Auto Task Force-GM to shed 23,000 jobs, kill Pontiac brand

WASHINGTON – General Motors Corp. will cut an additional 7,000 to 8,000 factory jobs in the United States, kill the Pontiac brand and shed 2,600 dealers by 2010 under a revised business plan developed under the Obama administration's eye.

The plan, along with an offer to bondholders to exchange $27 billion in GM debt for about 10% of a reconstituted GM and a small amount of cash, makes clear that the automaker's fate over the next few weeks rests with President Barack Obama. His auto task force set the terms of the bond deal and the goal of having 90% of the debt exchanged, and the U.S. government would become GM's majority shareholder if the plan succeeds.

GM Chief Executive Officer Fritz Henderson warned today that should the exchange not meet the task force's target, GM would file for bankruptcy on or before June 1. To succeed, GM will need thousands of GM debtholders to agree -- from individuals to some of the largest investors in the world -- by May 26.

"It's not impossible, but it’s a tough task," Henderson said, adding: "If we were to materially fall short, we would fall into a bankruptcy process."

As part of the debt offer, GM said, the administration would consider converting 50% of its loans to the company into GM stock. Combined with a similar request to the UAW for converting half of the $20 billion owed to a retiree health-care trust to shares, the plan envisions the government owning at least 50% of a reconstituted GM and the union holding about 39%.

Obama's auto task force said in a statement today that GM’s offer was an “important step,” but noted that its concessions hinge on bondholders and the UAW agreeing as well.

“We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the president’s commitment to a strong, vibrant American auto industry,” the task force said.


The new plan Henderson unveiled would get GM to profits in a U.S. market of 10 million vehicles -- a far lower rate than GM imagined just a couple of months ago. Should the debt swap succeed, GM will cut its debt by $44 billion and its structural costs by 25% by 2010.

"The objective here is not to survive, the objective is to develop an operating plan that allows us to win," Henderson said.

The new job cuts bring the total number of hourly jobs eliminated under GM’s plan to 21,000 by 2010 and 23,000 by 2011. GM said additional cuts among salaried workers would be expected, but did not give a specific target. As it had indicated earlier this month, GM now plans to close 13 plants by 2010 and an additional five plants by 2012.

Henderson said the Pontiac brand would be closed by 2010, calling it an “extremely personal decision.” In addition to speeding up decisions on Saturn, Saab and Hummer, GM will be left with four brands – Chevrolet, Buick, GMC and Cadillac.

He said while talks continue on Saab and Hummer, there was no deal on the table yet for Saturn that would allow GM to keep building those models beyond this year.

GM said it now expects it will need $27 billion in total from the Treasury to withstand the recession, including the $15.4 billion it's already received. That includes $2.6 billion it will need this quarter and an additional $9 billion after that, some of which includes the cost of deeper job cuts and plant closings.

Henderson said dealers targeted for closing would begin hearing from GM in a matter of weeks. Dealers have been apprehensive about a GM bankruptcy, but it's not clear how quickly GM could close outlets given a bevy of state laws protecting dealers.

Through the cuts in brands and models, GM will shed 14 models through 2010, although the Chevrolet Volt electric car remains on track for a 2010 launch.

GM, Chrysler in line for more federal aid from The Auto Task Force

Chrysler in line for $500M more; GM weighs fate of Pontiac, GMC

Robert Snell and David Shepardson / The Detroit News

Washington -- The Obama auto task force is preparing to loan General Motors Corp. about $5 billion in additional federal short-term aid, and Chrysler LLC $500 million, an Obama administration official familiar with the matter said Thursday.

The disclosure assigns a dollar amount to the pledge of continued short-term support issued late last month by the administration, after it rejected GM's and Chrysler's restructuring plans and requests for up to $21.6 billion in additional assistance. The official said the decision was expected to be announced next week -- though the precise amounts were still the subject of talks between the government and the automakers.

