“Gotta ask for the bail – I mean sale, ha-ha,” Red-Ink Rick Wagoner told his man in Germany. That would be Hans H. Demant, VP Developent of GM Europe and Managing Director of Opel Germany. Wagoner instructed Demant to ask the German government for €40b, or make that a cool $50b. “What should happen, Hans? The worst thing Angela can say is no.” Demant didn’t want to go eye-to-eye with Chancellor Angela Merkel. Instead, he wrote a letter, to be co-signed by Klaus Franz, the head of Opel’s Workers Council. Usually, Demant avoids signing any paper that has Franz’s signature on it, but the situation was dire, and the message to be sent was “jobs, jobs, jobs.” In the letter, GM Germany’s unlikely duo applied for loan via the European Investment Bank, as soft as marshmallows. While they were at it, they also suggested cheap credit to buy new Opels cars, and cash into the hand of each upstanding German citizen who feeds his Opel car older than 10 years into the shredder, along with a tax credit to reward the purchase of a new car. “That should do it” said Demant. Both signed, and the urgent enquiry for Euros was expressed to Berlin.
Category: News Blog
Dear Secretary Paulson:
We are writing to urge you in the strongest possible terms to use your authority under the Emergency Economic Stabilization Act (EESA) or other statutes to immediately address a significant and systemic threat to the U.S. economy and provide emergency assistance to the domestic automobile industry.
With Gullinkambi crowing the end of time and fate for a once-proud industry, the heroes of Detroit and DC are gathering to fight the future. But one hero is turning a deaf ear to the sounding of the Gjallarhorn… at least until his fate drags him inexorably back to the fray. Bloomberg reports that today’s meeting between President-elect Barack Obama and President George W. Bush was “friendly” while they discussed “the broad health of the auto industry.” But, as the battle for a short-term federal bailout joins in Washington over coming days and weeks, Obama will be conspicuously absent. Before leaving town, The One told reporters he won’t be “spending too much time in Washington over the next several weeks.” “It’s important to bear in mind that Congress was wrestling with issues like an economic recovery program prior to the election and didn’t come to a conclusion,” said Obama. And if Congress can not come to a decision before January 20? “It will be the first priority,” Obama swears. Until then, Obama will sing praises of the Democrat’s planned short-term stimulus package, which may or may not be DOA. From a comfortable distance. In Norse mythology, the Ragnarok is merely the final fate of the Aesir, not the end of times. As a fierce battle brews in DC, Obama will wait and watch while he still can. His hour in Valhalla will come soon enough. The battle will go on.
Autocar slips this little nugget in an alarming alarmist story that Ford will run out of cash by May: “Ford has already pulled all of its UK advertising across all mediums until the end of the year.” I’m Googling like mad, but can’t find any corroboration. If true, this is some SERIOUS SHIT. Meanwhile, TTAC’s Ken Elias debunks Autocar’s assertion that FoMoCo will be out of dough by the spring. “AutoCar’s analysis on Ford’s cash flow is incorrect. For the year to date, Ford has used $15.7 billion in cash, although only $2.9 billion relates to pre-tax losses. The bulk of the cash used to date reflects mostly restructuring efforts due to constriction in working capital ($6.7 billion) and funding the required VEBA to the amount of $4.6 billion. Since these are mostly one-time items, the cash burn situation at Ford does not appear as dire as that of GM. Any stabilization of Ford’s North American business will stem its cash outflows.” Thanks for the heads-up Ken.
No good deed, or lucky bet, goes unpunished. Germany’s auto makers are crying poor at the bargaining table at the same time Porsche-VW is crowing about record gambling profits. Against this background, the AP reports that “IG Metall is seeking an 8 percent raise for the 3.6 million workers it represents in the metal and electronic industries.” Germany’s auto industry has the lion’s share of IG Metall workers. Didn’t the union bosses in Sindelfingen get the word about Automotive Armageddon? Apparently the union guys have taken a page from the Gospel of CEO’s and can only see the massive profits German industry has run up in recent years. “IG Metall has defended its requested wage hike as justified because companies’ profits increased 220 percent between 2004-2007– a time when wages effectively increased by only 8.7 percent– union leader Berthold Huber has also indicated they would accept less.” Ah, the dirty little secret of modern times has been, up until a few months ago, the massive run-up in corporate profits and executive pay happened while workers got next to zero share of the growing pie. When times were good, the excuse for giving little was global competition. When times are bad, the excuse is “can’t afford it.” Meanwhile, the burghermeisters continue to live large and the pain of recession falls on the masses. Tune in tomorrow for more of the same.
