Chrysler’s one-time bailout fodder, the minivan, gets no love this time around. Auburn Hills plans on idling its St. Louis South minivan plant on October 31, a move that has drawn a protest from 600 local UAW workers. The St. Louis Business Journal reports that frustration among workers is mounting. “This membership has done everything this company has asked us to do,” says UAW officer Chuck Brodell. “We build a quality van. We made it more efficient and we lowered costs. What more does the company want us to do?” St. Louis is also being hit by a shift reduction at the St. Louis North plant that makes the Dodge Ram, causing locals to question Chrysler’s priorities. “There were 1.6 million vans sold in the U.S. in the last four years versus 240,000 in Canada,” says Brodell. “We should be building them in America not in Canada.” But the discontent isn’t limited to the United States. Minivan assemblers in Windsor, Ontario are pushing to increase production by rebranding the Caravan/T&C/Routan as a Nissan, plans which Chrysler say will never see fruition. “It’s a falsehood. I know for a fact it hasn’t been discussed,” Chrysler senior manager of communications tells the Ottawa Citizen. “Would Volkswagen even let us entertain the idea? I don’t know, contractually.” Or maybe it has something to do with the fact that Nissan acknowledges (unlike Chrysler and VW) that the minivan market has “collapsed.” Either way, don’t expect any pro-bailout photo-ops featuring Dodge Caravans this time around.

Chrysler’s Jim Press is refining the “not a bailout” argument today, calling federal loan proposals “an acceleration of technology into the hands of consumers who couldn’t afford it, if we didn’t do it.” Furthermore, Press tells the Detroit Free Press that taxpayers will reap concrete benefits from the loans. “I think it will allow everybody to bring electric cars, plug-in hybrids, hybrid cars, even range-extended hybrids. All of those vehicles will be accelerated,” says Press. No, seriously. “These are going to be very doable products, looking at production, not just research, he deadpans. “Our focus of our investment from his point forward is improving the environmental footprint of our cars.” Why, Mr Press? Are high oil prices shifting the market towards greater fuel efficiency, making these investments a smart business choice? Not exactly. “We’re worried about dependence on foreign oil,” says Press, getting all national security advisor on us. “But if you fast forward 15 years, where will batteries come from? Right now, the major sources of batteries are other countries. So are we trading our dependence on foreign oil, which is a natural resource, for a dependence on other countries to produce something in a factory? We need to stimulate that development here — here in Michigan.” In other words, the real reason that Detroit should receive bailout loans is that it’s an organ of the national interest. If you think a Volt in every pot, and a head start on tackling Peak Battery sounds tempting, Press is even willing to put some accountability (and your money) on the hood to push you over the top. Press says $25b in loans would be a “good start,” and that the Feds should “look at the return on that $25 billion, and if in everyone’s perspective, we can do it again, we should. I think for a beginning, $25 billion is an appropriate place to start.” The camel knows it need only get its nose into the tent…

The Pension Benefits Guarantee Corp has had enough of Delphi’s ongoing pension debacle, and has warned the GM spinoff that it would file in court to seize a further $900m of the supplier’s assets. Having missed hundreds of millions of dollars in payments to its pension plan, Delphi’s still-profitable overseas operations are targeted for seizure by the PBGC. On Tuesday, reports the Wall Street Journal, the PBGC sent the second letter in the last month to urge GM to absorb at least $1.5b in Delphi’s pension obligations by the end of the month. Timing is crucial, because new pension laws which go into effect on October 1 will make such deals far more expensive. Oh yeah, and then there’s the whole bailout angle. “I can’t speak for the rest of the government, but I assume if GM is asking for assistance from the government generally, the status of the GM-Delphi pension situation would be highly relevant,” says PBGC Director Charles E.F. Millard. We couldn’t agree more. So GM and Delphi have until the end of the week to file papers that would transfer $1.5b of Delphi’s obligations to the General’s pension account. If that date is missed, Delphi’s only remaining profitable business ventures will be ghost like Swayze. With the firm likely to follow shortly thereafter, Chapter 7 style. So, why would GM endanger it’s bailout chances and kill off its largest supplier, when it’s own pension fund is actually overfunded to the tune of some $18b? Because that’s “already committed to paying off United Auto Workers medical claims, funding employee buyouts and other pending obligations.” Rock, meet hard place. Meanwhile, man the lifeboats.