The White House said Thursday night no decision had been made about how much either automaker will receive. "No decisions have been made on how much working capital GM and Chrysler will be getting," said spokeswoman Amy Brundage.....More

White House questions viability of GM, Chrysler

WASHINGTON — President Barack Obama said Monday that neither General Motors nor Chrysler has proposed sweeping enough changes to justify further large federal bailouts, and demanded "painful concessions" from creditors, unions and others as their price for survival.

Obama also raised the possibility of a controlled bankruptcy to help either or both "restructure quickly and emerge stronger" — uttering the term that industry and union officials have warned repeatedly could lead to the collapse of an entire domestic industry.

With his words, Obama underscored the extent to which the government is now dictating terms to two of the country's iconic corporations — forcing the departure of Rick Wagoner as CEO of General Motors, and bluntly warning it may pull the plug on either or both companies.

The Bush administration late last year approved $17 billion in federal funds to help GM and Chrysler survive. It also demanded both companies submit restructuring plans that the Obama administration would review.

Even as he pronounced their effort unsatisfactory, the president said the administration will offer General Motors "adequate working capital" over the next 60 days to produce a reorganization plan acceptable to the administration.

He said Chrysler's situation is more perilous, and the government will give the company 30 days to overcome hurdles to a merger with Fiat, the Italian automaker. If they are successful "we will consider lending up to $6 billion to help their plan succeed," he said.

Obama spoke at the White House with the Big 3 standing at yet another crossroads. As the president noted, the industry has shed over 400,000 jobs in the past year as the recession took hold. Officials announced last week bailout funds would be made available to companies that supply the automakers, an attempt to keep them afloat.

Obama said he is committed to the survival of an auto industry — on terms that will allow it to compete internationally.

"But we also cannot continue to excuse poor decisions," he said. "And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars."

Obama and Auto Task Force Say there will be Major Restructuring coming to GM and Chrysler

Obama on autos: Aid ahead but at a price

GM, Chrysler updating plans for revival

WASHINGTON -- Heading toward Monday's announcement of his plans to help Detroit's auto industry, President Barack Obama said Thursday that the carmakers would need to make painful changes to get more federal help.

I think it is appropriate for us to say, 'are there ways for us to provide help to the U.S. auto industry to get through this very difficult time?' " he said during an online question-and-answer session. "But the price is you've got to finally restructure to deal with these long-standing problems.
"That means that everybody's going to have to give a little bit -- shareholders, workers, creditors, suppliers, dealers -- everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable."


His task force is expected to unveil a framework Monday that sets new terms for General Motors Corp. and Chrysler LLC to get more federal help beyond the $17.4 billion in loans they already have.


While noting the credit crisis and a sales slump that may reach new lows in March, Obama also revived criticisms of the industry he made in a 2007 speech to the Detroit Economic Club. He chastised the car companies for mismanagement, and said they could not rely on gas-guzzling SUVs as their sole source of profits.


"If they're not willing to make the changes," he said, "then I'm not willing to have taxpayer money chase after bad money."

Meanwhile, GM and Chrysler are preparing updates to their turnaround plans in the face of ever-worsening U.S. sales.

On Thursday, two forecasters pegged March's auto sales at annual rates below 10 million vehicles, the worst-case scenarios envisioned by the automakers.

Lowering their sales and production forecasts would raise the chances of even-deeper cuts, following GM's announcement Thursday that about 7,500 UAW workers agreed to buyouts and early retirements.

Here's a look at where their turnaround plans stand:

Workers
Chrysler, GM

• The UAW tentatively has agreed to end the so-called jobs bank, which pays laid-off workers most of their regular pay. The union also has made other unannounced concessions. Talks continue on replacing some cash payments the companies were to make for what the union's retiree health care trust is owed with company stock....More

Auto Task Force Set to Back More Loans -- With Strings

Latest Report on the Auto Task Force From The Wall Street Journal

By NEIL KING JR. and JOHN D. STOLL
President Barack Obama last month handed his auto-industry team a seemingly impossible task: to engineer the most complicated industrial restructuring ever attempted by the federal government, and to do it fast.

