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![]() WASHINGTON -- Detroit's Big Three automakers made a desperate plea for a $34 billion emergency federal bailout Tuesday, as General Motors Corp. and Chrysler LLC warned they would collapse by the end of the year without immediate help. The automakers delivered new business plans to Congress written during the last 11 days that for the first time spelled out in great detail the problems they face and the painful steps they must take to survive and restore profits amid plunging auto sales and a bleak outlook for 2009. The recovery plans exposed how conditions have worsened dramatically in the past two weeks since GM, Chrysler and Ford Motor Co. made their initial request to Congress for $25 billion and came as the industry reported a nearly 40 percent drop in November sales, the worst sales month in 26 years. After rebuffing the companies' first request, Congress told their top executives to come back with a detailed strategy for how they would spend the money and ensure future viability. The automakers, which have lost more than $100 billion combined since 2004, said in their new plans that they might not return to profitability until 2012. Whatever the outcome of the automakers' plea for aid, one thing is certain: The crisis will dramatically reshape the U.S. auto industry. Detroit's Big Three will survive only as smaller, leaner operations with a strong focus on producing fuel-friendly vehicles. The plans submitted Tuesday made the automakers' needs clear. GM needs $4 billion by the end of the year to stay solvent and requires at least $10 billion through the end of March. In total, the automaker is seeking $18 billion, with $12 billion in loans and a $6 billion line of credit. "Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," GM warned in its plan. GM Chief Operating Officer Fritz Henderson stressed the importance of getting federal aid in a conference call with reporters: "There isn't a Plan B," he said. Chrysler requested $7 billion, also needed by the end of the year; and Ford asked for a $9 billion line of credit, noting that it would not access the money unless the economy worsened. It remains far from certain, however, whether Congress will return to session next week to vote on a quick financial aid package for the automakers. Sen. Majority Leader Harry Reid, D-Nev., told reporters late Tuesday he wanted to see legislation on the Senate floor by Monday. "We'll do everything we can to take care of the auto industry," he said. House Speaker Nancy Pelosi, D-Calif., sent a letter to members saying a final decision on whether to return next week would be made by Friday. It is still not clear, however, how the two sides would resolve a major dispute over what pool of money to access to help the automakers. The Bush administration wants to use a $25 billion retooling fund to improve fuel efficiency to provide the bridge loans, while Democrats want to carve out funds from the $700 billion Wall Street bailout package. Fuel efficiency stressedIn their plans, all three automakers outlined a vision of more fuel efficient and smaller vehicles while promising new concessions on executive salaries and corporate travel. GM outlined some of the most dramatic cuts, including eliminating tens of thousands of jobs, closing nine factories, cutting its dealer network by more than 25 percent and shrinking, selling or shuttering at least four of its eight brands -- Saab, Pontiac, Saturn and Hummer, which account for 17 percent of its sales. The company also will work to renegotiate and reduce its debt from $65.6 billion to $30 billion. Its goal: to break even by 2012. "The plan is intended to achieve what would otherwise be achieved in a bankruptcy filing via a negotiated route," Henderson said. "It's not our plan to resort to the bankruptcy court but frankly we have to negotiate and let's see what happens." Chrysler, which was in tie-up talks with GM and the Renault SA-Nissan Motor Co. alliance earlier this year that have since been put on hold, said that it "continues to aggressively pursue strategic alliances and partnerships." Chrysler did not make public a roughly 100-page confidential document sent to Congress outlining its plans in more detail. Chrysler and GM are also seeking help for their finance companies. Chrysler noted in its plan that 75 percent of Chrysler dealers and 50 percent of its customers rely on Chrysler Financial for financing. "Chrysler Financial is in need of immediate liquidity support," the company said. GM, which owns 49 percent of GMAC, wants the finance arm to be designated as a bank holding company allowing it to have access to the $700 billion Wall Street rescue and the Federal Reserve's discount window. GMAC hopes to win the status by year's end and is in talks with the Federal Reserve. GM said both it and GMAC's majority