The Plan

[FoMoJo]

Automakers promise to cut salaries, ditch planes

excerpts...

The chiefs of both Ford and GM would cut their salaries to $1

they are grounding their corporate jet fleets

Ford's business plan projects that with a $9 billion federal line of credit the Dearborn-based carmaker can return to profitability sometime in 2011

Ford also will introduce electric vehicles and plug-in hybrids within three years

will seek more union concessions and trim its lineup of suppliers and dealers

CEO Alan Mulally -- who was paid $21 million last year -- would cut his salary to $1 only if Ford draws on the government money

GM's plan has CEO Rick Wagoner cutting his salary from $2.2 million this year to $1

The plan also outlines GM's plans to cut hourly costs, shrink its dealer network and sell up to four brands

Detroit-based GM already announced it is selling Hummer, and it may say it will try to sell its Saab, Saturn and Pontiac brands

Privately held Chrysler LLC has been quieter so far today about details of the turnaround plan

Apparently, they drove to Washington in hybrids...

More on The Plan

The company's heads decided not to use private jets to get to Washington this time to avoid criticism.

GM chief executive Rick Wagoner and Ford chief executive Alan Mulally are both said to be driving one of their own companies' hybrid cars from Detroit, while Chrysler boss Bob Nardelli will not use a corporate jet.


I guess that Nardelli may have hitch-hicked .  Chrysler does seem pretty desparate.

[Secret Chimp]

Too many symbolic gestures, too vague where it counts.

[Laconian]

Chrysler canned their hybrids before Nardelli could drive one.

[GoCougs]

LOL - driving a hybrid car from Detroit! An even bigger joke than plug-in hybrids and electric vehicles!

How about building high-quality, competitive, cost-effective small and medium-sized vehicles while paying your manufacturing labor realistic wages and benefits??? Seems to work for most anyone else...

I'm almost embarrassed for the CEOs letting themselves get pimped by know-nothing politicians and the MSM, but alas, they're paid the big bucks to take the bullets.

[S204STi]

Maybe I'm not a dyed in the wool capitalist, but the concept of fat-cat CEOs making huge money while their ship sinks is irritating to a lot of americans.  I don't see the point in CEOs making no money; they should be rewarded for their work, they clearly must be something special to be leading a corporation.  But refusing to take a pay cut, or in Mulally's case taking home 21mil while his company spirals down the toilet is downright irresponsible.

For me to accept the concept of a bailout, Ford and GM would need to fire the top level management and start over fresh with some new talent, they would need to be allowed by the federal government to void their contract with labor unions and start over (whether with a restructured union agreement that isn't so ridiculous or with non-union labor, which I would prefer). And they would need to take a page from their successful competitors such as Toyota and run a lean, efficient machine.

[GoCougs]

Maybe I'm not a dyed in the wool capitalist, but the concept of fat-cat CEOs making huge money while their ship sinks is irritating to a lot of americans.  I don't see the point in CEOs making no money; they should be rewarded for their work, they clearly must be something special to be leading a corporation.  But refusing to take a pay cut, or in Mulally's case taking home 21mil while his company spirals down the toilet is downright irresponsible.

For me to accept the concept of a bailout, Ford and GM would need to fire the top level management and start over fresh with some new talent, they would need to be allowed by the federal government to void their contract with labor unions and start over (whether with a restructured union agreement that isn't so ridiculous or with non-union labor, which I would prefer). And they would need to take a page from their successful competitors such as Toyota and run a lean, efficient machine.

Ford management knows however that Mullaly would make as much or more at dozens of other Fortune 500 companies.

[Colonel Cadillac]

Rick Wagoner making $2.2 million last year is very reasonable in my book, especially considering before the economic meltdown, GM was doing fairly well in the turnaround. 

Also, driving down from Detroit to Washington D.C. in a car is a huge waste of their time. It makes me just as mad that they are spending an entire day driving down versus a few hours when their companies are on the verge of bankruptcy. I blame the public's irrational criticism for this.

[Colonel Cadillac]

Would anybody buy Pontiac, Saturn, or Saab anyways? I can see buying Saab (hopefully Ford sells Volvo and Saab and Volvo team up), but the other two are virtually worthless.

[Submariner]

LOL - driving a hybrid car from Detroit! An even bigger joke than plug-in hybrids and electric vehicles!

How about building high-quality, competitive, cost-effective small and medium-sized vehicles while paying your manufacturing labor realistic wages and benefits??? Seems to work for most anyone else...

