Detroit's beleaguered Big Three auto makers yesterday headed back to Washington to submit restructuring plans justifying their appeal for as much as $34 billion instead of the $25 billion they originally wanted, which they claim is necessary for them to survive.
After being told 'no plans, no bailout' by the US congress last week, the big three returned to Capitol Hill armed with volumes of restructuring papers, in a renewed bid for a bailout, minus their executive jets that they had flown in last time, which had invited widespread criticism.
The restructuring plan:
General Motors: In the restructuring plan, GM, which is fast running out of cash, said it required up to $18 billion in loans, which includes an immediate cash infusion of $4 billion this month to stay alive until the end of the year, hiking its need by $6 billion from what it said it would need just two weeks ago.
GM will close down nine plants, reduce staff strength by 30,000 by 2012, sell Saab, downsize the Pontiac brand, talk to dealers about the future of Saturn and reopen the contract signed with the United Auto Workers and reduce its network of dealers by 27 per cent.
GM will also ground its corporate jets and stop leasing planes as also close its operations at Detroit Metro airport while CEO Rick Wagoner will cut his salary from $2.2 million this year to $1.
It will also negotiate with bondholders to lower the company's debt costs, which was at $30 billion at the end of the third quarter.
The company feels that it can turn profitable even if sales return to between 12.5 and 13 million vehicles a year and it can compete with its Japanese rival, Toyota by 2012.
Chrysler: Chrysler has submitted a 14-page restructuring plan to the Congress and it has asked for $7 billion bridge loan which will be required by late December as the company estimates its cash reserve could reduce to $2.5 billion by year-end. It has also asked for an additional $6 billion from the Energy Department to bring out more fuel-efficient vehicles.
The company said it will continue the process of cost structuring, get its operations streamlined, bring fuel-efficient cars and focus on alliances, developing partnerships and consolidating as part of its long term restructuring plans.
The company said, had the GM-Chrysler merger to go through, then the company would have saved between $3.5 billion and $9 billion a year
Chrysler is now forecasting that it could turn profitable with projected sales of 13.7 million in 2011 and 2012.
Ford: Ford is seeking up to $9 billion in federal line of credit although it is better placed than the other two big automakers and said it will utilise the loan only if market conditions worsen or if any of the big two goes bankrupt as it would put additional pressure on the company.
The company said it will increase production of small cars, introduce electric vehicles and plug in hybrids within three years, reduce the number of suppliers and dealers, spend more money on new technologies and it will renegotiate with the UAW to cut costs further.
If Ford dips into the government bailout money then CEO, Alan Mulally would cut his salary to $1 from the $21 million he drew last year.
Ford will also sell its five corporate jets and plans to sell its Volvo unit.
According to Ford's restructuring plans, the company will become profitable by 2011 as it estimates that its main North American operations will breakeven or even be withn three years and projects expects auto industry sales of 12.5 million vehicles in 2009, 14.5 million vehicles in 2010 and 15.5 million vehicles in 2011.
As the big three presented their plans to the US Congress, Autodata Inc rolled out new sales figures for the auto industry which looked very bleak.
According to the report, new vehicle sales in the US fell by 37 per cent in November to 746,789, which was the first time in decades that monthly sales fell below 800,000.
GM's sales fell by 41 per cent, Chrysler by 47 per cent and Ford 30 per cent. Among the foreign auto makers, Toyota Motor's sales fell by 34 per cent and Honda Motor 31 per cent in the US.
Nancy Pelosi, House Speaker said on Tuesday that the big three auto giants would eventually be rescued and the Congress is not considering bankruptcy as an option.
Congressional leaders are in the process of coming out with a bailout package that could be ready for a vote as the House meets again on Friday.
According to media reports, there is still a big divide within the Congress as to whether the auto makers should be bailed out and if they are, then the source of the bailout money.