Sources: Obama to give GM 2 months to restructure

[OmahaBlueDog]

<<WASHINGTON – The Obama administration plans to give General Motors Corp. enough government aid to restructure over the next 60 days, while Chrysler LLC will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA.

Two people familiar with the plan said Sunday it will demand further sacrifices from the automakers and bankruptcy would still be possible if the automakers failed to restructure. The officials spoke on condition of anonymity because they were not authorized to make details public>>

http://news.yahoo.com/s/ap/auto_bailout

and....

GM CEO Wagoner to step down at White House request

<<DETROIT – General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.

The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.

Wagoner's departure indicates that more management changes may be part of the deal, but it is still unclear who will be put in charge of GM. The automaker recently promoted Fritz Henderson, its former chief financial officer, to become president and chief operating officer. Many in the company thought he would eventually succeed Wagoner.>>

http://news.yahoo.com/s/ap/gm_wagoner

[DainBramaged]

1. You can't spin a giant company like GM in 60 days, not going to happen

a recipe for absolute failure. This will be the final blow to the UAW. And the American auto industry, since the parts suppliers will tumble like dominoes. Too bad, and here I thought they weren't in bed with the Japanese.

[OmahaBlueDog]

3. I was hoping you (as the resident expert) would reply first

..any chance that anyone can salvage anything out of the wreckage of the two companies?

[DainBramaged]

6. I have to see the plan, I don't know how it will affect everyone

You have parts suppliers ready to go bankrupt and close down, which would destroy the entire auto industry (Foreign and Domestic)yet two months is not enough time to bring the vehicles in the pipeline to market or shed the unprofitable divisions like Saturn, Hummer, Saab. Two months is just like dripping water into the mouth of a dying man instead of giving him intravenous fluids.

[RB TexLa]

9. So until now GM hasn't been doing anything to restructure? This just came up today?

Wow. Really amazing.

[OmahaBlueDog]

14. That's not entirely true

I know they've been trying to find buyers for Hummer and Saturn.

[RB TexLa]

The person I responded to acted as if this 60 days is it. That GM knew nothing of this before today

[Cessna Invesco Palin]

40. Yes, Obama is having gay sex and snorting cocaine with the Japanese.

I thought the primaries were over. :eyes:

[yodoobo]

45. Have faith in obama. He knows what he is doing.

UAW will come out of this just fine.

Obama has a plan for GM and he will not let the UAW down.

[MrPerson]

2. EVERYTHING MUST GO!!! DEALS LIKE YOU'VE NEVER SEEN!!!

[graywarrior]

4. Too bad they didn't make the Prius

[DainBramaged]

8. THAT (as much as I like you) was unnecessary.

Too bad the Japanese got BILLIONS in incentives to build plants here, and still import 60% of the vehicles and parts sold here, putting OUR industry at a disadvantage. And too bad the Japanese are backed by Senators Corker and Shelby, who are the thumb in the eye of the UAW.

PS, Prius sales are off 50% over this time last year.

[blue_onyx]

15. And too bad Senators Corker and Shelby

are too dumb to realize that the US auto companies going under would hurt the foreign companies too. There's a reason Toyota has publicly stated their desire for GM/Chrysler/Ford to stay in business.

[LiberalFighter]

35. I foresee Toyota, Honda and Nissan moving their operations to Canada

Because the labor pool in Mississippi and Alabama does not have enough qualified workers that don't require pictures for training.

[DainBramaged]

36. There are quite a few articles about that. affecting Japan too

http://www.nakedcapitalism.com/2008/07/cost-of-japans-competitiveness.html

Cost of Japan's Competitiveness: Increasing Poverty


http://www.thetruthaboutcars.com/toyota-falling-quality-is-job-one/


Toyota: Quality is Job One


To avoid the United Auto Workers (UAW), Toyota situated their new factories in “right to work” states. As many industry analysts have concluded, Toyota’s clean sheet factories (eventually aided by state-funded tax breaks) and non-union workforce gave them an immediate and unassailable advantage over their “domestic” competition. While GM, Ford and Chrysler were busy appeasing their unions, draining funds which could have been used to upgrade their ageing products and antiquated production facilities, Toyota hit the ground running and never looked back.

At some point, Toyota became a victim of its own success. The company’s double quick expansion, from perennial underdog to voracious overlord, has compromised their unique selling point: product quality. Specifically, Toyota has suffered a plague of recalls around the world. In 2003, the automaker recalled 200k American vehicles. In 2004, the number increased fivefold, to a little over one million vehicles. In the following year, the number leaped again, more than doubling to 2.2 million. So far this year, Toyota has announced five recalls affecting approximately 900K vehicles.

