DETROIT, March 31, 2009
GM CEO: Bankruptcy Looks "More Probable"
Auto Exec Says More Plant Closures May Be In Offing To Meet Tougher Government Standards
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Play CBS Video Video Ultimatums For Automakers President Obama has refused to issue another bailout to GM and Chrysler. Unless better business plans are constructed, bankruptcy may be a real option. Chip Reid reports.
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Video Goals For GM's New CEO Fritz Henderson, the new CEO of General Motors, discusses whether 60 days is enough time to turn the company around. Henderson also tells Katie Couric what it's like in the hot seat.
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Video Anxiety For GM President Obama has given GM 60 days to submit a new restructuring plan. Unless the auto giant makes major concessions, the company may go bankrupt. Anthony Mason reports.
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In this Dec. 12, 2008 file photo the General Motors logo is seen outside the GM headquarters in downtown Detroit. (AP)
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Fast Facts Obama Auto Industry Plan What's in store for GM and Chrysler after automakers' restructuring plans are spiked.
In his first news conference as CEO, Fritz Henderson said he expects the company would "need to take further measures" beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month.
GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said.
President Barack Obama said Monday that GM's initial plans to become viable didn't go far enough. He gave the company 60 days to make more cuts and get more concessions from bondholders and unions or it won't get any more government help.
The Obama administration also asked former CEO Rick Wagoner to resign, and Henderson took over as CEO on Monday.
Henderson said that although GM would prefer not to use bankruptcy protection to save itself, it is "certainly more probable" than in the past.
The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can't be made by the deadline, GM could go into court sooner, he said.
"It doesn't have to take 60 days. If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment" reviewed by the Obama administration's autos task force, he said.
Henderson also said GM is still talking with potential buyers of the Hummer brand, and a decision on the brand's fate will come in the next few weeks. GM said in a viability plan filed with the government in February that it would make the decision in the first quarter, which ends Tuesday.
While the future of plants is uncertain, so too is the fate of the nation's roughly 20,000 auto dealerships, many of whom are already struggling to stay in business.
The Obama administration's increased involvement in the auto industry did not sit well with Republican Senator Bob Corker of Tennessee, who today called the president's demands of GM and Chrysler "a dangerous precedent."
"I think for all of us who believe in free enterprise, this is the crossing of a major threshold, and it actually should send a chill to people all across the country," Corker said on CBS' The Early Show Tuesday.
"You know, we have become numb to all the bailouts that are taking place. And yet yesterday this administration decided that they know best as it relates to this industry - they're going to be making decisions about which plants close, which plants stay open."
(AP Photo/Carlos Osorio)
In an effort to increase sales, GM launched a program called "Total Confidence" that will make car payments for customers who lose their jobs through no fault of their own.
GM will make up to nine payments of $500 each to qualifying customers. Consumers must qualify for state unemployment benefits to be eligible for the program.
The program starts Wednesday and runs until April 30.
Ford Motor Co. announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss.
Shares of GM fell 32 cents, or 11.9 percent, to $2.38 in midday trading. Ford shares fell 6 cents, or 2.2 percent, to $2.70.
© MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 102 Comments"In an effort to increase sales [TO DIMWITS], GM launched a program called "Total Confidence" that will make car payments for customers who lose their jobs through no fault of their own. [AS JUDGED BY WHO, EXACTLY?? THE AAA?]
GM will make up to 9 payments of $500 each to qualifying customers. Consumers must qualify for state unemployment benefits to be eligible for the program. [!!!! ARE YOU F'N KIDDING ME???]
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Ford Motor Co. announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss.
Shares of GM fell 11.9 % in midday trading..."
L M F A : Laughing My Freaking Aaa Off!!!!
THIS COMPANY HAS GOT TO GO ON "THE ASH HEAP OF HISTORY," AND A. S. A. P.!!!!
This seems to be the case. If you read the latest GM story in the business section of CBS News you will notice that is what Fritz Henderson says. He has no specific direction from the government. At least Chrysler knows what they are suppose to do.
"(CBS/AP) He doesn't know exactly what the Obama administration wants him to cut, but Fritz Henderson, the new CEO of General Motors Corp., isn't waiting around to find out."
http://www.cbsnews.com/stories/2009/04/01/business/main4909711.shtml
Yet, nobody has specifically stated what type of changes the government wants GM to undertake before issuing more bailout money. Does anyone know what those changes are?
