One Bailout to Unite Them All
By Edward NiedermeyerAugust 28, 2008 - 32 views
![We should all be screaming \"Don\'t do it!\"](http://images.thetruthaboutcars.com/2008/08/detroit1.jpg "We should all be screaming \\"Don\'t do it!\\"")
Say what you want about Detroit, it still has some class. The media may already be counting the bailout billions, but the once-big three will be waiting until after Labor Day to visit Washington, hat in hand. Per Emily Post's corporate welfare etiquette, natch. The Wall Street Journal also reports that the Detroit three will speak with a single voice during upcoming meetings with federal loan officers. As in no screwing over Chrysler for a better deal. Of course that means the projected $50b will have to be split three ways. And then there's that damn CAFE ramp-up to worry about. In fact, Detroit insiders are already saying that 2011 compliance alone could take up the whole $50b. Why, it's almost as if Detroit might need even more money! But with political season in full swing and the economy emerging as a major issue, Detroit knows it has only to ask. Posturing representatives will hand out loans for the electoral feel-good, and before you know it there'll be a Volt in every pot. And billions of dollars in taxpayer liability for three spectacularly failing enterprises.
Posted in Chapter 11 | High Finance | Industry | News Blog | Politics | no comments 
Chrysler Shows its Suppliers its Books. Hey. What do YOU Care?
By Jehovah JohnsonAugust 27, 2008 - 320 views
![\"Shortly after returning to Chicago, Giancana was shot in the back of the head on 19 June 1975 while frying Italian sausage and peppers in the basement of his home in Oak Park, Illinois. After falling, his body was turned over and shot a further six times in the face and chin. It was believed by investigators that his murderer was a close friend whom he had let into the house. At the time he was scheduled to appear before a Senate committee investigating CIA and Mafia collusion in plots to assassinate Fidel Castro.\"](http://images.thetruthaboutcars.com/2008/08/samgiancana.jpg "\\"Shortly after returning to Chicago, Giancana was shot in the back of the head on 19 June 1975 while frying Italian sausage and peppers in the basement of his home in Oak Park, Illinois. After falling, his body was turned over and shot a further six times in the face and chin. It was believed by investigators that his murderer was a close friend whom he had let into the house. At the time he was scheduled to appear before a Senate committee investigating CIA and Mafia collusion in plots to assassinate Fidel Castro.\\"")
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.
Posted in Chapter 11 | News Blog | one comment
With Friends Like These, Who Needs $50b?
By Jehovah JohnsonAugust 27, 2008 - 372 views
The same suits who said GM's GMT900 SUVs were going to be the bomb have watched SUV sales implode. And so they've said fuck that shit [paraphrasing] and 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."
Posted in Chapter 11 | News Blog | 3 comments
Ford Unsure on Bailout Price Tag: “We’re still dimensioning”
By Jehovah JohnsonAugust 27, 2008 - 650 views
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?
Posted in Chapter 11 | News Blog | 8 comments
Pensions GM Dumped On Delphi Now In Peril
By Edward NiedermeyerAugust 27, 2008 - 1,255 views
The Detroit Free Press reports that GM retirees could face pension interruptions thanks to the General's dumping of obligations to bankrupt supplier Delphi. Salaried employees who never worked for Delphi had their pensions handed over to the troubled GM spinoff in 1999, and had wondered what was happening when checks began arriving with Delphi's name on them. But puzzlement is giving way to concern, as the federal Pension Benefit Guarantee Corp has warned that Delphi is some $3.5b in the hole on its pension obligations. And no wonder, considering GM saddled it with pension obligations from several closed and sold factories as a spin-off goodbye present in 1999, a move pension experts call "legal." As in there ought to be a law against it. Meanwhile, hundreds of the non-Delphi retirees have received letters from the supplier saying their pensions are at risk, thanks to Delphi's bankruptcy. Delphi is supposed to transfer $1.5b in (hourly retiree) obligations back to moneybags GM, but mysteriously that hasn't happened yet, prompting the PBGC's concern with the situation. Though Delphi's bosses swear up and down that they're committed to honoring pension obligations, if the transfer doesn't happen by September 30 when new PBGC rules go into effect, Delphi will likely find itself in pension default. Which means hundreds of workers who never even worked for Delphi would be at the mercy of the PBGC. And those same new rules mean the PBGC will likely not honor most planned payment step-ups and early retirement benefits. "I don't want a handout," says one retiree. "I want General Motors to pay my pensions like they told me they were going to do."
Posted in Chapter 11 | Industry | News Blog | Union News | 19 comments
The Case Against Bankruptcy
By Edward NiedermeyerAugust 25, 2008 - 1,987 views
If you happen to be looking for a quick fix to GM's and Chrysler's myriad woes, the closest you'll come to a silver bullet is good old Chapter 11. But Rick Newman of US News And World Report's Flow Chart blog seems to think a quiet little housecleaning bankruptcy isn't even an option any more. Newman argues that unlike, say, airlines, the automakers can't declare bankruptcy and still expect consumers to buy their expensive, warrantied products. He cites a CNW Marketing Research study which shows that 80 percent of respondents would suddenly lose interest in a brand if it declared bankruptcy. Then there's the chance that Washington D.C. could just decide that Detroit had the bad times coming and not make with the bailout. And unlike the recently-rescued financial giants, GM or Chrysler wouldn't bring the whole economic party crashing down around them if they did fail. Finally, Newman reckons Detroit's complex issues can't be solved with a simple reorg. After all, GM and Chrysler are slashing costs and squeezing suppliers in the status quo. The real issues, argues Newman, are revenue and products, neither of which will be fixed by bankruptcy. Taken together, the arguments seem convincing, but there are a few details being left out. Like the epic cash burn, the need to slash dealer franchises, and Washington's apparent openness to a hefty bailout. I, for one, am not completely convinced that (at least for GM) a Chapter 11 filing isn't the way to go. Chrysler, on the other hand, should just be taken out back and shot (Chapter 7). What say you?
