Truemors
The Big Three automakers are now seeking even greater sums of money, in the form of loan guarantees from the US government, simply to stay liquid and keep operating. The automakers have submitted to Congress a set of business plans that include plant closures, job cuts, "compensation reform" (meaning cuts in executive pay, perks, options and bonuses), and the potential elimination of several brands, such as Hummer, Pontiac and Saturn. GM is reporting that without federal assistance,it will be insolvent by the end of the year.
WASHINGTON — General Motors, increasingly desperate for a federal bailout to stave off financial collapse, told Congress on Tuesday that it was willing to drastically shrink every aspect of its operations to ensure its long-term survival.
On the same day that the industry reported its worst sales month in 26 years, the three Detroit automakers delivered new business plans to lawmakers in the hope of winning support for $34 billion in federal loans.
While the timing was coincidental, the dismal November sales report underscored the perilous financial condition of G.M., the Ford Motor Company and Chrysler.
Their combined loan request was substantially higher than the $25 billion that the three companies had initially hoped to get from Congress two weeks ago.
The House speaker, Nancy Pelosi, said on Tuesday that she had spoken with President Bush by phone on Monday about the need to help the auto industry and that she believed some sort of rescue would be provided, either legislatively or by the Bush administration.
“I think it’s pretty clear that bankruptcy is not an option,” Ms. Pelosi said. But she said that the companies’ revamping plans must first pass muster among skeptical lawmakers who sent executives of the Big Three home from Washington empty-handed last month.
But G.M., the world’s largest automaker for decades, said Tuesday that it was in such dire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit. G.M. also promised that it could be competitive on labor costs with Toyota by 2012.
G.M.’s president, Frederick A. Henderson, said the company would be insolvent if it did not receive federal assistance, including an infusion of $4 billion in cash before the end of the year.
“Absent support, frankly the company simply can’t fund its operations,” Mr. Henderson said in a call with reporters.
Chrysler, the smallest of the Detroit companies, is in similar difficulty, and
Comments (0)