By on December 1, 2008

Automotive News [sub] tells us that “The Senate Banking Committee has rescheduled its next hearing on ‘the state of the domestic automobile industry’ for Thursday, Dec. 4… The House Financial Services Committee has a similar hearing scheduled for 9:30 a.m. Friday, Dec. 5.” Once again, the news org fails to answer the one of journalism’s Holy Five: why? “No official explanation was immediately available for the postponement of the Senate hearing, originally set for Wednesday, Dec. 3. It is thought that lawmakers and their staffs want more time to review the Detroit 3 plans.” See how that works? Anyway, this smells bad. Our Ken Elias predicts that GM will file for bankruptcy the moment it becomes clear– if it does– that Congress has rejected their bailout request. By moving the hearing closer to the weekend, when the markets close, Congress could be engaged in a little pre-emptive damage control. Then again, that’s GM’s pattern. But could GM really convince Congress to cater to their PR whims? I am so not buying the idea that our legislators need more time to read the Big 2.8’s turnaround plans; if anything, Chrysler, Ford and GM need more time to prepare their plans. Or the pols themselves. Or maybe the automakers want November’s hideous sales results to sink in a bit (Deutsche Bank predicts a 45 percent drop for GM). You know; to “motivate” the masses. Politics. You gotta love it.

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15 Comments on “Bailout Watch 253: Conspiracy Theorists Unite! Bailout Hearings Postponed Until Thursday...”


  • avatar
    romanjetfighter

    If GM goes bankrupt when Congress denies them the loans, where does that leave Ford? Didn’t TTAC say that once one of them falls, the others will benefit or something?

  • avatar

    romanjetfighter :

    Ford will have to file to compete.

  • avatar
    HPE

    Love the pic.

    I tend to think Ford will play a wait-and-see when GM files C11. The fact is, NO-ONE knows for sure what will happen to a carmaker’s sales once they declare bankruptcy. If GM’s sales tank (further), Ford probably won’t be all that keen to rush headlong into the same process.

  • avatar

    they haven’t been able to do anything to correct the downward spiral in three decades, what in the world makes you think they’ll be able to do so in three weeks? this company has been headed south ever since the duPont divestiture back in the Fifties. Donaldson Brown, Albert Bradley, and a host of other “real” leaders departed and the firm began a precipitous decline that continues unabated. evolution has brought us the prodigious Red Ink (The Rat Fink) Rick.

    Aristotle “A is A”

    Wagoner “BK is OK”

  • avatar
    TexN

    Buickman,
    Now you owe me a new keyboard due to chai tea spewage caused by “Red Ink (The Rat Fink)Rick”!
    Tex

  • avatar
    Bubba Gump

    Buickman
    with all due respect I have read your return to greatness and the simple truth is your plan does not address the simple facts of legacy pension, insurance costs and massive flooring costs of 5000 extra dealers (for service and parts distribution) which are protected by state franchise laws. The simple fact is until these issues are addressed in some way your plan is moot. Plain and simple!
    GM’s hands are tied and you know that. When your return to greatness plan address that in a real life feasable manner I will stand up and take notice. Until then its just an armchair CEO proposition.

    Show me a real feasble plan/proposition to address these things in the current or even in the past 5 years.
    Like my daddy said talk is cheap.

  • avatar
    Landcrusher

    If GM bankrupts, Ford stock will plummet, and their ability to borrow will be shot. Right?

    I thought about buying Ford stock, and noticed it has gone up, but I avoid it because of how it might react to a GM failure. I wonder how much it costs to short it right now.

  • avatar

    this company has been headed south ever since the duPont divestiture back in the Fifties.

    You can’t discuss the history of GM without mentioning DuPont (both the DuPont company and Pierre DuPont who first bought shares of GM in 1914).

    The DuPont relationship with GM was a pretty cozy deal for DuPont. They made money from the dividends on the 43% of GM stock they owned plus a virtually guaranteed market for their paint and plastics.

    I can see why the DOJ under a Democratic administration (Truman in this case) went after DuPont under anti-trust statutes. DuPont fought it for over a decade, then threw in the towel. Even with all the other products DuPont sells to all sorts of industries (Corian, Tyvek, Stainmaster) the auto industry is still probably their biggest market and GM is most likely DuPont’s single biggest customer to this day.

  • avatar

    They need some leeway for repairs as they’re driving to D.C.

  • avatar
    Geotpf

    Robert Farago :
    December 1st, 2008 at 6:44 pm

    romanjetfighter :

    Ford will have to file to compete.

    I don’t buy that logic. I think the contrary is true; they could say, “Hey, we ain’t bankrupt like those people who Generally make Motors. You can trust us to back up our warranty!” Then they will gain a large amount of sales from people who would have otherwise bought GM products.

    Or maybe that’s Toyota’s job.

