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[RJ749]

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[RJ749]

AUTOMOTIVE NEWS EDITORIAL

The president must act

Keith Crain
and Peter Brown
Automotive News | December 12, 2008 - 11:25 am EST

Amid the greatest financial crisis of our time, President George W. Bush can show leadership and statesmanship by using a small percentage of the U.S. government’s financial bailout money to keep the American automobile industry alive.

The warnings from Chrysler LLC and General Motors about impending collapse were not a bluff. Now that a minority of the U.S. Senate has blocked any aid to the auto industry, all Americans must rely on the administration to lend the automakers money so they can help fix a damaged economy, rather than drive it down to awful depths.

As White House spokeswoman Dana Perino correctly said this morning, “A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.”

The White House reversed itself this morning. It said it is now considering using some of the $700 billion in financial rescue money for the auto industry. This could be one of Bush’s finest hours.

The sudden failure of the industry, superimposed over a global credit meltdown and a terrifyingly deep recession, would be catastrophic. Look beyond the automakers to their suppliers and dealers, and the communities in which domestic auto plants drive the local economy. Millions of people would be thrown out of work, would lose health insurance and would lose the ability to pay taxes.

The loans would be the best, cheapest and most efficient stimulus package the government can provide.

Last night’s shocking failure of the Senate to approve $14 billion in loans to Chrysler and GM came as enough Republicans tried to micromanage the automakers’ future. Sen. Bob Corker, the Tennessee Republican, actually proposed some useful ideas about how various requirements attached to government aid could help the automakers restructure debt and make labor costs more competitive.

But the Republicans’ ultimate support never came, and they refused to cut off debate and allow a vote.

Corker’s ideas still could be a basis for a viable industry. But not if the industry dies. In its precarious state, the industry could be permanently undone by precipitous plant closings, lending defaults and refusal of suppliers to ship parts for fear of lack of payment.

The next Congress and the Obama administration will have plenty of opportunity to attach as many requirements as are prudent to additional government loans. They can paint villains and assign blame. For now, President Bush must step in, or push the entire economy into a downward spiral.

We encourage him to act in the interest of all Americans and keep this industry alive.

You may e-mail Peter Brown at pbrown@crain.com

[Hugh Janis]

Not just the US......

Canadian Auto Workers also refused concessions.

Sweden's government approved a $3B bailout for Saab and Volvo yesterday.

http://www.forbes.com/markets/2008/12/11/saab-volvo-bailout-markets-equity-cx_je_1211markets13.html

It's happening thoughout Europe

[Admiral]

And you call this humor ?   

[RJ749]

No one is immune.



Toyota Delays Mississippi Prius Factory Amid Slump

Toyota Motor Corp. has indefinitely delayed a plant in Mississippi that was slated to start making its Prius hybrid sedan in May 2010, the latest sign that even foreign auto makers are scaling back North American operations. Toyota approved the plant in 2007, when sales were booming and foreign makers were racing to expand production to grab market share from the Big Three U.S. car companies. But the recession and plunge in industry sales to crisis levels are forcing even healthier car companies to retreat. "The market turned on Toyota just like it turned on the Big Three," said Rebecca Lindland, an analyst at IHS Global Insight, a forecasting firm. Toyota's Mississippi plant, near Tupelo, was originally supposed to build the Highlander sport-utility vehicle. When gasoline prices soared in the spring, it pushed the start of production to May 2010 from late 2009 and then said the plant would produce the Prius instead. The latest delay means that the Prius will continue to be produced exclusively in Japan. Last month, Toyota reported a 69% drop in net profit globally for its fiscal second quarter and slashed its full-year profit forecast by more than half.Source: The Wall Street Journal (Subscription required.)

[HogBreath]

..

[RJ749]

Yep...........