With almost no experience in the car business, the team's dozen core members have undergone a crash course in the myriad woes plaguing the U.S. auto industry. Within days, just over a month after setting to work, they'll begin announcing decisions.

Interviews with task-force members indicate that the administration doesn't want to let General Motors Corp. and Chrysler LLC slip into bankruptcy protection, a course advocated by some critics of the industry. Instead, the task force is expected to say that it sees viable futures for both GM and Chrysler, but only if there are sacrifices from their managements, unions and GM's bondholders. The team will also lay out a firm timeline for action.

The government is prepared to lend the companies more money. The two companies have requested $22 billion more -- including $9 billion for the second quarter. But the task force may not disburse new aid immediately, choosing instead to preserve that as leverage.

Hanging in the balance are the jobs of 140,000 GM and Chrysler employees, more than 10,000 dealerships across the country, and a large swath of the industrial base in the Midwest.

On Wednesday, the task force met with officials from Chrysler and Italy's Fiat SpA and indicated it is still interested in seeing the two companies form an alliance, as the companies have proposed, according to two people who attended the meeting.

It's clear the team is not yet ready to put forward a comprehensive fix. "It's a steep learning curve that they've been climbing, and there is still a lot to do," said Michigan Rep. Gary Peters, whose district in suburban Detroit houses hundreds of auto suppliers, a few days after meeting with the task force. "That's why I suspect they'll come out with some preliminary statements, and then get back to work."

In session after session in a warren of offices at the Treasury Department, the team has sat through tutorials on dealer financing, studied basic data and debated the future of U.S. car sales. They have spent days trying to understand the complexities of the hundreds of companies that supply the car companies with axles, seats and other parts......More

Auto Task Force Wants To See Viability

From The Detroit Free Press

General Motors Corp. began white-collar layoffs today, telling about 160 workers at the Warren Technical Center that their last day will be April 1.

The move is just the beginning of GM’s plans to cut 3,400 salaried jobs in the United States this year. Worldwide, GM plans to cut 47,000 workers by the end of the year.

The job cuts are part of GM’s sweeping restructuring efforts to make the company viable....More

Bailout plan from Auto Task Force may be stricter than GM, Chrysler expected

By Sharon Silke Carty, USA TODAY
DETROIT — The Treasury Department will announce this week a preliminary plan to help General Motors and Chrysler that sets goals and deadlines that could be more ambitious than the companies themselves have proposed, according to a Capitol Hill staffer briefed on the plan but who wished to remain anonymous because the proposal is not yet public.
Treasury's preliminary plan also could include a bridge loan to Chrysler that's less than the $5 billion the automaker wants, the staffer said. Treasury says details still are being finalized.

A more structured version of the plan will be detailed in April, when additional loan money could become available to the two troubled companies.

The Bush administration in December set a deadline of March 31 for the automakers to prove they would be viable with the help of emergency government loans. But since then, the car market has hit the skids, and both GM and Chrysler have said they need even more money to survive.

GM and Chrysler are operating on a combined $17.4 billion in government loans approved by the Bush administration. The two automakers have asked the Obama administration for another $21.6 billion and say they need it soon.

The president's auto task force is demanding that the car companies get significant concessions first.

GM bondholders are balking at swapping two-thirds of their GM debt for stakes in the company.

Bondholders warned the government this weekend that if they can't strike a deal with the automaker, the car company might be forced into bankruptcy. A group representing bondholders says many are not willing to take stock in place of bonds because they don't believe GM will be survive long enough to make the shares valuable.

That would result in "dire consequences for the company, the tens of thousands of hard-working Americans that GM employs and the economy as a whole," bondholder advisers from investment firm Houlihan Lokey wrote.

And although the United Auto Workers, which represents U.S. hourly workers, has agreed to concessions, the Canadian Auto Workers union hasn't reached an agreement with Chrysler.

