Archive for the ‘Chrysler’ Category

Detroit’s Auto Industry, Failure’s a Done Deal

November 18, 2008

“Nothing,” said a General Motors spokesman last week, “has changed relative to the GM board’s support for the GM management team during this historically difficult economic period for the U.S. auto industry.” Nothing? Not even the evaporation of almost all shareholder value?

By George F. Will
The Washington Post
.
GM’s statement comes as the mendicant company is threatening to collapse and make a mess unless Washington, which has already voted $25 billion for GM, Ford and Chrysler, provides up to $50 billion more — the last subsidy until the next one. The statement uses the 11 words after “team” to suggest that the company’s parlous condition has been caused by events since mid-September. That is as ludicrous as the mantra that GM is “too big to fail.” It has failed; the question is what to do about that.

The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection….

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/17
/AR2008111703101.html?hpid=opi
nionsbox1

*******************

By Martin Feldstein
The Washington Post
Tuesday, November 18, 2008; Page A27

The Big Three U.S. automakers need more than an injection of $25 billion from the federal government. Because of their ongoing losses, they would burn through that money in less than a year and would soon be back for more.

General Motors, Ford and Chrysler can make excellent cars, but they cannot sell them at prices that are competitive with the prices of cars produced in the United States by Toyota and others or with the prices of cars imported from Europe and Asia. The basic reason is the labor costs imposed by union contracts.

The Big Three pay much higher wages than production workers are paid in the nonunion auto firms and in the general economy. And the health-care costs of current workers and retired union members are an enormous additional burden.

The simplest solution is to allow GM and the others to file for bankruptcy. If the companies file under Chapter 11, they would be able to continue producing cars, and the workforce would remain employed while the firms reorganized. The firms would also be able to get short-term credit under bankruptcy protection.

The bankruptcy court could require the unions to rewrite contracts, bringing wages down to levels that would allow the firms to compete and therefore to maintain employment. Scaling back employee and retiree health benefits would further improve price competitiveness and allow better cash wages. The firms’ bondholders and other creditors would have to take losses. Shareholders’ fate would depend on how firms responded to this restructuring.

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/1
7/AR2008111702917.html?hpid=
opinionsbox1

Obama-Pelosi Stimulus May Fail to Reignite Economy

November 17, 2008

President-elect Barack Obama and House Speaker Nancy Pelosi may throw as much as half a trillion dollars worth of stimulus at the economy — and have little or no growth to show for it.

The forces arrayed against recovery, including the credit contraction and cutbacks by consumers, are so powerful that they may overwhelm the record sums of spending and tax cuts being discussed in Washington. The only consolation, economists say, is that without the stimulus, things would be even worse.

By Rich Miller, Bloomberg

Speaker of the House Nancy Pelosi speaks during a news conference ...
Speaker of the House Nancy Pelosi speaks during a news conference on Capitol Hill.  Democrats in Congress Monday launched a new multi-billion dollar drive to save the US auto industry, but the White House warned against draining funds from a huge finance industry bailout.(AFP/Getty Images/File/Brendan Smialowski)

“It’s hard for me to imagine we’ll have a return to positive growth before the fourth quarter of 2009, even with a $500 billion stimulus,” says Barry Eichengreen, an economics professor at the University of California, Berkeley. He sees the unemployment rate rising to 9.5 percent in early 2010, from 6.5 percent now.

The first dose of fiscal medicine might come within weeks, following the return of Congress today for a lame-duck session, and would focus on stepped-up government spending. The balance, including a tax rebate, would come after Obama assumes the presidency in January.

Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, says the economy may contract 2 percent next year without a package of at least $300 billion. With it, “we could get growth pretty close to zero,” he adds. That would still be the worst result since 1991.

A `Bolder’ Approach

“The breadth and potential depth” of the crisis call for a “bolder” approach, Obama economic adviser Gene Sperling said in congressional testimony Nov. 13. A package costing $300 billion to $400 billion “should be the starting point….

Read the rest:
http://news.yahoo.com/s/bloomberg/20081117/pl_bloomberg/aez
5fruymj4q;_ylt=Ak9FS0yn8CqAZ9eabFQuVA2s0NUE

Top Republican senators oppose automaker bailout

November 16, 2008

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition raises serious doubts about whether the plan will pass in this week’s postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

By Stephen Ohlemacher, Associated Press Writer

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.
Richard Shelby
Senator Shelby

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

General Motors headquarters is seen October 26, 2008 in Detroit, ... 
General Motors headquarters is seen October 26, 2008 in Detroit, Michigan. Picture taken October 26, 2008.(Rebecca Cook/Reuters)

“They’re not building the right products,” he said. “They’ve got good workers but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Added Kyl, the Senate’s second-ranking Republican: “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

House Speaker Nancy Pelosi, D-Calif., said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.