owner, Cerberus Capital Management LP, which also owns 80.1 percent of Chrysler would have to revise their commercial agreements. Ford hopes the aid will help it win approval for Ford Motor Credit to become an industrial bank, a move that will give it access to loans at a better rate. White House: $25B is topsIncreasing their request to $34 billon could prove a problem for the automakers. In an interview, Commerce Secretary Carlos Gutierrez said the Bush administration wasn't ready to support more than $25 billion in aid. "I don't know why they would call for more and that's why we've got to see the plans first," he said. "We believe we owe it to the taxpayers to ensure that they have a plan for viability. ... No one wants these companies to fail." Reid said that automakers have already submitted applications for more than $20 billion in retooling loans to pay for fuel efficient projects. Chrysler said it had applied for $8.5 billion, while GM has applied for $3.6 billion in loans related to its plug-in electric hybrid Chevrolet Volt and plans to make a second request. Ford has applied for $5 billion. The Energy Department has said it hopes to release funds early next year. Rep. Sander Levin, D-Royal Oak, said it was unlikely Congress would go home without taking action. "We're in a global automotive recession," he said. Sen. Carl Levin, D-Detroit, called the plans "an honest statement of their needs." Profitability a priorityJerry York, a former Chrysler executive and GM board member who is now an adviser to billionaire investor Kirk Kerkorian, who earlier this year sold most of his sizable stake in Ford, said he thought Ford's plan had been good but required "some tweaking" and now it has a better plan. He reiterated his belief that Chrysler wasn't viable on its own and needs to merge with a foreign automaker to give it access to markets outside North America. As for GM, York said the "situation is really sad." "It's been so obvious to so many GM watchers for so long that many of these actions were needed and it's come down to this: $4 billion by year's end or lights out." David Cole, chairman of the Center for Automotive Research in Ann Arbor, said the automakers were moving in the right direction. GM, in particular, he said, has rightly decided to put profitability ahead of market share. "You can look at it this as end of an era, or beginning of a new era," he said. The Big Three's several-thousand dollar higher labor cost per vehicle "was really a fatal disease. They have to get back to being profitable," Cole said, adding that the immediate problem is "the huge loss of revenue from reduced auto sales. That's an absolute killer." The automakers all agreed to government oversight from a panel that may have veto power over key business decisions. They will also give the government stock warrants in exchange for the loans and give the government senior status for its loans. The UAW has called an emergency meeting today reportedly to discuss reopening the landmark 2007 contract to make additional concessions. Ford, GM and Chrysler are all looking for help from the UAW as they restructure. Gov. Jennifer Granholm met privately with President-elect Barack Obama on Tuesday about the auto industry crisis. "I urged him to be supportive," she said, noting that Obama expressed interest in seeing the details of the companies' recovery plans. She said Obama made no specific promises about the auto bailout package. The governor was heading to Washington to meet with the Michigan delegation about the auto loan package. She said she spoke with the auto company CEOs and UAW President Ron Gettelfinger, who, along with Wagoner, Ford CEO Alan Mulally and Chrysler LLC CEO Robert Nardelli, will return to Congress later this week to testify about the aid request. "I'm encouraged by what I'm seeing so far," Granholm said. "They all will have plans that are specific and future-oriented. The symbolic pieces have been taken care of." Wagoner said he thought the executives would make a more "compelling case" in their testimony this week before the Senate Banking Committee and the House Financial Services Committee. He said they have gotten the message that symbolism is important to Congress. Wagoner, Mulally and Nardelli are all driving separately to Washington in hybrid vehicles after being criticized for arriving last month in private corporate jets. Wagoner will take to the road in a Chevrolet Malibu hybrid accompanied by Beth Lowery, the company's top environmental and safety official. Mulally was traveling in a Ford Escape Hybrid. Along with Gettelfinger, the CEOs will be joined by Keith Wandell, president of supplier Johnson Controls Inc. The automakers plan a series of Capitol Hill briefings today to explain and sell the plan to staff aides and committee members.
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