It finally looks like the Detroit Three – Ford, GM and Chrysler – will get their rescue loans from the US Government. But they had to sweat for the money.
Over the past couple of days the Detroit bosses have had to present detailed business plans to Federal Committees. In GM’s case, the plan involves laying off 30,000 more workers, shutting plants, and off-loading or closing Saab and Pontiac.
The boss Rick Wagoner will get a dollar a year until it’s turned around. And he won’t quite be the boss any more because he’s accepted the need for some sort of Government appointed ‘car czar’ to oversee the spending of the loans.
At first it all looked like typical political brinkmanship. All parts of the political spectrum took firm positions. Some didn’t want a bail-out at all. Some, including President Bush, wanted the money to come from cash already allocated for green car technologies. Democrats wanted the cash to come from the $700bn bank bail-out fund. Eventually the Democrats seem to have been flexible, but we haven’t seen the detail yet.
The plan is for a bill to be drawn up next week, so the final scheme could be signed off within days. Just as well. GM says it needs billions by Christmas.
In the end though, the fact that the matter has been so widely discussed is a good thing. The American political class now knows GM and Ford are serious (I don’t believe Chrysler will last). The car makers have really had to boil down their strategies. The American public have been reminded that the economy needs industry. The Japanese and German carbuilders in America know they can’t survive if Detroit’s suppliers go under. The car unions understand they’ll have to make sacrifices too.
Such rigorous discussion has to be good. Two weeks ago the US Treasury approved loan guarantees of $306bn for the bank CitiGroup, without any banking executives having to stand up and account for themselves or present a plan.
I assume Rick Wagoner will still get billions in bonuses though, Paul.
Although I dislike the big three because of their shoddy product quality and for swallowing up large parts of the markets (Saab, Volvo, Opel, etc.), they must be bailed out or 10 million workers/suppliers/dealers etc. will be out of their jobs. Such is the scale of the Detroit enterprises. Hopefully things will look up for everybody involved after this bail out. It would be nice, however, to see some of the companies in the big 3′s stables made independant again. More competition is much better, having a small amount of Global Monopolies means that if one goes down, lots of people lose out. This is why Chrysler must also be saved.
You just cannot imagine companies with this much status collapsing. Let’s think now a list of all the companies owned by GM alone:
Buick
Cadillac
Chevrolet
Daewoo
GMC
Holden
Hummer
Opel
Pontiac
Saab
Saturn
Vauxhall
If those GM will suddenly collapse, hardly anyone will be able to buy these companies. Which is why the US goverment had to step in. Or it would have been a world wide crisis.
I heard Rick Wagoner was asked to step down from being boss of GM…
pickup: Sen. Chris Dodd made comments that he thinks that Rick Wagoner should step aside. I don’t believe he’s been asked to do so formally.
catersam: none of these execs will pick up bonuses. That is part of the package.
I remain cynical that Chrysler in particular can claw its way back to profitability. Even GM look terminally wounded, but I hope to be proven wrong. Of the three, I only really care whether Ford survives, as they at least have good products in Europe. Vauxhall/Opel are showing signs of matching them, but in both companies cases, they need to market globally, instead of their current US/EU split product lines. Let’s just hope that they don’t use the lowest common denominator (i.e. the US product line up) as their global cars! What will be the US Govt’s influence on decision such as these?
Isn’t ford planning to sell eu cars in us??? And I personally still think GM should have gone bust and sold all the individual brands with componant sharing contract etc, that way each brand is individually managed, good cars get the green light quicker and cars become cheaper/more profitable because no pensions and healthcare will be carried over so still they should go bankrupt and gm can buy the brands and be better off and the brands it doesn’t want can be bought by somebody else
The guys at ford, chrysler & GM must have been sooooo worried! If you have a good sense of smell, you can just make out the smell of sweaty-pits. Yes, that’s the smell of big & very nervous buisness men who work for ford, chrysler and GM. Apart from the 30,000 layed-off GM workers.
**OFF SUBJECT**: Does anyone know what the song in the series 12 preview video is called?
Crysler just needs to die. this isnt the first time theyve been bailed out by the government. It sucks for all the workers but Crysler makes some of the worst cars ever. Every single car is pretty much guranteed to break or is of awful quility. over weight, under engineered, ugly, dirty, thristy, and unsafe.
Its ashame that GM is doing bad as they do make the best cars out of the Big Three.
i dont care about ford either way, they made some great stuff back in the day but sell crap right now. and whats worse is that they dont sell there EU cars here, which are ten times better then what they sell here in the states. the Focas, the Mondeo, the S-Max, while we are stuck with a 15 year old wannabe focas, a 20 year old taurus and a bunch of ugly thristy pickups and SUVs
PS. somebody please unblock the videos in the video secion.
