The big three American automakers unveiled plans to restructure and revamp their companies as they begged Congress for billions of dollars in loans to save them from collapse.
A display of Jeep and Chrysler brochures remain in the empty showroom of a Jeep dealership that went out of business in San Francisco, California. The big three American automakers unveiled plans to restructure and revamp their companies as they begged Congress for billions of dollars in loans to save them from collapse.(AFP/Getty Images/File/Justin Sullivan)
Ahead of scheduled congressional hearings on Thursday and Friday, Ford, Chrysler and General Motors all put forward proposals to trim some fat and revitalize their companies to face economic challenges ahead.
Ford Motor Co. presented Congress with a major reorganization plan and said it would break even or restore profitability in 2011 if lawmakers approve up to nine billion dollars in emergency financing.
General Motors asked for an 18-billion-dollar bailout, vowing to pay back 12 billion by 2012 and to review its Saab and Saturn labels to focus on core brands. In addition it will shed some 31,500 jobs.
Chrysler told lawmakers it needs a seven billion dollar loan by year-end to survive a perfect storm of a global credit crisis, falling demand for large vehicles and a worldwide economic slump.
US lawmakers set a Tuesday deadline for the key industry chiefs to come up with a plan, after they went cap-in-hand to Congress saying they urgently needed 25 billion dollars to avert a collapse of the sector.
Such a collapse could throw millions more workers out of jobs, especially in those industries reliant on the auto sector.
Ford said its plan calls for cost savings with unionized workers and an investment of 14 billion dollars over the next seven years to improve fuel efficiency through the development of new technologies and products.
If the plan gets congressional help, chief executive Alan Mulally would work for a salary of one dollar a year "as a sign of his confidence in the company's transformation plan and future."
And the struggling Detroit giant added that it would also sell its five corporate jets.
"Ford is asking for access to up to nine billion dollars in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available," the number-two automaker said in a statement.
It added that, unlike GM and Chrysler, it does not anticipate it will run out of cash next year, but needs access to the loan in case the economy worsens.
"We appreciate the valid concerns raised by Congress about the future viability of the industry," Mulally said, as Ford shares closed up 5.9 percent at 2.70 dollars.
"We hope that our submission today helps instill confidence in Ford's commitment to change, including our accountability and shared sacrifice during this difficult economic period."
GM submitted a plan to radically slash operating costs, increase the production of fuel-efficient vehicles and offered lawmakers several symbolic concessions including paying its chief executive officer a salary of just one dollar and getting rid of its corporate jets.
The company said it will reduce its US workforce from the current level of 96,537 people to between 65,000 and 75,000 salaried and unionized workers by 2012 and cut the number of US plants to 38 in 2012 from 47 in 2008.
"We believe that taking these tough actions will allow us to weather the current economic crisis and become a profitable, self-sustaining company if we are able to secure immediate financial assistance from the federal government," GM chairman Rick Wagoner said in a conference call.
Wagoner said GM - and the broader US economy - would "enter into a very uncertain and dangerous period" if Congress does not approve the loans.
"We hope that our case is compelling this time. We believe it is," Wagoner said.
GM said it expects to be "fully competitive" with rival Toyota on US labor costs for "both current workers and new hires" by 2012 due to "additional changes to be negotiated" with its main union, productivity improvements, turnover rates and the planned job cuts.
General Motors, which has warned it would run out of cash as early as January, said it will focus its product development and marketing efforts in the United States on four core brands -- Chevrolet, Cadillac, Buick and GMC.
The automaker said it would need 12 billion dollars to cover operating costs through the end of 2009 and also requested a revolving credit line of six billion dollars to "provide liquidity should a severe market downturn persist."
The automaker vowed to repay the 12-billion dollar loan by 2012 should overall US auto sales remain at or above 12 million vehicles a year.
Chrysler, the smallest of the Big Three Detroit automakers, said it will have an estimated 2.5 billion dollars in cash on hand by December 31 after a "significant downturn" of the US automotive sector in the second half of the year.
"Without an immediate working capital bridge, Chrysler's liquidity could fall below the level necessary to sustain the company through the first quarter of 2009," the company said.
Chrysler said it needs a seven billion dollar loan by year-end to survive the current crisis.
Looking to future energy needs, Ford said it will accelerate the introduction of gas-electric hybrid and fully electric vehicles, including plans to bring an electric van-type commercial vehicle to market in 2010 and an electric sedan to market in 2011.
It will also improve the fuel economy of its total fleet of vehicles by 36 percent for 2015 models.