  • avatar
    Geotpf

    Bubba Gump :
    December 1st, 2008 at 11:13 pm

    Buickman
    with all due respect I have read your return to greatness and the simple truth is your plan does not address the simple facts of legacy pension, insurance costs and massive flooring costs of 5000 extra dealers (for service and parts distribution) which are protected by state franchise laws. The simple fact is until these issues are addressed in some way your plan is moot. Plain and simple!
    GM’s hands are tied and you know that. When your return to greatness plan address that in a real life feasable manner I will stand up and take notice. Until then its just an armchair CEO proposition.

    Show me a real feasble plan/proposition to address these things in the current or even in the past 5 years.
    Like my daddy said talk is cheap.

    There’s a simple solution to this problem. Make more cars that people want to buy. If they make enough cars that people want to buy, all those dealers will be happy.

    Of course, this is impossible. So there is no solution; and bankruptcy is not a solution, becuase it will cause sales to drop further.

    Plus, the problem with legacy costs isn’t really the unions. It’s that they sell fewer cars that they used to. That is, if you are a growing, or even stable, company, retiree costs aren’t a problem. But if you are shrinking, you end up with more retirees than current employees, increasing your costs, which causes you to either cheapen the product or raise pricing, which causes sales to drop further, rinse, lather, and repeat. But the source of the problem is that a 1980 Honda or Toyota was a better vehicle than a 1980 Chevy. That set off this slow motion death spiral of rising costs and falling sales.

    The only way all three Detroit players can survive is to build a time machine and build better vehicles in 1980. A second solution is to have one of the Detroit players go out of business, raising sales at the other two long enough for them to get their shit together. Since time machines don’t exist, one of the Detroit Three must die. That is the only solution that exists to save the other two.

  • avatar
    dpeppers

    I think the UAW cheif is due on the hill Wednesday.

  • avatar
    menno

    Geotph, you are correct in your assessment, but you missed the target by 20 years. Building better cars starting in 1960 would have assured that GM, Ford and Chrysler (as well as AMC) would survive. Maybe even Studebaker.

    When I was a kid, in the early 1960’s, it was a given that cars broke down, leaked, had wind whistles on the road, wandered, had “issues”, rusted away in a few years, etc. Except for Volkswagens, which periodically did require (very inexpensive) engine rebuilds, which were built like Swiss watches in comparison, but which had other quirks like; always seeming to be backward in the ditch every winter’s first snow. And had no heat or defrosting to speak of. Which meant scraping the inside of the windshield while (trying to) drive in winter.

    OK back to 1980. I’m going to pinpoint the exact time that General Messup hugely messed up. The X-cars; the new 1980 front wheel drive [email protected] POS’s that GM foisted on the general public. The new front wheel drive technology meant that GM felt the need to penny-pinch elsewhere, like in “unseen” items, such as ultra-cheap heaters (which leaked), cheaper engine parts, cheaper steel, etc. etc.

    Now let’s move the time machine back to 1970, when the UAW struck GM and caused a recession because GM was still so big, shutting it down for 3 or 4 months actually meant something. GM execs should have formulated some spine and stood up to the UAW; the (Repugnican) administration would have eventually backed GM vs the UAW had the strike continued on, and GM “might” have been able to contain massive huge future cost increases by standing up the union then. In other words, in for a penny, in for a pound.

    OK let’s move the time machine back to 1960, when GM introduced the bizarro Corvair @ss-engine Corvair compact. Because they had spent way too much on the new-tech (VW copy) rear engine concept, they had to cheapen the daylights out of the interior; early Corvairs were nasty cheap. Then bean counters took away the anti-roll bar from the suspension and the rest is history. As for Ford, the car was (slightly) nicer inside, but the engine was absolute [email protected] – Ford’s NIV syndrome came home to bite them because Ford USA developed this POS 144 cu.in. six* instead of simply adopting the already reliable, already engineered and already in production Ford UK Zephyr/Zodiac 156 cu.in. six, which could have easily been tooled up for US production in the Falcon. Which became the bones on which the highly successful Mustang was later built. Oddly enough, the Chrysler Corporation Valiant (it was not a PLYMOUTH Valiant until 1961) was easily the best engineered new US compact for 1960, had the most interesting styling, front torison bars, the best (new slant six) engine, and the largely forgotten Rambler line was hugely successful, as was the (new for 1959) Studebaker Lark.

    * my father, a Ford man (1936 used, 1950 new, 1955 new, 1960 Falcon new) refused to buy any more Fords new after his Falcon; he bought a 1964 Rambler Classic V8 new, followed up by a new 1967 Rambler American six overdrive, then went to used GM cars for awhile, then used and later new Chryslers for awhile. He never was satisfied with any of them, really. He’s now 77, and says his (Nissan engineered) 1996 Mercury Villager is the best car he ever has owned.

  • avatar
    dpeppers

    chief even

  • avatar
    cmcmail

    I am not sure but, wasn’t JEEP bankrupt several times, and now it is one of the most valuable brands left in the Detroit 2.5’s portfolio.

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