Chrysler says that if it cannot get nearly $16 an hour in wage and benefit concessions from the CAW, as well as a guarantee of $2.3 billion in loans from Canadian governments and a break on a tax dispute with Ottawa, it might have to pull out of Canada, the Associated Press reported Monday.

Canada's the source of Chrysler's U.S.-market minivans and line of big sedans that includes the Chrysler 300 and Dodge Charger.

Buy Auto Task Force.Com---Domain Names

The Auto Task Force Visited GM and Dodge Truck

After the big visit by the Auto Task Force Yesterday, everyone is waiting for some response from the Presidential us auto task force.

Here is an article from Mlive on the Auto Task Force Visit.


Obama's auto task force scrutinizes GM, Chrysler operations
by Rick Haglund | Detroit Bureau

DETROIT -- Top members of President Barack Obama's automotive task force scrutinized operations of General Motors Corp. and Chrysler LLC as a March 31 deadline looms for the two automakers to prove viability.

At least four task force members were in Detroit on Monday, meeting privately with the automakers' executives and leaders of the United Auto Workers union.

"They're taking a deeper look at the auto companies and doing a lot of due diligence," said Stephanie Brinley, an auto analyst in the Southfield office of consultant AutoPacific. "The attempt is there. That's certainly a step in the right direction."

GM and Chrysler are being kept alive by $17.4 billion in federal loans. GM is asking for as much as $16.6 billion more, including $2 billion by March 31. Chrysler says it needs $5 billion by March 31 to stay in business.

The task force's visit was led by Steven Rattner, Obama's chief auto adviser, and Ron Bloom, a former investment banker who has served as an adviser to the United Steelworkers union.

They visited GM's technical center and a Chrysler truck plant in Warren. Task force members also drove several advanced propulsion vehicles, including the Chevrolet Volt electric extended-range car.

No details were released about any of the meetings with automaker executives.

"We believe today's visit provided a constructive glimpse of GM people, their passion for their work and the technology solutions that are behind the pages of our viability plan," GM said in a statement.

The visit comes as Republicans in Congress are ratcheting up opposition to more financial support for the ailing automakers.....More Mlive

Will The Auto Task Force Help Detroit?

Well the March 31, 2009 Deadline is quickly approaching for Chrysler and General Motors. This is the dealine for the viability plans to be in place for the two automakers.

Today 03/09/09 President Obama's Auto task Force is visiting Detroit, they will be at The GM Tech Center and Warren Truck the Plant That builds the New Dodge Ram.

Most of us here in Michigan are wondering if the Auto Task Force is leaning toward helping the Big Three, well GM and Chrysler for now or is this just a show?
We shall soon see!

Obama auto task force to come to Detroit next week

Article about Auto Task Force From The Detroit Free Press
WASHINGTON -- Leaders of President Barack Obama’s auto task force will travel to Detroit next week to meet with industry and labor officials worried about an imminent collapse of several companies absent federal aid.

An administration official said final details of the trip were still being worked out, but the task force visitors will include advisers Steven Rattner and Ron Bloom.


The task force has been conducting a string of meetings over the past two weeks to gather information and assess the depth of the problems facing the industry. General Motors Corp. and Chrysler LLC have said they need a total of $7 billion before the end of the month to avoid bankruptcy, and several suppliers are also on the brink.


Fiat Chief Executive Sergio Marchionne met with Rattner, Bloom and other members of the task force for two and a half hours today to discuss Fiat’s proposed alliance with Chrysler. Fiat has said it would take a 35% stake in Chrysler in return for sharing vehicle designs that could be used for several new Chrysler models.

Buy The Domain Name AutoTaskForce.Com-Website

GM auditors raise the specter of Chapter 11

DETROIT – General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.

The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission.

"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for the accounting firm Deloitte & Touche LLP wrote in the report.

In pre-market trading, GM shares fell 18 percent from Wednesday's close, to $1.80.

