroit News scribe David “Love Ya” Shepardson being sarcastic? Or is he actually trying to reassure readers that the head of The Ford Motor Company can drive a car? For once, Autoblog gets its right, focusing on whether or not Mulally will be driving a Focus for 10 hours straight (assuming Big Al doesn’t get high). Oh wait; Autoblog’s “WEBAD” (What Exactly Would Big Al Drive) poll doesn’t list the econobox amongst its vehicular choices. Never mind.
Automotive News [sub] tells us that “The Senate Banking Committee has rescheduled its next hearing on ‘the state of the domestic automobile industry’ for Thursday, Dec. 4… The House Financial Services Committee has a similar hearing scheduled for 9:30 a.m. Friday, Dec. 5.” Once again, the news org fails to answer the one of journalism’s Holy Five: why? “No official explanation was immediately available for the postponement of the Senate hearing, originally set for Wednesday, Dec. 3. It is thought that lawmakers and their staffs want more time to review the Detroit 3 plans.” See how that works? Anyway, this smells bad. Our Ken Elias predicts that GM will file for bankruptcy the moment it becomes clear– if it does– that Congress has rejected their bailout request. By moving the hearing closer to the weekend, when the markets close, Congress could be engaged in a little pre-emptive damage control. Then again, that’s GM’s pattern. But could GM really convince Congress to cater to their PR whims? I am so not buying the idea that our legislators need more time to read the Big 2.8’s turnaround plans; if anything, Chrysler, Ford and GM need more time to prepare their plans. Or the pols themselves. Or maybe the automakers want November’s hideous sales results to sink in a bit (Deutsche Bank predicts a 45 percent drop for GM). You know; to “motivate” the masses. Politics. You gotta love it.
Since the first mutterings of an auto industry bailout, the idea has wrapped itself in unabashedly patriotic rhetoric. Now that the battle for the billions has been joined, this nationalist veneer is reaching near-self-parody levels of earnestness. All the while we’ve been arguing that saving American jobs and saving the Detroit Three in their current forms are mutually exclusive goals. As reality slowly becomes too real to ignore, directors, representatives and pundits are beginning to acknowledge this trade-off, although you might be surprised by how they’re playing. Or, if you’re as cynical as we are, not. The gameplan comes from Mark Phelan of the Detroit Free Press, who argues that to survive, Ford and GM must “must show a business plan that’s profitable at much lower sales volume and has upside flexibility to build more vehicles and for workers to make more money with overtime. This will require plant closures and layoffs.” At home, of course. Meanwhile, Phelan argues that “GM and Ford’s greatest assets are their worldwide facilities and capabilities…
In the run-up to this weeks bridging tournament, GM and Ford are indicating their [belated] willingness to axe ailing brands. Now you could look at their most recent sales stats and argue that this description applies to all 11 U.S. car brands under The Big Two’s umbrella, but we speak here of the Swedish contingent: Volvo and Saab. The former lost $458m in the last quarter alone. The latter, well, who knows? GM doesn’t break-out Saab’s red ink. (The brand hasn’t made a profit since The General bought it in 1989.) Anway, The Financial Times reports “Ford and GM will both tell the US Congress they have long-term plans to dispose of the brands this week when they present detailed business and financial plans to support their request for $25bn of emergency funding.” “Long-term” being the operative word; the automakers can no more cut the Swedish brands loose without C11 than you can eliminate credit card debt by scissoring your plastic. But don’t worry, the suits have a way to avoid the thorny issue of using U.S. bailout bucks to protect Swedish (German?) jobs: they’ll ask Sweden for money.
