Bush wants automakers to get $25B fast

[jpd80]

LINK

WASHINGTON -- The White House said Friday that President Bush wants Congress to quickly move to grant automakers quick access to $25 billion from an energy retooling program, though it remained opposed to granting the companies funds from the $700 billion Wall Street bailout.

 

The loans were intended to pay only for factory improvements to support building more fuel-efficient vehicles but the administration now supports allowing automakers to use th funds for more urgent needs.

 

"We are now actively calling on Congress to pass legislation next week that will amend the loan program and help accelerate much needed funds to auto companies that can show long-term viability," White House spokesman Blair Jones said Friday evening. "We stand ready to accelerate the funds as soon as Congress acts. The opportunity to help viable auto companies is there for the taking."

 

But he emphasized the White House doesn't want to use the $700 billion bank bailout plan, known as the Troubled Asset Recovery Program.

 

"Congressional Democrats are instead choosing a path that will only lead to partisan gridlock with a focus only on the Troubled Asset Relief Program. The TARP was never intended for that purpose, and it is clear there's very little appetite to use TARP funds in this way," Jones said.

 

The White House shift set the stage for a possible compromise when Congress takes up an auto bailout Monday.

 

The automakers are pleading for federal aid as they confront a deepening financial crisis that threatens their survival. General Motors Corp. and Ford Motor Co. last week reported burning through a combined $14.6 billion in cash during the third quarter, and GM said it could run out of money by early next year without help

 

Automakers want the $25 billion in emergency loans to come from the Wall Street rescue funds. They hope to tap the $25 billion retooling program next year to build advanced technology vehicles.

 

Looks like it's the type of funding program that is the major hold up.

I hope the White House can sort this mess out next week and get relief to GM before it's too late.

 

GM and Chrysler need to change their ways and follow Ford's restructuring model.

Edited November 15, 2008 by jpd80

[CSMJ]

Looks like it's the type of funding program that is the major hold up.

I hope the whitehouse can sort this mess out next week and get relief to GM before it's too late.

 

GM and Chrysler need to change their ways and follow Ford's restructuring model.

ford has a good plan going forward gm does not. maybe ford will qualify for $ and gm wont.

[94bronco]

How is GM going to show long term viability? I do think this is a very good move by Bush though as now we won't have stupid stipulatons attached pertaining to MPG, and all that other stuff.

[Pioneer]

ford has a good plan going forward gm does not. maybe ford will qualify for $ and gm wont.

 

 

Then it won't matter. When/if GM goes down, their suppliers will fall like domino's.

 

Unfortunately, GM, Ford, Chrysler, Toyota, Nissan, and Honda all share common suppliers. If GM declares bankruptcy, the suppliers will not have enough income to keep their companies going, thus they will declare bankruptcy. It will take months to source parts from a new supplier. In the meantime, Ford and Chrysler will be pushed into bankruptcy from lack of income, leaving Honda, Nissan, and Toyota as the only major manufacturers left.

 

Not to mention the fact that there is no sources of funding for GM to get to reorganise since the financial sector is still in turmoil.

 

Things are looking pretty bleak.

[jpd80]

With funding, GM and Chrysler will need to rapidly downsize to survive

so those suppliers will get crunched anyway, it just won't be as bad as collapse.

 

People aren't ready for the big changes coming.

Edited November 15, 2008 by jpd80

[Pioneer]

With funding, GM and Chrysler will need to rapidly downsize to survive

so those suppliers will get crunched anyway, it just won't be as bad as collapse.

 

People aren't ready for the big changes coming.

 

 

I agree, but contraction is better then collapse.

[jpd80]

Yes but what if it's both?

A rescued GM contracts to survive but then collapse because of poor products anyway.

[2005Explorer]

Then it won't matter. When/if GM goes down, their suppliers will fall like domino's.

 

Unfortunately, GM, Ford, Chrysler, Toyota, Nissan, and Honda all share common suppliers. If GM declares bankruptcy, the suppliers will not have enough income to keep their companies going, thus they will declare bankruptcy. It will take months to source parts from a new supplier. In the meantime, Ford and Chrysler will be pushed into bankruptcy from lack of income, leaving Honda, Nissan, and Toyota as the only major manufacturers left.

