30 days for Chrysler, 60 days for GM

eeluddy · Uber Guru

30 days for Chrysler, 60 days for GM

2drpost · Uber Guru

don't know what to say about chrysler, i think gm should've gone chapter 11 to start with, to get out from under their burden.

Astro Jet · Poncho Master!

Key findings of the administration auto task force

The U.S. task force overseeing the restructuring of the auto industry on Monday said the plans submitted by General Motors and Chrysler failed to show how they could be viable. Under the plan:
GM will receive 60 days of additional working capital to resolve the situation.
Chrysler, about 80 percent controlled by private equity firm Cerberus Capital Management, will have 30 days to complete an alliance with Fiat SpA.
The task force said an expedited bankruptcy process to help GM and Chrysler eliminate unsustainable debt loads may be the best path if out-of-court restructurings with creditors cannot be negotiated.
The government said it will back the warranties of all new GM and Chrysler vehicles sold during the turnaround period. The measure is intended to reassure consumers who are fearful the companies will go out of business.
A new car czar, Edward Montgomery, will oversee the turnaround. Montgomery is a top labor economist and former deputy secretary of labor, will. He will serve as director of recovery for auto workers and communities.
Other key findings:

GENERAL MOTORS

The conclusion: GM's plan would not provide viability over the long term even if the economy improved.
GM could be made viable with more restructuring. The company will receive 60 days of working capital to develop a more aggressive restructuring plan and "credible strategy" to complete it.
Leadership changes: Rick Wagoner will step down as CEO; Kent Kresa will serve as interim chairman; President and C00 Fritz Henderson will become CEO. GM also will aim to replace a majority of its board in coming months.
The plan will include "an increased effort by the U.S. Treasury and outside advisers to assist with the company's restructuring effort," according to the task force.
More cuts required: GM must substantially reduce its debt and existing liabilities and will require substantially greater balance sheet concessions than for its existing loans.
The automaker must reach full competitiveness with the U.S. operations of foreign automakers rapidly and make a more aggressive restructuring of manufacturing, headcount, brand, nameplate and retail sales networks.

CHRYSLER

The conclusion: Chrysler cannot be viable over the long term as a stand-alone company and its plan contained a number of "unrealistic or overly optimistic" assumptions.
The new path: An alliance with Fiat could provide a path to viability, but the original proposal was unacceptable in many ways, including the potential for Fiat to hold a majority of the company before U.S. taxpayers were paid back.
Chrysler will receive 30 days of working capital to complete a definitive agreement with Fiat and secure the support of necessary stakeholders. The government would consider an additional $6 billion of loans to Chrysler if the partnership with Fiat is completed.
New requirements for U.S. funding: Chrysler must extinguish the vast majority of its secured debt and all of its unsecured debt and equity, other than trade creditors providing normal trade terms.
Chrysler, Fiat and the United Auto Workers union must reach agreements that provide greater concessions than outlined for the existing loans.
Chrysler and Fiat must provide a more detailed operating plan and the alliance must not require more than the $6 billion of additional loans that could be provided.

Astro Jet · Poncho Master!

Obama means business. GM's management has had a months to negotiate new deals with bondholders, suppliers, the unions, now they are all going to get their teeth kicked in. Hope they like an imposed deal better than one they could have negotiated...

Wagoner did accomplish some things, primarily the expansion of GM operations overseas, particularly into China, but in the home market where it mattered the most, his record was a disaster. From today's Detroit News:

"For all the support he still enjoys amid GM's salaried ranks, Wagoner's tenure was marked by unfulfilled promises, massive corporate losses, destroyed credit ratings, the insignificant value of GM shares, tens of thousands of jobs lost and the gutting of GM's sprawling operations."

The fact of the matter is that his turnaround plan wasn't going to work and would lead GM to chapter 11 anyway, so better to get someone in there who will make the massive changes that are necessary. In fact I read this morning that they plan to replace most of GM's Board of Directors soon as well. As you know, I've been ranting against the "old boy" GM management for quite some time. Wagoner is part of an insular management that just refused to recognize the massive mistakes they've made over the last couple of decades. As I've said before, given his track record, why does anyone think Wagoner is the one that will be able to turn GM around? His record speaks for itself. The administration has looked at Wagoner's plan and decided it doesn't make GM a viable company and therefore can't justify another $16 billion in loans. That would put GM's indebtedness up over $30 billion. When you are loaning that kind of money, you have the right to call the shots, especially when the borrower is a complete basket case without any other options. I read that part of the White House's biggest problem with Wagoner was that he just wasn't tough enough with bond holders in getting them to renegotiate their terms. Now we'll find out if they are prepared to recognize the seriousness of the situation or just take their chances with Chapter 11.