Woah...easy there...that makes way to much sense. 

I'm almost embarrassed for the CEOs letting themselves get pimped by know-nothing politicians and the MSM, but alas, they're paid the big bucks to take the bullets.

[SVT666]

GM to streamline brands: Sell Saab, shrink Pontiac, close or sell Saturn

General Motors announced today that it plans to refocus its dwindling resources on its core brands - Chevrolet, Buick, Cadillac and GMC - and sell Swedish automaker Saab, shrink Pontiac to a niche brand and either discontinue or sell Saturn depending on its value. The automaker will cut one-third of its current nameplates by 2012 and lose about 1,700 of its 6,400 dealerships.

The new, streamlined GM will debut by 2012, the automaker told the United States Congress today as a part of its restructuring plan.

Saab

GM President Fritz Henderson told reporters that Saab is essentially on the market effective immediately, though the automaker is conducting an ?expedited and strategic review? of the brand. GM has owned Saab since 2000, though it has had a stake in the Swedish luxury automaker for nearly 20 years. Potential suitors for Saab haven?t been named.

Saturn

Henderson told Automotive News that Saturn ?is just not successful.? He declined to specify whether the brand would be folded or sold off, though most analysts say that Saturn?s value is quite limited. Henderson said that the automaker would discuss the brand?s future with its dealer group before making an official decision.

Pontiac

Pontiac will become a ?specialty niche? brand, according to Henderson. This likely means the brand will be trimmed down to core performance models and that the volume models, G5 and G6, will probably not be replaced. Speculation earlier today about the future of the slow-selling G8 leads us to believe it will probably not be replaced, either, and the automaker has reportedly canned the next-generation Solstice.

?Pontiac will be more of a high-value performance brand, like Corvette to Chevrolet,? Mark LaNeve, GM?s North American vice president of sales, told the Detroit News.

Further restructuring

GM says it will continue cutting up to 30,000 workers by 2012 and continue closing up to at least nine plants. The automaker said it will also slash more than 1,700 of its 6,400 dealers.

The automaker?s plan calls for negotiating with the UAW to help cut manufacturing costs further, as well as with lenders and bondholders to cut back about $35.6 billion of the automaker?s $66 billion in debt.

$18 billion

GM requested $18 billion of the $25 billion the three automakers are asking in low-interest loans from the U.S. government. That figure is quite a bit higher than the $10 to $12 billion that CEO Rick Wagoner requested two weeks ago when he first met with Congress.

Four billion dollars are needed by the end of December, GM says, or, according to Henderson, ?the company cannot fund its operations.? He refused to confirm or deny that GM would go into bankruptcy, but the statement is still pretty clear about how dire GM?s need has become.

Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy,? the automaker wrote in its report to Congress.

Salary cuts

In response to concerns about executive compensation, Wagoner will take a $1 annual salary.

Henderson, who received $1.9 million last year, will take a 30 percent cut, while three others - Vice Chairman Bob Lutz, Chief Financial Officer Ray Young and Tom Stephens, executive vice president of GM powertrain and global quality - will all take 20 percent cuts.

GM?s Board of Directors will also reduce their annual retainer to $1 in 2009.

[SVT666]

Chrysler requests $7b loan, promises efficient gas and electric vehicles

Given its lean current condition, it comes as little surprise that the proposal Chrysler LLC issued to the United States Congress earlier today outlines fewer future product changes than the proposal issued by General Motors. Chrysler, in its request for a low-interest $7 billion loan, detailed its plan to bring more efficient gasoline and electric vehicles to the market.

Though it would be hard to say whether it is in more dire straits than General Motors, Chrysler announced that it will have just $2.5 billion in cash at the beginning of 2009. The automaker says its cash level will fall below the amount needed to operate during the first quarter of 2009 without the loan.
Unlike General Motors, which vowed to drastically cut its product lineup in its plan, Chrysler?s outline was more akin to Ford?s in that it discussed the automaker?s green future model line, though Chrysler neglected to specify any details on cost-savings plans.

Chrysler says it intends to bring 24 new models to dealer showrooms by the end of 2012, including a ?wide portfolio of hybrid electric-drive vehicles.?
Chrysler intends to introduce its first full-function electric-drive model by 2010 with the eventual goal of 500,000 units on the road by 2013.
The automaker also says it intends to increase international partnerships - like the one with Nissan that will see Dodge-badged Nissan Versas for sale in South America and Nissan-badged Dodge Rams for North America.