This is the week that the CEOs of Chrysler, Ford and GM make their second attempt at securing enough bailout bucks to stave-off bankruptcy (Ford not-so-much, but since you’re offering…). As is the way of such things, the serious “negotiations” is already going down, as politicians and supplicants prepare to posture for public presentation. Automotive News [sub] reports that Republicans have decided to focus their hypocritical ire (imagine a politician chastising an automaker for not balancing their budget) on the United Auto Workers’ (UAW) Jobs Bank. “The Jobs Bank requires the Detroit 3 to pay nearly full wages to hourly workers who have been laid off. Although the number of workers in the Jobs Bank has dwindled, the concept has become a powerful symbol of auto industry excess. General Motors is likely to propose its elimination, says a source familiar with the company’s thinking. Last week Bond did not spell out precisely which concessions he expects from the UAW. But during the congressional debates, many GOP lawmakers singled out the Jobs Bank as a wasteful Detroit 3 practice.”
GM’s Board of Bystanders spent a good part of their Sunday reviewing their Chairman (and CEO’s) DC-bound turnaround plan. According to Bloomberg, Rick Wagoner’s new new new new new new new turnaround plan takes two forms: a 10- to 12-page public document and a “private, more detailed plan of about 80 pages with background material.” If the existence of a “private plan” to spend an estimated $12b of your tax money isn’t enough of an outrage– and I’m thinking it is– then ask yourself this: why is this plan different from all other plans? “The largest U.S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because details haven’t been presented to Congress.” Don’t you just love fictional anonymous sources who always seem to state what common sense and pundits have already proclaimed? Neither do we. Anyway, as we’ve discussed umpteen times, the UAW’s Mother of All Health Care Plans was a non-starter before it started. GM can’t close brands willy-nilly; the lawsuits would make Oldsmobile’s termination look like a bris. And reworking an Accord is something GM should have done in 1976, not an escape clause fashioned by a terminally ill GMAC. Other than that, they’re good to go. C11. But shhh. Don’t tell that to GM’s Board. They’re thinking they’d better think it out again tomorrow.
As Farago wrote, the Caravan of Love broke down before it even left Motown. Supposedly, it went virtual, and took the information superhighway instead of routes 76 and 70 as even the most half-witted GPS would recommend. Jeez, they can’t even do what a 3 year old can do in 10 minutes: Build a website. TheEngineOfDemocracy.com displays the dreaded “Our site is currently under construction.” It promises: “We will be back online Monday, December 1st as promised.” What do they mean with “back?” Where they ever on-line before?
And then, that logo: I bet, trademark lawyers in Wolfsburg are right this minute arguing with Volkswagen top management: “We recommend sending a cease and desist. They are diluting our Autostadt mark.” “It might not be politically expedient. They’ll say we hate them.” “If you don’t send the letter, we may lose our mark.” Anyway, the thing on the site looks terribly like Volkswagen’s Autostadt logo. The Autostadt logo looks back at a long line of German Heritage: It was purloined from Volkswagen’s New Beetle, which was inspired by the old VW Bug, which was ordered by old Adolf himself. But at least: It was all in the family. The Engine Of Democracy: In the ass, and cooled by hot air?
According to Bloomberg, who has it from people supposedly familiar with the matter, GM “is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer.”
So assuming that they do: Will they just dump the brands? As in throw them away? Or will they sell them? If the latter, who do you think will be the successful bidder?
There’s a small rash of stories spreading through the media with a single common thread: everyone’s going to pull together to get GM through until the government picks up the tab. So, is it feel-good holiday rumormongering, or something more? Let’s take a look. The first story comes from Automotive News [sub], and it quotes GM purchasing boss Bo Anderson as saying suppliers aren’t demanding cash. And why would they? It’s not like things are tight right now. “Our suppliers are behind us,”Anderson tells AN, “We keep our terms of payments. They are contractual, something we negotiate with suppliers, and we think it is important to be a prompt payer. We are doing our best to hold the current terms.” Doth the gentelman protest too much? “It is very important to be very transparent and be open about the changes we see in the workplace with production schedules, product delay and any product changeovers,” says Anderson, while acknowledging that supplier CEOs face difficult conversations with their nervous directors, who worry about GM’s ability to pay as it suffers a liquidity squeeze and delays in getting financial aid from Congress. But anyone who has watched supplier after supplier go bankrupt over the past several years knows that suppliers have little choice in these matters. The UAW though? Read More >
Everyone else, notify your next of kin. Bloomberg attributes the all-too usual “people familiar with the matter” with the revelation that GM is “studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer.” And what price are they putting on the three brands? $12b worth of government “bridge loan.” There goes the argument that the bailout is about saving jobs. Of course, proving TTAC right (and doing what they say would happen if the loan didn’t go through) isn’t going to the only tough pill to swallow if the RenCen is serious about going through with this. A nasty little business called state franchise law awaits this oncoming freight train, potentially putting taxpayers (not to mention General Motors) on the hook for billions more. You know, since “bankruptcy is not an option.” Putting 82-year old brands on the block? That’s another matter. Anyway, old-school Saab enthusiasts rejoice, Pontiac faithful start looking for a white knight, and everyone with a job on the line, buckle up. The BOD is scheduled to review a proposal Nov. 30 and Dec. 1, and GM will then prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material. Until then it’s just one big, white-knuckle thrill ride.
