As Farago reported, the amount of federal money Motown would need to turn its business around– if money was, indeed, the determining factor– far exceeds the $25b first mooted. Or the $50b since suggested. And now, having floated not one but TWO trial balloons, Ford, GM and Chrysler are playing coy about the ballooning balloons. To its credit, The St. Louis Dispatch has tried to nail down the exact numbers and conditions, to see if their local minivan plant could be saved. "'We know the legislature authorized up to $25 billion, but the amount that could really make a difference likely is much higher,' GM spokesman Greg Martin told the Post-Dispatch. He declined to say how much additional money would be needed or confirm the $50 billion figure. Ford spokesman Mike Moran also did not confirm the increased loan amount. Chrysler spokeswoman Katie Hepler said the automaker is working to access the government loans. She declined to talk about specific dollar amounts or elaborate on where Chrysler would use any money it borrowed." And here's a surprise. "It also appears that some of the older plants owned by foreign automakers could apply for this loan, according to the original language of the legislation. Toyota Motor Corp.'s Georgetown, Ky., plant and Honda Motor Co.'s Torrance, Calif., location are two that fit the criteria." Only… The Department of Energy has until December to write the final rules that detail how to apply for the money.
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"Crucifies" may be a bit harsh. Or maybe it isn't. It's hard to tell. The New York Times article detailing the Golden State's new real estate development legislation waits until the eighth paragraph to chart the changes, and even then, it's not entirely clear how it works. "The bill yokes three regulatory and permit processes. One focuses on regional planning: how land use should be split among industry, agriculture, homes, open space and commercial centers. Another governs where roads and bridges are built. A third sets out housing needs and responsibilities… Under the pending measure, the three regulatory and permit processes must be synchronized to meet new goals, set by the state’s Air Resources Board, to reduce heat-trapping gases. Seventeen regional planning groups from across the state will submit their land-use, transportation and housing plans to the board. If the board rules that a plan will fall short of its emissions targets, then an alternative blueprint for meeting the goals must be developed. Once state approval is granted, or an alternative plan submitted, billions of dollars in state and federal transportation subsidies can be awarded. The law would allow the money to be distributed even if an alternative plan fails to pass muster." In English. "The goal is to encourage housing near current development and to reduce commutes to work." Or… "clustered communities," a new stick, the same old carrots and LOTS more red tape.
According to The Detroit News, Toyota has walked down its '09 global sales estimates by 700k units, from 10.4m vehicles to 9.7m. This is the second forecast downgrade; a tacit admission by the world's largest automaker that the U.S. sales slump will not experience the rapid recovery its native carmakers have been
praying for predicting. "[Toyota CEO Katsuaki] Watanabe said he saw as 'fundamental' the slowdown in the U.S. market as soaring gas prices not only crimp car purchases but drives an unprecedented shift in consumer demand from trucks to smaller fuel-efficient models." And just like GM's suits, Toyota's big boss tried to apply a coat of green gloss to the loss. "In his annual outlining of the company's business plan, Watanabe tried to sound an upbeat note by promising green vehicles. He said Toyota will speed up the delivery of a plug-in hybrid — which can be plugged into regular household electrical sockets — initially promised for sometime in 2010, to the end of 2009." Meanwhile, "It is forecasting its first full-year profit decline in seven years as it faces more problems from the weakening U.S. market."
My time writing for TTAC is strictly limited. Farago asked me to pinch hit while he's otherwise engaged. As soon as this site's founder returns from his light bulb changing duties, I'm going back to my regular, better-paying job. So while I've got the floor, I'd just like to share a revelation…. I heard a radio ad today for "Cadillac employee pricing." Prior to that moment, I hadn't really given much thought to the concept of Caddy opting-in to GM's overall firesale. Not until the pitchman assured me "you pay what Cadillac employees pay." And then it hit me. Why would a Cadillac buyer want to buy a car that the people who build them can buy? I mean, if a Cadillac employee can afford a Cadillac, where's the status in that? At the risk of having my foul-mouth censored yet again, that brand is so screwed. Upmarket my ass. And why in God's name do they have to tell everyone about it?
The AP reports Bob Lutz' prediction that GM will be profitable by 2010. Well, almost. "Lutz stopped short of predicting when GM would return to profitability, but said if it can further reduce structural costs, get higher prices for small cars, and if the U.S. auto market recovers, its top executives say they hope to return to black ink in 2010." The Detroit News reports that Maximum Bob mentioned Uncle Sam's
potential contribution. "[Lutz] also said GM and the other Detroit automakers would benefit from low-cost government loans to help them pay to update plants and speed up development of more fuel-efficient models consumers are demanding amid high gas prices."