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008....More

GM loses pride of place as Chrysler pulls ahead

During a month in which total industry sales fell 28%, Chrysler LLC toppled GM in February to become number one. It was the first time since 1949 that GM has been outsold by a rival, industry consultant Dennis DesRosiers said.

That year, GM design chief Harley Earl was perfecting the world's first cars with tail fins, inspired by Second World War fighter aircraft.

Ford Motor Co. also nudged past GM in February, which stood third with sales of 11,417, according to industry data released yesterday.

GM maintained its lead in overall sales in the year to date.

While the once-large gap between GM and its Detroit competitors is wiped away, foreign-based manufacturers also continue to close in on North America's home-grown automakers. Hyundai Motor Co., riding a weak Korean won that is allowing it to lower prices, tallied a 30% gain last month in Canada. It sold more cars than Honda Motor Co.' s main Honda brand.....More.....

Chrysler News-Cerberus defends not pumping more funds into Chrysler

Stephen Feinberg-Founder of Cerberus Capital Management LLC


Private-equity fund responds to New York Times editorial

Chrissie Thompson
Automotive News
March 2, 2009 - 12:43 pm ET

Cerberus Capital Management LP wants more federal loans for Chrysler LLC in order to avoid "excessive risk-taking" that contributed to Wall Street's demise, Cerberus' COO said today in The New York Times.

Mark Neporent, COO of the private-equity fund that owns 80.1 percent of Chrysler, made the comments in a letter responding to a critical Times editorial last week.

The Times had said Chrysler's restructuring plan submitted Feb. 17 to the Treasury Department was "little more than an assurance that it has already cut costs and accomplished most of what it had to do." The newspaper questioned why Cerberus is not putting more money into Chrysler, as "private-equity funds like Cerberus are supposed to do."

Cerberus intends to protect its investors through rules that limit how much capital it can commit to an individual company, Neporent said in his letter.

"Why should these retirees, universities and charities, simply because they are represented by a private investment manager, be required to take additional risks or make additional investments, when GM or Ford shareholders are not?" he wrote.

Neporent said Cerberus had appointed a "world-class management team" that "has executed many of the hard operational fixes that other American car companies are only now addressing." He reiterated Cerberus' willingness to surrender its equity stake in Chrysler Automotive, convert debt to equity and put $2 billion in other Chrysler interests on a lower priority behind the government's loans.

The Times' editorial had called the 100,000-unit production cut Chrysler offered in its Treasury restructuring plan "paltry." The automaker would then have "capacity to make almost 1 million vehicles more than it will sell this year -- on the questionable assumption that demand, and its market share, will bounce back next year," the editorial said.

The Times suggested the government had good reasons to say no to Chrysler's request for $5 billion in federal loans in addition to the $4 billion it has already received.

"It seems the secretive private-equity fund is willing to gamble on Chrysler's survival with the taxpayer's dime, but not its own," the editorial said. "Saying no might even make Cerberus reconsider and put up some cash of its own."

Cerberus took control of Chrysler in August 2007, appointing former Home Depot CEO Bob Nardelli to the automaker's top position. Nardelli, who had a reputation as a tough cost-cutter, hired former Home Depot executive John Campi as purchasing chief. Campi has since resigned, but not before withholding bailout cash from now-liquidated Plastech Engineered Products Inc. and litigating with other suppliers.

Other changes have included the arrival of Toyota's Jim Press to run Chrysler's dealer and marketing operations and Nardelli's $1.5 billion overhaul of 400 fit-and-finish problems in Chrysler vehicles.

Presidential Task Force on the Auto Industry-GM, Chrysler need to build sought-after cars

Article from The Detroit Free Press

If the Presidential Task Force on the Auto Industry wants to ensure the U.S. auto industry's success, it should make sure every plan that GM and Chrysler present answers one simple question:

Why are people going to buy this car?"

Get a good answer to that, and declare mission accomplished.