You know how it is. You’re talking with someone in the autoblogosphere on Ye Olde iPhone and he says “You know, GM’s pulled out of the LA Auto Show.” So you click over to the GM media website to see if it’s true, and there it is in black and white: “Public Invited to Put Pedal to the Metal Behind the Wheel of GM Vehicles at the Alabama International Auto Show November 14 -16.” No really. “Consumers attending the Alabama International Auto Show… will have a unique opportunity to truly ‘experience’ the GM display by getting behind the wheel and test driving many of General Motors’ new, fuel-efficient vehicles.” Such as the HUMMER H3T ALpha. Meanwhile, The Detroit Free Press‘ Katie Merx minx reports that GM’s “scaling back” its participation in the LA Auto show. “General Motors Corp. has canceled plans to unveil any new vehicles or host any news conferences at the Los Angeles Auto Show this month… The automaker will still have a presence at the LA show next week. The production version of the Chevrolet Volt extended-range electric vehicle will make its first auto show appearance and GM’s two-mode hybrids will be driving there.” By themselves, presumably.
If GM wants to have a chance of celebrating the New Year as a (somewhat) solvent company, it needs find $5b in cuts by the end of December. We’ve heard about the layoffs, forced vacations and executive pay cuts (wait, scratch that last one). But what’s going on with product development? After all, if the taxpayers are going to buy into GM big-style, we should know what we’re funding, right? CNN Money went through the GM product pipeline. (Keep in mind that things are changing fast.) The Volt and Cruze are said to be on-schedule, set to debut in 2010, the year that seems to get farther and farther away with every passing day. CNN says GM has given these two projects “protected status;” they’ll remain on schedule “no matter what crisis materializes.” Y’know, out of the clear blue sky. Of course, the fact that GM hasn’t announced a Volt battery supplier might lead you to question whether the Volt will make it in time, and anonymous information from one of the competing firms suggests a widespread pessimism on this point. So, two new products by 2010 (should the General survive till then). Anything else? Anyone? Bueller? Read More >
University of South Florida researchers have uncovered fundamental flaws in the first U.S. study that claimed red light cameras decrease accidents. Since 2001, the insurance industry’s report on the benefits of red light camera use in Oxnard, California has been cited by hundreds of cities as the basis for the adoption of photo enforcement. Researchers Barbara Orban, Etienne Pracht and John T. Large attempted to replicate these findings and discovered that the Oxnard numbers, intended to serve as the model of peer-reviewed scholarship, simply don’t add up. “The regression analysis of [Oxnard study authors Richard] Retting and [Sergey] Kyrychenko does not support their conclusion that red light cameras reduced total or injury crashes,” the University of South Florida team wrote in the American Journal of Public Health last month. This sounds familiar…
DATE: November 10, 2008
TO: All GM Dealers
FROM: Mark LaNeve [GM’s Marketing Maven]
SUBJECT: November GM Business Update – IDL Broadcast
On Wednesday, November 12, 2008, we will air a special IDL broadcast for all GM dealers. This broadcast will provide additional insights regarding last week’s GM Business Update.
