The Detroit plot slowly thickens. What will the climax be: Bailout, bankruptcy — or both?
Yesterday, US automakers submitted their plans and pleas to Congress for emergency rescue money. The climax (or anti-climax) is the end of the week, when the CEOs — Chrysler’s Nardelli, Ford’s Mulally, and GM’s Wagoner — make their appearance before Congress.
Only high-level details are available at this time. Even so, what do you think of them? Did you think it would be this bad?
Chrysler is in the worst shape of the Big Three. Execs are asking for $7 billion in low-interest loans to help cover expenses in the first quarter of 2009. This loan would also be a positive symbol of assurance to customers, employees, and suppliers.
GM promises to slash-and-burn to get survival money — $4 billion in loans simply to make it to the New Year, plus $8 billion to soldier on in 2009. Cuts would be made in jobs and factories, and the auto maker may dump or sell Saturn, Hummer, Saab, and Pontiac.
Ford appears to be in the best shape, though given its comparison companies, that’s not saying a lot. Ford is asking for $9 billion in loans but could survive without the money. Ford plans to invest heavily in hybrid and all-electric vehicles.
Ford and GM will get rid of their corporate jets, and Wagoner and Mulally pledge to work for $1 a year (if the loans are approved). Jettisoning the jets is a symbolic act, but the $1 a year salary is significant — I applaud them for taking this step. (We haven’t heard about Chrysler’s jets or salaries yet.)
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