Treasury Still Studying Auto Rescue

WASHINGTON – The U.S. Treasury Department said Monday it has made no decisions on how to engineer a rescue effort for U.S. auto makers, while President Bush gave assurances that help is on the way. "An abrupt bankruptcy for autos could be devastating for the economy," Mr. Bush told reporters... "We're now in the process of working with the stakeholders on a way forward. We're not quite ready to announce that yet." Meanwhile, Treasury spokesman Brookly McLaughlin told reporters that department officials, who are working closely with the White House on the issue, are still studying pertinent data. In weighing a much larger rescue effort for U.S. auto makers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek -- including whether to push the companies to file for bankruptcy -- and how to raise necessary funds. The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more. The Bush administration must also figure out whether, and how, to try to wring concessions from affected parties, including factory workers, dealers and holders of the companies' debt. Without such concessions, the companies are likely to need cash infusions long into the future, congressional critics say. The Bush administration can try to demand concessions upfront as a condition for making initial rescue loans. But it is unlikely Treasury can extract concessions from all the affected parties as part of a loan deal.
Source:  The Wall Street Journal

[RJ749]

The news isn't getting any better on the Big 3 Front:

THE U.S. AUTO INDUSTRY BAILOUT

Chrysler's plant closings add to bailout pressure

DETROIT/WASHINGTON (Reuters) -- Chrysler's decision to halt factory operations for at least a month put new pressure on the Bush administration to quickly help cash-strapped automakers.
The shutdown beginning on Friday will idle plants in the United States, Canada and Mexico that produce vehicles for the Chrysler, Jeep and Dodge brands.
More than 30,000 unionized workers at U.S. factories will receive nearly full wages and benefits during the shutdown, which Chrysler said was prompted by ongoing financial stress worsened by the global credit crunch and dwindling sales.
The move to save money underscored the urgency of pleas by Chrysler and General Motors for an immediate bailout they say is their best hope for near-term survival.
GM has said it would cut first-quarter ...  story  Published: December 18, 2008 07:00 European Central time
 

[spydglide]

Isn't this similar to what the MoCo did recently to reduce supply to the shrinking market?    spyder

[Coolbreeze]

The news isn't getting any better on the Big 3 Front:

THE U.S. AUTO INDUSTRY BAILOUT

Chrysler's plant closings add to bailout pressure

DETROIT/WASHINGTON (Reuters) -- Chrysler's decision to halt factory operations for at least a month put new pressure on the Bush administration to quickly help cash-strapped automakers.
The shutdown beginning on Friday will idle plants in the United States, Canada and Mexico that produce vehicles for the Chrysler, Jeep and Dodge brands.
More than 30,000 unionized workers at U.S. factories will receive nearly full wages and benefits during the shutdown, which Chrysler said was prompted by ongoing financial stress worsened by the global credit crunch and dwindling sales.
The move to save money underscored the urgency of pleas by Chrysler and General Motors for an immediate bailout they say is their best hope for near-term survival.
GM has said it would cut first-quarter ...  story  Published: December 18, 2008 07:00 European Central time
 

there's the whole problem,,,   "nearly full wages and bennies during shut down...."   what a crock.

[Fired00d]

there's the whole problem,,,   "nearly full wages and bennies during shut down...."   what a crock.

Really, where is the savings in that?

 
Ride Safe,
Fired00d
 

[spydglide]

well, the old mantra 'suck it dry' comes to mind.    spyder

[Fired00d]

well, the old mantra 'suck it dry' comes to mind.    spyder

Don don't let any of your voices comment.

 
Ride Safe,
Fired00d
 

[arcticdude]

Really, where is the savings in that?

 
Ride Safe,
Fired00d
 

The savings comes from less parts bought, less electricity burned, fewer worker's comp claims, etc, etc.  What they're doing is killing off the suppliers, moreso than truly helping themselves.  It's a deep hole they've gotten themselves into.

[Fired00d]

The savings comes from less parts bought, less electricity burned, fewer worker's comp claims, etc, etc.  What they're doing is killing off the suppliers, moreso than truly helping themselves.  It's a deep hole they've gotten themselves into.

True dat. Then when they start production again and can't get parts because the suppliers have had to shut down then they'll be shut down again. Vicious cycle they are starting.

 
Ride Safe,
Fired00d