G.M. Asks for $18 Billion as It Tries to Avoid Collapse

[Sgent]

Source: NY Times

WASHINGTON — General Motors will drastically cut jobs, factories, brands and executive pay in a desperate effort to persuade Congress to give it $12 billion in loans to stave off a financial collapse.

In an unabashed plea for an emergency government rescue, G.M. said Tuesday that it needed $4 billion in immediate loans to stay in business after December, and another $8 billion to carry it through the first part of next year.

Without help, the nation’s largest automaker could topple into insolvency within weeks and drag down the other two members of Detroit’s troubled Big Three. The company said it needed $10 billion in federal loans to keep running through March, another $2 billion for the balance of 2009 and a $6 billion line of credit in additional support beyond that.

....

Despite having radically downsized its operations in the last three years, G.M. said it would cut another 20 percent of its factories and jobs, seek to renegotiate the terms of $66 billion in debt, and push to re-open contract talks with the United Auto Workers to reduce labor costs.

Read more: http://www.nytimes.com/2008/12/03/business/03auto.html

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Read the entire article, its scary.

[phantom power]

1. "$10 billion to keep running through March" -- and what then?

Are people going to suddenly start buying cars again in April, like it was 1999?

This is bad.

[machI]

4. If GM takes the 10 billion, and goes bankrupt anyway, does the money get paid back?

Will the taxpayer's just be out for the 10 billion while some management executives at GM pay themselves a bonus for keeping the company going until March?

I don't want folks to lose their jobs, but I would like a little reassurance the money from the Treasury is not going to just vanish in this deal.

[phantom power]

6. I believe the manufacturing jobs can be saved, but maybe not the auto industry.

I mean, there will be an auto industry, but it may be permanently reduced in size. Those jobs will become jobs manufacturing railroads, rolling stock, mass transit. Or wind farms, nuclear reactor components, etc.

I'm worried about the number of jobs that will be lost in the transition. Even a highly motivated Obama and Congress can't ramp up entire new industries in 3 months. But that's what they need to try. Fast as possible.

[np33]

17. Assurances for what exactly

"oh hey I can gurantee I won't go out of business?" It's amazing that companies that employ millions of Americans and have enabled many working class people attain decent jobs with health benefits get so much slack for asking for a bail-out. Yet banks who messed up this whole system in the first place can ask billions upon billions and Americans barely break a sweat about it.

[eilen]

26. How much of GM's problem is d/t their financing/banking arm?

It seems to me that GM was more in the business of issuing credit than selling cars. With the credit crunch, I wonder if that has hit GM harder than the other car manufacturers. I'm sure there are high defaults as their credit came with high interest rates.

[Deja Q]

2. Give workers living wage jobs and nobody would be going under.

Henry Ford knew that, but he'd be called a communist today...?

:shrug:

But, as with every other thread I've posted in, someone will rightfully call me an idiot too. Fair enough.

[phantom power]

3. The only way I see out of this is a revival of Keynes.

If the govt just keeps pumping money intravenously into these companies, without addressing the demand side, it's going to just be a bottomless pit.

[Deja Q]

22. Precisely. At some point the other facets of the economy should be - must be - addressed.

[russspeakeasy]

5. Not a dime!!!

They will piss it away and be back in 4 months for more....the
workers need some protection...and chapter 11 provides it...

[Dr.Phool]

10. Dead Wrong.

I've been on the labor side of Chapter 11 twice. And the hourly workers got screwed both times.

And anyone else who's been on the labor side of a Chapter 11 filing.

[sarcasmo]

13. Chapter 11 screws the worker, but hey that's nothing new.

[ozymandius]

15. Chapter 11 only succeeds if there is a bridge loan.

Otherwise, without a bridge loan, it's an express route to Chapter 7. We cannot afford that.

[MichiganVote]

18. You're wrong on both counts.

[OhioChick]

7. GM to slash up to 31,500 jobs in US

Source: Economic Times India

3 Dec 2008, 0447 hrs IST, AGENCIES

CHICAGO: General Motors told lawmakers Tuesday that it plans to cut up to 31,500 more jobs in the United States, as it confronts a severe slump that has it begging Congress for an $18 billion bailout.