For lo, Robert Nardelli hath descended from the mountain, and yea verily he has a plan! “The company … is ready to share our plans for returning Chrysler to profitability as we move beyond this unprecedented financial crisis,” says Bob the Builder in a memo to employees that was leaked to Reuters. The memo clarifies that government funds would be used to support Chrysler’s ongoing operations, including obligations to pay wages and suppliers, fund health care and pensions and to continue future product development. Not a penny will go to Cerberus. In even less surprising news, Bloomberg reports that Chrysler expects to meet its 24 percent workforce reduction goal with few, if any, involuntary layoffs. Apparently Chrysler’s employees are finding buyout offers more compelling now that the company is in the federal begging business. “There is some reasoning here that is telling people there is more security in unemployment than in staying with the company,”says automotive corporate recruiter Ed Crowder. “If they don’t take it now, they are feeling we may not get anything in three months.” Chrysler expects “minimal, if any, involuntary layoffs come the end of next month,” according to spokesfolks.
The House Financial Services Committee will reconvene for another round of auto industry bailout hearings at 9:30 am on December 5, reports Automotive News [sub]. The committee did not release a witness list, but it is expected that the CEOs of General Motors, Ford Motor Co. and Chrysler LLC will appear for a second round of begging. We’re also learning that each company is expected to provide two documents to Congress. One would be a shorter, public summary. The other would be a longer, detailed document including proprietary information, to which Capitol Hill access would be tightly restricted, according to GM spokesfolks. Needless to say, TTAC will be posting the public copies, and would be more than happy to post the restricted versions as well, should any principled public servant feel that they deserve public review. You can find our contact form on our navigation bar at the top of your page. Meanwhile, the Senate Banking Committee has yet to schedule public hearings, and we’re still waiting to see how this will affect the planned caravan of love from Detroit to DC. We’ll keep you posted.
The Bush Administration’s decision to release $27b from the Troubled Assets Recovery Program to prop-up Citigroup has pissed-off Motown’s bailout brigade but good. “Financial industry rescue criticized as double standard” the Detroit Free Press‘ headline kvetches. “While the pending bailout of Citigroup is absolutely necessary because they’re too big to fail, it’s the height of hypocrisy of the outgoing administration and the treasury secretary to not make a more robust effort to do the same with Detroit,” said Anthony Sabino, a professor of business and law at St. John’s University in New York (chosen especially for his non-Detroit residency). “One cannot sit here in America and say Citigroup is more important than any one of the Big Three, let alone all of them together.” On the bright side, the funds directed Citi’s way have played straight into the hands of MSM class warriors like MSNBC’s Rachel Maddow, who see Congress’ reluctance to spread the national debt to Detroit as a classic triumph of evil champagne-swilling bankers over Bud-drinking blue collar builders. Paper shufflers vs. honest folk who make “stuff.” The meme is picking-up a head of [non-hybrid] steam– despite the fact that the banking system IS more important than Detroit’s stuff makers, and two wrongs don’t make a right, and where do you draw the line and who do you think you’re foolin’ (I got the presidential seal)? Never mind. Hubris will get you every time. Bank on it.
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