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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (45196)	11/19/2008 10:48:18 PM
From: stockman_scott	Read Replies (2) \| Respond to of 149317

Tonight Charlie Rose has a conversation about the auto industry with Barney Frank and Richard Shelby...Wish he would talk to some folks that really understand restructuring, the auto industry and turnarounds...I would like to hear good discussion with folks like Wilbur Ross or Jerome York...We hear way TOO MUCH from some of the same talking heads in Washington.

To: Lizzie Tudor who wrote (45196)	11/20/2008 12:16:24 AM
From: stockman_scott	Respond to of 149317

The Ramifications of Bankruptcy at GM, Ford, and Chrysler marketoracle.co.uk Nov 19, 2008 - 01:24 AM By: David Urban Much is being made in the press about the financial problems at GM, Ford, and Chrysler. For a number of years, the US automakers were the backbone of the US economy, providing jobs and products that were part of the rise of the middle class not just in this country, but abroad. A car was looked upon as a status symbol and along with the national highway system allowed Americans the freedom to travel and a symbol of wealth and stature. The Japanese then started to produce automobiles and became attuned to areas such as quality and production management, surpassing the US automakers. While quality has improved, brand management has not. Ask anyone outside of Michigan and despite producing quality automobiles, US automakers have a serious problem with brand management. There are too many brands competing in the same space for the same customers. Now the US automakers stand on the brink of bankruptcy as Congress debates a bailout package of at least $25 billion dollars. If bankruptcy were to be declared it would cause a major dislocation in the economy and the ramifications of a bankruptcy would last for years. First and foremost, the US automakers would be able to break UAW contracts. Under the current system all UAW employees, past and present, have the power to vote on UAW contracts. This means that the retirees, who greatly outnumber the current rank-and-file, generate significant influence over the current contracts in order to protect the benefits they have worked their lives to obtain. While this is a major problem for the US automakers as pension costs have risen and UAW members live longer lives, the retired workers were made an inherent promise when they were working on the assembly line. In return for working labor intensive and repetitive jobs, the company would take care of them when they retired. It is this inherent promise which makes a bankruptcy filing difficult. Not only would the US automakers be able to break the UAW contracts but they would be able to place their pensions back on the government much in the same way United did in order to decrease their cost structure and exit bankruptcy. Placing the pensions on the government would mean a cut in benefits for retirees. Not a favorable solution by any means, especially for those workers who worked their lives in difficult jobs toiling day by day to support their families and create a better life for their children. Dealership contracts are another area where bankruptcy would pose a problem. The automakers would be able to break dealer contracts which would mean consolidation in the dealer industry. This may also mean a consolidation in the number of brands carried by each automaker. Undoubtedly, this would cause a firestorm of protests across the country although some areas of the country could use stand to see a consolidation in dealers. Services may become hindered as it would require the surviving dealers taking on additional business in the maintenance category that they may not be equipped to handle. Once bankruptcy is declared you can expect parts suppliers such as Delphi to automatically file as well. Delphi has a number of agreements with GM, most prominently in the area of its UAW pension plan where Delphi can place part of its pension benefits back on GM. Communities directly and indirectly affected by the US automakers through plants, suppliers, etc. would become entangled and a wave of lawsuits would soon follow as everyone jockeyed for position. Just as important from a political position, this puts at least 37 electoral votes at risk for the Democrats in the 2012 election as the bankruptcy can be expected to drag on for years. I am not advocating that the bailout is a solution but the consequences of bankruptcy are not being discussed in the press. The ideal solution is a middle ground, where all parties need to admit that the current system is not working and needs to be changed. Each party needs to take a bitter pill and work towards some system where pain will be felt in return for a rescue package from the government. Back in the 1980's Lee Iococca came to the government looking for help. In the following years, Chrysler was able to temporarily get back on its feet before falling back into the position it is in today. Any solution put into place should ensure that the US automakers do not return to the table asking for additional funds in the future while guaranteeing stable and healthy jobs and benefits for current and past employees. By David Urban

To: Lizzie Tudor who wrote (45196)	11/20/2008 1:20:20 AM
From: stockman_scott	Read Replies (1) \| Respond to of 149317

