RKMBs Forums .::Important::. Politics and Current Events Democrat Leaders Want Automaker Bailout

If the Big Three Detroit automakers are denied a government bailout and allowed to go into bankruptcy, it just might spell the end of the road for America's No. 1 spectator sport. If the wheels come off for GM, Ford and Chrysler, they could for NASCAR, too.

NASCAR's stars — Jeff Gordon and Jimmie Johnson, among others — have been showing their support for the auto industry, urging their fans to contact their members of congress to push through the $25 billion Detroit bailout plan.

"We're optimistic that Congress will help support the automakers and help them get through this very difficult time," said Andrew Giangola, Director of Business Communications for NASCAR.

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"It would affect NASCAR if the manufacturers were not with us. It would very strange to watch NASCAR and not see Chevy and Ford and Dodge racing around the track."

Along with the rest of the country, NASCAR is feeling the financial crunch right now. Hundreds of millions of dollars in sponsorship funds fuel stock car racing, and the money just isn't flowing in as it used to. On top of that, attendance is down by just under 10 percent, and some sponsorship deals have not been renewed.

General Motors is cutting back on sponsorships; Sears dropped its 13-year running title sponsorship deal for the NASCAR Craftsman Truck series; and AAA and the Army have left altogether.

In an attempt to cut costs across the board the sport recently banned off-season testing, in which teams use official NASCAR racetracks to test or tweak vehicles or for practice. It's expected to save each team $1 million, but it has also cost about 1,000 garage workers their jobs.

Venues, teams and the sport itself are competing against each other for the same sponsorships. Lower profile racing teams worry they won't have the funds to enter next season; higher profile teams are merging to share resources.

"NASCAR in general is at risk with a broad bankruptcy in the industry, and I think [not bailing out the Big Three] would just frankly take out NASCAR," said Dr. David E. Cole, chairman of the Center for Automotive Research, a nonprofit group that studies the industry.

"But assuming there's some sort type of bridge loan to the Big Three and we'll get stability in the credit markets, I think NASCAR will live and at least two of the Big Three will continue to participate."

"NASCAR has a very significant stake in these talks to develop some form of a bridge loan," Cole said.

Somehow, experts say, NASCAR will survive. If the bailout comes through, industry experts say the sponsorship money will still flow into the sport, just more slowly. But if it doesn't come through, they say, the sport could be set back by 30 years.

Teams will have to learn how to survive with less money, there will be more shared sponsorships, fewer teams, less cash. It's possible that Honda -- or another foreign manufacturer -- could step in and fill the void left by Chevy and Ford and Dodge.

Dr. Larry DeGaris, president of Sponsorship Research & Strategy, who has conducted national sports scholarship surveys, said Chevy and Ford have had great success marketing to the NASCAR demographic and will likely maintain some level of reduced sponsorship. (Chrysler's NASCAR campaigns have shown less traction.)

The sport's fan base comprises somewhere between 40 million and 70 million people, depending on one's definition of a fan, and is strongest in smaller markets in middle-of-the-country states, near the American automobile manufacturers and the plants of their foreign competitors Toyota and Honda.

"That's all the more reason to maintain a visible presence at NASCAR," DeGaris said of the Big Three bailout seekers. "I don't think it would be a good idea for them to throw in the towel."

Racing teams are kept afloat by corporate sponsorship, from which they get 90 percent of their revenue. Sponsors include Loews and Home Depot home improvement outlets, NAPA Autoparts, Coors and Budweiser beers and Sprint/Nextel telephones. And big name drivers like Dale Earnhardt Jr. and Jeff Gordon have fronted multimillion-dollar marketing campaigns.

Sponsors have historically tapped into the sport's "real American" reputation, and experts agree that is expected to continue.

For example, despite SEARS dropping its $4 million annual sponsorship of the Craftsman Truck Series, Camping World filled the void a deal reported to be worth between $5 million and $7 million annually.

But NASCAR and its sponsors will have to tread lightly. Experts say corporations will have to be careful not to roll out expensive marketing campaigns to an audience that's increasingly unemployed. Similarly, if the Big Three automakers get their bailout, they'll need to be careful not to appear to be wasting taxpayer money with marketing campaigns.

"What the bailout represents is a downturn economy, and in a downturn economy your marketing budgets are among the first to be slashed," said Mark Dodds, sports marketing professor at State University of New York-Cortlandt. "I think it would be difficult to rationalize marketing spending when you're also making decisions to put people out of work."

But experts agree, the purchasing power is too strong.

"NASCAR fans know who the sponsors are and they appreciate them and they act on it," DeGaris said. "Their purchase behavior is influenced by NASCAR sponsorship. No other relationship or sport comes close to that success. NASCAR and Chevy is the best there is."

NASCAR is a private company, and revenue figures are not easy to come by. But since television contracts were still in place this past season and sponsorship contracts remained in place, experts suggest next year could show a loss. (Ticket sales do not affect the company; racetracks operate independently, as do racing teams.)