Automotive News (sub) reports that the National Automobile Dealers Association will not be joining the Detroit Alliance to lobby congress for bailout loans. In stark contrast to the collective approach to bailout lobbying taken by the three Detroit automakers, NADA is leaving those efforts up to individual dealers. “We represent all dealers,” said David Regan, the association’s vice president of legislative affairs. “NADA members likely will have different opinions on whether government loans would be in their economic interest.” This is, in effect, the same reason for the Ford-Chrysler-GM collective approach to lobbying, rather than going through the Alliance of Automobile Manufacturers. In short, the bailout is only good for Detroit, so there’s no reason for the successful automakers to waste precious lobbying money on it. Needless to say, this all further undercuts Detroits head-in-the-sand assertion that this is not a bailout. GM admits that it has recruited its dealers to shoulder some of the lobbying burden, though Ford and Chrysler remain cagey on the subject. If the once-big three want to convince America that the entire auto industry is suffering, and that the loan program is not corporate welfare for their failed business models, they’re going to have to recruit more help from across the industry. The lack of industry interest is highly instructive.

Automotive News [AN, sub] reports that “For automakers [that’s Ford, GM and Chrysler] to get access to up to $25 billion in low-interest loans included in the 2007 federal energy law, Congress must approve roughly $3.8 billion in new spending to cover default risk.” Bailout-wise, U.S. House of Reps Majority Leader Steny Hoyer (D-MD) is on the case. Maybe. “Hoyer could not say precisely when or if any proposal would come before lawmakers for a vote before they are scheduled to break at the end of September — possibly for the remainder of the year.” That’s crazy talk! But if you want hardcore insanity, wait ’til Friday, when GM CEO Rick Wagoner hustles to the Hill to bring out his begging bowl in front of a Senate Energy Summit. The Wall Street Journal previews Rick’s party line: “The auto makers and their Congressional supporters also will argue that they need funding to meet new fuel-economy standards imposed by Congress, and that the debt markets have broken down in the credit crisis, leaving them few other options.” The WSJ reveals that Congress has 15 days to do the deal before our reps piss-off. Even worse (for Detroit) not everyone’s on board. “The industry’s chance of getting help may have dimmed, however the government announced it will provide a plan to provide as much as $200 billion in new capital as part of a takeover of the country’s main providers of funds for home loans, Fannie Mae and Freddie Mac… Last week, Sen. Orrin Hatch (R., Utah) said he was concerned about the amount of money. ‘We don’t want our automobile industry to go down, but on the other hand, they’ve made a lot of bad choices.'” While I bet they get the bucks, methinks Rick’s cruising for a bruising.

All this low-interest federal loans to Detroit (a.k.a. bailout) mishegaas started as a proviso of last year’s Energy Bill. That little codicil tabled $25b worth of loans for retooling automaking factories that were/are twenty-years or older (not-so-coincidentally all but two of which belong to Motown’s mavens). From there, the number under discussion suddenly zoomed to $50b. But all of this taxpayer-funded loot depends on getting Washington to A) OK the $25b B) increase it to $50b. Or, gulp, more. So, where’s the “extra” $25b going to come from? Nancy Pelosi! The House Speaker promised the American public [via Bloomberg] that funding for the loans will be included in the 2008 energy bill, in a second economic stimulus package, or in legislation that will temporarily fund the government until the congressional budget work is complete. “We certainly would hope it will be part of the supplemental at the end of the day,” Pelosi said. “It is very, very important. It is about jobs, jobs, jobs.” Well, that’s three jobs anyway (at, what, $16.6b each). What’s the hurry? “The automakers and their suppliers are trying to get the initial funding appropriated so it’s available in January,” Bloomie’s says. Or, say, before the presidential election, ’cause they don’t trust Obama OR McCain to honor their pledge to support the “loans” when bailout fatigue sets in, someone wants to balance the budget or… bankruptcy. Too cynical? If only.

Just had a quick confab with TTAC’s Deep Throat. He makes an excellent point: against what can Detroit’s automakers secure their share of the $50b low-interest federal loans they seek? Ford’s mortgaged everything up to– and including– their logo. GM’s currently paying around $250m a month in interest payments on its current debt, pegged at $40.4b. (Some $9.1b in debt is coming due by January 2010, including $4.3 billion of long-term debt and a $4 billion note owed to a new trust fund for retiree health benefits.) The General has already sold off everything that isn’t nailed down, and much that was. Its foreign ops are its only remain asset of any value (and for how long?). Chrysler? They got nothing worth anything, except, possibly, the “value” of their Jeep brand. Quite aside from the question of what happens to the “old” debt (can the ailing automakers use the federal funds to pay off, pay down or even just maintain their existing loans?), what we’re looking at here is $50b of unsecured loans. In other words, if one or all of the automakers goes tits-up AFTER they suck on the taxpayer tit, John Q. Public will get nothing. Zip. Zilch. Nada. How great is that?

