Big Three Automakers Submit Plans to Congress
GM, which asked for as much as $18 billion to survive the
economic downturn, said the company would not last past Jan. 1 unless it
received an immediate $4 billion.
“There isn’t a Plan B,” GM Chief Operating Officer
Fritz Henderson said, according to the Associated Press. “Absent support,
frankly, the company just can’t fund its operations.”
Chrysler asked for an emergency $7 billion bridge loan to
make it through the end of the year plus an $8.5 billion loan to help restructure
its production facilities to make more fuel-efficient cars.
Ford said while it did not expect a liquidity crisis in
2009, financial collapse of Chrysler or GM would threaten its stability because
of overlapping supplier and dealer networks.
All together, the three companies are requesting up to $34
billion in government loans.
Heads of the three companies, Ford CEO Alan Mulally, GM CEO Rick Wagoner and
Chrysler chief Bob Nardelli, will appear before Congress on
Thursday and Friday. This
Time, they are making the trip to Washington in
fuel-efficient hybrid cars instead of their controversial trips in separate private
jets last month.
Ford’s plan to return the company to profitability by 2011 was
the first of the Big Three domestic automakers to answer Congress’ call for
more details on how they would spend government loans to get back on their feet.
The company’s plan asks for $9 billion in bridge financing to help restructure
but said it may not ultimately need the help.
“We want to continue this transformation, but if the
economy gets worse, and the industry gets worse, we want to be able to access
the bridge loans also to keep our transformation going and be part of the
economic recovery,” Ford CEO Alan Mulally told Reuters.
Its plan also calls for up to a $14 billion investment in
fuel efficiency improvements over the next seven years.
Mulally said if the government gave Ford a loan, he would
work for $1 a year and that all management bonuses would be cancelled in 2009,
as would merit increases for salaried employees in North America.
The company would also sell its five corporate planes.
Ford is also in discussion with the United Auto Workers
union to reduce its cost structure and narrow the labor gap between Ford and
Also in the plan is an effort to improve the fuel economy of
vehicles manufactured by Ford and to launch new hybrid, plug-in hybrid and
battery electric models by 2012.
Ford saw sales tumble 31 percent in November, but a sales
drop is expected for the entire auto industry, which has been hurt by a
struggling world economy and a tight credit market. Toyota Motor Corp, Japan’s
top automaker, also reported sales declines of 34 percent in November.
In order to return a pretax profit by 2011, industrywide
sales would need to reach 12.5 million vehicles in 2009, 14.5 million in 2010
and 15.5 million in 2011, the Associated Press reported. The seasonally
adjusted annual sales rate from October was 10.6 million vehicles.