Bush stepping in to aid auto industry BY DAVID ESPO The Associated Press
WASHINGTON — With Congress gridlocked and the economy floundering, the Bush administration declared Friday it would step in to prevent the “precipitous collapse” of the U.S. auto industry and the disastrous loss of hundreds of thousands of jobs sure to follow. A day after the sudden demise of rescue legislation in Congress, carmakers were talking with the administration and the Federal Reserve about how they could still get the billions of dollars they say they need to survive. The talks included conditions that automakers would have to meet, said GM spokesman Greg Martin. The administration said no decisions had been made on the size or duration of the new bailout plan, or what type of concessions might be demanded from the struggling automakers, their workers, stockholders or others. In a reversal, the most likely rescue option under consideration involved billions of dollars originally ticketed for the bailout of the financial industry. President George W. Bush had earlier declared that money off-limits to the beleaguered automakers. General Motors Corp. and Chrysler LLC have warned they are running out of cash and face bankruptcy without some form of assistance. Ford Motor Co., which is in somewhat better shape financially, has been seeking access to a line of credit. Underlining its difficulties, GM announced Friday it would cut another 250,000 vehicles from its first-quarter production schedule — a third of its normal output — by temporarily closing 21 factories across North America. The move affects most plants in the U.S., Canada and Mexico. Many will be shut the whole month of January. Urgent requests for White House intervention to save the automakers came from President-elect Barack Obama, Republican and Democratic members of Congress and outside groups. “Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” White House press secretary Dana Perino said after the failure of a $14 billion bailout bill in Congress. The legislation died when Senate Republicans demanded upfront pay and benefi t concessions from the United Auto Workers that union officials rejected. Perino added, “Given the current weakened state of the U.S. economy, we will consider other options if necessary including use of the TARP program to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.” TARP is the $700 billion Troubled Assets Recovery Program, the financial industry bailout plan enacted in October. All but $15 billion of the first $350 billion has been dedicated to troubled banks or insurance companies, and the Treasury Department is barred from dipping into the second $350 billion without a formal notification of Congress. No decision has been reached about such a notification, administration officials said. If one is made, Congress could then vote to prevent the action, but it would be unlikely to prevail in a showdown with the president. Obama, who will inherit the problem next month, even if bailout billions are handed over in the meantime, said, “My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required.” In a letter to Bush, House Speaker Nancy Pelosi urged the president to demand “the same tough accountability” and taxpayer protections from the automakers as was contained in legislation that cleared the House at midweek. Michigan Rep. Thaddeus McCotter, a conservative Republican from a state where Ford, GM and Chrysler are headquartered, said, “With the legislative opportunities now exhausted, I urge the president of the United States to immediately release Wall Street TARP funds to the domestic automakers to avoid their impending bankruptcy and its consequent devastation of working families and the depression of our American economy.” It was unclear what role was left to lawmakers after an extraordinary week in which prospects for industry relief seemed to change by the hour. A week ago, the government reported the loss of 533,000 jobs in November, the worst monthly showing in more than 30 years. In the days between then and now, the White House and congressional Democrats agreed on a $14 billion measure that would have extended short-term financing to the industry while establishing a powerful new “car czar” to make sure the money was used to turn the Big Three into competitive companies. That bill passed the House on Wednesday but immediately ran into opposition from Senate Republicans who said it did not go far enough. On Thursday, they demanded the United Auto Workers union agree to accept a lower pay and benefits package that would be in line with compensation earned by workers at U.S. factories producing cars for Japanese companies such as Honda, Toyota and Nissan. In an unprecedented series of negotiations, lawmakers met with representatives of industry and labor on the fi rst floor of the Capitol in hopes of striking a deal — the effort that ultimately collapsed when the UAW balked at the terms demanded. At a news conference on Friday, UAW President Ron Gettelfinger accused GOP senators who blocked emergency loans of trying to “pierce the heart” of organized labor. Sen. Bob Corker, R-Tenn., who played a leading role for Republicans, told reporters at............................................http://www.dailygazette.net/De.....amp;EntityId=Ar00400
First published in print: Saturday, December 13, 2008
Paul Finnegan's Dec. 4 letter. "Big Three should steer toward future," about the meeting between Congress and auto industry leaders stated that "instead of asking the CEOs if they 'jet pooled' to a meeting in Washington, they should have focused on the real issue." He goes on to say that the real issue is that Congress needs to know how the Big Three are going to reorganize and fix their companies before they get the "free" money from Congress.
The first thing that needs to be looked at is the fact that Congress has no right to take taxpayer money and give it to whomever they want. There's an old document that most people have either forgotten about or decided is now useless. It's the Constitution, which is what our country has been based on since the document's signing in September 1789.