Last Friday, at the celebration of the Model T’s 100th anniversary, Bill Ford kept referring to the $50b federal loan guarantee proposal in the most oblique manner possible. “I’m very happy that both presidential candidates have endorsed this,” Ford said, as reported by the The International Herald Tribune. “The leaders of both parties are embracing this as something that they believe in, so that’s got to help us.” Billy’s once-heir apparent Mark Fields shared the non-nomenclature: “This is not about benefiting Wall Street like maybe some of the other actions that have been taken. This is benefiting Main Street, the working men and women. The auto industry is part of the backbone of the U.S. economy.” OK, so that brings us to today’s article in Automotive News [sub], where Ford CEO Alan Mulally has announced to the world that FoMoCo is “ready” for the bailout loans. “The only conversation we have now is, what is the right way to finance, and what is the right provision for deciding which companies participate,” Mulally opined. “We are very positive.” And that’s it. No wait. “I absolutely don’t think it’s a bailout.” And “We are in very good shape as far as liquidity.” That said, Mulally stressed that “current conditions” are the toughest he has seen in his nearly four decades in U.S. industry. Really? C’mon. I thought Boeing was on the ropes when Big Al took over. And what about the LAST energy crisis? And if liquidity’s so great, why borrow from the feds? These guys want to play it both ways: we need the money and we don’t need the money. That’s so annoying.

Ralph Nader has plenty of good reasons for opposing the $50b taxpayer bailout, sorry, “low interest federal loans” for Detroit. Namely, “decades of poor decision-making” and Detroit’s total inability to drum-up capital on Wall Street. Unfortunately, Nader’s name, reputation and government intervention fetish discredit his cause. GM wasted no time rising to the bait, brushing off Ralphie-Boy’s criticism with a suitably put-down. “There are many more relevant voices in this discussion that see the existing provision for what it is,” spinmesiter Greg Martin told The Detroit News. “A sound, smart policy to inject capital into the industry to get advanced technology vehicles on the road quickly.” For once, a GM toady gets it right. About Nader. The consumer advocate argues for government intervention on a socialist scale: a “public takeover of the corporations.” Though a thorough managerial reshuffling should be a condition for any government bailout, Nader’s proposal of a government-run U.S. auto industry is ridiculous. Any such move would lead to a British Leyland-type public ownership debacle. Opponents of the bailout plans would do well to keep their distance from his wild schemes.

Paul Ingrassia, former Detroit Bureau Chief for The Wall Street Journal (and current biz guy for same) is not happy with “the Detroit situation.” Ingrassia warns that backing Freddie Mac and Fannie Mae deal with public funds encouraged management to make “reckless investments that have backfired badly.” He then scolds Detroit in a decidedly TTACian way. “The Detroit Three got into their current quandary by making decades of bad decisions, with some help from the United Auto Workers union,” with a special shout-out to lavish management bonuses and the UAW’s jobs bank. Ingrassia believes a company should only be bailed out if “its demise would wreak havoc on the entire economy.” Detroit doesn’t pass the smells bad test. “Even if Ford, GM and Chrysler were to go out of business — and it’s highly unlikely that all three will simply cease to exist — there will be plenty of good cars for Americans to buy. And many will be made in America, even if they carry foreign nameplates. Toyota, Nissan, Honda, Hyundai and other foreign car companies have expanded greatly their U.S. manufacturing operations in recent years. They’re doing so because Americans are buying their cars.” OK, so it’s no means no, yes? No. “All this said, if Detroit’s short-sightedness and political expediency make a bailout inevitable, let’s make sure taxpayers stand to get rewarded for their risk.” Illogically enough, offerring the re-tooling loans to ALL automakers is Ingrassia’s biggest string. “But if developing fuel-efficient and alternative-energy cars is deemed worthy of taxpayer subsidies for public-policy purposes, it’s just common sense not to put all our eggs in Detroit’s basket.” Bailouts for all? Go figure.

When we last checked-in with Washington Post columnist Warren Brown, he was showing the Cadillac Escalade Hybrid some love. Before that, he was predicting a Detroit comeback. And now Warren’s pimping for a federal bailout. Although we salute the WaPo car scribe for calling the federal loans by their real name, his argument for the 50 bil is equal parts belligerent and bizarre. For one thing, Warren blames his Capitol Hill brethren for The Big 2.8’s misery. “American politicians and regulators enabled Detroit’s profligacy. The same politicians who made a big show of demanding that Detroit produce more fuel-efficient cars and trucks did next to nothing to create a market for their sale. In fact, federal economic policy, deeply soaked in cheap gasoline, did just the opposite. By mandating more technical fuel economy without adjusting the price of the fuel consumed, federal policy lowered the cost of driving in the United States and, in turn, helped increase consumer demand for bigger vehicles and more horsepower. It was all good . . . until a meteoric rise in gasoline prices ended all of that.” Yes, well, Warren’s a moral relativist (as are several of our TTAC commentators). He believes that if we bail out Bear Stearns and Iraq we should bail out American manufacturing. Someone should tell Warren that the domestics receive plenty of federal, state and local tax breaks for their factories, just like the transplants. In case he forgot. [thanks to inept123 for the link]