-- Edited by Astro Jet on Monday 30th of March 2009 06:27:08 PM

Astro Jet · Poncho Master!

The CAW doesn't have a clue. They actually think they "work hard". They actually think that they are "highly skilled" and "irreplaceable". They think they have already "given up a lot". I do blame management for caving into their demands for decades and that is why they are now so overpaid and overbenifitted, but in their own minds, they probably actually believe they are not. They are living a total Alice in Wonderland existence. Nothing is going to get through to these cement heads that they can be easily replaced by people making half as much until the companies actually do go into bankruptcy, which is precisely what I think is going to happen now. That is why Obama made such a big deal this morning about the announcement that all the warranties would be backed by the US government. Some sort of structured bankruptcy is just around the corner folks...

2drpost · Uber Guru

Astro Jet wrote:

The CAW doesn't have a clue. They actually think they "work hard". They actually think that they are "highly skilled" and "irreplaceable". They think they have already "given up a lot". I do blame management for caving into their demands for decades and that is why they are now so overpaid and overbenifitted, but in their own minds, they probably actually believe they are not. They are living a total Alice in Wonderland existence. Nothing is going to get through to these cement heads that they can be easily replaced by people making half as much until the companies actually do go into bankruptcy, which is precisely what I think is going to happen now. That is why Obama made such a big deal this morning about the announcement that all the warranties would be backed by the US government. Some sort of structured bankruptcy is just around the corner folks...

i agree hillar, they cannot survive with the same old rule workforce.
i hear wagoner may be leaving with a $23 million 'severance'. amazing, no conscience, no morals.

73SC · A Poncho Legend!

Unfortunately that's a pretty sub standard severance when you get fired, that's only one year's pay. I am sure he has a parachute clause and it is what it is.

As for the union, Don Newman was just interviewing Ken Lewenza of the CAW on CBC and you have to hear it to believe it. He is saying that legacy benefits are not a negotioable item, he talks as if he is an equal partner with the Firms, Governement and Union. He said if GM can't honour the legacy deals then the Government will have to, read that to be me and you! Newman asked him if he knew what Bankruptcy would means for his members and he basically said that it was a bluff.

65post · Poncho Master!

69 belair wrote:

don't know what to say about chrysler, i think gm should've gone chapter 11 to start with, to get out from under their burden.

Yea the Bush-Obama team were told from the very beginning not to give tax payers dollars to these guys and let them go into chapter 11.Now the money is gone done the crapper and thay are right back to where they started.

Astro Jet · Poncho Master!

73SC wrote:

He said if GM can't honour the legacy deals then the Government will have to, read that to be me and you! Newman asked him if he knew what Bankruptcy would means for his members and he basically said that it was a bluff.

Oh, he and Buzz know exactly what bankruptcy means and they are scared sh!tless that it might actually happen now. It means that if any auto manufacturing survives in Canada it will be non-union and he and all his cronies will be out of a job. As for the goverment of Canada picking up their pensions, that is just absolutely laughable. The government probably isn't even liquid paying CPP benefits. Does he think everyone else in this country whose pension isn't guaranteed or just has an RRSP is going to all of a sudden bow down and agree to give CAW members exalted status and pay extra taxes to guarantee their pensions? Like I said before, these guys literally have no clue and have such a sense of entitlement and self worth, they are completely out of touch with reality and are going to be rudely awakened in a month or two when they are out on the street with nothing.

2drpost · Uber Guru

.....out on the street. yes, looking for work or with guns, looking for lewenza.

2qwik2c · Poncho Master!

Might be a good idea to get the GM of Canada Docs for the cars while you still can??? Who knows what might happen with the service in the near future??? As was discussed on another site.

eeluddy · Uber Guru

Astro Jet wrote:
The CAW doesn't have a clue. They actually think they "work hard". They actually think that they are "highly skilled" and "irreplaceable". They think they have already "given up a lot". I do blame management for caving into their demands for decades and that is why they are now so overpaid and overbenifitted, but in their own minds, they probably actually believe they are not. They are living a total Alice in Wonderland existence. Nothing is going to get through to these cement heads that they can be easily replaced by people making half as much until the companies actually do go into bankruptcy, which is precisely what I think is going to happen now. That is why Obama made such a big deal this morning about the announcement that all the warranties would be backed by the US government. Some sort of structured bankruptcy is just around the corner folks...

Nicely put Hilar. I have no idea what KoolAid the CAW brass has been serving to the members but can't they see this is no bluff? Don't they realize that GM & Chrysler sign the paychecks, the union take their cut, not the other way around?