The task force must, of course, deal with a host of other issues. It will oversee concessions from labor, bondholders and car dealers. It has to help the automakers craft a plan to broaden product lines and simultaneously reduce their production capacity to profitable levels.

Those are remedial measures, however. They stanch the arterial bleeding, but do not save the patient.

Survival flows from long-term profitability, and that can only come from a model line rich with vehicles that people desire.

The calculus of desire is an immensely complicated equation, as anyone who's ever been on a date knows.

In the case of a vehicle, certain things are givens: safety, fuel economy, reliability. They are the equivalent of showing up for a date at the right time and place: You have to get them right, but that's just the start.

Does she make you laugh? Does he like the same music and movies you do? Does the way she thinks surprise and interest you? Does he listen when you talk? Do you keep looking because you keep finding new things to like?

Those, and more, are the elements of attraction, whether it's a dinner that lasts three hours or a car you commit to paying for over the next five years....More

Report: $40B in bankruptcy aid sought for GM, Chrysler

Is bankruptcy The Best Answer for GM, Chrysler's survival?

Outside advisers to the U.S. Treasury have started lining up the largest bankruptcy loan ever, talking with banks and other lenders about at least $40 billion in financing for General Motors and Chrysler in case the two automakers need it, the Wall Street Journal reports.

Administration officials said they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings, and that the latest efforts are "due diligence."

Initial discussions call for private banks to provide the financing, with the government guaranteeing or backstopping the loan. Lenders are reluctant to commit funding to GM or Chrysler for several reasons -- most are concerned they won't get all their money back. The government advisers also are looking at ways the Treasury could "prime" banks making the debtor-in-possession, or DIP, loans, so the government could be paid back before private creditors.

The estimated $40 billion in DIP financing that GM and Chrysler would need would be five times as large as the previous record for such financing, which is used to fund day-to-day operations while companies sort out their debt....More

Treasury mulls bankruptcy options for GM, Chrysler

Obama administration says that all options - including bankruptcy - are being considered for the struggling automakers.

NEW YORK (Reuters) -- Outside advisers to the U.S. Treasury are lining up contingency financing options for General Motors Corp. and Chrysler LLC as part of a review of restructuring options for the automakers, a Treasury official said on Monday.

The official commented to Reuters after the Wall Street Journal reported that outside advisers to the Treasury were talking with lenders about financing of at least $40 billion for the car companies, in case the two automakers needed it.

People involved in talks with senior administration officials told the paper that the administration believes that the option of Chapter 11 filings by the two automakers needs to be seriously considered.

"Everything is on the table right now," one person involved in the matter told the paper, adding that President Barack Obama does not want to see more massive job losses in the auto industry.

The Treasury official told Reuters that the action is not an indication of future plans for the companies, but is aimed at ensuring all options are properly considered and made available.

The administration also does not want to anger the United Auto Workers union by appearing to push for bankruptcy, the Wall Street Journal report said, citing the person involved in the matter.

The initial discussions call for private banks to provide the financing known as a debtor-in-possession (DIP) loan with the government guaranteeing or backstopping the loan, the paper said.

In this scenario, some of the financing would be used to pay back the $17.4 billion the government lent GM (GM, Fortune 500) and Chrysler late last year, the paper said.

Treasury advisers are handling the effort and keeping GM and Chrysler informed of the steps through back-door channels, the paper said, citing people familiar with the matter.

Recently, government advisers have aggressively courted big lenders Citigroup Inc. (C, Fortune 500) and J.P. Morgan Chase & Co. (JPM, Fortune 500), which have also received government aid, to participate in any bankruptcy financing, the paper said, citing people familiar with the matter.

Last week, GM and Chrysler requested nearly $22 billion in U.S. government loans, on top of $17.4 billion received so far, and said they had reached tentative deals with the United Auto Workers union to reduce labor costs.

GM Chrysler Merger:Dragging GM and Chrysler to the altar

The two embattled automakers say they can make it as stand alone companies, but government officials might decide the best solution is a merger.

