GM and Chrysler have hit rock bottom. Burning through bailout money and hounded by creditors and union retirees alike, the companies are facing a fight for survival. After both companies had their most recent bailout plans rejected, and were ordered to make vast changes, both companies have struggled to meet their deadlines. And despite recent reports that the government is finally going to offer some more bailout cash, both companies still appear to be teetering on the brink for disaster.
Chrysler, according to a report by The New York Times, is preparing a Chapter 11 bankruptcy filing under government supervision, and will likely file as early as Monday. The government had offered Chrysler $6B USD in loans if it could complete a merger deal with Fiat, but Fiat has refused to commit to such a deal until the UAW makes steep concessions (which appears unlikely) or the company washes its debts via bankruptcy. The deadline for the merger is next Thursday, but the government may give Chrysler an extension if it files for bankruptcy protection.
The government has reached a deal with the U.A.W., whose members’ pensions and retiree health care benefits would be protected under the bankruptcy filing, as well. This clears the way for such a filing.
The only obstacle that remains are the creditors, mostly banks (JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs), to which Chrysler owes $6.9B USD. The creditors have thus far only offered to exchange $2B USD of the debt for a 40 percent stake in the company, a proposal which Chrysler flatly rejected. However, a bankruptcy could wipe them out entirely. A bankruptcy would also likely wipe out the interests of Chrysler's current owner, Cerberus Capital Management, which bought Chrysler from Daimler in 2007.
A Chrysler bankruptcy could rock the supply chain, causing difficulties for Ford and Chrysler as well. Fortunately it comes around the time of the summer shutdowns that occur frequently in the automotive industry's bad years.
Meanwhile, GM also fights for its life. In GM's case, it hopes to avoid bankruptcy by slashing brands and dramatic restructuring. According to automotive site Inside Line, a source and GM says that the company will officially kill the Pontiac brand on Monday. The brand is currently labeled a "niche brand". The announcement would reduce GM's brands to four -- Chevrolet, Cadillac, GMC and Buick. It would end the careers of such muscle car legends as the Pontiac GTO and Firebird. It would also end the young career of the Pontiac G8, which drew strong reviews and revived interest in the brand.
A request for official confirmation from GM, was met with spokesman Tom Wilkson stating, "There's nothing I can share with you at this time. Keep your eyes on our media site. Officially, nothing has changed with Pontiac's niche-brand status, until you hear differently."
While the automotive industry is clearly in a world of trouble, they aren't going down without a fight. And if the latest news from GM and Chrysler are any indication, the companies are willing to do whatever it takes to keep fighting till the bitter end.
quote: The only obstacle that remains are the creditors, mostly banks (JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs), to which Chrysler owes $6.9B USD.
quote: It's so freakin' easy for repubs to put other's jobs and lives on the chopping block and still maintain a self righteous attitude. Such attitude comes from a sheltered style of life. But I guarantee that if those repubs who can so easily take someones job away in the name of "fiscal responsibility" were to face the same thing, they'd whine and moan that life isn't right and injustice is being done them.Nothing but spoiled brats. Get out and face what the common man is facing you idiots.
quote: Companies do not exist to give people jobs!
quote: Countries like China can save a lot of $ by not funding a highschool education for their factory workers - should the US abolish public education so our labor is cheaper?
quote: The difference between the neocons and liberals is that liberals see this as an ultimately shortsighted and BAD thing, while neocons think it's the greatest thing since sliced bread and wish to accelerate it. The funniest thing of all is that the jobs lost in the US inevitably go to a MORE socialistic, communistic country than the US. It's particularly ironic that the Republicans, who so bitterly hate anything socialized, are the ones blindly leading the charge to socialize the rest of the world.
quote: Where I work, I had an idea that saved the company $7,500/year. You know how much I got of that? A one-time bonus of $50. Wow. Oh, now sure, I can break my back, and maybe if I'm lucky I'll get a 5% raise instead of 3%... but seriously, there's not a lot of motivation to go "above & beyond the call of duty"....Capitalism works best when the workers have an actual incentive to work hard; if the CEO's just hoard the money no matter how the company does, is it any surprise when the workers only have a minimum interest in seeing their company succeed?
quote: Get out and face what the common man is facing you idiots.
quote: How can you possibly be this stupid? Companies do not exist to give people jobs! The jobs are a side effect of company growth.
quote: That perspective makes it obvious: the point of your life is not to make the economy better. The purpose of the economy is to make your life better.
quote: The insane belief that only pro-business policies and tax cuts for the wealthy are the road to prosperity ignores the need for balance, and the law of diminishing returns and bubbles (as when too many investment dollars chase too few truly productive opportunities). Its like saying if two aspirin cure a headache, taking fifty must make your head feel terrific.
quote: Total up the billions it has and will take to save these jobs. Then look at how much help that money could give those same people if you let the company go under - with training for new careers, loans to start small businesses, help with moving costs to areas with more opportunities, etc. For the $25 billion or so we've pumped in so far, plus the $20+ billion we'll put in GM in the future and paying off Chrysler's former workers, we could have spent a hundred grand on each of the GM and Chrysler employees getting them in to new careers. With plenty left over to extend credit to the industry's domestic supply chain.
