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Posts Tagged ‘Big Three’

Bankruptcy Leads Possible Plan for Struggling GM and Chrysler

WASHINGTON — The Obama’s administration’s leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.

The move would in essence split both companies into their “good” and “bad” components. The government would like to see the “good” GM to be a standalone company, according to an administration official. The “good” Chrysler would be sold to Fiat SpA, assuming that deal is completed, this person said.

GM and Chrysler have had bankruptcy attorneys devising plans for such a move in recent months.

GM looks increasingly like it will be forced into filing for bankruptcy protection, sometime in mid-to-late May, in a plan where the automaker breaks into two companies, the surviving entity a “new GM” that maintains key brands such as Chevy and Cadillac and some international units, say several people familiar with the situation.

A key ingredient is getting the UAW to agree to an entirely new labor contract, including major reductions in health-care benefits, according to several people involved in the matter. “That’s the No.1 wildcard here,” one of these people said Monday.

At Chrysler, bankruptcy would be used to force new labor contracts and rework debt deals with secured creditors. People working on Chrysler’s behalf say the deal is risky, because the company is still not convinced that it could survive even a short-term bankruptcy.

Obama Says Auto Industry Needs to do More

WASHINGTON (AP) — President Barack Obama says General Motors Corp., Chrysler LLC and all those with a stake in their survival need to take more hard steps to help the struggling automakers restructure for the future.

Obama, in an interview with CBS’ “Face the Nation” broadcast Sunday, said the companies must do more to receive additional financial aid from the government.

“They’re not there yet,” Obama said.

Details of the plan remained tightly held Sunday, but General Motors CEO Rick Wagoner was stepping down immediately as chairman and chief executive of the Detroit automaker, said a person with knowledge of the plans. The person declined to be identified because Wagoner’s plans had not been formally announced.

Wagoner’s resignation came as the president was set to announce a plan Monday for the government to provide more money in exchange for tough concessions from union workers, bondholders and others. Lawmakers were expected to get briefed on the plan Sunday evening.

“We think we can have a successful U.S. auto industry. But it’s got to be one that’s realistically designed to weather this storm and to emerge — at the other end — much more lean, mean, and competitive than it currently is,” Obama said.

Obama Says We Cannot Let Big Three Fail

WASHINGTON — President Barack Obama scolded the domestic carmakers Tuesday night for “years of bad decision making,” but said “the nation that invented the automobile cannot walk away from it.”

In a speech to a joint session of Congress, the new president offered no details as to how he would help the industry restructure, and no promise to grant the billions of dollars in new aid that General Motors and Chrysler seek.

But it was his strongest commitment yet to preserving the companies that have defined Michigan’s economy and identity for a century.

“We are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win,” he said. “Millions of jobs depend on it.”

Big Three Bailout is Near

DETROIT, Dec 18 (Reuters) – General Motors Corp and Chrysler LLC made significant progress late Thursday on a deal to secure emergency loans as part of a U.S. government aid package, people familiar with the talks said.

The package would demand sweeping restructuring at the troubled automakers in exchange for bridge loans to carry GM and Chrysler for several months, according to the sources.

Emergency federal loans for the two companies could be announced by the government as early as Friday, according to the sources who were not authorized to discuss the negotiations.

Chrysler Closing All Auto Plants for a Month, GM Delaying Volt Factory

Dec. 17 (Bloomberg) — Chrysler LLC, awaiting a federal rescue as its cash dwindles, will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.

Production won’t resume until Jan. 19 at the earliest, Chrysler said today in a statement. General Motors Corp., also waiting for word on U.S. loans, said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.

The cutbacks showed how far the automakers are going to save money and prune output as plunging sales threaten their ability to stay in business. Both companies say they may run out of operating funds in just weeks without emergency U.S. aid.

Auto Loans Could Come By Friday

WASHINGTON — Treasury Department officials are weighing the condition of the nation’s banks before they loan money to General Motors Corp. and Chrysler LLC, possibly by Friday.

Treasury Secretary Henry Paulson said automakers would soon get emergency loans but the department is still asking detailed questions of automakers before it allocates any money from the $700 billion Troubled Asset Relief Program, or TARP. GM and Chrysler are seeking up to $15 billion in emergency aid to keep them afloat through the beginning of next year.

President Bush has signaled he’ll provide money to the automakers and a decision is going to come soon.

Michigan Will Lose at Least 90,000 Jobs in 09 Maybe More

Michigan will lose 225,000 jobs – 5 percent of its total payroll – next year if two of the Detroit automakers file for bankruptcy, Comerica Bank’s chief economist warned in his latest report on the state’s economy.

Even if the auto companies succeed in winning loans from the federal government, Dana Johnson estimates that Michigan will still lose about 90,000 jobs, or a little more than 2 percent of its payroll, with 30,000 of the lost positions related directly to the auto industry.

Johnson expects Michigan to undergo its sixth consecutive year of recession in 2009 because of the continued restructuring efforts at the Detroit Three automakers.

“The endurance of the citizens of the state is going to be sorely tested,” he wrote in his report. “But as the above numbers on potential job loss so clearly indicate, it will be a far more daunting test if the Detroit Three fail to win a government rescue package.”