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Archive for the ‘Big Three’ Category

Cash For Clunkers Bill Approved by Congress

The Senate approved a $1 billion program yesterday to give vouchers to consumers who trade in their gas-guzzling clunkers for more fuel-efficient models — a move that dealers hope will revive slumping auto sales.

Congressional leaders attached the legislation to a $106 billion spending bill to fund troops in Iraq and Afghanistan.

The spending bill passed by a 91 to 5 vote but not before some Republican lawmakers unsuccessfully sought to strip the measure from the bill.

Dealers, unions, trade groups and automakers have been lobbying for months for the legislation in hopes that it would stop the streak of dismal U.S. auto sales.

“The simple fact is that we need to get Americans into car showrooms, and this is the bill that will do it,” Rep. Candice S. Miller (R-Mich.), a co-sponsor of the legislation, said in a statement.

Consumers would be able to start using the $4,500 vouchers as soon as the National Highway Traffic Safety Administration finalizes the rules — a process that must conclude within 30 days of the president’s approval.

GM Plant Closures Will Hit Michigan Hard

General Motor Corp. is drastically shrinking its footprint in Michigan, closing another six factories by the end of next year. The company announced the names of the 11 plants that will close by the end of next year — and a 12th that will close in 2011.

GM will close Lake Orion assembly by September — though it will be on standby — and close permanently its Pontiac assembly plant by October. The Spring Hill, Tenn. plant will close in November and also go on standby. GM’s Wilmington, Del., plant will close next month.

On the powertrain side, Livonia Engine will close in June 2010, Flint North Components in December 2010, Willow Run in December 2010, Parma Components in December 2010 and Fredericksburg, Va., components in December 2010.

GM Filed Ch. 11 Bankruptcy This Morning

NEW YORK (CNNMoney.com) — General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable but became inevitable after years of losses and market share declines that were capped by a dramatic plunge in sales in recent months.

In the end, even $19.4 billion in federal help wasn’t enough to keep the nation’s largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.

Nearly a dozen plants will be identified for closure by 2010, resulting in 20,000 job losses. Three more plants are set to be idled and put on stand by status in hopes for a rebound in sales that may never come.

GM will also shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That will likely result in more than 100,000 additional job losses.

More than 650,000 retirees and their family members who depend on the company for health insurance will experience cutbacks in their coverage, although their pension benefits are unaffected for now.

GM Filing Ch. 11 Bankruptcy Monday in New York

General Motors Corp. president and Chief Executive Officer Fritz Henderson will hold a mid-day news conference from the GM Building in New York on Monday, the day the 100-year-old automaker is expected to file Chapter 11 bankruptcy.

GM, which has lost nearly $90 billion since 2005, is expected to file bankruptcy in U.S. District Court in New York, where rival Chrysler LLC is undergoing a court-ordered restructuring. President Barack Obama also plans to address the nation Monday on GM’s planned court restructuring.

Chrysler Files For Bankruptcy

Washington — The White House will force Chrysler LLC to file for bankruptcy protection today, after talks between the Treasury Department and the Auburn Hills automaker’s creditors failed last night to reach an agreement.

“This will be quick, it will be efficient, it is designed to deal with those last few holdouts” who blocked an out-of-court restructuring, President Barack Obama said in a televised announcement from the White House. Obama pledged the bankruptcy filing would not disrupt the company’s operations or the lives of its workers.

The president had harsh words for the group of investment companies and hedge funds that balked at a debt restructuring. “I do not stand with them,” Obama said, calling them “speculators” who sought to endanger Chrysler’s future for their own benefit.

Big Three Automaker Retiree Pensions at Serious Risk

General Motors Corp. and Chrysler LLC retirees and employees could lose $23 billion in pension benefits if the companies terminate their retirement plans in bankruptcy, the government’s pension insurance agency warned Tuesday.

Neither GM nor Chrysler plans to file for bankruptcy, but both are taking steps to prepare in case they are forced to do so in the coming weeks. While neither has said it plans to terminate its pension program, struggling steel companies and airlines have used bankruptcy to get out from under large pension obligations and turn them over to the government.

GM and Chrysler combined provide pension benefits to about 630,000 retirees and dependents, and cover another 300,000 who haven’t begun drawing benefits.

The Obama auto task force has warned that GM’s future pension costs — which include $6 billion payments due in 2013 and 2014 — are “unsustainable.”

If either GM or Chrysler terminates its pension plan, it would be the largest assumed by the government, in terms of number of employees.

The PGBC was created by Congress in 1974 after the failure of the automaker Studebaker in 1963, which left 11,000 retirees with just 15 cents on the dollar on their pensions.

People are Leaving Michigan at an Alarming Rate

Joe LaCross drives American cars. Always has. Born and raised in the blue-collar suburbs of Detroit, this son of a welder wouldn’t dream of rolling past his autoworker neighbors in a Toyota. But not long ago the 38-year-old pulled into the driveway of his Sterling Heights home in a vehicle wreaking even more havoc in his home state.

A moving van.

“I grew up here,” said LaCross, as he packed to move to Florida in search of a job. “My family is here. My wife’s family is here. I love everything about Michigan.

“Everything,” he said, picking up a plastic storage tub, “except the economy.”

People are leaving Michigan at a staggering rate. About 109,000 more people left Michigan last year than moved in. It is one of the worst rates in the nation, quadruple the loss of just eight years ago. The state loses a family every 12 minutes, and the families who are leaving — young, well-educated high-income earners — are the people the state desperately needs to rebuild.

“I never thought I’d leave,” said LaCross, looking around his empty Michigan home. “What happens now?”