I’m still not so sure the big 3 deserve any money. We’re stuck here with crap cars and I want better ones! I feel for the workers, but in all truth UAW is 50% of the problem. What it costs Toyota, and the others $25 to make costs the big 3 $75 – mostly due to outrageous labor costs.
Its good to know that the Unions are willing to take big hits to help out, but I still say it’d be best to let ‘em all tank. It’d get get rid of the dead weight in Chrysler and GM and Ford should be able to squeak by after restructering.
Ford would probably be very pleasantly surprised if it sold its EU cars here. And after last night – well… it might just revolutionize mall shopping for good
** Good point: why are videos blocked? Top Gear America is boring.
GM cannot even comprehend shutting off Chevrolet & Cadillac. The other branches might be chopped off but not these two!
Its stupid, they should be allowed to die. It’s financial evolution: non-profitable companies fall, a new generation of eco-friendly and almost certainly profitable manufacturers rise in their place. If the money was going to be exclusively spent on modernising and improving the efficiency of the Big three and their products it might be a good idea. Except we all know it won’t. The money will just turn out ‘green’ cars like the ridiculous lexus 4×4 hybrid. Its a waste of US taxpayer’s money.
At least we’re putting the brakes on a little, in diving headlong into the next great depression (great slump).
I hope Saab and Vauxhall don’t go. Both are on the verge of becoming the ‘it’ brand in motoring, atleast according to me.
And it would be lovely if British Ford gets bought by someone else with deep pockets. Bill Gates, screw that charity mumbo-jumbo, buy Ford. Theres a Focus in it for you.
Your economic theory is deeply flawed. People aren’t buying cars, and this is a pit of money that will disappear.
What needs to happen is for these companies to fail, and for some young brave entrepreneurs to buy up the old warehouses and equipment and rebuild a viable business.
The Government is incompetent and they have absolutely ZeRO experience running a car business.
Manufacturing should be the heart of any economy but propping up bad businesses is like trying to prop up a house built on sand, when you should let it collapse and build again on more solid ground.
All these bailouts are only extending the problem.
Yes times will be tough, but for a much shorter period as rebuilding can happen quick. Instead these businesses will just die a longer death!
i just lost the game
Duvsta,
If you consider that we are dealing with an ever growing number of working Americans, who were working last year, being without jobs or unemployed (unemployed means collecting unemployment) now, and add to that, that almost 1/4 of all American jobs are linked in some way to the auto industry, the companies cannot be allowed to fail as long as there is room to intercede. Even with this help, GM has announced 30,000 more layoffs, the possible sale of Saab, and the possible end of Pontiac. It’s good that the government has stepped in for now, even if all it does is delay the inevitable.
http://www.bls.gov/news.r elease/empsit.nr0.htm
Of the big three, Ford seems to be in the best financial shape (at the mo). Ford have said they could last through 2009 with the money that they borrowed before good old borrowing got tight.
Ahh… lovely interest-bearing borrowed money… you know; the money that Ol’ Henry Ford loved so much!
Here’s me thinking that the bankers’ would treat FoMoCo. the same way they treated the Tsar of Russia !
And another thing; one thing that US autos and US influenced cars aren’t is ‘cheeky’. EU cars have that… er… ‘quality’. But it’s not really a quality though is it? Better sticking with ruggedness as your design influence, in the long run it carries more respect.
Let me stick my oar in on this topic.
I think the EU models are superior to the US, in every way. I don’t accept that ruggedness is the way forward. The European Ford’s are as reliable as almost anything else out there. For something to be rugged it has to be heavy duty and for that it needs to be heavier, built from thicker gauge materials and use more resources in the process. That is very dated thinking.
I was delighted to hear that Ford was sending its EU models to the USA, but now I read that they are AGAIN changing their design direction so that they have just one international design language. Like Toyota for example. Nissan. Honda, or best example of all, Mazda. Why have they not always done this? Its seems ludicrous to sell completely different cars in various markets to satisfy the same basic niche.
Having heard about the design language issues, I now think that its possible the EU Fords are going to be dumbed down to the US model standards to save money. The EU models are probably very expensive to manufacture, whereas the US models are not. It is the Unions and all that goes with them that are crippling the US company.
But regardless of what they build… if the economic situation worldwide does not change, it doesn’t matter one iota what they produce, because no one will be buying them regardless.
PDMC, the global ford design language plan has been around for a couple of years at least. I doubt it has much to do with the “credit crunch” and Ford US’ money issues.
The focus Mk 3 was planned to be the same in the UK and US, though from what I’ve read recently the design next design language, Kinetic edge (isn’t that just the last 2 design languages bolted together!!!) will appear first on the next generation Mondeo.
who the hell is GM ???
soz but i just dont no !!! :s
I’m nominating JC for Car Czar. He can just teleconference from over there so he doesn’t have to spend too much time inside airplanes. “No, no, no, stop building that, it’s rubbish!”
Chrysler and cerberus? Can we say MG Rover and the Phoenix four again?…..