The plan neglects to mention what Chrysler would do to reduce costs, however. The automaker has already slashed thousands of jobs, closed factories and reduced CEO Bob Nardelli?s salary to $1 annually. Chrysler apparently won?t cut or sell any brands - most analysts view Jeep as the most valuable brand in the automaker?s lineup and say that Dodge and especially Chrysler division are of limited value.

[SVT666]

Ford details business plan to Congress

Ford Motor Company has released details of the plan its CEO, Alan Mulally, is currently presenting to the United States Congress in Washington, D.C. In the plan, Ford asks for up to $9 billion in bridge financing and says that it intends to invest up to $14 billion in the U.S. over the next seven years to develop more fuel efficient cars and that it will work to reduce costs, including canceling all 2009 management bonuses.

There aren?t many shocking statements in Ford?s plan. It can essentially be broken up into two themes: Cost savings and future products.

Cost savings

Ford confirmed in a statement released to the media that it is selling its fleet of five corporate jets. As we previously reported, Mulally plans to take a salary cut to $1 annually if the U.S. government approves the loan, though there?s no timeline detailing when his compensation would increase. Ford also confirmed that it will continue cutting dealers and the number outsourcing suppliers it will consider for work. Ford looks to cut the number of potential suppliers from 3,400 to 750.
All bonuses to be paid in 2009 have been canceled, the automaker said, adding that no employee will receive a merit increase in 2009, either.

Future products

Ford said it plans to invest $14 billion on advanced technologies and products over the next seven years. It said that by 2014, more than 90 percent of the models Ford, Lincoln and Mercury offer will be considered ?Advanced Technology Vehicles? by the U.S. Energy Independence and Security Act.

At next month?s North American International Auto Show in Detroit, Ford says it will discuss in detail the company?s ?accelerated vehicle electrification plan,? which will include a family of hybrid vehicles on the market by 2012 and battery-electric vehicles for commercial use in 2010 and a sedan in 2011.
Ford?s plan doesn?t specifically detail negotiations the automaker is currently having with the UAW.

[Laconian]

I just saw the newspaper a few minutes ago, one of the headings was "Ford to advance green car timeline" or something like that. I thought "ooo, expedited Fiesta! C-MAX! Ka! " Then I read the column and saw that they were referring to electrics. Piffle.

[Colonel Cadillac]

I really hope congress does not bail out Chrysler. It is a waste of money!

[TBR]

Hmm...

18+9+7 /=25

[Colonel Cadillac]

Hmm...

18+9+7 /=25

They want $34B now, the statements listed the old $25B figure from the first time they asked congress. I have to say, kudos for congress in making the Big 3 release a business plan as to what they are doing with the money, the executives seem to have given more thought about what their companies need to do. I wish the banks had to give us a little more insight as to what is going on with their billions of government money.

[cozmik]

It will be interesting to see if anyone buys Saab. It'll probably be a while if anyone does considering the market.

[Raza]

It will be interesting to see if anyone buys Saab. It'll probably be a while if anyone does considering the market.

I'll buy Saab.

I won't buy a Saab, but I'll buy Saab. 

[Colonel Cadillac]

It will be interesting to see if anyone buys Saab. It'll probably be a while if anyone does considering the market.

The problem with the plan of someone buying Saab or any of their companies is that few can afford to do so right now, and even fewer banks have the capital to lend for such a transaction. Perhaps bailout bank money can be used?

[SVT666]

I'll buy Saab.

I won't buy a Saab, but I'll buy Saab. 

Let's pool our money.  I've got $11 CDN ($8 USD).

[TBR]

They want $34B now, the statements listed the old $25B figure from the first time they asked congress. I have to say, kudos for congress in making the Big 3 release a business plan as to what they are doing with the money, the executives seem to have given more thought about what their companies need to do. I wish the banks had to give us a little more insight as to what is going on with their billions of government money.

I wish the government would give us a little more insight on whats going with their billions of our money.

[Colonel Cadillac]

I wish the government would give us a little more insight on whats going with their billions of our money.

Hah, good point there. That makes me ask another question, why the hell did we enter Iraq if weapons of mass destruction was not the reason? That's been a pretty big waste of taxpayer money.

[TBR]

Hah, good point there. That makes me ask another question, why the hell did we enter Iraq if weapons of mass destruction was not the reason? That's been a pretty big waste of taxpayer money.

Complicated issue well beyond the scope of this thread....