 

Not to mention the fact that there is no sources of funding for GM to get to reorganise since the financial sector is still in turmoil.

 

Things are looking pretty bleak.

 

Since the same suppliers supply all of the companies if GM goes under there won't be any cars produced in the US? I don't buy that. There will still be a similar demand for vehicles. GM's market-share isn't just going to go away into thin air. It will be divided up by the remaining companies left and considering GM is a major pickup truck maker don't you think that Ford and Chrysler would benefit most of all?

 

I am not saying that I want to see GM go under, however I don't believe that the failing of GM would necessarily destroy Ford and Chrysler.

[Extreme4x4]

Maybe you didn't read everything he wrote???

 

If GM goes under, they will do so owing their suppliers BILLIONS of dollars. Since everyone works on a "just in time" delivery system, none of the other automakers have parts sitting around, to build their products. When the suppliers do not receive money from GM, they will declare BK, as most of them are holding on by a thread. When they go BK, they will not supply parts to ANYONE.

 

Herein lies the problem. While Ford is strong enough to weather this economy, with no serious disruptions to their supply lines............... if they are unable to make vehicles, even if only for a few months, it would throw them into BK also.

 

This same problem would kill Chrysler also, and seriously damage the transplants also. Frankly, it would probably seriously damage the entire auto industry, as many of these suppliers are multinational also.

 

Nobody has the money to prop up all of the suppliers either.

 

That is the main danger from GM failing. If they go BK, there will be noone to give them financing to come out of it, and they will be liquidated.

 

Yes Toyota, Nissan, Honda, and the like, will survive. However, they would also be severely weakened.

[TStag]

A bailout of Ford would be reasonable because Ford is in much better long term shape. But GM is in a mess. GM need enough cash to keep going for a few more quarters whilst it is effectively nationalised, broken up and then sold off in chunks to the highest bidder.

 

And yes, yes I know breaking it up would be tough but there are ways to re-organise GM to make this happen. Pontiac, Buick, Cadillac, Chevrolet, GMC, Hummer, Opel, Vauxhall, Holden, Saturn and anything else I forgot can't live under the same roof forever. The company needs reorganising and another cash injection would simply delay the inevitable.

[mettech]

Give the money to the suppliers and let the car companies stand on their own.

 

That way if the companies fail, and who ever buys the plants or if they reorganize, they suppliers will be ready.

Edited November 15, 2008 by mettech

[2005Explorer]

Maybe you didn't read everything he wrote???

 

If GM goes under, they will do so owing their suppliers BILLIONS of dollars. Since everyone works on a "just in time" delivery system, none of the other automakers have parts sitting around, to build their products. When the suppliers do not receive money from GM, they will declare BK, as most of them are holding on by a thread. When they go BK, they will not supply parts to ANYONE.

 

Herein lies the problem. While Ford is strong enough to weather this economy, with no serious disruptions to their supply lines............... if they are unable to make vehicles, even if only for a few months, it would throw them into BK also.

 

This same problem would kill Chrysler also, and seriously damage the transplants also. Frankly, it would probably seriously damage the entire auto industry, as many of these suppliers are multinational also.

 

Nobody has the money to prop up all of the suppliers either.

 

That is the main danger from GM failing. If they go BK, there will be noone to give them financing to come out of it, and they will be liquidated.

 

Yes Toyota, Nissan, Honda, and the like, will survive. However, they would also be severely weakened.

 

That was a good explanation. I now see the point about the billions that GM owes these suppliers bringing down the house. It makes you sort of wonder if Ford was smarter back in the day when they supplied most of their own parts. Who are Fords main suppliers? I know Visteon is a big one, but who else is out there? I am sure they use a lot of suppliers, but I am curious who are the big ones that would go down if GM bankrupts?

[taxman100]

Why would the feds give money to Chrysler, who is owned by a private equity firm with literally hundreds of billions in assets under management, and is highly profitable?