Chrysler has $6.1 Billion, but $5 Billion in monthly costs detnews.com By Alisa Priddle The Detroit News Thursday, November 20, 2008 For Chrysler LLC, bankruptcy is a real threat, with only $6.1 billion on hand and about $5 billion a month in operating costs. CEO Robert Nardelli made the private company's financial status public this week during his testimony in Washington, D.C., as part of a bid for federal assistance by Detroit's Big Three. Underscoring the automaker's precarious position, the company was placed on 'Rating Watch Negative' by Fitch Ratings Wednesday, on the heels of the disclosure that Chrysler burned through $3.3 billion in cash in the third quarter. That's more half the $5 billion Chrysler has run through so far this year. General Motors Corp. sliced through $6.9 billion in the quarter ending Sept. 30; Ford went through $7.7 billion. Nardelli said Chrysler's financial obligations amount to $4 billion to $5 billion for salaries, benefits and suppliers. With vehicle sales down 38 percent in October, the automaker likely burned through another $1 billion, which means cash is at the minimum the company needs to keep the lights on in Auburn Hills. With vehicles sales expected to continue their downward spiral in the fourth quarter, many are wondering whether Chrysler can limp its way into the new year. An automaker unable to pay its bills runs the risk of forcing the hand of unpaid suppliers to demand payment or stop shipping parts. "Without government support we believe auto suppliers will tighten terms causing Detroit Three bankruptcy filings," said Eric Selle, chief analyst with J.P. Morgan in a report Wednesday. Chrysler is in a fragile state and "could be dangerously close by the end of the quarter" to running out of liquidity, Nardelli said as he testified before the Senate and House alongside his counterparts Rick Wagoner of GM and Alan Mulally of Ford, as well as UAW president Ron Gettelfinger. Detroit's automakers are seeking a $25 billion bridge loan to stave off bankruptcy during a credit crunch that has cut off loans from traditional sources. Nardelli was also the hand-raiser for every suggested condition to obtaining money -- from a $1 salary to meeting increased fuel-efficiency regulations and funding minority dealers. "We'd be open to any requirement." Opening up the books Under majority owner Cerberus Capital Management LP, Chrysler's books have been closed to public scrutiny. The last disclosure was $11.7 billion in June, a healthy figure that led to a jest by Chrysler president Jim Press that it had other automakers sniffing around the Chrysler vault. That was during a period of negotiations of a possible tie-up between Chrysler and GM, an initiative that was halted. Cerberus is still interested in a partner or the sale of Chrysler and Nardelli used the hearings to repeat the desire for partnerships, alliances, or sharing of anything from purchasing to technology. This week the automaker announced a partnership with German supplier ZF Friedrichschafen AG to run a new axle plant it had planned to operate alone. Fitch said acquisition or global expansion are necessary for Chrysler to remain viable. Because Chrysler is the smallest of Detroit's automakers, there is a growing sense that letting the automaker go would help the industry as a whole. "Chrysler could probably be broken up and spread around without creating a catastrophe for the industry," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "It would be a lot easier on the economy than GM or Ford (going bankrupt) which would be really expensive." He said all three are vulnerable and within weeks or months apart of going under, and he foresees further consolidation of the industry. "How it unfolds is unclear, but Chrysler will be involved," he said. Industry executives quietly muse about the potential to improve the overall health of the industry without Chrysler, whose capacity is about equal to the overcapacity in North America. Nardelli said Chrysler looked at a prepackaged bankruptcy where the terms are pre-arranged to shorten the length of time in Chapter 11 to a month or two compared with a year or two for conventional bankruptcy. "We looked at pre-negotiated. We've looked at almost every alternative within Chrysler as a privately held company before we came here and ask for support," he told the Senate. "We just cannot be confident that we will be able to successfully emerge from bankruptcy," Nardelli said, telling the House, "it would be devastating." Even Jerome York, former Chrysler chief financial officer, told CNBC bankruptcy means the "end of the company." Chrysler has cut $2.2 billion in fixed costs and 1.2 million units of capacity so that it is at the breakeven point, Nardelli said. "We're doing everything humanly possible to survive this current period," Nardelli said.