Bailout Watch 227: Ford, Chrysler and GM Asking for $34b
We now know why The Big 2.8 postponed their Capitol Hill bailout begging ’til the end of the week: they were waiting for November sales results to up the ante. Automotive News [AN] reports what we glommed-onto earlier: the Motown bailout bill has ballooned by billions. “General Motors, Ford Motor Co. and Chrysler LLC together are asking Congress to approve loans and credit lines that total $34 billion.” So Congress is going to lend three automakers $34b– when the same automakers couldn’t properly assess their financial needs two weeks ago? Yup. “House Speaker Nancy Pelosi said automakers will get help. ‘An intervention will happen,’ she said at a Washington news conference. Echoing industry leaders, the California Democrat said bankruptcy is not an option for any of the companies.” To be fair, the privately-held Chrysler corporation’s “request” is, was and will be $7b– which doesn’t make it right (just consistent). And GM that looks like the biggest NSFW; upping its call on the public purse from somewhere between $10b – $12b (what’s a couple of billion between business partners?) to $18b. But the big surprise here is Ford. The Blue Oval Boys are in real danger of over-thinking this one…
“Ford is seeking a $9 billion credit line, but Ford CEO Alan Mulally says the company shouldn’t have to use it unless the economy worsens beyond current expectations. The Ford request is an increase from the $7 billion to $8 billion that Mulally sought from Congress in November… If U.S. industry sales fall dramatically — to 10.2 million light vehicles in 2009, 10.7 million vehicles in 2010 and 11.7 million vehicles in 2011 — Ford said it would need increased funding of up to $13 billion.”
Maybe Big Al can figure that one out whilst sipping miniatures at a Motel 6 somewhere between Detroit and DC.
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The 25 billion number seemed pretty arbitrary to me when it was requested a few weeks ago. "Lets see, 25 billion seems like a nice round number that we may have a prayer to get. Then we can divide it up by market share, and see what we can do with it." This is inexcusable, particularly as to GM , which really need the money right now. It should be mind-boggling to us all that Chairman Rick (who came up through GM's finance side) would not look at their figures, decide how much they really need, add it to the requests of the other contestants, and present a 34 billion plan. I mean the first time. Ford should take a little less heat on this one, because it seems to be at the trough only because the other guys are. An accurate plan from Ford would request that congress decide how much GM and Chrysler need, then award a fair share for Ford. Anyone with three children understands. Chrysler? Pick a number. Doesn't really matter. We all need to chew over the fact that the GM chairman looked congress in the eye (eyes?) and deliberately put out a lowball request that he KNEW (yes, KNEW) was not going to be enough. This is dishonest. GM management must be so used to giving everyone the mushroom treatment for so long, why should congress be any different. They need to go. Does someone have Jerry York's number?
Maybe I'm missing something, but I don't see any plans, only good intentions. Guess they'll drive to hell in a hybrid on a road paved with those. Specifically, there is a lot of "seek"ing - to restructure debt, to renegotiate contracts, to reduce dealers - but no indication they can actually DO any of that. And if they don't - they're dead. I can make a "plan" to make a fortune by going back in time, too, but if I can't actually travel back in time, how does that constitute a plan, rather than just a wish?