Article One, Section Eight, gives 16 specific powers, then states that Congress has the power "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers." Nothing in those 16 powers states that it is Congress' job to help by handing money to anyone for any reason.
If the Big Three need money, maybe they should do what they have done in several instances in the past. There's a reason that their stock is traded on the stock market, because they offered partial ownership in their company and someone wanted to buy it. Maybe it's time to see if anyone else wants to buy partial ownership by offering a new amount of stock into the market.
Let the people who have confidence in the Big Three buy the stock. It has worked before, it'll work again. It's the free market.
and what is the argument???? unions providing prevailing wages???? I am not totally against unions but the lack of foresight and the life support needed is mind boggling.......
pull the plug----there is always another Frankenstein to put together.......
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
While discussing the Big Three bailout with a co-worker, we might have come to a better solution than just giving these auto companies our money without a direct impact to the taxpaying citizens who are subsidizing this. I have owned American cars but I now own two foreign cars, because they are a more efficient and reliable vehicle, with less service, better gas mileage and a better warranty. What if the government was to give a tax deduction or credit to people who buy Americanmade cars for five years or the life of their car loan? It could be in the form of less federal taxes taken out of your paycheck or a tax deduction of your car loan at the end of the year. This would immediately stimulate the car industry, the banking business (people would be taking out car loans), and we would be putting more efficient cars on the road (as long as they start designing them). It would be an immediate payback to the taxpayer who qualifies, and it's a win-win situation for all involved. It might take a little paperwork with payroll or our Internal Revenue Service, but at least it’s a beneficial alternative that the taxpayer could take advantage of, instead of feeling like we’re not just handing over a big amount of money to these CEOs.
Automakers cut back Big Three temporarily closing manufacturing plants BY TOM KRISHER The Associated Press
DETROIT — Chrysler announced Wednesday it is closing all its North American manufacturing plants for at least a month, the starkest move taken by U.S. automakers as they anxiously await word about government loans. All three companies have been taking dramatic steps as they struggle to survive the recession and U.S. sales have dipped to their slowest rate in 26 years. Chrysler and General Motors fear they might not have enough money to pay their bills in a matter of weeks. Attempting to cut costs, GM was halting construction of a plant tied to one of its most important projects, the Volt. Ford also said it will shut down 10 plants for an extra week in January because of sluggish sales. Chrysler said it would extend the normal two-week holiday shutdown that begins Friday to at least Jan. 19 at all 30 of its factories due to slumping sales. The lack of consumer credit is hampering sales and forcing the production cuts, Chrysler LLC said in a statement. Chrysler, Jeep and Dodge dealers say they have willing buyers for vehicles but they can’t close the deals, Chrysler said. “The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation,” the statement said. The Bush administration is mulling ways to help the automakers after Congress failed to reach a deal on $14 billion in loans for GM and Chrysler. Ford has applied for a $9 billion line of credit but says it has enough cash to make it through 2009. Funding for the loans is expected to come from the $700 billion Wall Street rescue fund, but many Republicans have objected. “It’s clear that the automakers are in a very fragile financial condition and they’re taking steps to deal with it,” White House press secretary Dana Perino said in a statement. “We’re aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way.” House Democrats have encouraged Treasury Secretary Henry Paulson to adopt accountability provisions included in a House-passed auto bailout bill — the product of a deal with the White House — as a condition to get the loans. The measure would have given a Bush-appointed “car czar” oversight over any major business decisions by the automakers. The Bush administration has signaled that concessions would likely be required of stakeholders in the deal — auto companies, the United Auto Workers union, bondholders and others. Chrysler spokesman Dave Elshoff said four plants will be temporarily closed beyond Jan. 19: two plants in Toledo, Ohio, and one each in Ontario and Detroit. Toledo North, which makes the Dodge Nitro and Jeep Liberty, and Toledo Supplier Park, which makes the Jeep Wrangler, will be closed until Jan. 26. The Windsor, Ontario, plant, which makes minivans, and Detroit’s Conner Avenue plant, which makes the Dodge Viper roadster, will be closed until Feb. 2, Elshoff said. Chrysler sales were off 47 percent last month and are down 28 percent through the first 11 months of the year. At Ford, a company spokeswoman said Wednesday it will shut down 10 of its North American assembly plants for an extra week in January, also due to lower U.S. sales. Spokeswoman Angie Kozleski says the normal two-week holiday shutdown will be extended to Jan. 12 at all operating assembly plants except those in Claycomo, Mo., near Kansas City, and the Dearborn, Mich., truck plant. Ford will also extend the shutdown at some engine, transmission and parts stamping plants, or temporarily shut portions of them to match cuts at the assembly plants, she said. The extra week of down time has been planned for several months as part of the company’s first-quarter production schedule, Kozleski said. Ford Motor Co.’s U.S. sales were down 31 percent in November and are off 20 percent through the fi rst 11 months of the year. Laid-off workers at Ford and Chrysler get vacation pay for the normal holiday shutdown, then will receive unemployment benefi ts and supplemental pay from the company that total about 85 percent of their normal pay. General Motors Corp. said last week it will temporarily close 20 factories across North America and make sweeping cuts to its vehicle production. Many of those plants will be shut down for the entire month of January. GM said Wednesday it was delaying construction of a new engine factory in Flint, Mich., in an effort to conserve cash. The plant is to make 1.4-liter engines for the Chevrolet Cruze and the Chevy Volt plug-in electric car, two key products in.................http://www.dailygazette.net/De.....amp;EntityId=Ar00101
Federal Government to Loan Automakers $17.4B The $17.4 billion in low-interest loans will be drawn from the $700 billion Wall Street rescue fund but it will be called back if the companies are not viable by March 31.
