Big Three survival bailout requests rise to $34B
By JULIE HIRSCHFELD DAVIS and TOM KRISHER
Associated Press
December 3, 2008
Page 2 of 3
Ford CEO Alan Mulally, GM CEO Rick Wagoner and Chrysler chief Bob Nardelli all planned to road-trip the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.
Mulally and Wagoner both said they'd work for $1 per year -- something Chrysler's plan said Nardelli already does -- if their firms took any government loan money, while Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.
The executives are going out of their way to show deference to lawmakers and a willingness to flog themselves for past mistakes. "I think we learned a lot from that experience," Mulally told The Associated Press in an interview.
Ford, in far better shape than GM and Chrysler, asked for a $9 billion "standby line of credit" to stabilize its business but said it didn't expect to tap the funds unless one of Detroit's other Big Three went bust. Its plan projected Ford would break even or turn a pretax profit in 2011.
The company plans to cut its number of dealers by more than 600, to 3,790 by the end of the year.
The unions were preparing to make sacrifices as well. United Auto Workers leaders summoned local union leaders from across the country to an emergency meeting Wednesday in Detroit to discuss possible concessions. Up for discussion were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers' payments into a multibillion-dollar union-administered health care fund.
U.S. automakers are struggling to stay afloat heading into 2009 under the weight of an economic meltdown, the worst auto sales in decades and a tight credit market. The three burned through nearly $18 billion in cash reserves during the past quarter.
Ford's recovery blueprint said it would invest $14 billion over the next seven years to boost its vehicles' fuel efficiency, and it said it would improve the overall efficiency of its fleet by an average of-- percent next year. The company plans to speed its rollout of electric and hybrid gas-electric vehicles.
And Ford is calling for a partnership among automakers, parts suppliers and the government to develop new battery technologies domestically, so the U.S. doesn't have to rely on foreign batteries -- as it now does on foreign oil -- to power its cars.
Besides cutting its number of dealers, it will trim its major sourcing suppliers by more than half, to 750 from 1,600.
GM said it would make huge cuts in its numbers of workers as well as reductions in its vehicle brands and plants by 2012. The auto giant is seeking a $12 billion loan to keep it running, plus a $6 billion line of credit in case market conditions worsen.
GM would focus on four brands -- Chevrolet, GMC, Buick and Cadillac. By 2012, the plan calls for 20,000 to 30,000 fewer workers, a reduction of nine facilities and 1,750 fewer dealers. The company also outlined efforts to negotiate swapping some of the company's debt for equity stakes in the automaker.
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