Again, Toyota’s rapid growth is to blame. For one thing, the company’s design centers have been understaffed. The shortage of in-house talent has forced Toyota to outsource, relying on its parts suppliers to design key components. At the same time, the automaker has increased the amount of parts sharing among different models. The practice has dramatically increased the scope of a "single" failure, as witnessed by last October's recall of 1.27m Japanese vehicles. Goldman Sachs estimates that design faults (e.g. rubber parts not thick enough to withstand engine heat and joints too weak to hold together) account for 68% of Toyota’s 2004 recalls.

Andrew Phillips of Nikko Citigroup stated "Toyota's resources have been stretched quite a bit by the big increases in volume." Shinsei Securities analyst Yasuhiro Matsumoto lays the blame for Toyota’s declining quality squarely on Katsuaki Watanabe’s shoulders. He claims the CEO’s constant focus on cost cutting has created devastating production glitches. The resulting quality issues have become so alarming that Watanabe recently admitted, "I take this seriously and see it as a crisis." It’s just as well; Goldman Sachs analyst Kunihiko Shiohara estimates that it may take Toyota four years or more to achieve "a fundamental turnaround in quality levels.”

[Hannah Bell]

41. right, they've been running plants there for 30 years, but suddenly the people got too dumb.

[LiberalFighter]

56. They must be getting dumber with them spending less on education

and it must be getting more expensive to train them over and over.

[Hannah Bell]

58. yeah, it's a wonder ford ever found anyone to build his cars when the average worker

had a 4th-grade education & could barely speak english.

lack of school don't mean "stupid".

[LiberalFighter]

60. Education requirements weren't the same then. Machinery isn't the same as then.

[Hannah Bell]

61. yes, the high level of education in mexico is the reason for maquilas.

& filipino farmworkers are the degreed contingent turning out many computer devices.

[graywarrior]

48. Chill out

[bluestateguy]

5. I'm not really sure what the alternative is

If someone knows, I'm all ears.

If McCain were in there right now, he'd tell them to go straight into bankruptcy. So I hope the companies are very, very grateful.

[tritsofme]

7. More spinning wheels, if you will, GM will eventually face Chapter 11.

Allow the feds to provide DIP financing, mitigating the risk of liquidation, and let GM shape itself into a profitable company.

[OmahaBlueDog]

10. I'm going to go out on a limb here

I think this is "in lieu of Chapter 11"

I think GM in Chapter 11 is really bad for PR right now, so (this is pure speculation here)the WH wants increased control to allow Treasury, Commerce, and Defense to determine what has to be kept afloat, and what can be sold off.

People forget, GM has huge defense contracts -- and not all of them are automotive (I believe they still own Hughes Satellite -- someone can correct me on that). It's not just cars either; diesel enggines for semis, straight trucks -- there's a lot on the line here.

[nonconformist]

57. It won't be an 11. It will be a 7. It will be a disaster.

GM needs credit to buy the parts to make the vehicles, credit they won't be able to get under a chapter 11.

So what will happen, if GM isn't really helped, is that they'll file a 7 and cease operations.

The parts manufacturers will fail, and also need to file for bankruptcy. This will in turn severely impact Ford. Chrysler will fail right along with GM.

That will also affect foreign auto makers squatting in the US when the parts manufacturers fail.

Talk about a trickle-down effect! Before it's over, hundreds of thousands of people will be without jobs, and we'll be forced to import all our vehicles.

How lovely.

[MrPerson]

11. They are going to shed the pensions and the health care

[OmahaBlueDog]

12. Or the Feds will absorb all or part of them in exchange for keeping the jobs

...just a thought

[DainBramaged]

13. UH the Union assumed responsibility for those in 2007

next.

[MrPerson]

16. That's not what I heard. $70 per hour labor costs because

of retired workers.

I know they pay as low as $14 per hour, but they still pay health care and pensions for the retired.

[DainBramaged]

17. OH BOY, you are spewing REICH-WING talking points now

stop while you can.


http://mediamatters.org/items/200812060002

[MrPerson]

18. Nope. I said $14 per hour. But the legacy costs are there.

You just don't know the facts.