The financing arms of Germany’s automakers are way ahead of GMAC. Germany’s industry rag Autohaus heard of a little sit-down of BMW, Daimler and VW. All present cheerfully agreed to ask Frau Merkel for a little help. Not to prop up their equity, no need. They’ve got enough. BMW actually went on record and said: “Our bank is right as rain.” (Or German words to that effect.) So why are they holding out their hands for a hand-out to the tune of a few billion Euros? Germany’s captives would like the government to co-sign their notes, which would give them access to cheaper money, which would make their profits even higher, which would give their parents more leeway in giving low interest loans for even higher sales, which would be good for the economy, jobs, the social structure of Deutschland. Dietmar Kupisch, spokesman of VeeDub Germany’s Financial Services said it simpler to the Braunschweiger Zeitung: “It would mean cheaper liquidity for us.” Mercedes doesn’t need any help. Surprising reaction from Opel: “Thanks, but no thanks. We are taken care of by GMAC.” Haven’t they gotten the memo? Nobody even bothered to ask Porsche. Anyway…
Autobloggreen‘s Sam Abuelsamid’s been talking to GM PR about his story re: the delayed debut of Saturn’s plug-in hybrid gas – electric Vue. (I could blog my blog of his blog, but why bother?) More accurately, GM PR’s been talking to Autobloggreen’s Sam Abuelsamid re: the delayed debut of Saturn’s plug-in hybrid gas – electric Vue. “Our original statement said that production would begin ‘as soon as 2010’ because we did not want to create artificial deadlines,” GM spokesman Brian Corbett lied to AB’s man in green. “We have dedicated significant resources to the program and it is progressing rapidly. Now that we are further along in the development process, we can now give a more up-to-date projection.” And that is? “From what we’re hearing from sources at GM,” Sam reports, “the PHEV is still moving ahead and will go into production and it will likely debut sometime in 2011.” Sources? Does Sammy mean Senior Corbett? Dunno. But the scribe’s coda sounds suspiciously pre-spun. “Given the importance of the Volt to GM and the limited resources it has at the moment, it makes sense for them to focus on the ER-EV first. Work is proceeding on the VUE and knowledge learned about lithium batteries and controls is being applied to the PHEV.”
Buried in this morning’s Detroit News article on White House support (maybe) for additional bailout bucks for Detroit: news that Chrysler has filed an application with the Department of Energy (DOE) to secure a share of the $25b federal no to low-interest retooling loan program. Showing the reportorial sympathies for which his paper is justifiably known (at least in these parts), the News’ David Shepardson wrote that “it was not clear how much the automaker requested.” In fact, Chrysler is refusing to release this information. I just got off the blower with Shawn Morgan. The ChryCo spinmeister said her employer has “no plans to release the information.” In fact, Chrysler has specifically asked the DOE to keep the information confidential. When quizzed for an explanation, you know, being that it’s taxpayer money involved an all, Morgan claimed the amount of money requested constitutes “competitive information.” Chrysler’s secrecy is hardly a surprise, given that the ailing American automaker’s owned by the Kremlin-like Cerberus private equity group. Still, it IS our money (for now). Needless to say, TTAC’s putting in a call to the DOE.
Whether you agree with the Iraq War II or not, whether you view America’s military presence in country as a burgeoning success or an endless quagmire, the Bush administration has created what we’ll call an “ongoing situation.” The question now facing George W: does he want to be the president who initiated direct(ish) federal participation in the American automobile industry? The answer came on Monday: maybe. Our pals at The Detroit News report that The White House has signaled its willingness to support new legislation to aid Detroit. BUT– keep your God damn hands off the previously-enacted $700b Wall Street bailout package. “Congress is going to come back into town next week,” Presidential Spokesfolk Dana Perino said. “If they decide to try to do something more on the auto industry, we would listen.” Meanwhile… “Michigan lawmakers and the automakers are moving aggressively to try to shift public opinion in favor of more federal aid for the Big Three.” Yup. “GM posted a link on a company Web site for its dealers to send letters to Congress, and will be posting similar letters for retirees and consumers. The effort is called ‘Mobilize Our Auto Nation.'”
Detroit News columnist Daniel Howes is just coming around to the idea that Detroit’s automakers are about to collapse, bringing about the reckoning that any open-minded journalist could (and did) see twenty years ago. And Danny’s pissed. At us. “It’s easy, sitting behind a keyboard, to type, ‘no one’s too big to fail’ or ‘let ’em file Chapter 11′ or ‘serves ’em right.’ It’s especially easy if you and yours don’t have to endure directly the jobs lost, tax revenue gone, pensions halved, health care benefits denied, dealerships closed, supplier lines shut down.” Is this how Detroit thinks of its current predicament? Fortress Detroit? That they’re somehow blameless victims in all this, and America actively WANTS them to fail? Apparently so. “But autoworkers, salaried employees, retirees, even executives, are people, too. The nasty Schadenfreude heaped on this dismal situation says more about those doing the heaping than those who go to work each day, do their jobs and play by the rules.” Danny goes for an “if… then” close…
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