quote: Total up the billions it has and will take to save these jobs. Then look at how much help that money could give those same people if you let the company go under - with training for new careers, loans to start small businesses, help with moving costs to areas with more opportunities, etc.
quote: The only reason people have jobs is because they make more money for the company than it costs to pay them, if that situation changes they get cut just like any other asset the company has that is unnecessarily costing them money.
quote: You know what spoiled brats are? People who works for a company for 30 years, and demands life time pensions, regardless of the financial burden it puts on the company.
quote: The tyranny has ended and that jerk Bush was sent packin'. I sincerely hope my president Obama will put him and the rest of his posse on trial for crimes against humanity.
quote: He is the reason why the nation is going bankrupt. He ruined this nation for no other reason than his moronic ego.
quote: Not that im going to try and defend Bush's liberal fiscal policies but its leftist social welfare programs are the reason we are going bankrupt,
quote: its leftist social welfare programs are the reason we are going bankrupt, not the wars in Iraq and Afganistan.
quote: No, we're going bankrupt because people who think government is the problem, not the solution, pushed to deregulate the financial industry, and took a generally very lax view on regulatory oversight.
quote: I believe the OP wasn’t referring to welfare program, but the general welfare programs (collective). Paying farmers to not grow, ethanol subsidies, welfare, SSI, food stamps, bank bailouts, extended unemployment, govt. healthcare (Medicaid, Medicare for example), etc, etc, etc.All of those programs for those who believe they are "entitled" to get something for free add up.
quote: Social Securtity, Medicare, and Medicaid now make up 44% of the federal budget and they are growing each year.
quote: The reason why they make variations of the same basic car is to keep costs down. By sharing the same chassis, they can produce that part in bulk and lower the cost to make each one.
quote: diluting their own market share
quote: I don't understand that argument. A sale is a sale, whether the badge on the car said Pontiac or Chevrolet. They have niche brands to cater to people who don't identify with the main brands. I guarantee you GM isn't going to sell more Cadillacs by changing the name on them all to Chevrolet.
quote: you have a G8, cadillac CTS, chevy malibu all the same car
quote: think you're politicizing this too much. Bush and the neocons called for the same thing, you recall -- in fact he was the FIRST president in a couple decades to propose fuel standard increases. Its just the trendy thing to do these days. McCain called for the same sort of things too. Remember politicians just blindly follow public sentiment.
quote: Well, the fact of the matter is that corn prices have gone up substantially as a result of its cross-usage in producing ethanol.
quote: Remember politicians just blindly follow public sentiment.
quote: he was the FIRST president in a couple decades to propose fuel standard increases.
quote: The government has reached a deal with the U.A.W., whose members’ pensions and retiree health care benefits would be protected under the bankruptcy filing, as well.
quote: Chrysler, according to a report by The New York Times, is preparing a Chapter 11 bankruptcy filing under government supervision
quote: The government has reached a deal with the U.A.W., whose members’ pensions and retiree health care benefits would be protected under the bankruptcy filing, as well. This clears the way for such a filing.
quote: saving the members pensions and health care benefits is not saving the union. If Chrystler goes bankrupt, there is a good chance they may not recover, and thus many of its workers will lose their jobs. That's not exactly what I would call giving the UAW what it wants, as those lost union dues can add up pretty quick.
quote: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits the public treasury with the result that a democracy always collapses over lousy fiscal policy" -Alexander Tyler
quote: You're looking at the whole situation through the wrong lens. Obama and the majority of our elected officials care about 1 thing; getting re-elected.
quote: So if a politician appears to care about the union the union member thinks that the politician cares about them and will consequently be more likely to vote for said politician.
quote: In this case win the support of the UAW and you win 1.5 million votes. By protecting pension plans of UAW members current and former Obama is securing himself millions of votes in the 2012 election cycle.
quote: They might be going bankrupt, but if they are able to restructure and get people back to work it'll be money well spent.
quote: Both parties have been equally worthless for years now.
quote: after Bush proved himself part of (or at least an enabler of) Big Government and Big Brother, I've switched to Libertarian.
quote: Fortunately it comes around the time of the summer shutdowns that occur frequently in the automotive industry's bad years.
quote: There are plenty of people here that are willing to work hard. Unfortunately, none of them speak English...
quote: Either way the tax payers were going to get stuck with it, because either their pensions/medical benefits were protected or they all are forced to go onto social security and medicare.
quote: Ah yes, those lavish pensions of a whole mere $1500 a month, which are taxable, and were already paid for
quote: A Chrysler bankruptcy could rock the supply chain, causing difficulties for Ford and Chrysler as well.
quote: Don't worry all of GM's cars are built on the same platform. Instead of the Pontiac G6 or G8 they will call it the GM-6 or the GM-8 and advertise it as a new model.
quote: with the U.A.W., whose members’ pensions and retiree health care benefits would be protected under the bankruptcy filing...