[DainBramaged]

19. Neither do you, I HAPPEN to be a UAW member so want to compare Union cards?

http://www.uaw.org//auto/12_01_08auto1.cfm

[MrPerson]

20. The Facts

http://mediamatters.org/items/200812060002?f=s_search

TOTAL COMPENSATION

The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked. This total is made of two main components: cash compensation ($39.68) and benefit/government required programs ($33.58).

The average annual cash compensation for hourly employees in 2006 was $39.68 per hour. Included in average earnings are straight-time pay, Cost of Living Allowance (COLA), night-shift premiums, overtime premiums, holiday and vacation pay. In 2003, GM workers logged 41,363 (hours in 000's) in overtime hours for an average of 371 hours per worker; in 2004, 39,409 overtime hours for an average of 374 hours per worker; in 2005, 33,555 overtime hours for an average of 337 hours per worker; and in 2006, 27,265 overtime hours for an average of 315 hours per worker.

Benefit/government required programs in 2006 added an additional $33.58 for each active hour worked. These costs include: group life insurance, disability benefits, and Supplemental Unemployment Benefits (SUB), Job Security (JOBS), pensions, unemployment compensation, Social Security taxes, and hospital, surgical, prescription drug, dental, and vision care benefits.

[DainBramaged]

21. I think, you are not here to defend GM or the UAW, I think you need to be on my ignore list

goodbye. Keep pushing those Reich-wing memes. And keep picking out all of the things you WANT to be correct.

And for the record, you folks ONLY show up and push that shit when ANYTHING regarding the survival of the UAW shows up. The AVERAGE is $38 with ALL benefits included. You can't add all of the benefits paid to the retired/survivors/disabled workers. THAT is intellectually dishonest, but what do you care, you got to put that shit out once again.

[MrPerson]

22. Thats why I linked to Media Matters.

[RB TexLa]

23. Give it up, some here have their commandments

Thou shall never, ever criticize thy General Motors

Thou shall support all auto companies giving their profitable divisions to thy General Motors

Thou shall support the government not only bailing out thy General Motors but also paying to prevent any bad PR.

Thy General Motors shall never have to consider mortgaging itself out like Ford did or assuming a foreign partner like Chrysler is doing.

[DainBramaged]

24. You just think one of these days I'll tell you I love you instead of ignoring your drivel

You sad, sad little person. You REALLY must have a need to follow my threads and comment JUST to draw attention to yourself. :rofl:

[RB TexLa]

25. I have no idea who you are. I don't know anyone on DU except for my wife

and she rarely posts.

[DainBramaged]

26. Than stop harassing and stalking me asshole.

You have nothing to offer, go make your own thread skewering GM.

[blue_onyx]

27. It goes both ways

There are some on here that do nothing but criticize GM. Anytime there's a little good news for GM, all the GM haters find some way to spin it negatively. As for your first "commandment," "Thou shall never, ever criticize thy Toyota" is more applicable to DU. I can't understand the way some people worship that company.

[RB TexLa]

28. True, both kinds are just as messed up

[Hannah Bell]

44. criticizing general motors is fine. repeating the bullshit about labor cost being the cause of its

problems: bullshit.

[AndyTiedye]

47. Would GM Be Profitable if the Government Picked Up the Health Care Costs?

[TahitiNut]

29. Cute. You take the FALSEHOOD that article debunks and recycle it as an alleged fact??

Where I come from, that's called a deliberate LIE.

[MrPerson]

30. Add up the costs - its $70 per hour just not to that worker.

[TahitiNut]

34. You seem to have some reading comprehension problems.

The pension costs of FORMER workers are compensation to THOSE workers and should be reflected in THEIR pay when they were working and accounted for by setting aside reserves. In no way, shape, or form should the DELAYED COMPENSATION or pension benefits of FORMER workers be characterized as a CURRENT labor cost.

Do the math, $%^&%^& ... if NOBODY worked a single hour then GM would STILL have to pay those pension costs. Or go bankrupt.

This is made somewhat clear in the article but YOU decided to recycle the FALSEHOOD.

[MrPerson]

37. Not if they filed bankruptcy - which was my point.

[TahitiNut]

38. You don't have a "point". You're peddling a FALSEHOOD.

Your posts on this matter have no merit whatsoever.

LESS than 10% of the cost of a GM auto is due to labor costs. Union labor has been sliced and diced ENOUGH!

