Two weeks of annual leave still needed taking. Lots of late-autumn chores needed doing around the house. The last two weeks of November should be quiet so Dave Leggett and the rest of the just-auto team can handle the news. Or so I thought. You know how it turned out. The Detroit Big Three faced up to looming liquidity crises but were sent home from their first trip Washington to concoct more detailed plans for state aid. Markets everywhere continued to tank. Assembly lines were idled for days or months, more workers faced losing their jobs. And it ain’t over yet. In a quarter-century of covering this industry and close to two decades more as an interested observer, I don’t think I’ve ever seen things as bad, though the 1970s oil crises ran it close.
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All eyes were on the Detroit-based automakers this week, of course. Tuesday saw the first submission from Ford showing it was in the least perilous cash position, needing only a credit line of $9bn, and its paper placed a degree of emphasis on, ahem, selling the five corporate aircraft – the subject of much controversy after all three CEOs each used a private jet to last month’s first hearing on Capitol Hill, and earlier, when media learned that senior executive Mark Fields was using a private jet to commute weekly to Dearborn from his home in Florida. Chrysler followed up with a plan that requested an urgent $7bn of immediate cash infusion and GM said it would like $12bn in total, with $4bn by the end of this month, plus a $6bn credit line.
When the CEOs, having, as they should have first time round, driven to Capitol Hill yesterday in some of their current and prototype hybrid and electric vehicles, GM’s Rick Wagoner dropped a bombshell. His testimony to the Senate Banking Committee now included a request for a second $4bn tranche of the $12bn loan sought as early as Janaury. Things suddenly looked a lot more serious for the US giant.
Reviewing yesterday’s six hour Senate session, ahead of another one in the House today, it’s clear that US lawmakers will need some convincing to bail the Big Three out. Will a free market and Chapter 11 bankruptciy restructurings (as many industry observers and public opinion polls have suggested) or politics (think of the auto-related jobs held by voters, the lost taxes) prevail? We’ll have to know soon, as it’s now quite clear GM and Chrysler will be toast by the end of the first quarter of 2009 without some help.
It’s a hotly discussed topic here at just-auto.com – we certainly all don’t agree as this debate between editor Dave Leggett and contributor Mark ‘Coolbear’ Bursa shows.
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By GlobalDataAway from Detroit, Honda earlier today shocked the world of Formula One racing by announcing it would try and sell its UK-based team. The UK has developed a global reputation for excellence in this area and the potential loss of 800 jobs is worrying. But the team is already attracting interest from other parties and will likely be revived under new management.
Amid all the gloom a bright spot. Mini has redesigned its convertible and introduced a new technology to auto industry-speak – the Openometer.
Have a good weekend.
Graeme Roberts
Deputy Editor
just-auto.com