Speaking at a now-standard new model private press preview (our invite got lost in the mail), GM Car Czar Bob Lutz tried to put the kibosh on speculation that his employer was going Tango Uniform (as above)– even as he's pimping for federal loan guarantees. Automotive News [sub] reveals that Maximum Bob reckons "I do think the American automobile business is deserving of government loan guarantees because the financial institutions in the U.S. are so stressed out right now." Lutz said that Wall Street's "stress" led to a lack of financial support, obviating "a competitiveness that we may well need." At the same time, Lutz thinks federal loan guarantees are no biggie. "We are not accepting government money," Lutz insisted. In fact, "the last time the government backed a loan for an automaker — for Chrysler Corp. in 1979 — it made millions because Chrysler paid the loan off early." Millions? Bob Lutz makes millions. (Frequently.) Meanwhile, The Detroit News reports that Republican Rep Joe Knollenberg called President Bush's top economic advisor, Keith Hennessey, urging the president to support up to $50 billion in direct loans for automakers. Bipartisan support, eh?
ChyrCo's procurement Veep wants the company's suppliers to understand that they're part of the Chrysler family, which ain't goin' nowhere. Capice? (So wait for your God damn money, OK?) The Bradenton Herald spills the beans on Joe Campi's charm offensive. "On Friday, Campi said the 160 suppliers visited Chrysler's headquarters Thursday to hear from the automaker's chief financial officer, the second time in about a month that suppliers were brought in for such a presentation. 'We did a complete financial review, balance sheet, earnings performance, you name it, we covered it,' Campi said. 'Not too different from what I've seen in
legit publicly traded companies. I think the mood was very upbeat.'" Or so they told Campi. Anyway, if that wasn't enough to quell suppliers' queasiness, Don Campi had a blunt message for all those "friends of ours." "I am not looking to kill suppliers," he asserted. "But there are some I can't save." Sam Giancana couldn't have said it better. 'Cause they would have thrown his ass in jail.
The same suits who said GM's GMT900 SUVs were going to be the bomb have watched SUV sales implode. And so they've cut back on GMT900 SUV production as fast as they can; which hasn't been very fast 'cause how can it be what with the UAW and all. Meanwhile, the communities that depend on GMT900 production for jobs and tax revenue are saying, what the Hell are we going to do now? The answer is, of course, nothing. There's nothing they can do. But politicians have got to be seen to be doing something. So Lt. Gov. Lee Fisher of Ohio heard of GM's cutbacks in Moraine (1000 jobs lightly toasted) and did the right thing — at least as far as getting re-elected is concerned. Fisher offered GM $56m worth of tax credits and grants to "encourage" The General to crank-out SUVs that nobody wants to buy. "The proposed assistance announced Wednesday consists of a $54 million job retention tax credit," The Chicago Trib reports. "And a $2 million 'rapid outreach' grant." Rapid outreach? Is that like "rapid reach-around' without the "around?" Anyway, fat chance. Pony-up $25b to $50b like the feds and then we'll talk. The Trib says "a message seeking comment was left for GM." Can you imagine the response? "GM is fully committed to its Ohio work force. Sorry about the no-sales-due-to-gas-prices thing, but it's not our fault. Thanks for the offer. We'll get back to you on that. Expect to hear from us sometime around, say, never."
Automotive News [AN, sub] reports that Ford execs are prowling the halls at The Democratic National Convention, drumming-up support for "A Bailout Plan By Any Other Name Would Still Look So Green" low-interest federal loans. Leading the charge (in every sense of the word): Ford Purchasing Chief "Motown" Tony Brown and his company's duly elected representative, Debby Stabenow. So, guys, how much taxpayer money do The Blue Oval Boyz need to buy some more time to hide their incompetence, draw their million-dollar paychecks and help put Barack Obama in the White House; and why the Hell should hard-working Americans give it to them when there's a perfectly good private banking system in this country? (Just kidding about the second part, unfortunately.) "We're still dimensioning," Brown told AN. Stabenow was equally forthcoming. "Stabenow said she doesn't know what the total amount should be. She indicated it may be necessary to press for some this year and more next year. 'We need to do something now.'" What do you mean we, white woman?