NEW YORK (CNNMoney.com) -- Federal loans kept General Motors and Chrysler LLC out of bankruptcy in December.

Now as both companies try to prove they are worthy of keeping those loans -- and perhaps getting even more -- there are some who think the government might try to bring the two companies together in a corporate "arranged marriage."

Kimberly Rodriguez, head of the global auto practice at Grant Thornton Advisory Services, said that such a deal would make more sense for Chrysler than for GM (GM, Fortune 500), but that it also might be the best alternative for government officials trying to keep as many Chrysler workers and U.S. suppliers on the job as possible.

"It's a better option than Chrysler trying to survive as a stand alone company," she said. "It's not a great solution. But if your solution set is so imperfect, it's not a bad option."

One of the things that derailed merger talks between the two companies last fall was the fact that it would cost more money upfront to combine them than to try to go it alone. Closing excess factories and dealerships and combining operations would cost billions of dollars neither have right now..

Treasury has already loaned the two companies $17.4 billion and the two requested up to $21.6 billion more in the viability plans they submitted to the government earlier this week.

Rodriguez said she thinks the government will at least consider whether it would be better to loan them even more money so they can combine and emerge as a stronger company down the road.

"You have to decide how much money to throw at the thing," she said.

Plans acknowledge merger advantages
Federal officials charged with overseeing the bailout of General Motors and Chrysler LLC met as a group for the first time Friday to start weighing the turnaround plans.

Buried deep within those two 100-plus page plans was the suggestion that the companies might be best off if they were combined into one.

Chrysler went so far as to quote analyst estimates that such a combination could produce between $40 billion to $58 billion in improved profits for the two companies between now and 2016.

The Chrysler plan said that "there exists further benefits from U.S. consolidation but no clear action path with GM." Instead, the company is now focused on trying to complete an alliance it is studying with Italian automaker Fiat.

"We knew we would get asked questions about our earlier discussions related to proposed alliances, so we decided to be very upfront and put it all in the presentation," said Chrysler spokesman Stuart Schorr. But he acknowledged that conceptually, a deal with GM provided Chrysler the greatest cost savings.

GM also says in its plan that it is not pursuing any kind of combination with Chrysler. It also seemed more dismissive of the idea than Chrysler.

"The recent, rapid deterioration in economic conditions have made investment in the up-front costs associated with such consolidations an obviously lesser priority than addressing the immediate restructuring needs of General Motors," the company said in its plan.

But GM spokesman Tom Wilkinson said GM is interested in hearing suggestions from the federal auto task force for the best course for the company to pursue.

"I think there will be some great discussions there," he said. "We want to continue to have this be a constructive process for all concerned."

Both companies have announced plans to shrink further in response to the weaker U.S. auto sales outlook.

Chrysler laid out plans to cut about 3,000 addition U.S. workers, or about 6% of its remaining staff. GM said it plans to reduce its U.S. work force by about 20,000 workers this year, and close five additional plants by 2012, on top of the 12 it had already said it expected to shutter. Each have offered buyouts to all their remaining hourly staff.

And the smaller the two companies get, the easier it might be to combine them, said David Cole, chairman of the Center for Automotive Research.

"You're kind of setting it up to partner with somebody," said Cole.

GM, Chrysler raise aid request by $21.6 billion,Viability plans

GM, Chrysler raise aid request by $21.6 billion
Viability plans underscore worsening cash crisis

Christine Tierney and David Shepardson / The Detroit News

General Motors Corp. and Chrysler LLC asked Washington for as much as $21.6 billion more Tuesday to stave off bankruptcy, citing worsening economic conditions in new business plans that are likely to provoke fresh criticism of Detroit's embattled auto industry.

Their pleas for more aid, raising the tab for the auto industry's rescue above $40 billion -- which includes a $39 billion bailout for the two automakers plus requests from suppliers -- present a major challenge for the new administration of President Barack Obama. The government wants to help the domestic industry restructure but faces mounting bailout fatigue across the nation.