[Hannah Bell]

46. uh, no, pension costs were part of the package when the pensioners were working, & included in labor

cost THEN. GM supposedly was setting aside a percent of those workers' pay to cover pensions; e.g. instead of paying them another $5/hour, GM put the $$ into a pension fund. It was a negotiated benefit, i.e. part of a *contract* which supposedly *can't be broken* (if you're a Wall Streeter pulling down millions for wrecking the world economy).

Pensions are not, or shouldn't be, a *cost* to GM *now* - unless they underfunded the pension fund, i.e. instead of funding the pension fund, they "borrowed" the money contracted to the workers.

BTW, current total of all costs, per the article, is $69/hr.

GM has recently shed its health care obligation to retirees, too - that will now be the union's responsibility.

Labor cost = about 10% of the cost of a vehicle.

GM's 2008 revenue = 189 BILLION.

If they paid EVERY SINGLE ONE of their 650,000 workers & retirees WORLDWIDE $50K/yr that would STILL be only 17% of their income.

[MrPerson]

31. And getting rid of the costs is the goal of a Chapter 11.

[DainBramaged]

32. Yup, I caught it instantly, but that's OK, I won't be reading his tripe anymore.

And the UAW link in a previous post which has the KO video on this exact subjest apparently wasn't enough to convince it.

[madrchsod]

39. just another night of the same old shit

american workers paying for the japanese workers retirements while the usa workers get fucked...

[Hannah Bell]

42. bull. shit.

[Deja Q]

62. True, the CEO's severance package for being so vigilant in destroying the company is worth it.

If I was CEO, I'd wreck the company for only $5 million. Not $20 mil. 75% savings. Yet nobody called me. :cry::cry::cry::cry::cry::cry::cry::cry:


No pony yet either. But until then, I can buy some glue and stick a saddle on it.

[tomm2thumbs]

33. make everyone who works there part owner - let's see what happens

experiments are fun.

[Cessna Invesco Palin]

43. Why would I want to part-own a giant pile of debt? n/t

[Marie26]

49. What I don't understand is

why AIG & the other banks weren't required to "restructure" before receiving bailout funds. AIG just posted the largest loss *ever* for a company. Why aren't sacrifices required of Wall Street the same way they are required of the automakers?

[JustABozoOnThisBus]

50. Any news on Wagoner's severance package?

Or is he just being frog-marched out with a cardboard box of mementos?

So the new head of GM is a "finance guy". Look for more head-cutting, more off-shoring as the main road to recovery. Too bad. A "car guy" might have been better motivated to drive quality, efficiency, etc, to actually improve the company.

[DainBramaged]

51. What does it matter? Why is this important to YOU?

Do you OWN GM stock, or a GM car?

[JustABozoOnThisBus]

52. Wagoner doesn't really matter. GM matters to me

because I work for a supplier. And, yeah, I own a GM vehicle, but that's not a big deal. Mostly, if GM goes under, I'm out of a job. So I guess my point of view is not exactly "unbiased".

[DainBramaged]

54. Sorry, you didn't make yourself clear, my apologies

we BOTH have a tremendous amount invested, along with the other 3,000,000 people involved in the Domestic auto industry. And like I said elsewhere, give it all to Wall Street, and NOTHING for Main Street. I am very disappointed in the events of today.

[HiFructosePronSyrup]

53. 20 million smackers.

Although to play Devil's Advocate, that's chump change to the billions of dollars he's cost GM over the last 8 years.

[TahitiNut]

55. Wagoner is the latest in a long line of MBA vampires since Roger Smith.

Roger was essentially the beginning of the end at GM, with only a single operational ("car") guy during the entire time and then for only 2 years.

Having an MBA heading a car company is like having a mortician for a family doctor. :shrug:

[ColesCountyDem]

59. Some times there are no GOOD options, just less-bad ones...

2 months really isn't enough time, if the President really wants to save GM and Chrysler and their suppliers, many of whom are about to file for bankruptcy themselves. I've done many bankruptcies, including Ch. 11s for businesses in deep, deep doo doo, and the single most important factors in the short-term are cash and breathing room (time).

The Treasury needs to infuse cash into GM and Chrysler quickly, with the ummm... 'understanding' (read: threat)... that it MUST be used to pay suppliers and others who are critical to the companies' long-term survival. Once that's done, the administration should craft and enact legislation that reasonably protects pensions and benefits, even if it requires federal funding to do so. Once that is done and the public is educated by the President that the companies will not be going out of business, some form of orderly debt restructuring (say, Ch. 11) must begin immediately.

It ain't a perfect solution (or the only one, for that matter), folks, but it ain't exactly a perfect situation, either...

edit: typo