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Auto Giants Ratchet Up Pleas for Aid
Although many critics say the companies should be allowed to go bankrupt, Ford, GM and Chrysler have argued that bankruptcy filings would hurt suppliers, cause massive job losses and drive customers to rival car companies.
"The plan is intended to achieve what would otherwise be achieved in a bankruptcy filing by a negotiated route," GM's Henderson said.
GM said it would sell its Saab division and begin discussions with Saturn dealers to fold or sell the brand. It said it would concentrate on four of its brands -- Chevrolet, Cadillac, GMC and Buick. Pontiac will become a niche brand. It also proposed an oversight board to protect taxpayer interests.
The restructuring plan would lead to widespread job losses. The company said that by 2012 it would reduce its network of dealers to about 4,700 from 6,450. By 2012, it would also close nine manufacturing facilities and reduce the number of workers by at least 20,000.
The United Auto Workers will meet today with delegates of the three automakers "to discuss the auto crisis," UAW spokesman Roger Kerson said.
The companies were also expected to be negotiating with bankers about how to reduce debt and slash interest payments, most likely by pressing bond holders to convert their holdings to equity.
Chrysler's business plan, about half the size of its cross-town rivals, argued that bankruptcy would be even more costly. It said that $17 billion to $20 billion in financing that would be required to sustain Chrysler for one year in Chapter 11, the part of the bankruptcy code that allows firms to continue operations.
Because the company is owned by the private-equity firm Cerberus, the size of Chrysler's request is likely to prompt extra questions from lawmakers. In addition, the company recently had pressed for a merger with GM, arguing that the combined firm would be stronger after eliminating overlapping costs.
While GM and Chrysler emphasized their immediate cash needs, Ford said it was financially prepared to weather this storm. Barring a bankruptcy by one of its domestic competitors or a more severe downturn, Ford said, it does not anticipate a liquidity crisis in 2009.
Nevertheless, it too asked for federal money to be set aside just in case. Ford requested up to $9 billion in financing and said that could rise to $13 billion if economic conditions worsen. It hoped to return to financial stability, or even profitability, by 2011.
The company also said it would invest about $14 billion in the United States on advanced technologies to improve vehicle fuel efficiency over the next seven years. And it provided initial details of a plan to build a family of hybrids, plug-in hybrids and battery-powered vehicles. The all-electric vehicles would include a van for commercial fleet use in 2010 and a sedan in 2011.
In addition, Ford said it would explore the possible sale of its Sweden-based Volvo brand.
"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," Mulally said in a statement.
Using its 2005 fleet as a baseline, Ford vowed to improve the fuel economy of its vehicles by an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models.
It also planned to reduce its dealer and supplier base. By the end of the year, the company said it would have 3,790 U.S. dealers, 14 percent fewer than it had at the end of 2005.
The automakers' pleas coincided with grim new sales figures, the lowest in 25 years. GM's November sales dropped 41 percent, while Ford's slid 30 percent. Chrysler's sales eroded 47 percent from the same month last year.
Both GM and Ford said their expectations of profitability were based on a partial recovery in U.S. auto sales.
The urgent appeals set up a political drama in the waning days of the Bush administration. The administration has urged Congress to redirect funds from a $25 billion loan program to help automakers retool factories and develop fuel-efficient technologies.
But Pelosi and others have urged the administration to tap the $700 billion bailout established to deal with the financial crisis -- a move rejected by the administration.
The automakers say they are counting on money from both the rescue and retooling programs.
In its pitch, GM "acknowledges that it has made mistakes in the past," but it argued that "the company would not require Government assistance were it not for the dramatic collapse of the U.S. economy, which has devastated the company's current revenues and liquidity."
Staff writer Lori Montgomery contributed to this report.