GM, Chrysler submit bailout plans to Congress[SIZE=-1]
The final tally to maintain GM, Chrysler, and their suppliers: $56.5 billion
- GM had already received $13.4 billion and last night requested an additional $9.1 billion.
- GMAC, GM?s former captive finance company now half owned by the owner of Chrysler, received $5 billion.
- Chrysler, which has received $4 billion, says it needs another $5 billion.
- It also requested additional aid for Chrysler Financial, the company?s in-house financing arm, which received $1.5 billion in aid in mid-January.
- Parts suppliers to the industry, including GM and Chrysler have also requested $18.5 billion in federal aid. (If suppliers begin to fail, it would wreak even more havoc for the automakers, who couldn?t build cars without some of their parts.)
The assistance given so far is in the form of loan guarantees, which the automakers would be scheduled to start paying back in 2012.
The restructuring plans released last night were given as a response to conditions in the original aid package passed Dec. 19, last year. These plans are supposed to lay out how the companies will return to viability.
GM and Chrysler, as well as Ford, were in the process of restructuring their businesses when the financial crisis hit in October. Ford was farther along in its restructuring and has said it may ask for $8 billion in aid but has not yet done so.
Since the bailout was first announced, General Motors has announced that it will sell or close its Hummer, Saturn, and Saab brands, will lay off 10,000 white-collar workers and cut managers? pay. And it has closed two factories laying off an additional 3,800 workers. In addition, it is negotiating with the UAW to win other cost-saving concessions on work rules and company health-care contributions. The UAW has already announced the closing of its controversial Jobs Bank, in which laid off workers were paid salaries while they waited to find new positions. GM is also seeking concessions from its bond-holders.
In addition, its plan last night, the company announced that by 2012 it would shutter 14 more factories--five more than previously scheduled.
Chrysler closed its Newark, Del., assembly plant in December that built Dodge Durango and Chrysler Aspen, including hybrid versions of the two full-sized SUVs. And it has announced a new partnership with Italian automaker Fiat, to develop some new small, cars that will meet new federal fuel-economy regulations. Since 2006, Chrysler has laid off 26,000 union workers as well as 26 percent of its white-collar workforce.
If that weren?t bad enough, the automakers were asked to examine the cost of bankruptcy, as well. Each company presented several bankruptcy options, which ranged from somewhat more expensive than the bailout money they are requesting to more than three times as expensive.
As auto sales continue to fall, the outlook for automakers worsens. GM?s plan says the company could be profitable at an annual industry sales rate of 11.5 to 12 million vehicles. Chrysler?s is based on just 10.1 million units. If sales don?t improve, based on sales in January 2009, the industry may sell just 9.5 million cars this year.
The companies say without federal aid, they will not be able to meet payroll and other obligations by March.
And while GM and Chrysler are in the worst shape, it isn?t just Detroit that?s hurting. Toyota posted its first loss in history in the last quarter.
It seems a bleak day in the automotive world, indeed.
?Eric Evarts
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