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Auto's Big Three Fuel Up For Bailout

POSTED: 02:53 PM ET, 12/ 4/2008 by Derek Kravitz


Jeep employee Marv Skampo, above, attends a town hall for autoworkers yesterday in Toledo, Ohio. United Autoworkers President Ron Gettelfinger, from left, Chrysler CEO Robert Nardelli, Ford CEO Alan Mulally, and General Motors CEO Rick Wagoner have all taken turns this week testifying before Congress about a proposed auto industry bailout. (Photos Getty, Reuters, AP)

On Capitol Hill today, it was all about being green, efficient and technologically savvy.

Executives from Detroit's big three automotive manufacturers, Gerald Wagoner Jr., president and CEO of General Motors Corp., Alan Mulally, president and CEO of the Ford Motor Co. and Robert Nardelli, chairman and CEO of Chrysler, LLC, are speaking to lawmakers from the Senate Banking Committee, asking for up to $34 billion in emergency bailout money to save the nation's struggling car and truck industry.

VIDEO | Auto Executives Arrive in Style

It has been two weeks since the executives appeared before Congress, only to be sharply criticized for arriving for the hearings in private jets. Today, all three men said they came to Washington by car.

And all three pledged to use any federal money wisely, to benefit the consumer.

Still, many lawmakers said they remain skeptical of any government-funded bailout.

Sen. Richard C. Shelby (R-Ala.), the top Republican on the Banking Committee, said he would oppose any bailout for the auto manufacturers, saying the companies were lagging behind overseas rivals.

"The firms continue to trail their major competitors in almost every category necessary to compete," he said.

And Sen. Charles Schumer (D-N.Y.) simply said: "I don't trust the car companies' leadership."

Mullaly said Ford now has a "laser focus" on the company's most important brand, the Ford blue oval.

"It used to be that our approach to our customers was, if you build it, they will come," Mullaly said. "We produced more vehicles than our customers wanted and then slashed prices, hurting the residual values of those vehicles and hurting our customers. Now we are aggressively matching production to meet the true customer demand."

Mulally added that the company was also now focusing on smaller cars with higher fuel economy, reducing labor costs and streamlining its global production.

Nardelli said Chrysler would negotiate "cost-saving concessions from all constituents" and invest in fuel-efficient cars and trucks in exchange for a $7 billion loan, adding that his company's future is "robust, it's realistic and it's green."

"With such a huge hit to our sales and revenue base, Chrysler requires a loan to continue the restructuring and fund our product renaissance," he said. "Chrysler has a sound plan for financial viability that includes the seeking of shared sacrifice from all constituents."

Wagoner urged congressional leaders to push through a bailout, citing cost-cutting moves at General Motors, including reducing the board's compensation to $1 a year and ceasing all corporate aircraft operations. He also pledged that the company would pay back any loan in full by 2012.

By Derek Kravitz |  December 4, 2008; 2:53 PM ET
Previous: Holiday Looks Different After 'Black Friday Stampede' | Next: Rangel Attacks Times; Times Fires Back

Comments

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Just finished watching the day's auto industry hearings in the states.

This is what we are going to get: before March 1/09 Chrysler and GM are going to figure out how to merge (saving $8-10 billion per year); and all industry stakeholders are going to be forced (via threat of bankruptcy on March 1/09 if they do not succeed)... forced to make substantial sacrifices. They threw around 30% for bondholders that at present are thinking 19% looks good; but with bankruptcy 19 not so good. In effect: bankruptcy without the declaration of such... by way of government edict. This is my prediction.

Also, I want to congratulate the participants, particularly that Chrysler fellow, for having "got to honesty": you sirs, are honorable people. Yours sincerely, Daryl Atamanyk

Posted by: DarylAtamanyk | December 4, 2008 4:11 PM

How many of us intensely dislike the car buying ritual? I know I do. And how many have had to make expensive repairs to our American cars, or worse yet found ourselves on the side of the road late at night with our disabled American cars? Now we are asked to feel sorry for the workers, the auto dealers and the executives. This afternoon, I saw on the news crawl the true bailout to the Big 3 might reach $125 billion. No, all the players in the American auto business have played us for fools for the last time. I drive a foreign car made in Alabama because of the sorry experiences I have had with American cars over the past 30 years. It doesn't surprise me at all that so many Americans are against the bail out.