GM said it planned to reduce its total US employment from the current level of 96,537 people to between 65,000 and 75,000 salaried and unionized workers by 2012.

The total number of US plants would be cut to 38 in 2012 from 47 in 2008.

GM has already slashed its workforce nearly in half from the 2000 levels of 191,465 people. The company operated 59 powertrain, stamping and assembly plants in the United States in 2000.

The job cuts were detailed in a report GM presented to Congress in hopes of securing government-backed, low-cost loans.

GM said it expects to be "fully competitive" with Toyota on wage costs for "both current workers and new hires" by 2012 due to "additional changes to be negotiated" with its main union, productivity improvements, turnover rates and the planned cuts.

A landmark labor agreement reached last year has lowered GM's total costs for new workers to 25 to 35 dollars an hour compared with Toyota's average US labor cost of between $45 and $50 per hour, GM said.



Read more: http://economictimes.indiatimes.com/GM_to_slash_up_to_31500_jobs_in_US/articleshow/3786519.cms

[bemildred]

8. Blackmail, nationalize them. nt

[russspeakeasy]

9. Buy em

and fire every vp and department head and have them re apply
for their old jobs...start over... It is the only thing that
will get their attention...

[geomon666]

11. What is their plan to make money?

Is cutting jobs their plan? Cause if that's the case, they can go take a hike along with the other two dinosaurs.

[Azlady]

12. GM COO was just on Hardball

Said that up to 3 million across the country could be affected by their short fall! that of course includes dealerships and part making companies... didn't know there were any left here! CRAP!

[LiberalFighter]

24. That includes support services in the local communities.

Many of the tools used on the line are bought locally in hardware stores.
Office supplies usually bought locally. Paper, staples, paper clips, etc.

Then there are the contributions that UAW members make through the local United Way, giving blood to the Red Cross, annual Day of Caring, donating unused clothing especially during winter months, making contributions to families that are not as well off during Christmas. Those activities are organized by the local union that might not otherwise be.

[Earth_First]

14. GM has a healthcare liability of $5.9 billion annually...

In addition to employee coverage on healthcare; it also holds a liability of $1.9 billion in prescription drug coverage.

GM is liable for the health of their employees to the tune of $7 billion dollars annually.

The answer seems pretty obvious to me: single-payer universal healthcare.

I cannot believe that 'The Big 3' are not crusading the way towards implementing a more sane and rational healthcare delivery system in this country.

It would save them, well, BILLIONS.

(...and that's just 3 corporations in ONE industry.)

[np33]

16. Okay BUT

they have slightly more pressing issues.

[Blue_Tires]

21. others have brought that up before

they really could have blazed a trail to make that happen...but for whatever the reason, the big 3 decided to spend all their lobbying dollars on fighting increased fuel mileage standards

[WoodyM]

19. Why are such conditions and demands

being placed on the auto industries and no questions asked of the financial institutions that we are bailing out with much greater help?

[pampango]

27. I'd be happy if they put the same conditions on the Big 3 that they put on Citibank.

Government control of executive compensation and dividend payments and partial ownership of the companies through government stock ownership.

If we gave the auto management $25 billion or $39 billion (not the loans/guarantees that are being proposed now), with no conditions or demands, what assurance would we have that they would use the money wisely to make the industry and auto workers jobs viable in the long run?

[NMDemDist2]

20. How many times have we bailed out the Airlines?

:shrug:

[Blue_Tires]

23. another DUer brought up this idea

the rat bastard big oil companies could bail out Detroit easily with petty cash...the automakers and oil companies have a history of colluding with each other when mutual interests are at stake...

[pinniped]

25. The financial industry just snapped their fingers and 700+ billion materialized....

right before their very eyes. And it did, since it was probably just printed up at the BEP. There wasn't any doubt they were getting their payout.

The big banks should have been made to beg like this. But I guess there wasn't any time for that shit.

A super meltdown was imminent unless it happened that same week.

[sarcasmo]

28. Pinniped, it's all about destroying the UAW.