GM's new plan to survive

[teamlynn1]

In case anyone missed this here is what they came up with so far to make it!




THE AUTO INDUSTRY BAILOUT


GM offers cuts in brands, salaries, debt, payroll

Harry Stoffer
Automotive News
December 2, 2008 - 3:17 pm ET


WASHINGTON -- The General Motors of 2012 will have fewer brands and nameplates, thousands fewer dealers and employees, and much less debt on its balance sheet, under a restructuring plan GM gave Congress today.

GM will focus on its "core brands" of Chevrolet, Buick, GMC and Cadillac, the plan says. GM will sell Saab, shrink Pontiac to a niche brand and consider selling or closing Saturn, GM President Fritz Henderson told reporters at a briefing today.

GM also plans to trim its U.S. dealerships from today's 6,450 to about 4,700, Henderson said. It will cut about one-third of the nameplates from its vehicle lineup.

GM executives say the plan will enable the company to be profitable even if the U.S. new-vehicle market makes only a modest recovery.

GM, like Ford Motor Co. and Chrysler LLC, submitted its plan in an effort to persuade Congress and the Bush administration to approve $25 billion in emergency loans to the Detroit 3 this month.

In the starkest acknowledgment GM has made of its financial condition, the company says it needs $4 billion in federal aid by the end of the month.

Henderson, in a briefing with reporters today, refused to say what would happen if GM does not get the immediate aid it seeks. But without government support, he warned, "the company cannot fund its operations."

Request: $18 billion

GM's plan asks Congress for $12 billion in loans by the end of March. It seeks another $6 billion in revolving credit if market conditions don't turn around.

The total request is higher than the $10 billion to $12 billion that GM CEO Rick Wagoner requested of lawmakers during congressional hearings two weeks ago.

Henderson called the GM plan "a blueprint for creating a new General Motors -- one that is leaner, profitable, self-sustaining and fully competitive." Among its key features:

• Reducing the number of GM brands and nameplates, a step GM critics have demanded for years.

Henderson said GM will seek a buyer for Saab. Pontiac will be shrunk to a "specialty, niche" brand, Henderson said. GM already has put Hummer up for sale.

Under its franchise agreement with Saturn dealers, GM will seek a new course for that brand, Henderson said. Asked whether GM would sell or fold Saturn, he said he would not eliminate any options.

The brand "is just not successful," Henderson said.

The number of GM nameplates would drop from 63 today to about 40 by 2012, Henderson added.

• Trimming GM's 6,450 U.S. dealerships to about 4,700.

Most reductions would occur in metropolitan areas, Henderson said.

• Reopening talks with the UAW to cut manufacturing costs further.

Henderson declined to identify the additional concessions GM will seek. But he said GM expects to be fully competitive in labor costs with Toyota Motor Corp. by 2012.

Henderson estimated GM's total U.S. head count would drop from today's 96,000 employees to between 65,000 and 75,000.

• Negotiating with lenders and bondholders to remove about $35.6 billion in debt from GM's books. At the end of September, the company owed $66 billion. Henderson said that debt load is too heavy.

GM aims to achieve through negotiation the kind of debt reduction that otherwise might occur in bankruptcy, Henderson said. The plan probably will involve some exchange of debt for stock.

Breakeven: 13 million sales

Under its plan, GM would break even if U.S. light-vehicle sales recover to just 12.5 million to 13 million cars and trucks a year, Henderson said. Over the past few months, the annualized U.S. sales rate has been less than 11 million units. From 1999 to 2007, the industry sold more than 16 million new cars and trucks each year.

In its plan, GM also agreed to have a government oversight board monitor use of the federal money. Taxpayers would get a stake in the company in exchange for the loans.

After last month's congressional hearings, House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., chastised the Detroit 3 CEOs for failing to make an adequate case for federal aid.

The leaders demanded that the Detroit 3 tell Congress in detail how they would use federal loans and how they would make themselves viable for the long term.

Reacting to lawmakers' complaints that the companies' CEOs came to Washington last month in separate corporate jets, Wagoner is scheduled to return to the capital this week in a Chevrolet Malibu Hybrid.

Wagoner has agreed to accept a salary of $1 next year. The GM plan includes cuts in pay for other senior executives, and the company says it is ceasing use of its jets.

Committee hearings on the Detroit 3 loan requests are set for Thursday in the Senate and Friday in the House. As they did last month, the Detroit 3 CEOs and UAW President Ron Gettelfinger are expected to testify.

