G.O.O.D

Source: International Herald Tribune

Even a U.S. government bailout could not save three of the last remaining plants in the United States still making sport utility vehicles.

Reeling from its financial problems and a collapsing SUV market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big SUVs ruled the road. The moves followed the shutdown last Friday of Chrysler’s factory in Newark, Delaware, which produced full-size SUVs.

The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big SUVs since the early 1990s.

Most of the plant’s 1,100 remaining workers were not scheduled to work the final day, but many showed up for an emotional closing ceremony. Dan Doubleday, who had 22 years on the job, broke down in the plant’s snowy parking lot afterward.

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Technorati Tags: General Motors, SUV

Source: CNN.com

The collapse of negotiations could possibly doom General Motors to a bankruptcy and closure in the coming weeks, with Chrysler potentially following close behind.

While Ford Motor has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants such as Toyota Motor and Honda Motor.

The struggling automakers may get some money anyway.

As part of their effort to urge skeptical Republicans to back the deal, Bush officials made clear that if Congress didn’t act, the White House would have to step in to save Detroit from collapse with funds from the Troubled Asset Relief Program, according to the sources familiar with the conversations.

One of the sources said that a White House official made it clear to a GOP senator that would be the worst option, because the loan could go to the auto companies with few or no requirements along with it.
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The sources asked not to be named because of the sensitivity of private conversations.

Democrats pressed the White House from the start to help Detroit by using some of the $700 billion for the financial sector, but the White House and Treasury Secretary Henry Paulson refused.

“I would only hope that the president, who has worked so well with us for the past several weeks, would now consider using the TARP money,” Reid said after Thursday night’s vote.

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Technorati Tags: General Motors, Chrysler , bailout

Source: Bloomberg.com

The Bush administration’s $14 billion automaker bailout plan and other alternatives lack the votes to pass the Senate, as lawmakers seek to beat a deadline to keep General Motors Corp. and Chrysler LLC from collapsing.

GM and Chrysler are in a race against the clock as they need federal aid to keep from running out of cash early next year. Pressure is mounting on GM as a small number of partsmakers ask for payments in advance, people familiar with the matter said.

“It’s going to be really hard for anything to get to 60” votes needed to overcome delaying tactics, said South Dakota Republican John Thune.

Senate Majority Leader Harry Reid said he’s working on an agreement that would let the Senate consider Democratic legislation approved yesterday by the House, as well as a slightly different version by Senate Democrats and a Republican alternative. The Bush administration has endorsed the Democratic plans it helped negotiate.

“We have danced this tune long enough,” said Reid, a Nevada Democrat. “If the Republicans want to have a better bill then they should offer an alternative and I invite them to do that.”

The House went home after passing its plan last night. Speaker Nancy Pelosi tossed a challenge to senators, saying on Bloomberg Television she wouldn’t bring her chamber back for further action if the Senate passed a different version.

Some Republicans threatened to block the Democratic plans from coming up, saying a so-called auto czar created by the legislation wouldn’t have enough authority to enforce cost cuts at the automakers.

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Technorati Tags: bailout , automaker

General Motors Corp and Chrysler LLC

Source: Reuters

General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers’ bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

All three automakers have urged Congress to authorize $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable.

The White House did not dismiss the industry’s $34 billion figure on Wednesday but said it was too early to say what it might support on an emergency basis.

Senate Majority leader Harry Reid wants to try to find a way to avert threatened bankruptcies in the U.S. auto industry with Detroit Three chief executives readying for a make-or-break hearing on Thursday on the bailout request.

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Technorati Tags: General Motors, Chrysler

Source: The News Journal

Moody’s Economy.com chief economist Mark Zandi estimates that 2.6 million jobs — about 1.9 percent of the U.S. work force — would be lost if GM, Chrysler and Ford were to go under.

That includes more than 255,000 people directly tied to the three companies and another 2.3 million whose jobs are indirectly dependent — everything from people who work in the steel, glass, fabric, tire and electronic industries to the barista who makes $4 cappuccinos for the ad executive who’ll be out of work when his auto industry business ceases to exist.

Zandi argues the economy is too weak to absorb that fallout.

“This could be the thing to push us over,” he says. “The ripple effect is like throwing a big boulder into the economic pond.”

The auto industry is woven into the grass roots of the U.S. economy, through its dealer networks, the advertising it buys in newspapers and local TV and radio stations, the health care it buys for its workers and their families and the retirees it supports.

The domestic auto industry supports nearly 800,000 retirees and spouses with pensions and, until recently, health care for everyone. Now that’s being cut back for white-collar retirees, but if the automakers file for bankruptcy, they could shed their pension costs and force the government to pick up the tab.

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Technorati Tags: General Motors, Chrysler, Ford

Source: CNN.com

Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.

“There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they’re going to be trimming down and streamlining their businesses,” Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.

“It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious.”

He added, “couldn’t you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it.”

The executives — Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM — were seeking support for a $25 billion loan package. Later Wednesday, Senate Majority Leader Harry Reid reversed plans to hold a test vote on the measure.

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Technorati Tags: Ford, Chrysler, GM