FOXNews.com Friday, December 19, 2008
The federal government will help Detroit's ailing automakers survive at least another few months by offering $17.4 billion in rescue loans in exchange for concessions from carmakers and their workers.
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the last half of the $700 billion from the Wall Street rescue fund that it approved in October to bail out huge financial institutions.
Tapping the fund for the auto industry essentially exhausts the first $350 billion of the fund, he said.
President Bush said Friday that a bankruptcy was unlikely to work for the auto industry at this time because it would deal "an unacceptably painful blow to hardworking Americans" across the economy.
Automakers will get $13.4 billion of the money this month and the next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. An additional $4 billion will be made available to the companies later. Ford Motor Co. has said it does not need immediate help.
Bush said the loans will be called back if the companies are not viable by March 31.
"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."
Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.
Obama hailed Bush's decision as "a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers."
Obama called on the auto companies to bring all their stakeholders together, including labor, dealers, creditors and suppliers, to make the hard choices necessary to achieve long-term viability.
"The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it," he said in a statement.
The White House package is the lifeline desperately sought by U.S. automakers, who warned they were running out of money as the economy fell deeper into recession, car loans became scarce and consumers stopped shopping for cars.
The carmakers have announced extended holiday shutdowns. Chrysler is closing all 30 of its North American manufacturing plans for four weeks because of slumping sales; Ford will shut 10 North American assembly plants for an extra week in January, and General Motors will temporarily close 20 factories -- many for the entire month of January -- to cut vehicle production.
Bush said the auto manufacturers have faced serious challenges for many years: burdensome costs, a shrinking share of the market and plunging profits.
"In recent months, the global financial crisis has made these challenges even more severe," he said.
The president said that on the one hand, the government has a responsibility not to undermine the private enterprise system, yet on the other hand, it must safeguard the broader health and stability of the U.S. economy.
"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers," he said.
"Under ordinary economic circumstances, I would say this is the price that failed companies must pay," the president said. "And I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances.
"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."
General Motors and Chrysler thanked the administration for its help Friday morning.
In a statement, Chrysler CEO Bob Nardelli said the initial rejection of capital will help the company get through its cash crisis and help eventually return to profitability. He said Chrysler was committed to meeting the conditions set by Bush in exchange for the money.
General Motors said in a statement that Bush's decision will help "preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us."
GM added that the loan will allow the company to accelerate the completion of its restructuring plan and lead to a "leaner, stronger General Motors."
Not everyone was pleased with the auto rescue plan. Sen. John McCain was among several Republican lawmakers who decried Bush's decision.
"I regret the president's decision to give away over $17 billion to the domestic automakers. I find it unacceptable that we would leave the American taxpayer with a tab of tens of billions of dollars while failing to receive any serious concessions from the industry," McCain said in a statement.
"It is deeply disappointing that the administration has chosen to use taxpayer dollars to delay the inevitable need to fundamentally restructure these companies," U.S. Rep. Tom Price, R-GA, said in a statement.
There is a WHOLE SYSTEM out there for companies to reorganize and do what they need to do to 'fix' their problems etc......the coporate/banking world and government set the freakin' thing up.....
THE AUTO COMPANIES SHOULD BE MADE TO UTILIZE IT AND SO SHOULD THE UAW........get over it and move on......be the big boys ya'll are and be smart
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
According to ABC News, Chrysler is closing all its plants for a month, affecting all blue-collar workers. They will collect unemployment benefits that are nothing close to their weekly paychecks. Interestingly, some whitecollar workers will continue to receive their same paychecks. Same old thing: The hard-working guy suffers while the corporation fi ghts for a government bailout and the fat cats get richer.