Reid and Pelosi have promised to call Congress back into session next week to consider the companies' aid pleas if the viability plans are acceptable.

[LS3SSRS]

wow... lots of jobs lost here.

[MrGazinya]

I friggin hope my dealer ain't on the list

[Scott@Bjorn3D]

It will probably be like they said in big cities where you can have 3 or 4 dealers when you really only need 1.

[kdbolt70]

Man, this is really unfortunate to see. I really hope they can minimize the layoffs, and get a good deal worked out with the union.

[L. James]

The New York Times has a well written article on it:

http://www.nytimes.com/2008/12/03/bu...03auto.html?hp

[DGthe3]

Thread Moved

[r0cketdr]

Showing my ignorance here, but what does "shrinking Pontiac to a niche brand" mean exactly? I'm driving a Solstice GXP right now (while waiting on my Camaro) and it's a pretty nice little roadster.

[camaro&T/A]

[QUOTE=teamlynn1;206648]

Wagoner has agreed to accept a salary of $1 next year.

one dollar????

[DGthe3]

Originally Posted by r0cketdr

Showing my ignorance here, but what does "shrinking Pontiac to a niche brand" mean exactly? I'm driving a Solstice GXP right now (while waiting on my Camaro) and it's a pretty nice little roadster.

They won't offer many mainstream products. Cars like the solstice would stay, the G5 would go.

[a6pk2go]

Let's just hope the goverment pulls them thru and they stick to their plan. Let's buy American people and buy as many GM's as your family can handle.

[NAHURRY]

Originally Posted by MrGazinya

I friggin hope my dealer ain't on the list

[DGthe3]

I haven't commented yet . . .

GM is asking for 18B? Seems like too big of a slice to me since they account for ~40% of domestic sales. The other surprising thing is the NEED $4B this month.

[edog]

Their is a lot of restructuring going on. I feel for those who will lose their jobs due to the restructures. I hope the UAW understands the money they make, for running their organization, is far less important than the money the individual working to support a family makes. They should be profitable enough to live, but not to maintain their quality of life at the expense of the worker or the company.

Also, I hope they are willing to accelerate the Camaro project...This could help to generate needed cash. Pushing it back delays much needed cash flow for GM and all the car dealers who sell for them.

I have submitted emails to me Governor and Senator in attempt to have them support the loans for these three. I hope they remember this is a request for a LOAN and not a handout!

[The_Blur]

I give a thumb up for giving it all. GM is willing to make a lot of sacrifices. I'm very disappointed to hear that GMC is considered a core brand. All they do is sell rebadged Chevrolets.

[av8r]

I hear there are talks about nationalizing the brand? I dunno what that would mean for us as a country. Tax payers own it?

[camaropete]

Although this restructuring is going to be painful, it is the right thing to do in order to make the company viable long term. I worked for a company that went from 100,000 worldwide down to around 60,000 in the matter of two years. It was painful, but doable and was absolutely necessary to keep the company afloat. I am confident that GM can do it and in the end the slimming of the company and the products will keep her alive.

To all those in GM, hang in there! We are doing what we can (letters to representatives, buying cars, etc) to help you out.

[radz28]

I can totally see GMC being a core brand, moreso if they got rid of Chevy trucks. They do have a couple exclusive vehicles that I recall, but not much different than what Chevy has, just like you said. All this information is staggering, really... How much control is the government really going to have on what choices we have on what vehicles we can buy. This is very scary... Not to mention all the people this plan effects. So many jobs and families will be effected, it's not even funny.

How did Detroit get here?

[The_Blur]

Originally Posted by av8r

I hear there are talks about nationalizing the brand? I dunno what that would mean for us as a country. Tax payers own it?

They are not suggesting nationalizing GM. Taxpayers will own a small stake in GM to hold it accountable. That is all.

[MrIcky]

GMC sells med-heavy equipment (such as 5500/6500 and chassis cabs) so it makes sense to keep them as a brand. However, I don't know why GMC sells light trucks.

As far as the plan goes- it's harsh but it's good to see that they are "all in" on making this work out short of a bankruptcy. Maybe I'll forego the Camaro and go get a Cobalt SS this week. My stock is in the crapper anyway so I might as well go have some fun with what I have left.

