RON430

I hesitate to read too much into the circus that just took place in DC. As far as I know, there was never, ever any form of legislation proposed for laying out the terms of the bailout. Now this is my interpretation so take it with a big grain of salt and I recommend that you find a replay of the hearing and listen for yourself to make your own conclusion.

Several House members asked them a) how did you put the $25B number together and b) what will you use the money for. As I recall they went down the row. Waggoner said that their estimate was that in 2009, GM would need 10 to $12B. Nardelli said that ChryCo would need $7B. Mulally who was last in line gave two answers. Answer A was that they didn't need any money assuming sales didn't get markedly worse. Answer B was that Ford wants 7 to $8B in 2009. From what I recall, and it is getting fuzzy (write it off to a senior moment) he also quickly put out that GM wanted its proportionate share of the $25B. I don't know whether he was talking about based on market share, current losses, etc. It just didn't make sense.

When they were asked what it would go for they all answered in lockstep, operating expenses.

When Kanjorski told them that they couldn't get their $25B but wanted to know how much they need to get them to March 31, it was amazing. I have to believe that Wagoner knows but didn't want to say. And Nardelli was about in the same boat. Kanjorski who was really trying to help these guys never got a straight answer. My reading, and this is mine only from watching the hearing, is that GM and ChryCo will use all of $25B just to get to March 31 but didn't want to say it. And they will need at least that much again to get to Dec. 31. And that assumes sales don't get worse and Ford doesn't take a penny. I really think Wagoner wanted the $25B to be put up and any of the three of them could pull on it as they wanted and GM would take $15 to $20B in the next 18 to 20 weeks. That is purely a guess as Wagoner, Nardelli, Mulally, and Gettelfinger made no statement of fact in either current expenses, plans for cutbacks, or burn rates in relation to sales so there is no basis for my opinion other than watching the hearing and trying to read between the lines.

I am sorry if I led anyone to believe that I feel that all of GFC will file bankruptcy. I don't feel that way and the rest of your question is just about verbatim what I have posted in the related threads in the Debate Forum. According to Mulally, Ford doesn't need a bailout. He didn't say so but the word is that when Mulally started at Ford, he hit the credit markets big time. That pumped up Fords cash reserves. GM and ChryCo were too smart to do that. Now, the credit markets have their own concerns about credit to anyone and with the story GM and ChryCo are giving, I can't see why anyone would give them any loans or underwrite their bonds. So what was Mulally doing there? Good question. Obviously, Wagoner and Nardelli went to Mulally and told him that if he doesn't help them now, then he better not need any money from the gov in the future. It isn't because of suppliers or any other hogwash it is simply that if the car companies don't get bailout checks set up right now, they won't get them a year from now. So my guess is that Mulally was a reluctant participant.

I am not sure whether I posted in this thread or over in the Debate Forum but should GM and/or ChryCo "go down" as in no longer be a supplier, then it will be good for the survivors. Just inescapable logic. No matter what the US annual sales volume returns to, the fewer suppliers, the bigger share they could get if they are competitive. Except of course for startups or anyone buying their way into the US market by picking up a car plant or two from the possible GM, ChryCo auctions. But we haven't gotten into that topic yet.

I don't think anyone can make a case that we have too few suppliers of autos in America and Ford would benefit if the GC go away. I hate to have the gov being in the position of picking a winner but if a bailout makes sense, force feeding it to Ford appears to make the most sense. And I would give Ford first crack at picking up assets from GC as well if I were the gov. The newest plants or the ones best aligned with what Ford sees as useful for their future manufacturing. That's a business view and many will disagree with it but I would rather have one very strong car company that might spin off divisions in the future making more stand alone companies than three living dead.

Mulally did couch everything in terms of car sales not degrading from present levels. That indicates to me that while they are losing money, they are very close to a break even, especially when the real cost savings from the UAW 07 contract become effective which won't happen until 2010. While I have the best feeling about Ford, I have mixed feelings about my respect for them or Mulally. I think they should have made it more clear that they aren't in the boat that GM and ChryCo are in. Also, there are some reports this morning that other Ford top managers feel that Mulally was not totally accurate when he said everything is fine at Ford and that they don't need a bailout. Getting at the truth, as always, is pretty difficult.

