Facing their slowest sales in 26 years, all three companies have had to make cut backs. Ford Motor Co. announced plans Wednesday to shut down 10 plants for an extra week in January, while General Motors Corp. decided to halt the construction of a plant tied to the building of a new electric car.
Chrysler, which saw a 47 percent decline in sales last month, will extend a normal two-week holiday shutdown that begins Friday to at least Jan. 19, idling 46,000 workers.
The Wall Street Journal reported Thursday that GM and Chrysler’s majority owners were resuming merger talks, and that Chrysler owner Cerberus Capital Management LP has indicated its willingness to give away part of its ownership in the auto maker.
But GM spokesman Greg Martin told the Detroit Free Press the report is not true. Merger talks were held in October but ended as the companies’ cash crisis escalated.
The financial situation has grown dire for the companies, and Chrysler and GM fear they might not have enough money to pay their bills within a matter of weeks. The companies have said they need at least $8 billion by the end of the month to avoid bankruptcy and at least $14 billion to get through the first quarter, the paper reported.
The White House is considering ways to help the automakers after Congress failed to reach consensus on a measure to buoy GM, Chrysler and Ford by extending up to $14 billion in emergency loans and other measures and create a “car czar” to oversee how the Big Three handled promises to innovate and restructure.
The administration has said it is open to using money from the $700 billion Wall Street rescue plan for the loans, reversing its earlier stance on the issue.
“The president is not going to allow a disorderly collapse of the companies. That is not an option,” White House spokeswoman Dana Perino told reporters Thursday. “We’re nearing a conclusion, we’re narrowing options, I just don’t have anything for you today.”
President George W. Bush told Fox News Channel yesterday he was still “thinking through” details of any government assistance.
The automakers have also started making payroll cuts. In November, Chrysler cut about 5,000 salaried jobs through a buyout and early retirement program. It is expected to have eliminated more than 1,800 hourly positions by the end of December, reported the New York Times.
The moves have employees and car dealers nervous. Dealers have been requesting nearly $60 million a day from a Chrysler Financial fund used to finance vehicle inventories. The credit arm has said it may have to temporarily halt the loans.
Chrysler Financial’s chief executive, Thomas F. Gilman, told dealers in a letter dated Dec. 12. not to borrow more than “what’s absolutely necessary for the operation of your business.”
With the continuing negative news right before the holidays, some autoworkers have had to make drastic cut backs in their personal finances.
“I haven’t even bought any Christmas presents yet because I don’t know what’s going to happen next,” Jerry Fogarty, a 48-year-old father of three who has worked at the Chrysler Trenton engine plant for nearly 16 years told the AP.
“I want to go to work tomorrow. … We all want to work. That’s all we want to do.”