Tuesday, February 17, 2009

Like a Rock… GM Seeks Up to $16.6 Billion in Aid, 47,000 Job Cuts

GM stock was sinking like a rock today, losing another 12.8% of its value, falling to the deep fiat ocean bottom, a startling 97.8% off its year 2000 bubble high:

Well, as requested by Nancy Polosi and Barney Frank, today they submitted their “survival/ reorganization plan.” Guess how they plan to survive? ON YOUR MONEY while laying off more Americans, that’s how:

GM Seeks Up to $16.6 Billion in Aid, 47,000 Job Cuts

By John Hughes and Jeff Green

Feb. 17 (Bloomberg) -- General Motors Corp. said it needs as much as $16.6 billion in new U.S. loans, more than doubling the aid to date, and must get some of the cash next month to survive. GM plans 47,000 more job cuts worldwide this year.

Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.

The automakers met a deadline today to report progress in revamping operations with $17.4 billion in loans granted so far, and now they must show the U.S. by March 31 that they can become profitable and be allowed to keep the money. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.

A request for more aid “was inevitable,” said Jim Hossack, an analyst at consulting firm AutoPacific Inc. in Tustin, California. “It’s because sales in January were less than anyone expected.”

GM’s retrenchment includes closing 5 more U.S. plants by 2012; selling or shutting down the Hummer unit by the end of next month; and chopping salaries by as much an additional 30 percent for the four-most senior officers after Chief Executive Officer Rick Wagoner, who already is working for $1 a year.

Bankruptcy Scenarios
The biggest U.S. automaker said it examined three bankruptcy scenarios, with price tags of as much as $100 billion, and that all were less-favorable options than a rescue.
At least $9.1 billion more in loans is needed to finish restructuring, GM said, and that sum could rise to $16.6 billion should the economy worsen. Detroit-based GM has received $13.4 billion since December.

Production of Saturn cars would stop in 2011, if the brand hasn’t been sold, GM said. Should dealers or other investors present a proposal, GM “would be open” to a spinoff or sale, according to the Detroit-based automaker’s viability plan.

The Saab unit may have to be restructured under Swedish bankruptcy laws without government support there, GM said.

Chrysler said it needs an additional $5 billion March 31 after receiving an initial installment of $4 billion. The new job cuts at the third-largest U.S. automaker would be in addition to 32,000 shed through the end of last year.

Worsening Outlook
The worst U.S. auto market since the early 1980s helped drag GM and Chrysler to the brink of collapse and now is hampering their recovery, with domestic sales last month plunging 49 percent at GM and 55 percent at Chrysler. Should the loans be recalled, the money could be used to force the companies into restructuring in bankruptcy.

“We appreciate the effort that these companies and their stakeholders have made,” White House press secretary Robert Gibbs said in a statement. President Barack Obama’s administration “will be reviewing these reports closely in the days ahead.”

GM and Chrysler again rebuffed the idea of a bankruptcy filing, which Gibbs had said earlier he couldn’t rule out.

“All research indicates bankruptcy would have a dramatic impact on GM sales and revenue,” GM said in its 117-page plan, citing a study that concluded 80 percent of consumers wouldn’t buy a car from a bankrupt company. “A restructuring process outside of bankruptcy is highly preferable,” GM’s report said.

‘Unbearable Stress’
Bankruptcy “would create unbearable stress not only for our suppliers, but also the suppliers of other automakers,” Chrysler Chief Executive Officer Robert Nardelli in a briefing with reporters. “It would have a cataclysmic effect on the entire auto industry.”

Liquidating the Auburn Hills, Michigan-based automaker might cost 2 million to 3 million jobs, according to Chrysler’s plan.

GM fell [like a rock] 3.7 percent to $2.10 at 4:51 p.m. after regular New York Stock Exchange composite trading. Earlier, the shares sank 32 cents, or 13 percent, to $2.18, extending their decline over the past year to 92 percent. Chrysler is controlled by Cerberus Capital Management LP.

To meet loan requirements, GM and Chrysler have been trying to persuade the UAW to accept equity instead of cash for half of next year’s scheduled payments into union-run retiree health- care funds.

Discussions are continuing over how the companies will finance those trusts, the UAW said in an e-mailed statement announcing the preliminary agreement on other contract terms. Lower-cost labor contracts would help GM, Chrysler and Ford trim expenses.

Chrysler President Tom LaSorda said the labor savings are enough to keep the federal loans.

‘Competitive Parity’
The accord lowers labor costs to “competitive parity” with expenses at the U.S. factories of overseas automakers, Joe Hinrichs, Ford’s group vice president for manufacturing and labor affairs, said in a statement.

GM also is required by the government to cut two-thirds of its $27.5 billion in unsecured public debt to $9.2 billion, and the company has been in talks with bondholders.

GM’s 8.375 percent bonds due in July 2033 slid 0.63 cent to 15.13 cents on the dollar, yielding 55.1 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.

GM’s pension plans were underfunded by $12 billion to $13 billion as of Dec. 31, according to the company’s report. GM may need to make “significant contributions” to its plan for hourly workers in 2013 or 2014, according to the presentation.

You know, comrades, the manure is piled so high that I don’t think I can hold my watch high enough to save it.

Let’s really cut the crap here, okay? The automakers are as insolvent as our banks. Bashing the employees is just another distraction along the path to the ultimate destination – zero. The big three could pay their employees NOTHING and they would still be losing money out the wazoo. They simply built too many cars the same as the homebuilders built too many homes. Both of which were loosely financed with Ponzi debt derivatives.

Now, instead of forcing them into bankruptcy we are risking the very foundation of freedom that this country was built upon to pretend to save a few jobs that I’ll simply guarantee you will not exist 2 years from now with or without government help.

And how stupid do they think we are (don’t answer that – we know)? Bankruptcy will kill their sales?! Ha, ha… good one! The punch line, of course, is that there are already no sales to kill!

And you want me to give money to Cerberus – a freaking speculative hedge fund of the elite? That’s even funnier!

I don’t know about you, but I’ve donated all the money I care to the auto manufacturers. I’ve owned many a Chevy in my days (7 off the top of my head), but I can tell you that the only thing I currently see that’s like a rock is the gray matter between the ears of the Big 3 CEO’s, the Senators and Congressmen in D.C., and Taxpayers who have yet to revolt.

Like a rock, my ass. America and Chevrolet are sinking like a stone.

Bob Seger – Like a Rock:

Great song. To bad it's all gotten down to the hustlers and their schemes...

I Wonder how many Americans are losing sight of their dreams?