The “Big Three of Detroit” met the deadline set by the Democratic congressional hierarchy last month to present their restructuring plans and justify how they would use the help of Congress.
In summary, the three companies reiterated their commitment to a reduction in executive salaries, the refinancing of debt, union concessions, the manufacture of hybrid and electric cars, and the elimination of some brands.
The CEO of Ford, Alan Mulally, who received a salary of two million dollars and a total compensation of 21.7 million dollars in 2007, kept his commitment to earn a dollar a year if they grant the loan.
GM CEO Rick Wagoner promised the same, while Chrysler’s Robert Nardelly has already received this salary. In addition, GM and Ford will continue their plans to sell their fleet of corporate aircraft.
The president of the House of Representatives, Nancy Pelosi, warned today that the bankruptcy of the sector “is not an option” and predicted that there will be some type of intervention.
“I think there will be an intervention, a bankruptcy puts everyone at a disadvantage, including our economy, so that is not an option,” Pelosi told reporters.
The money, he said, would have to come out of new loans or the financial rescue of 700 billion dollars already approved for Wall Street, something that the White House opposes.
If an agreement is made, the Senate would vote for the car rescue plan on December 8, said Senate Majority Leader Harry Reid. But before the plans will pass through the screening of each audience on Thursday and next Friday.
As a whole, the “Big Three of Detroit” requested 34,000 million dollars in loans and lines of credit, which exceeds by 9,000 million the amount that the congressmen have been negotiating.
The Democrats demanded the delivery of the plans before studying a possible loan of 25,000 million dollars. The first brave was Ford, who requested a loan of up to 9,000 million dollars, which would only be used if his situation worsens. Ford, which has recorded annual losses since 2005, expects to produce earnings for 2011.
Its plan foresees, among other elements, an investment of 14,000 million dollars in high technology in the next seven years, an increase in the manufacture of small cars, hybrid vehicles and electric powered by a battery (BEV, in English).
would serve as a line of defense or an important safeguard against deteriorating conditions
while we implemented a transformation in our company,” Mulally explained.
GM, which detailed its plan in 37 pages, requested a loan of 12,000 million dollars and a line of credit of 6,000 million dollars to reach 2010 and which would be used if market conditions deteriorate.
This plan foresees for 2012 a reduction in the workforce of between 20,000 and 31,000 employees, the possible elimination of the Pontiac and Saturn brands, and the closure of some 1,750 dealers and nine facilities.
Chrysler requested a $ 7 billion “bridge loan” to respond to its liquidity and capital crisis and to continue its long-term restructuring and viability plan.
The company wants the loan no later than December 31 and affirmed that federal aid -according to Nardelli, “the least expensive of the options” – will serve as a “guarantee” for its suppliers, customers, and employees. Chrysler also expects a substantial reduction in operating expenses and benefits for employees.
Chrysler expects that, after making an initial payment of 1,000 million dollars to
the loan granted by the Government, “the company will have approximately 12,500 million dollars in cash for 2012, which will provide a solid foundation to continue paying federal loans”.
The executives of the three companies, who traveled to Washington by car when they did it in private planes last month, again warned of the situation facing the sector, aggravated by the global financial crisis.
Automobile sales suffered a 37% drop in November, to its lowest annual rate in 26 years, due to the recession and the credit freeze.
The Union of Workers of the Automotive Sector supports the efforts of the companies, insisting that, without the friendly hand of Congress, GM could declare bankruptcy before Christmas.