 

If they don't want to dump more money into Chrysler, why should the U.S. Treasury?

[Extreme4x4]

That was a good explanation. I now see the point about the billions that GM owes these suppliers bringing down the house. It makes you sort of wonder if Ford was smarter back in the day when they supplied most of their own parts. Who are Fords main suppliers? I know Visteon is a big one, but who else is out there? I am sure they use a lot of suppliers, but I am curious who are the big ones that would go down if GM bankrupts?

 

Ifeg also made an excellent point in another thread, about what happens to suppliers, when the manufacturer goes BK. He said that when there is a filing, the BK trustee sends out a letter to the suppliers. Not only does the letter say that they are not getting anymore money, but it also tells the supplier to RETURN any money that they have gotten, from the BK company, for the last 90 days. This would destroy the suppliers. Money taken away from them, no new money coming, and parts already shipped.

 

He is obviously talking from first hand experience.

 

2005, there are hundreds of suppliers. Most of them are not exclusive to GM or Ford, but also supply many other auto manufacturers.

 

The shear volume of suppliers, is what makes it impossible to keep them afloat with money. There just isn't enough.

 

This is why people in the know, call the entire industry, a house of cards.

[Pioneer]

Give the money to the suppliers and let the car companies stand on their own.

 

 

What if the supplier is represented by the UAW, or another Union?

 

I don't know why I'm asking. Anything short of a "No", and I think you're lying.

 

Forget I brought it up.

Edited November 15, 2008 by Pioneer

[jpd80]

Give the money to the suppliers and let the car companies stand on their own.

 

That way if the companies fail, and who ever buys the plants or if they reorganize, they suppliers will be ready.

Which suppliers, Tier1 Tier II or Tier III?

Depending on what you mean, funds would need to go to hundreds of just on time businesses.

 

Just on time suppliers cannot claim government loans until directly affected by default and as a result,

a full review of imminent position would have to occurr before funds were approved - way too late.

 

No it's better to avoid distress in suppliers and keep major manufacturing alive for now.

Edited November 15, 2008 by jpd80

[mettech]

What if the supplier is represented by the UAW, or another Union?

 

I don't know why I'm asking. Anything short of a "No", and I think you're lying.

 

Forget I brought it up.

 

It's not the suppliers fault of poor management from GM.

 

Keep the suppliers going until this plays out.

 

GM made their bed... They can lay in it... but don't drag the rest down with them.

 

Support the suppliers.... It's cheaper in the long run.

 

 

I don't have a problem with Unions... I was in the Teamsters for nearly 8 years.

[mettech]

Which suppliers, Tier1 Tier II or Tier III?

Depending on what you mean, funds would need to go to hundreds of just on time businesses.

 

Just on time suppliers cannot claim government loans until directly affected by default and as a result,

a full review of imminent position would have to occurr before funds were approved - way too late.

 

No it's better to avoid distress in suppliers and keep major manufacturing alive for now.

 

 

It is better that the suppliers get the support to keep the other manufacturers going. Besides, sales should increase with Ford and the others in NA to help with some of the slack.

 

However, if a supplier is solo source with GM.... They can lay in the same bed and suffer the same fate.

 

 

Besides, maybe people will start buying GM products this month in groves and they wont fold.

 

The business model that GM followed got them to this point. I can not believe that they didn't see this coming.

[suv_guy_19]

The business model that GM followed got them to this point. I can not believe that they didn't see this coming.

 

 

You invested in them didn't you? You obviously didn't see it coming either. You have a very cold uncompassionate way of looking at things. I pray and hope that your legislators don't feel the same.

[jpd80]

It is better that the suppliers get the support to keep the other manufacturers going. Besides, sales should increase with Ford and the others in NA to help with some of the slack.

Oh, I agree but ask your self why the government isn't doing that?

They cannot apply for the loans before GM defaults, by then it is too late to help them.

GM can apply now and get loans immediately.

 

Stop thinking about BK and punitive action against GM - this is all about damage control in communities.