Good question but I want to reamplify my point. Paulson, who I think has really bungled a lot, has done some worthwhile things. One of the things he has done is force feed banks who proclaim they don't need any extra funds to try and keep the system solvent and start up credit. I think ChryCo and GM should head off to bankruptcy court and they should not only have to propose their restructure plans but they should base their plans on commercial lending sources. If they can't find any commercial lending sources, that is their problem. It will be because the private sector has little faith in them.

I think Ford should be fast tracked for the efficiency retooling money and given some contract, probably defense related - let's buy 5 or $10B worth of next gen Hummers or Abrams or APCs or something from them, to insure their solvency and make their supply chain and employees as stable as possible. And as the market recovers and Ford and Toyota and BMW and Nissan and Honda pick up sales, they will increase their orders to suppliers that have lost GM and ChryCo business. Of course, I have little faith that DC would agree with that.

RON430

If GM has suppliers that only sell to GM and GM goes into bankruptcy, the suppliers will find out just how stupid they have been. Having one customer always, always makes you vulnerable. Now, if the suppliers have some of their business with GM but also have some of it with ChryCo and Ford and Toyota and Honda and Nissan, then they will not go out of existence. In the short term, they may have to get smaller. And they may not. If GM disappeared tomorrow, then all the demand for vehicles that GM is supplying will be picked up by other manufacturers. It's not like every GM customer will never, ever buy another car or truck if they can't buy a GM product. So the other manufacturers pick up sales. And if those guys are using foreign suppliers, then it doesn't help our suppliers if they can't compete. The solution for any company is to be competitive to survive and thrive, not handouts.

RX300-BV

I came across this article in the NY Times.

http://www.nytimes.com/2008/11/24/bu...2&ref=business

Mr. Ford has been Detroit’s most vocal environmentalist since becoming the first family member to run Ford since his uncle, Henry Ford II.

Even when Ford was living off profits from its big sport utility vehicles, he was pushing to take the company in a greener direction. Ford was the first automaker to bring to market a hybrid version of an S.U.V., the Ford Escape, and it is introducing a new line of Ecoboost engines next year that will cut fuel consumption by up to 20 percent.


Ford has already undergone an extensive revamping at the direction of Mr. Mulally, who succeeded Mr. Ford as the automaker’s chief executive in 2006.

Since then, the company has cut 40,000 jobs, sold off three of its brands and begun an effort to transform its truck-heavy vehicle fleet with an influx of smaller, more fuel-efficient cars.

RON430

Ford is pretty much admitted to be in the best shape but from what I have seen, it had nothing to do with their product planning. It was simply Mulally getting to the credit markets a couple of years ago when he was hired in and filling up the bank account. GM and ChryCo didn't and now can't. But it may not be enough to elevate Ford to any particularly special status other than a few more months of losses.

Ford ‘Likely’ to Fall Short of Cash, Barclays Says

By Bill Koenig

Nov. 26 (Bloomberg) -- Ford Motor Co., racking up $24 billion in losses since 2005, is “likely to fall below minimum cash levels” in the second half of next year, a Barclays Capital analyst said.

Ford then will have to either tap a revolving credit line or request U.S. loans, Barclays’ Brian Johnson wrote in a report today. A Ford spokesman, Bill Collins, declined to comment.

The Dearborn, Michigan-based automaker will end this year with $13.5 billion in cash, more than its estimated $10 billion in working-cash needs, Johnson wrote. Ford used $7.7 billion in cash last quarter, in part because it halted output of the top- selling F-150 pickup for much of the period.

“We expect Ford to continue to burn through cash in 2009, and estimate that the company will fall below minimum cash levels” by $2.7 billion in the second half, wrote Johnson, who is based in Chicago. He rates the shares as “equal weight.”

Ford, the second-biggest U.S. automaker, is trying to bolster its reserves after selling 20 percent of Mazda Motor Corp. and cutting North American salaried costs by another 10 percent on top of a 15 percent reduction earlier this year. Ford, along with General Motors Corp. and Chrysler LLC, is seeking U.S. financial assistance.

Ford rose 25 cents, or 15 percent, to $1.91 at 11:28 a.m. in New York Stock Exchange composite trading.

‘Positive Equity Value’

Chief Executive Officer Alan Mulally said in a Nov. 7 Bloomberg Television interview that the third-quarter cash burn was “considerably higher than what it will be going forward.” He didn’t provide a figure. Chief Financial Officer Lewis Booth, talking to reporters that same day, declined to specify Ford’s minimum cash level.

