Not to be outdone by GM CEO Rick Wagoner's $2.2m salary re-raise, 165,563 shares, 500k stock options and 75k restricted stock units; FoMoCo has just paid CEO Alan Mulally $4m in Blue Oval stock and $3.56m worth of stock options. (That is, of course, on top of Mulally's $2m base salary and the $35m in compensation Ford's paid their CEO for his first 14 months of service). As Automotive News [sub] reports, the former Boeing executive's new compensation package comes hot on the heels of his employer's $2.7b '07 loss. More to the point (if not for shareholders), the gravy train rumbling through Dearborn could anger Ford's union workforce looking at buyouts, buydowns and piss-offs. Or not. Coincidentally enough, Mulally's bonanza comes just two days after Big Al announced a $1k bonus for all Ford's United Auto Workers (UAW) members. And the fact that the announcement is hitting the wires on the weekend? More uninvited serendipity, surely. Bottom line: the bottom line has no relation to Motown executive pay. 

The custody battle over Plastech's injection mold tooling just got a lot more complicated. Mlive.com reports that H.S. Die, the company who manufactured Plastech's Chrysler-specific parts tooling, says that it holds a special-tool lien. In theory, the agreement gives them legal priority to reclaim the equipment now that Plastech has entered bankruptcy. (Chrysler is appealing the decision barring the automaker from reclaiming the same tooling.) H.S. Die was surprised to find itself on top of the "unsecured creditors" list; Plastech owes it $9m. H.S. Die has filed a legal notice, arguing its legal right to the equipment– registered with the state of Michigan– as unpaid-for merchandise. If the court rejects the die maker's arguments under this under-interpreted lien jurisprudence, H.S. Die stands to lose millions. If, on the other hand, the tooling is handed back to H.S. Die, Chrysler could find itself in the awkward position of having to work-out a deal with yet another supplier to keep production lines moving. The saga continues…

As the American Axle (AA) strike stretches into its second week, Automotive News [sub] reports that GM may be considering bailing out yet another troubled supplier. Thus far, GM has claimed the Axle-caused work stoppages gave them an opportunity to trim bloated truck and SUV inventories. But as the strike begins to halt all of GM's high profit North American truck production, and hobbles hundreds of other suppliers, this shit is getting serious. Negotiations between the United Auto Workers (UAW) and American Axle management are deadlocked. American Axle wants to cut UAW wages in half across the board, from $28/hr to $14/hr. The only viable scenario at this point: the now-standard package of buyouts, buydowns and flowbacks. Once GM has finished buying out enough of its own workers, it could move the holdout American Axle workers to its own payroll, freeing AA management to hire new employees at the now-competitive rate of $14/hr. But isn't the point of GM's buyout program to trim its payroll fat? And hasn't GM already blown its bailout budget on Delphi? Chapter 11 if they do, Chapter 11 quicker if they don't.

We've heard this somewhere before… but it wasn't Chrysler… Oh, right! Nearly two years ago, Renault-Nissan CEPO Carlos Ghosn was making noise about joining/purchasing/dismantling General Motors (at the behest of the Lion of Las Vegas, investor Kirk Kerkorian). GM CEO Rick Wagoner Wagoner circled his Board of Bystanders' wagons and GM was free to tank on its own. As the Motor Authority reports, it's the same story here kids. Anyway, Renault is hoping to make out like a bandit with its 25 percent ownership of longstanding Russian punchline automaker Lada. As Carlos puts it. "Russian car sales may surpass Germany to become Europe's largest single market this year." Also, they may not. Either way, Renault may start supplying Lada with platforms and drivetrains. Presumably it'll be the same entry level stuff Renault-Nissan is giving Chrysler to sell in South America. Wait, what? Anyone else confused?

Last July, Delphi agreed to pay GM $2.7b when it emerged from bankruptcy to resolve "long-standing issues." In November, GM said it would settle for $750m in cash and $1.2b in stock AND it would loan Delphi $750m towards the $6.1b needed to exit bankruptcy. And now… GM's agreed to loan their former division another $2.8b. The Detroit News says the new agreement still transfers Delphi stock to GM (now worth $200m less). And Delphi's cash payment to GM shrinks to $175m. Yes, well, five of the six non-GM investors bankrolling Delphi say they'll walk, unhappy with GM's part of the deal. The lead investor, Appaloosa Management, claims the loans are "contrary to Delphi's stated goal of reducing its reliance on and exposure to GM and developing relationships with other (automakers)." And here's the kicker: Delphi has asked the bankruptcy court to force Appaloosa and its partners to continue supporting the restructuring plan. (How to win friends…) Meanwhile, Delphi is still wrangling over providing collateral for some $2b in unpaid pension obligations. They've only put up $150m so far; the Pension Benefit Guaranty Corp. has filed $600m in liens against Delphi's foreign assets. Legally, the PBGC could seize Delphi's foreign ops to satisfy those obligations. Practically, all Hell would break loose. 

