Now that the General Motors has officially threathened the government with a ruined economy if GM is allowed to file for bankruptcy, the US Congress has very reasonably asked that GM (and the other 2) come up with a plan for a turnaround. For starters, threatening the US government isn’t a great idea, and doesn’t really constitute a “plan” to get taxpayers to loan the Detroit automakers money.
Secondly, it is appalling that none of the Big 3 had a plan when they went to congress to beg the first time around! I don’t know how Rick Wagoner, Alan Mulally, and Bob Nardelli can ask, with a straight face, for billions and billions of US (and now, Canadian) tax payer dollars with nothing more than a Boogie Man-sized threat that the North American economy will be brought to its knees if the government doesn’t comply. That threat actually sounds oddly familiar… where have I heard that before? Oh yea… al-Queda. Terrorists make these kinds of threats. “Give us the money! Or else!”
I guess that the long standing ideal of our governments not to negotiate with terrorists had a clause. And the clause states that “negotiations are ok if the terrorists are suit-wearing, private-jet flying white guys”. Interesting policy to say the least.
So should these three companies, only two of which are publicly-traded (Chrysler is owned by private-equity group Cerberus), be funded by our governments? Not without a very detailed plan, I say. And even then. This was the same thinking in the US Congress two weeks ago when the Big 3 CEOs went to Washington empty handed and empty minded. Wagoner, Mulally, and Nardelli showed up in three separate private jets from Detroit to ask for billions and yet, they had no plan on how the money would be used nor how their companies would return to profitability. I guess the three of them figured that they could terrorize their way into billions of dollars. Errr… no.
Mulally and Wagoner even had the audacity to defend their spine-tinglingly large salaries and said that they wouldn’t work for $1 per year until their companies returned to profitability, as Congress suggested. Nardelli was more reasonable and said that he would work for, essentially, free, at least showing that he was willing to make some compromises to secure the government loan. So Congress, with applaudable patience, gave the three of them some time to collect their thoughts and return at a later date with a plan of action.
Today, GM elaborated on some of those plans. Here are the highlights:
- CEO Rick Wagoner will now work for $1 per year.
- Sell the Saab and Hummer brands
- Reduce Pontiac brand
- Reduce total workforce by around 25% from current level of 96,000
- Reduce or remove Saturn brand
- Launch predominately cars and crossovers in the near future
- Negotiate away $35.6 billion in debt
- Reduce number of dealers in the US by around 25%