Yesterdays Detroit Free Press begins reporting it this way- to Regain Trust with great new vehicles
First and formost they must get the vehicles right. Every new model they introduce must be a fuel-efficency leader for its class.
Second- they must build great small cars. Cars that dont just match but exceed, the quality, fuel economy and flair of models like the Honda Civic-Nissan Versa and Mini Cooper-
Third- they must demonstrate that 40 mpg midsize sedans and 50 mpg subcompacts are just around the corner, and that when they come into view, they will be gorgeous-
Yesterdays Detroit Free Press begins reporting it this way- to Regain Trust with great new vehicles
First and formost they must get the vehicles right. Every new model they introduce must be a fuel-efficency leader for its class.
Second- they must build great small cars. Cars that dont just match but exceed, the quality, fuel economy and flair of models like the Honda Civic-Nissan Versa and Mini Cooper-
Third- they must demonstrate that 40 mpg midsize sedans and 50 mpg subcompacts are just around the corner, and that when they come into view, they will be gorgeous-
I agree, but they better accomodate families.......without 'the family' as the foundation a nation will fall.........they become easy targets for divide and conquer......
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Island Chevrolet general sales manager James Severtson arranged for a Chevrolet Suburban SUV outfitted with massive tires costing $5,000 apiece to drive over a Honda Accord.
On the first attempt Friday, the monster truck blew a hydraulic hose and leaked vital fluid while the Honda remained intact and ready for more.
Dealers spending $5k a piece for tires on a PR stunt - and we feel the need to bail them out?
This is really interesting; the last few words are mighty telling!
This is a video of a new Ford plant in Brazil. One look at this and you will be able to tell why there will probably never be another one built in the US.
It will also point out why more assembly plants will go off shore.
For years, foreign-made cars have been imported to the United States — Volkswagens, Saabs, Volvos, Suburus, Jaguars, Land Rovers to name a few — but it's been at numbers that haven't hurt the sales of the Big Three "American cars." The big push by Toyota, Honda and Nissan has done the damage to American auto workers. Now Toyota and Honda are building plants in the United States, but they are at an advantage because they don't have to pay the benefits and retirement packages that the American car manufacturers do. If the Big Three fail, their employees and the employees of the 3,000 parts manufacturers that supply them would be out of work. What would this do to our country? Why would an American citizen purchase a foreign car knowing that it is hurting American workers and that the profi ts leave our country? I have a bumper sticker that I purchased more than 20 years ago: "Unemployed, hungry, eat your foreign car." Think about it.
Fed lets GMAC tap bailout fund BY MARTIN CRUTSINGER The Associated Press
WASHINGTON — The Federal Reserve has granted a request by the financing arm of General Motors to tap the government’s $700 billion rescue fund, bolstering GM’s ability to survive. The Fed announced Wednesday that it had approved GMAC Financial Services’ request to become a bank holding company. That designation makes GMAC eligible to receive a portion of the bailout fund and get emergency loans directly from the Fed. Analysts had speculated that without financial help, GMAC would have had to file for bankruptcy protection or shut down, dealing a serious blow to GM’s own chances for survival. The Fed cited “emergency conditions” in justifying its decision. The move to rescue an auto financing company was just the latest extension of the federal bailout program, which was designed to shore up ailing banks but has grown to include insurers and credit card companies. GMAC provides financing for both GM dealers and customers as well as home mortgage loans through its Residential Capital LLC division. The company is 51 percent owned by Cerberus Capital Management LP, the investment fund that also owns Chrysler. GM owns the remaining 49 percent of the company. Under the Fed’s order, Cerberus and GM, whose businesses are mainly outside banking, would both have to significantly reduce their ownership stakes in GMAC. GM has committed to reducing its ownership in GMAC to less than 10 percent. Cerberus was ordered to reduce its stake to 33 percent of total equity in the company. A GMAC bankruptcy filing would have cut off financing to the roughly 85 percent of GM’s North American dealers it does business with. The future of Chrysler Financial, Chrysler’s financing arm, is also uncertain. Earlier this month, Chrysler Financial, which provides financing for 75 percent of Chrysler dealers, said it could be forced to temporarily suspend funding for dealer vehicle inventories if dealers keep pulling large amounts of their money out of an account used to fund those loans. The Fed’s decision was announced after the close of a shortened trading day on..............http://www.dailygazette.net/De.....amp;EntityId=Ar00604
Logged