Posted by bajajohn1 at 11:32 PM : Mar 31, 2009
Wrong, that's your generation speaking. I've managed and owned businesses and managed a a consultant several bamkrupt companies. It's the very last thing you want to do.
Many times it can be averted by loans, change in market position, creating more cash flow. Working with banks and suppliers.
Bankruptcy is the EASY way out with the assumption that poof, it's fixed. The airlines have been used as an example here many times. Ask yourself this how many went through multiple bankruptcy? More than one. How many have actually been made finacially stronger by their bankruptcy? Answer, few. And airlines are not manufacturers, they actually produce nothing, they simply provide a service that feeds other businesses. Comparing the two is an apples and oranges situation.
As to GM bankruptcy taking a long time----that's what all the talk about a pre-packaged bankruptcy is all about. In and out quickly.
As to GM's ability to compete, think about this until this year GM was the number one producer and seller in the world. They still sold more in the US than Toyota in Jan and Feb until the financial mess they had profitable operations in Europe and Asia. They burned through their OWN reserves at about a billion a month for 8+ months, so they had money behind them in reserve.
Competative adjustments? Being the number one seller in the world for 77 years is not competitive? Get real. They also happen to be #2 in the world at the moment. Once again, not competitive? And once again-Get Real.
They have two problems right now:
Lack of sales generating cash flow (and only 2 manufactuers showed an increase in Jan and Feb. Hyundai/Kia and Subaru, Toyota was off 36% on top of a 38% month) that's a problem with everyone. It's estimated that Toyota is burning through cash at a rate nearly as fast as GM, they just happen to have more in reserve.
Overhead costs of the retired, their current overhead is very close to non union makers.
Your assumption that bankruptcy will cure the problem is a simplistic answer to a very complex situation.
The laugahable part is every other country has promised funds to their automakers. Why? Because they understand the importance of manufacuring, the wages it pays, the taxes it generates and how it flows through the economy.
Also, lets cut through the c**p of "Bailout" and talk about what this really is. A LOAN with interest. Let's also consider that the automakers have a history of borrowing and repaying and living up to long term agreements.
Keep in mind the government never had to get this involved--they could have followed the Chrysler model and GUARANTEED the loans through the financial institutions and taken the interest, the banks could have spread the the risk. However the Bush administration--Not the Obama administration structured it that way.
Posted by mjvwsr at 7:04 AM : Apr 1, 2009
Actually there have been a number of concessions made by both the UAW and the CAW during this and prior to the collapse. Ford reached an agreement that puts their UAW folks at about 1 dollar per hour above the non union plants.
1979, the company was teetering on the brink of bankruptcy
Chrysler applied for loan guarantees. Everybody, especially the business community opposed the prospect of Government backed loans.
Chrysler was issued a loan guarantee of $1.5 billion
Chrysler turned around and paid back the LOAN, EARLY. No bailout a LOAN. The same thing that is happening at the moment. They makers are being LOANED the money.
You are right about one thing, here is your model, it worked, use it!
Posted by rickwar98 at 5:10 AM : Apr 1, 2009
Correct with one addition. Lee Iocca (spelling) told the UAW he had a lot of $16 an hour jobs but no $32 an hour jobs and the UAW renegotiated. Don't see a lot of that going on now.
1979, the company was teetering on the brink of bankruptcy
Chrysler applied for loan guarantees. Everybody, especially the business community opposed the prospect of Government backed loans.
Chrysler was issued a loan guarantee of $1.5 billion
Chrysler turned around and paid back the LOAN, EARLY. No bailout a LOAN. The same thing that is happening at the moment. They makers are being LOANED the money.
You are right about one thing, here is your model, it worked, use it!
Posted by rickwar98 at 5:10 AM : Apr 1, 2009
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Accurate synopsis. It did work and the company could've been still thriving if the foundation laid then had been maintained.
Posted by ramos1129 at 1:18 AM : Apr 1, 2009
Wrong Chrysler never filed bor bankruptcy, get your facts and years straight and stop posting the same old worn out s**t and misinformation.
1979, the company was teetering on the brink of bankruptcy
Chrysler applied for loan guarantees. Everybody, especially the business community opposed the prospect of Government backed loans.