“The House is ready to do it,” said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. “There’s no downside to trying.”
Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd were among the congressional Democrats negotiating the bailout settlement on Sunday. (Joseph Silverman/The Washington Times)

Above: Ready to bail, from L to R: Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd. Photo by Joseph Silverman

Read the rest:
http://news.yahoo.com/s/ap/20081116/ap_on_go
_co/auto_bailout;_ylt=AmAt77VLR57r0Uq41kBoeYWs0NUE

Auto Maker Bailout “Doubtful”

November 14, 2008

A senior Democratic senator raised doubts on Thursday that an attempt to bail out U.S. automakers had enough support to clear Congress this year. 

As Republicans amplified their concerns about a bailout, Senate Banking Committee Chairman Christopher Dodd raised the biggest red flag for fellow Democrats trying to craft a $25 billion rescue and pass it during a post-election session set to start next week.
.
By John Crawley and Rachelle Younglai, Reuters 

“Right now, I don’t think there are the votes,” Dodd of Connecticut told reporters about prospects in the Senate. “I want to be careful of bringing up a proposition that might fail,” he said.

Although Dodd said “we ought to do something” and personally backed using money from the ongoing $700 billion financial services rescue program to help Detroit, he was skeptical that enough Republicans would support a bailout.

Senate Majority Leader Harry Reid, a Nevada Democrat, also cautioned that success of a bailout rests with Senate Republicans and the White House. With their slim majority, Democrats cannot force a measure through the Senate or trump a White House veto.

The White House opposes the approach being taken by congressional Democrats but has not threatened to block any bailout. Bush administration officials have said they would consider other steps Congress can take to help General Motors Corp, Ford Motor Co and Chrysler LLC.

Dodd said there have been “legitimate issues raised” about how to help.

Read the rest:
http://www.reuters.com/article/marketsNews/idINN1339
368420081114?rpc=44

Commentary: Say no to the auto bailout

November 13, 2008

General Motors, Ford, Chrysler and the United Auto Workers union are pouring millions of dollars into a lobbying campaign for a taxpayer bailout.

The money devoted to influence peddling in Washington would be better spent on improving quality and finding ways to reduce a bloated cost structure, but both management and UAW have decided that fleecing taxpayers is a better option.

A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the synonymous with inflexible and anti-competitive work rules.

Perhaps most important, though, is that a bailout would be bad for the long-term health of the American auto industry. It would discriminate against the 113,000 Americans who have highly-coveted jobs building cars for Nissan, BMW and other auto companies that happen to be headquartered in other nations.

These companies demonstrate that it is possible to build cars in America and make money. Putting them at a competitive disadvantage with handouts for the U.S.-headquartered companies would be highly unjust.

A bailout also would be bad for General Motors, Ford and Chrysler. The so-called Big Three desperately need to fundamentally restructure their practices. More specifically, the car companies need to endure some short-term pain in order to restore long-term viability. But that won’t happen if politicians raid the treasury.

From CNN

Read the rest:
http://www.cnn.com/2008/POLITICS/11/13/mitchell.
auto/index.html

Goldman suspends GM rating, Chrysler urges aid

November 13, 2008

Goldman Sachs suspended its rating on General Motors Corp on Thursday and said the automaker needs at least $22 billion in federal aid, while Chrysler said it would be “very difficult to survive” without government support.

By Soyoung Kim, Reuters

Chrysler LLC Chief Executive Bob Nardelli said Chrysler was losing money due to a decline in U.S. auto sales to 25-year lows, and said Chrysler would seek federal money for its liquidity and restructuring needs.

In one of his few appearances since merger talks between GM and Chrysler broke off, Nardelli said Chrysler must have broader ties with U.S. automakers or alliances with overseas competitors to ride out the industry downturn.

The auto industry has stepped up lobbying efforts for government support and the heads of the three U.S.-based automakers are expected to testify next week before a congressional committee considering aid for the industry.

The Bush administration said the government could quickly disburse $25 billion in loans already approved by Congress. However, the administration has responded coolly to an aid plan being shaped by Democrats, which includes using part of the $700 billion financial rescue package to provide additional liquidity for the auto industry.

U.S. President-elect Barack Obama is considering appointing someone to lead efforts to help the auto industry return to health, an Obama aide said on Thursday.