Posted by: saelij | December 4, 2008 4:21 PM

Let. Them. Fail. Wagoner says "We’re here today because we made mistakes." Guess who's responsibility it is to own up and live with it? Theirs. It sure as hell isn't my responsibility, so please don't make it. The rest of the country gets to file chapter 11 and start over when they fail. There is NO reason why these guys can't do the same.

Posted by: JackShaftoe | December 4, 2008 4:33 PM

GMC, Ford and Chrysler all need to fall. No freaking bailout. Free market will determine their fate. When they fail and file for Bankruptcy that will be the end of the UAW, which has driven up cost and been the major downfall for the American Car Company’s. In fact that’s the major issue with all union jobs. Greed!!! Let them fail, someone else will come in buy them out and force out the unions. That will be a great day in America!

Posted by: TravisChapman | December 4, 2008 4:40 PM

saelij-the retard,
It’s not the cars we have a major issue with; it’s the principle of inefficient business practices caused by the UAW, and incredibly ridiculous legislations. Your comments about being stranded are absurd! Only American cars break down? Fool! Thanks for playing, now let the adults finish the conversations, while you play scratch-n-sniff with your tongue!

Posted by: TravisChapman | December 4, 2008 4:48 PM

By stepping outside of the authority granted to them by the Constitution, meddling in private industry, and in a large part causing the economic problems that have adversely affected the domestic auto industry, the federal and state governments have made every taxpayer liable should they fail. This money should be in the form of a settlement instead of a loan.

By doing the same thing in the banking industry, they have also made us liable for bank failures. By then supporting the banks in their illegal and predatory loan activities the government is complicit and we are now liable to every home owner who's property is foreclosed on and every business that has been forced to close because of banking practices.

http://ewebsmith.com/gov/WrongBusiness.html

Posted by: websmith1 | December 4, 2008 4:53 PM

I wish the members of Congress would go to the auto show in Boston to see what small american companies already have a good working electric car prototype. We should be subsidizing one or two of those companies and get THEM on their way to mass production at a reasonable and competitive price.

The benefits would help us get off foreign oil and fossil fuels much quicker than one or all of the "big 3". Jobs would be created in both parts and material production. Getting any of the "Big three" to do this is like trying to get the Queen Mary II to turn on a dime. - Ain't gonna happen.

The best chance that GM had to get into the Hybrid busniness with any kind of seriousness was to take a lightweight Saturn Ion and put a hybrid engine in it.
But, alas, GM put its heavy thumb on Saturn and turned it from an innovative, lighweight acrylic, semi-independent car company in Tennessee into a conventional, metal, off-the-shelf GM car company. In fact, the gas mileage of Saturn's cars has gone DOWN over time. Such arrogance.

I still own two older Saturns and they get 35MPG higway. I guess that's why GM keeps sending me letters to buy my old Saturns back. They don't want them to see the light of day again. They were a good car but the team in Tennessee did not build in planned obsolescence.

Posted by: vernoncormier | December 4, 2008 5:19 PM

I was so angry watching the 3 auto makers requesting tax payers funds. I own and operate a small business and if I operated my business in the same fashion as the auto makers have, I would be out of business.

Improper management, over paid executives, producing inferior products, lack of customer service, no regards to their customers needs or wants, expense of private jets to ask for a loan from tax payers......and Congress is really thinking of giving them the money. Let them fail, the same as Congress would let me fail in my business. They have options, bankruptcy.....
Hey maybe I can go before Congress and request only $250,000 bail out for my business.....How do I get a hearing?

Posted by: teddiechavez | December 4, 2008 6:48 PM

Responding to Teddiechavez, I would just like point out that your small business does not effect over 3 million tax payers. If the Automakers go under where will those 3 million unemployed go? Not all of these people are part of the UAW. In that 3 million job figure that they use they include all of jobs that support the auto industry. The American Auto Companies are the largest consumer of glass, plastic, steel, and electronics. Other estimates say that if the auto industry fails then 4-6 states could be ruined, taking them 13 years to recover. I'm just trying to point out the other side of the argument

Posted by: skiarmada3 | December 4, 2008 9:43 PM

skiarmada3,
They won’t be unemployed silly! Haven’t you heard Osama is going to save us all. Remember? Change? The change we can count on? We wont have to work and the Government with it incredible gift will support us all while printing more money. It’s going to be great!

Posted by: TravisChapman | December 5, 2008 4:10 PM

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