Posted in Chapter 11 | Industry | News Blog | 30 comments
TTAC Called It: Wall Street Journal Reveals Motown’s $25b Bailout Plan
By Robert FaragoAugust 22, 2008 - 2,727 views
And so it begins. The Wall Street Journal' s lead editorial makes it perfectly clear that Motown's plans to tap your taxes is well advanced. And guess what? It's a god damn conspiracy! "Earlier this month… the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits. We've since heard that lobbyists for the car makers are taking their pitch for direct federal loans around Washington, with a goal of unveiling the plan after Labor Day — conveniently in the frenzy of the fall election campaign. They've briefed Congressman John Dingell, the dean of Michigan Democrats, as well as officials in the Bush White House… The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years." TTAC will have an editorial on this shortly.
Posted in Chapter 11 | High Finance | News Blog | Taxes | 92 comments
GM to Spend $500m on Cruze Launch
By Robert FaragoAugust 21, 2008 - 1,848 views
Not to belabor the point (much), but the Chevrolet Cruze is GM's next next big thing. As such, the future Chevy needs a steady stream of spin touting it as such. And so why-the-Hell-isn't-he-embattled GM CEO Rick Wagoner cruises over to Lordstown, Ohio to announce his company's intentions to someday rule the world. I mean, design, build and sell a competitive, profitable small car for the North American market. Automotive News [sub] reports that Rick promised Lordstown $500m to facilitate Cruze control. That ain't much in the new car development scheme of things. And once again, The General's spinmeisters are using every possible opportunity to amp-up the rhetoric re: GM's impact on the U.S. economy. "The investment in Lordstown is one of several that have been announced at U.S. plants in the past five years, adding up to over $2 billion total investment in Ohio and more than $20 billion in the United States." Federal loan guarantee much?
Posted in Chapter 11 | New Cars | News Blog | 24 comments
Delphi Bondholders Sue GM To Stop $300m Loan
By Robert FaragoAugust 21, 2008 - 867 views
Why would Delphi's bondholders sue GM in Manhattan court to prevent a $300m cash infusion? Because Highland Capital Management and other bondholders fear GM's "undue" influence over the bankrupt parts supplier. [NB: the $300m is on top of an existing $650m loan.] In other words, GM's money could give it the leverage it needs to prevent its former division from selling off profitable bits of Delphi. Like, say, the parts of Delphi that supply the GM corporate mothership with parts. GM control would also mean that the artist formerly known as the world's largest automaker could forestall a Delphi Chapter 7, should the bondholders decided that the jig is up. "It is merely a band-aid (albeit an enormously expensive and porous band-aid),'' the bondholders told Bloomberg. "It is a truism that borrowing to fund losses is a loser's bet.'' You want to talk about cash burn? "Highland and other bondholders said in the objection to the additional financing that Delphi used more than $960 million in net cash to fund operating activities in just the first six months of 2008." Anyway, bankruptcy judge Robert Drain approved a $5m company payout for the legal costs of defending former Delphi officers and employees from lawsuits related to pension funds and the bankruptcy.
Posted in Chapter 11 | Media | News Blog | Suppliers | 5 comments
GM’s Next Next Big Thing: The Chevrolet Cruze
By Robert FaragoAugust 21, 2008 - 2,467 views
While GM PR is milking the plug-in electric - gas hybrid hybrid Chevrolet Volt for all its worth, the automaker is shifting emphasis towards it latest savior. The Camaro. Wait. No. That's not it. The Beat. Nope. Hybrid SUVs? Uh-uh. The Cruze! "Wider and longer than most of its competitors, Cruze has a purposeful stance…" Yada, yada yada. Engines? At its European launch, the Cruze control will feature a choice of a 1.6-liter (112 hp), 1.8-liter (140 hp) or a new 2.0-liter turbo diesel (150 hp) four banger; with a five-speed stick or all-new six-speed auto. U.S. spec? Mpgs? No se. But here's the real news: GM reckons they can 
make money on building and selling this sucker in the U.S. "Small cars are becoming a permanent feature of the U.S. market, and the odds of earning a decent return have gone up" for domestic auto makers, auto analyst John Casesa told CNNMoney. "The window of opportunity for GM is now." Only, as Dow Jones' anonymous writer points out, "GM is counting on one more critical - but still uncertain - element to turn small cars into money makers, which is that consumers will ante up thousands of dollars more for a new small Chevy." Now what are the odds?
Posted in Chapter 11 | Europe | New Cars | News Blog | 74 comments
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