Yet since the government extended the first emergency loans in December, the already weak U.S. auto market has collapsed to its lowest level since the 1980s....More

Does auto task force trump a car czar?

By James R. Healey, USA TODAY
From a "car czar" who could have micromanaged the foundering auto industry, for better or worse, Detroit automakers now will be delivered into the hands of a committee, the White House says.
The Presidential Task Force on Autos — its members not yet named — will consist of representatives of nine governmental agencies and the White House, and will be run by Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers.

TUESDAY DEADLINE: Time is up for GM, Chrysler to file restructuring plans

"The task force lets us use the experience of many people across government," spokesman Robert Gibbs said Monday. "I don't think that one (czar) vs. several people is a problem."

About the only thing such a committee could do is guide automakers "through bankruptcy or bankruptcy-like proceedings," says Barry Hirsch, professor of economics at Georgia State University. "It is too late for this comprehensive restructuring to take place through negotiation and voluntary agreement among the stakeholders."

General Motors (GM) and Chrysler, already living off government loans, must file plans Tuesday to show how they would remain viable if the government lends them billions of dollars more.

If the government gives the go-ahead, the committee overseeing the automakers' plans will have representatives from the departments of Treasury, Labor, Transportation, Commerce and Energy, as well as from the National Economic Council, the White House Office of Energy and Environment, the Council of Economic Advisers and the U.S. Environmental Protection Agency.

The Treasury secretary will oversee loan agreements.

When GM and Chrysler sought — and got — emergency federal loans late last year, Congress envisioned a powerful person called a car czar to ride herd on automakers' decisions. The czar would ensure that the interests of taxpayers are protected.

While there was some worry that so powerful an overseer could meddle in car companies' daily affairs, Detroit automakers agreed that a single, decisive official could be helpful.

No czar ever was named. Now, the size and makeup of the Obama administration's task force makes skeptics wonder if such a group can make the quick decisions Detroit needs to stay afloat, and can avoid politics and interagency turf wars....More

Chrysler and GM, UAW again seek concessions deal

General Motors Corp., facing a Tuesday deadline to present a long-term viability plan, resumed negotiations with the UAW on Sunday afternoon after talks broke down Friday, the Free Press has learned.

The Detroit automaker is trying to get concessions from the UAW and debt holders as required under the terms of the $13.4-billion loan package approved by the U.S. Treasury Department in December. The deal calls on GM to get the stakeholders to voluntarily reduce the debt GM owes them. But the talks have been difficult, as the various stakeholders vie for a better deal, which would likely mean less favorable conditions for another party.

"This is probably going to go right down to the wire," a person briefed on the efforts said. The person did not want to be named because of the sensitive nature of the negotiations.

Talks between GM and the UAW broke down Friday when the UAW walked out, the source said. On Saturday, the union said it was rejecting the proposals from GM and Chrysler LLC, saying they were unfair to workers and favored bondholders.

Officials from the UAW and GM began talking again Sunday afternoon, though it was not clear at what level, the person said.

GM declined to comment Sunday, and a UAW spokesperson didn't respond to a request for comment.

Meanwhile, talks between the UAW and Chrysler also continue, the company said in a statement. "The company is working diligently on its viability plan and will submit it by its deadline on Feb. 17," Chrysler said.

Despite the back-and-forth between various stakeholders, White House senior adviser David Axelrod said during NBC's "Meet the Press" that GM and Chrysler's restructuring would require sacrifice from workers, executives and others.

He sidestepped questions about whether the industry could withstand a bankruptcy at GM. A person familiar with GM's negotiations with bondholders told the Free Press last week that bankruptcy remained a "very real risk."

The Wall Street Journal reported Saturday that GM will present two alternatives to the government Tuesday: one calling for billions more in rescue money, and the other calling for financial assistance as part of a bankruptcy filing....More