Detroit 3 Ceos Make Headway In Senate Hearing

[fbachman]

Harry Stoffer

Automotive News

December 4, 2008 - 10:00 am ET

UPDATED: 12/4/08 5:22 p.m. EST

 

 

 

 

WASHINGTON -- The Detroit 3 CEOs won a warmer reception in Congress today than they did two weeks ago as Senate leaders said they were searching for ways to provide emergency aid.

 

"I don't think we want to walk away without trying to get something done," Christopher Dodd, D-Conn., said after chairing a six-hour Senate Banking Committee hearing on renewed requests from General Motors, Ford Motor Co. and Chrysler LLC for $34 billion in loans.

 

 

Many committee members complimented the industry chiefs on the plans they presented for using federal aid and restructuring to become viable for the long term.

 

But the senators also showed that they -- as well as the House and Bush administration -- remain far from a consensus on how to help. The House Financial Services Committee holds its next hearing tomorrow.

 

Today's session offered more ideas on how to deal with the industry's crisis. There was talk of creating a powerful board of trustees or auto "czar" to impose concessions on automakers, organized labor, lenders to the car companies and other stakeholders.

 

Some lawmakers said financial institutions that have gotten money from a $700 billion economic rescue program should make government-guaranteed loans to the Detroit 3.

 

Others, such as Sen. Richard Shelby, the ranking Republican on the committee, were unmoved. They said they believe the companies should restructure in bankruptcy. Shelby's Alabama is home to Honda, Hyundai and Mercedes-Benz plants.

 

Economist: They'll be back

 

An economist told the committee that the estimated $34 billion overall cost of the bailout cost could rise. Two weeks ago, the automakers had estimated they needed $25 billion.

 

The industry may need $75 billion to $125 billion to avoid bankruptcy and the companies may well return asking for more money later if they get the $34 billion they want now, said Mark Zandi, chief economist of Moody's Economy.com.

 

"I'm skeptical, doubtful that it's going to end at $34 billion," Zandi said.

 

Dodd said he takes seriously warnings that an automaker bankruptcy would be "cataclysmic" for an already weakened economy.

 

"Maybe history would prove us wrong, but that's a hell of a bet to take," Dodd said.

 

Dodd and other senators indicated they will look for a way to provide short-term loans, especially to GM and Chrysler, which say they could run out of cash by the end of the year. Then lawmakers could consider a broader, more detailed program when a new Congress and President-elect Barack Obama take office next month.

 

Said Dodd: "We're not going to write a check for any amount of money without serious conditionality associated with it."

 

Sen. Carl Levin, D-Mich., called today's hearing "a giant step forward."

 

He also said information produced over the last couple of days by GM, Ford and the J.P. Morgan banking firm makes the case that failure of one or more of automakers would have a "systemic" impact on the nation's financial system.

 

That is because an automaker's default on debt would trigger hundreds of billions in loses among financial firms, he said.

 

No jets this time

 

GM, Chrysler, and Ford delivered detailed plans this week to Congress for using federal "bridge" loans and becoming viable companies in the long term. The appeals came after their initial hearings two weeks ago.

 

Those appearances resulted in criticism for rejecting calls for personal sacrifice and for seeking federal aid after flying to Washington in corporate jets. The performances also inspired a lampooning on "Saturday Night Live."

 

GM CEO Rick Wagoner arrived at the Capitol building today in a light blue Chevrolet Volt electric prototype, but drove most of the way from Detroit in a Chevrolet Malibu Hybrid. Ford CEO Alan Mulally showed up in a white Ford Escape Hybrid, and Chrysler's Robert Nardelli was in a white EV electric vehicle.

 

With U.S. auto sales at 26-year lows and global credit markets sluggish, GM and Chrysler could be at the brink of failure within weeks, United Auto Workers President Ron Gettelfinger told the committee.

 

"We could lose General Motors by the end of this month" without a massive government assistance package, said Gettelfinger, whose union promised yesterday to make additional concessions to help save the companies.

 

GM says it needs $4 billion this year, an additional $8 billion by the end of March and another $6 billion in revolving credit if market conditions don't improve.

 

Chrysler says it has to have $7 billion by the end of the year, and Ford says it may tap $9 billion if one of its domestic rivals collapses.

 

Act of contrition

 

Earlier, GM's Wagoner said if Congress demands contrition from the Detroit 3 in exchange for at least $34 billion in emergency federal loans, he was prepared to offer it.

 

"We made mistakes," Wagoner told committee members.

 

GM made many decisions that were "right for the times," Wagoner said. But the company failed to build enough flexibility into its operations and did not move fast enough to invest in smaller, more fuel-efficient vehicles for the United States, he conceded.

 

Wagoner said the Detroit 3 learned a lot from last month's "difficult" congressional hearings. For GM, he said, that process accelerated "a healthy internal review."

 

GM's restructuring plan promises deep cuts in brands and nameplates, jobs, executive salaries and corporate debt.

 

House Speaker Nancy Pelosi, D-Calif., has echoed Dodd in saying that inaction is not an option. Pelosi and Senate Majority Leader Harry Reid, D-Nev., plan to call Congress back to Washington next week to consider aid proposals.

 

Other witnesses at today's session were:

 

• Keith Wandell, president of auto-parts supplier Johnson Controls Inc.

 

• James Fleming, president of the Connecticut Automotive Retailers Association.

 

• Gene Dodaro, acting comptroller general of the U.S. Government Accountability Office.

 

• Mark Zandi, chief economist of Moody's Economy.com.

 

[unit731]

Interesting.

 

I watched both the Senate and the House.

 

The House of Representatives - and the 3 CEO's of Automakers and UAW president.