Plastech may not have done so well in the plastics molding business lately, but it sure knows how to play the doormat with aplomb. In a touchingly "stand-by-your-man" moment, Plastech General Counsel Kelvin Scott confirmed yesterday that the bankrupt firm would continue supplying Chrysler with parts "indefinitely." This announcement comes despite the fact that the Pentastarred lawyers are currently working on their second attempt to legally extricate the very tooling Plastech uses to produce Chrysler parts. So why is Plastech eliminating the threat of work stoppages at Chrysler plants and thereby losing all of its negotiation leverage? Is it playing nice for Judge Shefferly, who has already staved-off round one of Chrysler's legal predation? Our theory? Plastech knows it's products are of such poor quality that the best way to hurt Chrysler is to keep 'em rolling into their plants. Just kidding. I think.

On the same day that GM announced its disastrous February sales figures, GM's Board of Bystanders OK'ed an executive reshuffle. Those of us expecting the Board to clock the prospect of a fourth year of declining sales, profits and U.S. market share, and then defenestrate GM CEO Rick Wagoner (to float away on his golden parachute) were surprised to discover the current CEO remained in situ. Meanwhile, Chief Financial Officer Fritz Henderson assumed the re-created post of Chief Operating Officer. While pundits aplenty saw this as a Henderson succession play, has Fritz already relieved Rick of command? The Wall Street Journal says "Speaking to reporters yesterday at the Geneva auto show, Mr. Wagoner outlined what his role will be in the auto maker's hierarchy, saying that he will focus on global growth, advanced technologies and environmental lobbying… Mr. Wagoner said he also hopes to at least double his amount of annual visits to China, a fast-growing new market where GM has become well-established. Visiting roughly twice a year in the past 'didn't feel right,' he said." If you ascribe to Ted Turner's Lead, Follow or Get Out of the Way philosophy, it's clear that Rick's now checking out any time he likes. But will he ever leave?

While GM's Board of Bystanders was busy congratulating GM CEO Rick Wagoner and CFO (now COO) Fritz Henderson for the company's "tremendous progress," its suppliers were busy suspending ops. Automotive News [sub] reports that the American Axle strike that has idled six soon-to-be-seven GM plants is taking it toll throughout GM's supply chain. "Lear Corp., the seating supplier to GM's light trucks, has laid off 700 employees and idled one plant, spokesman Mel Stephens said. 'Where GM production is down, we are down,' said Stephens. He said four more plants are operating at reduced speed and more closings are expected." Interior supplier (and Chrysler suitor) Magna International says it's "adjusted its production schedules." The plant closures' ripple effect on other suppliers is sure to spread quickly and widely. As of this writing, no new negotiations between American Axle and its United Auto Workers members are scheduled. Even if the strike was resolved today, restarting production would be an expensive and time-consuming process, that GM and its other suppliers can ill-afford.

When a bankruptcy court judge ruled that Chrysler could not strip bankrupt supplier Plastech of its proprietary tooling, it looked like the two were stuck with each other. And yet, a surprisingly short extension to their interim supply agreement signaled more conflict ahead… and here it comes. The latest supply contract is set to expire at midnight on Monday. The Detroit News reports that rather than extend it again, Chrysler will appeal the ruling and try once more to remove their equipment from the Plastech plant. In their court paper, ChryCo's lawyers postulate that "the court's decision may have significant implications for the way automakers and their suppliers do business in the future." True dat. And if Chrysler's appeal fails? Industry watchers say it could put Detroit's suppliers at a huge advantage over their customers… and potentially trigger another wave of supplier bankruptcies.

Reuters reports that the strike at American Axle is forcing General Motors to idle production at two more plants: Moraine, Ohio (Chevrolet Trailblazer and GMC Envoy) and the AMC General plant in Mishawaka, Indiana (Hummer H2). This brings the total number of off-line production facilities to six, including the four factories that produce the GMC Sierra and Chevrolet Silverado pickup trucks. Job-wise, "13,700 GM workers, or almost 20 percent of its blue-collar work force, could be laid off this week." Next in the firing line: Yukatahoeburbelade production in Arlington, Texas and Janesville, Wisconsin. GM is down-playing the strike's effects on its bottom line. Marketing maven Mark LaNeve painted the problem as a convenient way to keep inventories low– in the face of February's 20 percent decline in truck sales. But GM [still] depends on the big rigs for the lion's share of its profits. If the strike stretches on, if truck inventories sink below severely diminished demand, the drain on GM's cash flow will be nothing short of catastrophic.