Chrysler was issued a loan guarantee of $1.5 billion
Chrysler turned around and paid back the LOAN, EARLY. No bailout a LOAN. The same thing that is happening at the moment. They makers are being LOANED the money.
You are right about one thing, here is your model, it worked, use it!
Yet, nobody has specifically stated what type of changes the government wants GM to undertake before issuing more bailout money. Does anyone know what those changes are?
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To bajajohn1....excellent post. The media and GM are not doing the public any favors by referring to Chapter 11 as bankruptcy. Chapter 7 is bankruptcy.
People also forget the Chrysler Model. Sometime in the 70s (maybe 80s?), Lee Ioccaca(?) filed Chapter 11 for Chrysler. After much heroic business efforts, Lee guided Chrysler out of Chapter 11 and into a leaner much more profitable car company. Why not use this model now?
One Bullet!
Surely, the idiots in charge know at this point whether GM will go bankrupt.
bajajohn1
I demand that our American government remain capitalist, and reject socialism and fascism, forever.
Just as our founding fathers.
ST
The SearingTruth American Recovery Plan
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1. Investigate the treason and subversion of our Constitution during the Bush, and now Obama, administrations and try all Republicans and Democrats involved in Americas most shameful period in history. Any found guilty must be justly punished according to the rule of law.
2. Get as much of the trillions of dollars we gave away to billionaires back, as soon as possible.
3. Let all the failed corporations in America go bankrupt, so that viable companies can move in and clean up the mess.
4. Immediately implement universal health care for the people, and an emergency plan to shelter and feed us so we can weather the depression.
5. Implement publicly funded elections, and forbid political bribery (a.k.a. "lobbying"). Every citizen may contribute a maximum of $20.00 to their favorite candidate, whether they're a homeless person or a corporate CEO. And that's it, period. This will do away with one of the major causes of our rampant political corruption.
6. Begin a ten year economic disengagement program from China. Besides being an inhumane nation that regularly commits atrocities upon all those within its domain, they are our enemies and are simply using the trillions of dollars we are giving them to build an army to destroy us.
7. Implement fair trade, because "free trade" doesn't exist, and has helped to bring us to the brink of destruction. This means making trade agreements that benefit America, not other nations.
8. Forbid the outsourcing of American jobs, which is another key reason America is failing. And from now on any company that wants to move to another country may do so, and then never do business in America again without extremely high tariffs on their products or services.
9. Heavily regulate and monitor our financial system so criminal billionaire thugs can threaten us again.
A Future of the Brave
Yet, nobody has specifically stated what type of changes the government wants GM to undertake before issuing more bailout money. Does anyone know what those changes are?
Yes it IS your problem you idiot moron. Where do you think that those 10 year old used cars your buying are coming from? If the new car buyers stop buying new cars they are going to hold on to their old cars and fix them rather than trade them in - then there will be a shortage of used cars and prices on them will jump to where you will be then only able to afford to buy a 15 year old car and then maybe no car at all because even those will be out of your price range.
I don't buy new cars either - the newest car I ever bought was 9 years old, every other one a lot older. I have a 41 year old car in the driveway right now and it still runs although I don't drive it every day anymore. And I know how to fix them, even the newer cars with the computers as I have all that tooling - I'm able to buy those old junker non-running vehicles and make a good car out of them so I'd be better off than you during a shortage of used cars - but I'm not dumb and saying that new car sales have nothing to do with me. Geeze!
Every used car you buy was a new car once that someone else bought and kindly paid for the depreciation so that YOU could have a niced used car that didn't put you in hock for the rest of your life. You jolly well better be concerned if the economy tanks and those nice people stop buying new cars and taking the depreciation hit for you.
So many generations disproved, and so many generations embraced.
By the children of terror, desperately recoiling from any boundary perceived."
SearingTruth
A Future of the Brave
Obama gave them two more months. If he gives them more money, he's doing no better than his predecessor. - Posted by LawyersGuns-n-Money at 9:22 PM : Mar 31, 2009
Actually, he's doing much better. He is making GM do something their problems, which have been festering for probably 20-30 years before they get any more tax payer dollars.
Bush and Crew more or less gave it away without restrictions. Almost 6 months later and we still do not know much about the 350 Billion given away by Bush, where it's at, who received it, etc.
"General Motors Corp.?s new chief executive said Tuesday that he will not reduce his salary to $1 a year like his ousted predecessor, Rick Wagoner."
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