“We believe that Ford has positive equity value even” without U.S. assistance, Johnson wrote, estimating that value at $10 billon, or about $4 a share. That was a reduction from a previous price target of $6.

Ford borrowed $23.4 billion in late 2006 to pay for cutting jobs and closing plants while continuing to develop new models. To secure that financing, Ford put up assets including its factories, test-track facilities and corporate headquarters as collateral.


http://www.bloomberg.com/apps/news?p...d=aOOOfv5.EtV4

doug_999

It's not like they went out and bought a jet to go to these meetings. They already had one and it makes sense for them to use their time effectively, and therefore to fly there on the jet (I'm sure they weren't the only ones on it). I just don't understand why people are making such a big deal out of this. Possibly if people had their own businesses they might understand.

CDNROCKIES

I don't buy your justification. There are many of us that have businesses of our own on this site...the difference is that most of ours' are profitable and we know how to keep them that way. Ford and GM each had 7 private jets. At $30M a pop, plus staffing them and a cost of $20 000 per flight, this is not chump change we are talking about. A half a billion dollars is not insignificant.

LexFather

GM is still one of the largest companies in the world. They are supposed to have corporate jets. As bit said, its a waste for execs to fly commercial.

I will say they do waste a lot but its way bigger than some jets.

RON430

Life isn't fair. Deal with it. Investors in companies and customers of companies have a lot of varying opinions. When someone invests in a company, they have a right to say they don't want their money going for a corporate jet. Or first class airfare for that matter. Some customers realize that whatever they see at the company, they are paying for it. And they may not want to see a corporate jet either. May or may not be fair but it is even worse when there are public funds being used. If GFC get back on their feet, no one will care how the execs get around. But when you are begging for a public fund handout, you need to respect the way the game is played. GFC just have to deal with it or forget DC for the money.

IS350jet

I don't want to see any of the big three bailed out. But, I don't want to see them go under, either. They belong in the marketplace. GM and Ford *can* build great cars, not so sure about Chrysler. Wagonner has already said that he refuses chapter 11 reorganization. What a pitiful soul. Doesn't he realize that chapter 11 is the best thing that could happen to his company? Oh, that’s right, he would probably lose his job along with Lutz and many other top executives. Sorry, but the top team and all of their inflated salaries need to go. Same thing with the union contracts, which can be broken under chap. 11.

Don't even get me started on Chrysler. Why does Nardelli even have a job? Isn't this the same guy who turned Home Depot into a train wreck? Now Chrysler. Who's making these decisions? Oh, that's right, all of his buddies on the board are. Chrysler has built nothing but crap under his direction. Pitiful.

Ford is definitely in a better position than the other two. Mulally has the vision to take Ford in a new direction. It can already be seen in the quality of their products. They have a long way to go but at least Ford has a clear and concise plan. More so than GM or Chrysler, Ford saw what was going on in the marketplace with regards to more fuel efficient cars and they reacted quickly.

I don't much care for domestic cars but it would be a shame (not to mention disastrous) if any of them went under.

leedogg

The brand name for these 3 is effectively dead. If I were in charge, I'd send all 3 into chapter 11, merge the 3 of them into one new company, remove any redundant positions, then I would partner up with one of the big japanese companies so that they can provide oversight over the manufacturing process. I'm thinking Acura/Honda would be a good partnership. They can help out with each other's shortcomings.

bitkahuna

iTrader: (20)

Maybe in your eyes, but that's definitely not true. Maybe NASCAR rings a bell?

And trucks? And Chevy Corvettes and Camaro? Ford Mustang? These brand names are not dead.

The companies on the other hand, have major issues of course and are running out of money quickly.

mitsuguy

iTrader: (2)

IMO, it would be silly to buy a vehicle from one of these manufacturers right now unless you are really a gearhead or an investor...

Reasoning - if they go under there might not be support for your vehicle in the future (possibly near future) There are so many more stable options out there right now that picking a vehicle from an automaker that might not be around is just silly, IMO...

Now, if it came down to it and they did go under, and were liquidating cars at very cheap prices with no warranty, then I'd be all for it... I know I can repair anything that may break and absorb the difference by getting a real good deal to start... The same may not be true for the average person though...