Big Three survival bailout requests rise to $34B
The Associated Press
The company plans to cut its number of dealers by more than 600, to 3,790 by the end of the year.
The unions were preparing to make sacrifices as well. United Auto Workers leaders summoned local union leaders from across the country to an emergency meeting Wednesday in Detroit to discuss possible concessions. Up for discussion were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers’ payments into a multibillion-dollar union-administered health care fund.
U.S. automakers are struggling to stay afloat heading into 2009 under the weight of an economic meltdown, the worst auto sales in decades and a tight credit market. The three burned through nearly $18 billion in cash reserves during the past quarter.
Ford’s recovery blueprint said it would invest $14 billion over the next seven years to boost its vehicles’ fuel efficiency, and it said it would improve the overall efficiency of its fleet by an average of 14 percent next year. The company plans to speed its rollout of electric and hybrid gas-electric vehicles.
And Ford is calling for a partnership among automakers, parts suppliers and the government to develop new battery technologies domestically, so the U.S. doesn’t have to rely on foreign batteries — as it now does on foreign oil — to power its cars.
Besides cutting its number of dealers, it will trim its major sourcing suppliers by more than half, to 750 from 1,600.
GM said it would make huge cuts in its numbers of workers as well as reductions in its vehicle brands and plants by 2012. The auto giant is seeking a $12 billion loan to keep it running, plus a $6 billion line of credit in case market conditions worsen.
GM would focus on four brands — Chevrolet, GMC, Buick and Cadillac. By 2012, the plan calls for 20,000 to 30,000 fewer workers, a reduction of nine facilities and 1,750 fewer dealers. The company also outlined efforts to negotiate swapping some of the company’s debt for equity stakes in the automaker.
Chrysler said it would cut costs by slashing employee benefits — including suspending its match portion of the 401(k) retirement plan and reducing its health care contribution for salaried workers — and terminating its lease car program. It said it would also ask more productivity of each employee.
Chrysler’s product plan includes the first full-function electric-drive model in 2010 and expansion to additional models by 2013. The company’s market penetration of electric-drive vehicles will further increase with over 500,000 produced by 2013, the blueprint said.
GM, according to its quarterly report filed with the Securities and Exchange Commission, owes creditors $45 billion and it must pay more than $7.5 billion early in 2010 to a UAW-administered trust fund that will take over retiree health care payments.
Ford owes more than $26 billion, with $6.3 billion due to its UAW trust fund at the end of 2009. Chrysler, a private company, does not have to open its books, but its CEO, Nardelli, has said it would be difficult for the company to make it without federal aid. All three likely are negotiating with the UAW for delays in payments to the trusts.
The companies are resisting calls that they file for bankruptcy, arguing that no one would buy a car from an automaker that might not survive the life of the vehicle.