Humbled and fighting for survival, Detroit's once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline.
WASHINGTON — Humbled and fighting for survival, Detroit’s once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline.
General Motors and Chrysler said they needed an immediate cash infusion to survive until New Year’s, warning they could drag down the entire industry if they fail.
Chrysler said it needed $7 billion by year’s end, and GM asked for a quick $4 billion as just the first installment of as much as $18 billion to stay afloat and weather even worse economic storms.
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“Failing to act now will hurt many American families and undermine our country’s economic recovery, far outweighing the costs related to supporting an industry that touches every district in every state of the nation,” Chrysler said.
“There isn’t a Plan B,” said GM Chief Operating Officer Fritz Henderson. “Absent support, frankly, the company just can’t fund its operations.”
New sales figures underscored the seriousness of the situation. U.S. light-vehicle sales at General Motors and Chrysler plunged more than 40 percent in November, while Ford’s sales dropped 31 percent, battered by an economic storm that has sent consumer demand for new vehicles to lows not seen in decades.
Democratic leaders have said they might call Congress back next week to pass an auto bailout, but only if the carmakers’ blueprints show the companies have reasonable plans to stay viable with the help.
Making no commitments, House Speaker Nancy Pelosi, D-Calif., said Tuesday: “We want to see a commitment to the future. We want to see a restructuring of their approach, that they have a new business model, a new business plan.”
Pelosi added, “It is my hope that we would” pass legislation to help the industry.
Senate Majority Leader Harry Reid, D-Nev., said he would try to jump-start debate Monday on a bailout measure. “We have to make sure we do everything we can to take care of the auto industry,” he said. “I hope we can do something.”
All three companies’ plans envision the government getting a stake in the automakers, which would allow taxpayers to share in future gains if they recover.
Along with detailed stabilization plans, the executives offered up a hefty dose of humility and a host of symbolic concessions designed to repair their images, badly tattered after they arrived in Washington last month on three separate private jets to plead for federal help.
Ford Chief Executive Alan Mulally, GM CEO Rick Wagoner and Chrysler chief Bob Nardelli all planned to road-trip the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings Thursday and Friday.
Mulally and Wagoner each said they’d work for $1 per year — something Chrysler’s plan said Nardelli already does — if their firms took any government loan money, while Ford offered to cancel management bonuses and salaried employees’ merit raises next year, and GM said it would slash top executives’ pay. Ford and GM both said they would sell their corporate aircraft.
The executives are going out of their way to show deference to lawmakers and a willingness to flog themselves for past mistakes. “I think we learned a lot from that experience,” Mulally said.
Ford, in far better shape than GM and Chrysler, asked for a $9 billion “standby line of credit” to stabilize its business but said it didn’t expect to tap the funds unless one of Detroit’s other Big Three went bust. Its plan projected Ford would break even or turn a pretax profit in 2011.
The company plans to cut its number of dealers by more than 600, to 3,790 by the end of the year.
The unions were preparing to make sacrifices as well. United Auto Workers leaders summoned local union leaders from across the country to an emergency meeting Wednesday in Detroit to discuss possible concessions.
Up for discussion were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay, and postponing the automakers’ payments into a multibillion-dollar union-administered health care fund.
The automakers are struggling to stay afloat into 2009 under the weight of an economic meltdown, the worst auto sales in decades and a tight credit market. The three burned through nearly $18 billion in cash reserves during the past quarter.
Ford’s recovery blueprint said it would invest $14 billion during the next seven years to boost its vehicles’ fuel efficiency, and improve the overall efficiency of its fleet by an average of 14 percent next year.
The company plans to speed its rollout of electric and hybrid gas-electric vehicles.
And Ford is calling for a partnership among automakers, parts suppliers and the government to develop new battery technologies domestically, so the U.S. doesn’t have to rely on foreign batteries to power its cars.
Besides cutting its number of dealers, the company will trim its major sourcing suppliers by more than half, to 750 from 1,600.
GM said it would make huge cuts in its work force as well as reduce its vehicle brands and plants by 2012. The auto giant is seeking a $12 billion loan to keep it running, plus a $6 billion line of credit in case market conditions worsen.
GM would focus on four brands: Chevrolet, GMC, Buick and Cadillac. By 2012, the plan calls for 20,000 to 30,000 fewer workers, a reduction of nine facilities and 1,750 fewer dealers. The company also outlined efforts to negotiate swapping some debt for equity stakes in the automaker.
Chrysler said it would cut costs by slashing employee benefits — including suspending its match portion of the 401(k) retirement plan and reducing its health-care contribution for salaried workers — and ending its lease-car program. It said it would also ask more productivity of each employee.
Chrysler’s product plan includes the first full-function electric-drive model in 2010 and expansion to additional models by 2013. The company’s market penetration of electric-drive vehicles aims for more than 500,000 produced by 2013, the blueprint said.
GM, according to its quarterly report filed with the Securities and Exchange Commission, owes creditors $45 billion and must pay more than $7.5 billion in 2010 to a UAW-administered trust fund that will take over retiree health-care payments.
Ford owes more than $26 billion, with $6.3 billion due to its UAW trust fund at the end of 2009.
Chrysler, a private company, does not have to open its books, but its CEO, Nardelli, has said it would be difficult for the company to survive without federal aid.
All three likely are negotiating with the UAW for delays in payments to the trusts.
The companies are resisting calls to file for bankruptcy, arguing that no one would buy a car from an automaker that might not survive the life of the vehicle.
Tom Krisher reported from Detroit. Associated Press reporter Ken Thomas contributed from Washington.