No question: The Big 2.8's supply chain is in disarray. Plastech, Delphi, American Axle– these are just three of the U.S. parts suppliers already in bankruptcy, with fully 25 percent of other major domestic parts makers teetering on the edge of Chapter 11. The domestics are operating on the assumption that the faster they outsource their parts production overseas, the better. Speaking to Automotive News [sub] analyst John Casesa warns that Chrysler's new purchasing czar John Campi's rush to confront domestic suppliers (Plastech) and seek low cost foreign replacements may not be such a good idea– especially when seen in historical context. "In the early 1990s, former GM purchasing chief J. Ignacio Lopez proved that point. When he bid out proprietary part designs to garner the lowest prices, Lopez launched a brutal price war that created lasting animosity between GM and its suppliers. The industry is still struggling to heal the wounds." And speaking of war, does it really make sense for the domestics to combine Just in Time production and long, long supply lines in this time of crisis? As Toyota's quickly resolved Tundra problems show, it's best to keep your friends close and your suppliers closer. 

As opposed to… "Inactive Subaltern Status Quo Soldier?" Whatever you call Peter Arnell, Automotive News [AN, sub] reports that Chrysler's "Big Idea" consultant is prowling Auburn Hills, tweaking the American automaker's branding, product planning, customer relations and dealership coordination. (Arnell was the brains behind the hugely expensive Celin Dion – Chrysler Pacifica promotion; regarded as a total flop.) Reading between the lines, AN reckons Arnell may exacerbate Chrysler's long-standing tradition of internecine conflict. "Arnell's consulting services bring him into areas of the company that already have bosses, raising the spectre of possible turf wars and executive conflicts. Among the people and the areas to watch: Trevor Creed is Chrysler's chief designer; Deborah Meyer is chief marketing officer; Frank Klegon heads product development." Arnell– salary unknown– may have the edge on his erstwhile rivals. He worked with CEO Bob Nardelli over at Home Depot, where the dream team unleashed the caps lock ORANGE WORKS in the winter of '06. The range of chi-chi bespoke products (e.g. a martini shaker-shaped fire extinguisher) did nothing much for Home Depot's bottom line.

Ex-Toyota and current Chrysler president Jim Press says every car his new employer makes— or will make once the automaker starts/finishes their long-promised model cull– will be a hybrid. Eventually. Meanwhile, Popular Mechanics claims the Prez' promise was "the first by a major auto executive that openly embraces hybrid technology as an across-the board sea change.” Nope. As we reported previously, Toyota executive vice president Kazuo Okamoto predicted Synergy Drive would become ToMoCo’s default drivetrain. Anyway, we've heard nothing about/from Chrysler's semi-independent "ENVI" hybrid development team since the Detroit Auto Show's awkward concept cars. And speaking of champagne dreams and caviar wishes, Press said Chrysler plans to build and sell as many Chrysler-branded products overseas as are currently sold in the U.S. (roughly 2.7m units). Again, no idea of what, when or where. Why? Because they like you.

After yesterday's post on Bill Ford's compensation package, I had a little chinwag with FoMoCo PR Supremo Oscar Suris. Suris explained that his boss– the automaker's Executive Chairman and former CEO– has, indeed, "modified" his May 2005 pledge. (Billy swore on a stack of dry cleaning bills that he wouldn't take a plug nickel from his family namesake until the company was profitable for a full financial year.) The new deal is this: from 2008, Ford will "postpone" Billy's annual compensation until Ford is profitable. In other words, if and when Ford gets back in black, cha-CHING! All the money from '08 forward comes due. How much? Suris wouldn't say. "The Committee felt this was a fair and reasonable way for Bill Ford to stay true to his pledge on some level." Yes, well, keep in mind that Ford is no longer making dividend payments; the Ford family's auto-related cash flow has stopped. As to what Bill Ford has done to aid the "company's progress in restructuring its troubled North American operations," he hired Alan Mullaly. What do you want, blood?

Troubled Chrysler supplier Plastech's bankruptcy proceedings just got a little more complicated. Automotive News [AN, sub] reports that Johnson Controls Inc. (JCI)– which accounts for over half of Plastech's $1.4b annual business– filed a motion yesterday to force the plastics manufacturer to either accept or reject their sourcing agreement. In the motion, JCI claims that Plastech is incapable of producing the 6000-odd parts it sells to Johnson at the agreed price; an issue which has forced JCI to "bail-out" Plastech several times in recent years. Although firms in bankruptcy usually take several months to arrange a reorganization plan before accepting or declining contracts, JCI argues that it can't afford to wait. "If the debtor cannot assume the (agreement) and perform according to its terms, the debtor cannot reorganize." The key issue appears to be Plastech's ability to secure capital coming out of bankruptcy. JCI, Chrysler and other Plastech customers have made it clear that they will no longer pay out lump sums above the negotiated cost of sourced parts. Meanwhile, Plastech's $31m line of credit is nearly gone. The firm has 15 days to respond to JCI's motion. This is getting really ugly really fast.