Democratic presidential hopeful Barack Obama is running the above ad, “Revitalize,” in Michigan. Obama hopes to win votes in the key battleground state by accusing of Senator John McCain of “selling out” Michigan workers. In other words, the republican nominee didn’t support $50b in low-interest federal loans. Before he did. Of course, neither that big ass billion dollar number nor the specifics of who might get what are part of the Obama spot. For his part, McCain said… nothing. Automotive News [AN, sub] reports that the Senator from Arizona brought his freshly-minted (and minty fresh) Veep babe to The Wolverine State for a 35-minute appearance. “Surprisingly, the question of whether the government should support General Motors, Ford and Chrysler with guaranteed loans for r&d efforts did not come up during the appearance.” Hey! What about you guys asking? Anyway, John’s nothing if not a seasoned politician. “We may not agree from time to time on a specific issue until I reverse my position,” McCain said. “But I will promise you this: I will never let you down and I will always, always put my country first.” Uh-oh.

The Washington Post reports that Uncle Sam is set to take yank the chain of Fannie Mae and Freddie Mac. “The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives, and use government funds to prop them up, government officials told the two companies yesterday, according to sources familiar with the conversations.” It’s a bailout, but not as we know it. “Under the plan, the federal government would place the firms in a legal state known as conservatorship, the sources said. The value of the company’s common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government.” To avoid sticker shock, the feds will “invest” your money in stages. “Instead of giving each company a big capital infusion up front, the government plans to make quarterly infusions as the companies’ losses warrant, the sources said. This would be an attempt to minimize the initial cost of the rescue.” Clearly, this is the template for the “real” Detroit bailout, once they piss-away $50b in federal low-interest loans. Either that, or it will lead to “bailout fatigue” that will torpedo the D2.8’s chances of taxpayer rescue.

What did you expect? Jerry Flint has been a Detroit apologist since Kennedy’s Justice Department tried to force GM to spin-off Chevrolet (if only). Still, Flint’s argument [via WardsAuto] in favor of $50b in low-cost federal loan guarantees for America’s beleaguered automakers is yet another conflicted, half-hearted recommendation. “Detroit can’t convert from a truck-heavy mix to fuel-efficient cars without help, not the way the losses are piling up. General Motors lost $15 billion just in this year’s second quarter, and Ford lost more than $8 billion. Should the nation bother to save the industry? Yes. Opponents say Detroit brought the trouble on itself, ignoring decades of warnings about oil and letting foreign auto makers win battles over quality and technology. That’s all true. Detroit auto makers have made plenty of mistakes, but that doesn’t mean they should not be helped. The Detroit Three provide hundreds of thousands of good-paying jobs, plus millions more at suppliers and related businesses.’ Translation: the D2.8 are up shit creek, they failed to compete and they’re too big to fail. Double negative aside, it’s a reasonably coherent and compelling arguement. Especially when Flint adds the “strings attached” caveat (albeit asking workers rather than over-compensated executives to take a hit for the team). So why don’t the automakers themselves A) admit their failures and B) admit their mistakes and C) put a concrete proposal in front of the people who will (mark my words) guarantee these loans? Motown’s “reluctance” to come clean is reason enough to deny them the money.

So writes former Chrysler outside counsel Steven Roby in a rebuttal Op-Ed in the Los Angeles Times today (the original LAT Op-Ed contended that the US government should not bail out American manufacturers). His thesis of “It’s not the Big 3’s fault” is supported with inventive arguments such as “It’s not the Big 3’s fault” and also “It’s not the Big 3’s fault.” More specifically, he writes that GM, Ford, and Chrysler are just ridiculously, unreasonably burderend by high health care costs, that foreign governments directly subsidize manufacturers, and that other countries manipulate currency. We’ve been through this, time and time again. (He also accuses foreign governments of indirectly subsidizing “their” automakers through grants to research universities. Apparently this lawyer has never heard of the Bayh-Dole Act, which allowed for private patents of government funded research at Universities. And I take it he also has never visited Stanford, Berkeley, Duke, UNC-Chapel Hill, Michigan State University, and so on.) But the big problem is that Roby’s article never recognizes any Detroit mistakes: that the Big 3 spent years raking in piles of cash because of SUVs, or benefitted from the chicken tax on pickups, or benefitted from the special EPA status of “light trucks,” or that Chrysler already was bailed out in the past 30 years, or that GM, Chrysler, and Ford haven’t built a truly competitive small car. Roby writes that “The Times should not judge GM, Ford and Chrysler unless it can walk in the shoes of the executives and production workers.” The production workers have gotten the shaft, and nobody is blaming them. But I’d love to walk in the shoes of an executive like Rick Wagoner, whose company can lose billions upon billions of dollars and still go home with a $14 million paycheck. No, the global market for cars is not completely fair. Time to stop complaining and deal with it. Still.