Read the rest:
http://news.yahoo.com/s/nm/20081113/bs_nm/us_autos;_
ylt=AoxQlVWmKP6w17NQ.n2SVOWs0NUE

Back biting over Barack Obama’s Treasury Secretary gives him (first? another?) headache

November 9, 2008

Since Tuesday night’s terrific triumph at the polls and the euphoria that followed, Barack Obama has met reality squarely: he accidentally insulted Nancy Reagan, drew condemnation over his comments from Iran and concerned mumblings from Israel, Russia’s Medvedev wants an “early” meeting to discuss planned missile defenses in Poland and the Polish president says Obama promised to finish the missile project while the Obama camp says the President-Elect made “no commitment.”  Now Mr. Obama has to select a Treasury Secretary  and a Secretary of State from among a cast of well qualified and eager experts….

****

Barack Obama is wrestling with “back biting” and clashing egos as he tries to find a Treasury Secretary to help him pilot the US out of economic meltdown.

By Tim Shipman in Washington
The Telegraph (London)

Disagreements among senior Democrats and members of his team over who he should pick has given the President-Elect a wake up call about the treacherous partisan waters he now has to navigate, according to those familiar with the discussions.

Mr Obama used a national radio address yesterday to reiterate his support for a new $100bn “rescue plan for the middle class” and warned: “We are facing the greatest economic challenge of our lifetime.”

Stacks of U.S. one hundred dollar notes are piled up after counting ... 

But despite the hopes of some aides that he would be able to name a Treasury Secretary in the first few days after the election, Mr Obama has found that he has to spend longer conisdering his decision after being bombarded by aggressive lobbying for the main candidates.

It is the President-Elect’s first taste of real dissent after having his views accepted without equivocation on the campaign trail.

Steven Clemons, senior fellow at the New America Foundation, a centre-left think tank, said “policy and personality battles” have broken out over the Treasury and defence portfolios, as well as selection of a Secretary of State, the senior foreign affairs post.

“Tension, backbiting, and jostling for position is fraying the nerves of many who are highest on the list of candidates Obama is considering for senior positions,” he said.

Time is pressing. The US economy shed another 240,000 jobs in October, the tenth month in a row, and the big three car manufacturers experienced a sales slump of 32 percent, to their lowest level since 1991. Ford, General Motors and Chrysler are now asking for a $25bn government bail out of their own.

But Democrat power brokers are split over the two frontrunners for the Treasury job. Lawrence Summers, who held the post under Bill Clinton, has influential support and is also pushing hard for the job. But he is blamed by many for the financial deregulation which contributed to the recent Wall Street collapse.

Lawrence Summers
Lawrence Summers was Secretary of the Treasury for Bill Clinton for about a year….

Feminist groups are horrified by his record as president of Harvard University, where Mr Summers suggested that women were inherently less good at maths than men.

Kim Gandy, the president of the National Organisation of Women, complained last week: “It’s very important that whoever is in key positions understands the importance of women to this economy.

“I do wonder whether if his had instead been a comment or an opinion about African Americans having less capacity for math and science, would he be on anybody’s short-list.”

Ms Gandy said she is lobbying Mr Obama to choose one of the female economists, Laura D’Andrea Tyson or Sheila Bair.

Read the rest:
http://www.telegraph.co.uk/news/newstopics/uselection2008
/barackobama/3407398/Back-biting-over-Barack-Obamas-
Treasury-Secretary-gives-him-his-first-headache.html

GM reports $2.5B 3Q loss, says it’s running out of money, suspends Chrysler takeover talks

November 7, 2008

General Motors Corp. said Friday it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn’t get government aid.
.
By TOM KRISHER and JEFF KAROUB, AP Business Writers
From The Associated Press

GM also said it has suspended talks to acquire Chrysler. While it didn’t specifically name the automaker, GM said it was setting aside considerations for a “strategic acquisition.”

“While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside,” the company’s said in a statement.

The automaker said its cash burn for the quarter accelerated to $6.9 billion, and government aid will be “essential” because of the slow economy and credit crisis.

The GM logo hangs over an unsold 2009 Acadia sports-utility ... 

Above: The GM logo hangs over an unsold 2009 Acadia sports-utility vehicle on the lot at a GMC Truck dealership in the south Denver suburb of Littleton, Colo., on Sunday, Oct. 12, 2008. General Motors Corp. on Friday, Nov. 7, 2008 said it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009. GM also said it has suspended talks to acquire Chrysler, and said its cash burn for the quarter accelerated to $6.9 billion due to a severe U.S. auto sales slump.(AP Photo/David Zalubowski)

Read the rest:
http://news.yahoo.com/s/ap/20081107/ap_on_bi_ge/earns_gm;_ylt=
AsQnG1GHOpiokSxdWMm4QZys0NUE