[Angrybird 12]

Now My comments:
I can't see them selling Saturn, everything they sell now is tied into another GM division, but it really didn’t say they were going to sell or fold Saturn, but that was an option they could have, he said they would plot a new course for them (something I thought they had done in the last 3 years). But if they were going to fold Saturn this is what I would like to see…

I think they should make the Vue the next Equinox, take the Sky into the Chevy brand change a few details to make it look a little more like a retro Corvette and call it the Stingray. and then drop the rest of the Saturn line.

Chevy should start building the Aveo here, along with the Cruze, drop the Cobalt, Keep the Malibu, Camaro and Corvette. Drop the Impala, (Leave the big cars to Buick).

For Pontiac keep the Solstice, the G8 ST, and maybe the G8 GXP & GT, and drop the rest.

GMC should just handle the large commercial trucks and let Chevy have the consumer lineup of pickups , SUV’s and vans.

Buick should drop the Enclave but keep their two cars.

Leave Cadillac as is except drop the XLR sportscar.

oh yeah, call the Volt, the GM Volt and let all the brands sell it.


But that is my opinion.

[stovt001]

A niche Pontiac? So does that mean the Lamda based G12 I was so looking forward to is dead? And what of the Hummer and Saab Lambdas? The world should not be deprived of 3 more models of the exact same vehicle!

OK in all seriousness, this plan is pretty good. I still don't see a need for a truck-only brand in this market, and we've all heard about a million promises from GM to make Pontiac a niche performance brand and then they give us the G3, but this is a solid start.

[a6pk2go]

I got an e-mail from my congress woman today about the financial state of the auto industry.

Here is is:


Dear Mr. Richerson:

Thank you for contacting me regarding the financial state of the U.S. automobile industry. I welcome your thoughts and comments on this issue.

Our economy is facing dramatic challenges. Financial conditions are rapidly deteriorating, creating volatility and uncertainty for businesses, small and large, across the country.

As Texans, we have learned to take responsibility for our actions and being asked to pay for the mistakes of others is something many, including myself, find deeply troubling. While I am a firm believer of free market principles, I also believe that our economy is facing new challenges that if unaddressed, may produce serious unwarranted costs.

On September 30, 2008, the President signed into law H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009. This legislation included, among many items, funding to support a $25 billion loan program for U.S. automakers. The loans, which will be repaid with interest, are intended for long-term business restructuring to promote innovative technologies and new fuel efficient products. The Department of Energy, which is administering the loan program, has indicated that the loans are scheduled to be released in 12 to 18 months.

Several weeks after H.R. 2638 was signed into law, executives of the three major U.S. automakers requested Congress provide an additional $25 billion to $50 billion from the Treasury’s Troubled Asset Relief Program (TARP) to support their short-term funding needs. The CEOs of the largest U.S. automakers testified before Congress that their companies are facing a liquidity crisis, and without an immediate injection of capital, their businesses may fail, creating massive job losses across the country.

The domestic auto industry has failed to meet foreign competition, and I do not think taxpayers should have to provide additional money from the TARP to the auto industry. Instead, I have proposed restructuring and expediting the $25 billion Department of Energy loan program to help the American auto industry weather the financial storm and retain their employees across the country. Requiring these prior funds, which are required to be paid back with interest, to be used on long-term expenditures is not the best use of federal resources when these companies are struggling to stay operational. Rather, these funds should be utilized for short-term needs first. I also believe that any government plan to aid the auto industry must include significant taxpayer protections, including restrictions on executive compensation, concessions from the unions, and assurances that each recipient of federal loans is financially viable.

As Congress returns to debate this issue, you may be certain I will keep your views in mind.

I appreciate hearing from you. I hope you will not hesitate to contact me on any issue of concern to you.

Sincerely,
Kay Bailey Hutchison
United States Senator

284 Russell Senate Office Building
Washington, DC 20510
202-224-5922 (tel)
202-224-0776 (fax)
http://hutchison.senate.gov

[MerF]

Nice response.

[FenwickHockey65]

Originally Posted by The_Blur

I give a thumb up for giving it all. GM is willing to make a lot of sacrifices. I'm very disappointed to hear that GMC is considered a core brand. All they do is sell rebadged Chevrolets.

They sell rebadged Chevrolets...yet GMC is still GM's second best-selling brand.

GMC is brilliant...spend no engineering dollars, slap on some different body panels, and people will still buy them.

Believe me guys, GM has analyzed this over and over again, and if GMC wasn't economically feasible, they would kill it. There's obviously still some money coming out of that division.