 

The one House of Representatives member from the state of Alabama grueled the panel and asked absurd no answer questions. Kind of a filibuster type of questions. Oh, he went on that the governments role is NOT to be in the car business and that government should NOT help the auto industry. The regular druel - crap.

 

But just look at what the state of Alabama has for automotive plants. And what the State of Alabama did and does due for the Automotive industry (foreign in fact).

 

Oh, my, the government should NEVER do anything to help the auto industry. Bad. Hmmm. . . .

 

Below:

 

First of all, Alabama provided tremendous incentives and tax breaks for inducing the automotive investments. For example, the incentives package to induce Mercedes-Benz?s investment in 1993, when the state competed with thirty states, amounted to $153 million. The offer surpassed $100 million of North Carolina, which was a presumed forerunner until then. It included training workers, clearing and improving site, upgrading utilities, and buying 2,500 expensive vehicles. Even though the state had difficulties with financing the incentives, it has steadfastly stood by the deal. [19] To land Honda in 1999, Alabama again committed to a total of $102.7 million in incentives to buy the land and prepare the site for construction, plus training the plant?s employees, along with $55.6 million in tax breaks. [20] In 2002, when Hyundai decided to build an automotive plant in Alabama after considering about sixty U.S sites, the state also provided Hyundai with $252.8 million incentives package. [21]

 

 

 

Next, the state has had proven training programs. Alabama Industrial Development Training (AIDT) was established to recruit, assess and train qualified potential employees at no cost to industries. [22] They also provide job-specific pre-employment and on-the job-training programs. Over the last 10 years, AIDT has played significant roles in the growth of the automotive industry in Alabama; it delivered thousands of excellent workers for automotive companies throughout the state. Moreover, AIDT even sent staff and trainers to Japan and Korea to learn their manufacturing processes. [23] The Alabama Department of Postsecondary Education (DPE), seventeen state-sponsored universities, and sixteen independent colleges and universities have also provided various job trainings.

/

 

 

 

http://www.umich.edu/~econdev/alabama_auto/index.html

[fbachman]

Interesting.

 

I watched both the Senate and the House.

 

The House of Representatives - and the 3 CEO's of Automakers and UAW president.

 

The one House of Representatives member from the state of Alabama grueled the panel and asked absurd no answer questions. Kind of a filibuster type of questions. Oh, he went on that the governments role is NOT to be in the car business and that government should NOT help the auto industry. The regular druel - crap.

 

But just look at what the state of Alabama has for automotive plants. And what the State of Alabama did and does due for the Automotive industry (foreign in fact).

 

Oh, my, the government should NEVER do anything to help the auto industry. Bad. Hmmm. . . .

 

Below:

 

First of all, Alabama provided tremendous incentives and tax breaks for inducing the automotive investments. For example, the incentives package to induce Mercedes-Benz?s investment in 1993, when the state competed with thirty states, amounted to $153 million. The offer surpassed $100 million of North Carolina, which was a presumed forerunner until then. It included training workers, clearing and improving site, upgrading utilities, and buying 2,500 expensive vehicles. Even though the state had difficulties with financing the incentives, it has steadfastly stood by the deal. [19] To land Honda in 1999, Alabama again committed to a total of $102.7 million in incentives to buy the land and prepare the site for construction, plus training the plant?s employees, along with $55.6 million in tax breaks. [20] In 2002, when Hyundai decided to build an automotive plant in Alabama after considering about sixty U.S sites, the state also provided Hyundai with $252.8 million incentives package. [21]

 

 

 

Next, the state has had proven training programs. Alabama Industrial Development Training (AIDT) was established to recruit, assess and train qualified potential employees at no cost to industries. [22] They also provide job-specific pre-employment and on-the job-training programs. Over the last 10 years, AIDT has played significant roles in the growth of the automotive industry in Alabama; it delivered thousands of excellent workers for automotive companies throughout the state. Moreover, AIDT even sent staff and trainers to Japan and Korea to learn their manufacturing processes. [23] The Alabama Department of Postsecondary Education (DPE), seventeen state-sponsored universities, and sixteen independent colleges and universities have also provided various job trainings.

/

 

 

 

http://www.umich.edu/~econdev/alabama_auto/index.html

 

+1000

 

We have to remember one thing.....

 

for 99.9% of those Senate/Congress illeterate, dribbling incompetents:

 

If ya line em all up, you MAY get 1/3 of 1 IQ

 

They are in Washington because they couldn't hold a real job at McDonalds due to lack of intellect.

 

If they DID get a real job, they would be fired in under 2 weeks..

 

They work in Washington because they are too dim-witted to get a job anywhere else. Of course, they are there because WE vote for those dimwits.

 

They are self serving, crooked, dishonest and completely out of touch.

 

My Evidence:

 

Barney Frank

Chris Dodd

John Kerry

Ted Kennedy

Maxine Waters

Nancy Pelosi

Harry Reid

Hillary Clinton

George Voinovich

 

 

 

list goes on and on....

[SnakeEyeSS]

Oh man, if you watched the Maxine Waters questions, it was funny. people in the background looked like they had headaches, gritting their teeth and holding their head. You could see people in the audience just TRYING to make since of her questions, she went ON AND ON about small independent dealers. None of the CEO's pointed out that too many dealers aren't helping anything!

[fbachman]

Oh man, if you watched the Maxine Waters questions, it was funny. people in the background looked like they had headaches, gritting their teeth and holding their head. You could see people in the audience just TRYING to make since of her questions, she went ON AND ON about small independent dealers. None of the CEO's pointed out that too many dealers aren't helping anything!

 

I think it was Maxine Waters who, upon the successful touchdown of the Mars Rover some years back, made a speech where she wondered if the Mars rover would find the flags left there by the astronauts when they were there in the late 60s and early 70s.....

 

 

sad... but true