[hotrodalex]

I don't care about $1 salaries, grounding jets, and all that crap. I want to see improvements in areas where is really counts. I want to see more efficient manufacturing, more flexible factories and plants, cutting costs where is doesn't matter but keeping the product a quality product. Things like that show me that the company wants to change. The things they said tell me that they want to get back to where they were before and then go back to those bad habits.

[Colonel Cadillac]

I don't care about $1 salaries, grounding jets, and all that crap. I want to see improvements in areas where is really counts. I want to see more efficient manufacturing, more flexible factories and plants, cutting costs where is doesn't matter but keeping the product a quality product. Things like that show me that the company wants to change. The things they said tell me that they want to get back to where they were before and then go back to those bad habits.

It sounds like Chrysler is going down that path for sure and I believe it to be a bad idea to bail them out--Chrysler represents the excess in the auto industry and needs to be shut down, almost all of their cars save the minivans, new Rams, and some Jeeps, are completely unsatisfactory and cannot compete with the rest of the industries' products.

Ford has had a good restructuring plan for the past few years and the products they have been turning are competitive in the market, it's just that consumer confidence in their products was shot through horrible products 10-20 years ago and it needs to be regained. With the government money, they will be turning out a different type of product (fuel efficient cars, electric cars etc) which is entirely a new direction for Ford and a good direction, perhaps their brand image will shift back towards a positive one. I believe they can return to profitability, hopefully by 2011 as they say, but we'll see. Hopefully on top of a change in product strategy, they also enact major cost-cutting, and that was mentioned. They should be closing Mercury like GM is Saturn and hopefully Pontiac (let's face it, nobody will buy them), so that irks me that they are not.

GM is shutting down their excess makes, Saturn, hopefully Pontiac, and attempting sales of Hummer and Saab, also to remove the excess in the auto market, something they should have done long ago but would never have been able to do. They are also going to be moving towards different product strategies similar to Ford, and that should be beneficial. Also, they are cutting much of the workforce and are generally downsizing. The company was too big and had too many similar products, things were inefficient; they won't be nearly as inefficient in the future having one economy brand, Chevy, two luxury brands, Cadillac and Buick (they should get rid of Buick North America, but that is not a part of the plan, not good), and one SUV/Truck brand, GMC. They should have one of each, but they are keeping Buick which is a mistake. Otherwise, they look to be going in the right direction

The current situation the Big Three are in is quite an eye opener for them and hopefully the UAW and they are learning not to take certain situations for granted--they must always innovate and build quality products. They cannot take brand loyalty for granted like they did.

[dazzleman]

Too many symbolic gestures, too vague where it counts.

I think that's probably right.  I'd need to hear a lot more details.  It's awfully late to be thinking of this stuff -- by about 30 years.

[JWC]

Maybe its time to bail out the dealerships too...


http://www.cbsnews.com/stories/2008/12/02/eveningnews/main4644132.shtml?tag=lowerContent;homeSectionBlock201

[dazzleman]

Maybe its time to bail out the dealerships too...


http://www.cbsnews.com/stories/2008/12/02/eveningnews/main4644132.shtml?tag=lowerContent;homeSectionBlock201

Yes, let's bail out every failing enterprise.

This whole bail out mess is going to have to fall of its own weight.

I get the feeling that all this is actually going to prolong our economic problems, by preventing us from making the adjustments necessary to get our economy healthy again for the long run.  Let's not forget that our current problems have come about at least in part because of the actions we took to prevent a recession at the end of the last cycle.

[JWC]

Do liberals even believe in evolution anymore?

First, save all the dying species on the earth for fear that without even one, the whole food chain will fail.   I know life's been hell for me ever since the demise of the Dodo bird.

If they truly believe in the survival of the fittest, then some companies will fail and the stronger ones, the ones with foresight and good leadership will survive.  You can not bail out everyone. 

If my dealership fails, then all my customers will go to the next dealer.  With all the extra business, they will need more techs and service advisers and the jobs will be filled by those who lost their jobs elsewhere.  Not to mention a larger building, so contractors go back to work to enlarge the other dealer.

Right now, my dealership and the nearest other Ford dealer are running out of work by 2-3pm and what we do have is mostly oil changes and tire rotations.  It isn't enough for both to survive. They have already started laying off office personnel.  With a bailout though, we can delay the eminent failure of one or both for another year or so....or business can return to the levels it was one year ago.  (Though two years ago was even better).

[Danish]

One thing to keep in mind: Ford only requested a credit line and not a loan. They say that they might not need the money but they'd like the option to be available if needed.

I'm kind of an optimist and I'd like to believe that thats the case and its not some PR line.