"Right now it's a reduced version of what it was, but the fundamentals are still solid," DeGaris said. "The big question mark is next year."

"Do we have our eye on things? Absolutely. As industry we're doing what we can," said NASCAR's Giangola.

"NASCAR has been around for 60 years. We've been racing when the stock market's been booming and racing when the stock market's been through difficult times.

America's love affair with automobile is certainly not going to diminish anytime soon."

Others aren't so sure how it'll all pan out. "I would say difficult times ahead," Dodds said. "It would be difficult to imagine seeing NASCAR gone. But will it change? Most certainly."

Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when its CEO appears before two legislative committees this week.

Also, CEO Alan Mulally said he'll work for $1 per year if the automaker has to take any government loan money.

The plans Ford submitted to Congress on Tuesday also say the company will cancel all management employees' 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.

The company also said it will sell its five corporate aircraft. The CEOs of all three Detroit automakers were harshly criticized during congressional hearings last month for flying to Washington in separate corporate jets while seeking loan money.

Mulally said in an interview with The Associated Press on Tuesday that Ford will emphasize its cost cutting efforts with the United Auto Workers union and will give much more detail to Congress than it did when lawmakers grilled the automakers' CEOs last month.

Mulally said Ford will seek $9 billion in government loans but may not need them. The Dearborn-based company has said it has enough cash to make it through next year without assistance.

As part of the plan submitted to Congress, Ford said it does not anticipate a liquidity crisis in 2009, "barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales." The loan would provide a safeguard against worsening conditions, the company said.

The company said it will accelerate plans to roll out plug-in electric vehicles as part of its plan. The vehicles will come out starting in 2010 and include the Transit Connect small van and a car the size of the Ford Focus compact.

Ford also said it will accelerate plans for hybrid gas-electric vehicles.

The CEOs of the Detroit Three are scheduled to appear before congressional committees Thursday and Friday to seek a total of $25 billion in government loans. Chrysler LLC and General Motors Corp. have said they are perilously low on cash and need the government loans to survive the recession and the worst auto sales environment in 25 years.

Ford's plans to achieve profitability or break even by 2011 are based on industrywide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011. The seasonally adjusted annual sales rate dropped to 10.6 million vehicles in October.

Ford's plan calls for an investment of up to $14 billion to improve fuel efficiency over the next seven years. The company said would improve the overall efficiency of its fleet by an average of 14 percent in 2009.

Mulally also says he will encourage automakers and parts suppliers to join forces to develop new battery technologies in the U.S. for future electric cars so the country doesn't rely on foreign batteries.

Ford's plan said it will reduce its number of dealers by 606 to 3,790 by the end of the year. It will also trim the number of major sourcing suppliers it uses to 750 from 1,600.

Ford reiterated its intention to offload Volvo, by either selling the Swedish automaker or spinning it off into a separate company. Since 2007, Ford has sold its Jaguar, Aston Martin and Land Rover lines. It also sold most of its stake in Madza.

Bush is drinking again. Has to be it.

DETROIT — Opponents of a Congressional bailout for Detroit auto companies and the United Automobile Workers union traded charges Friday over who was responsible for the defeat of legislation that would have provided temporary financing until the automakers restructured.

Senator Bob Corker, a Republican of Tennessee, suggested the fault lay with the U.A.W.’s president, Ron Gettelfinger, whose union declined to agree to allow wage concessions in 2009 as part of a deal.

But at a news conference Friday morning, Mr. Gettelfinger said the union feared that it was “being set up” by Mr. Corker, who he said was asking the union for concessions that were not sought from other participants in the talks.

Mr. Gettelfinger called on the Treasury and the White House to release financing and “prevent the imminent collapse of the automakers and the devastating consequences that would follow.” Until now, the White House had resisted such a move, but said Friday morning that it would consider using money from the $700 billion financial bailout to help the automakers.

Late Thursday, the Senate did not take up an assistance measure passed by the House, after hours of negotiations between Senate Republicans with the auto companies and the U.A.W. The sticking point apparently was the union’s refusal to agree to lower wage and benefit rates as soon as next year.

Representatives for the union, which had already accepted a series of cuts in its current contract, sought instead to push any more concessions back to 2011, when the U.A.W.’s contract with Detroit auto companies expires.

In a statement Thursday night, the union said it was “prepared to agree that any restructuring plan should ensure that the wages and benefits of workers at the domestic automakers should be competitive with those paid by the foreign transplants. But we also recognized that this would take time to work out and implement” using programs like buyouts and early retirement offers to bring in new workers at lower rates.

“Unfortunately, Senate Republicans insisted that this had to be accomplished by an arbitrary deadline,” the statement said. “This arbitrary requirement was not imposed on any other stakeholder groups. Thus, the U.A.W. believed this was a blatant attempt to make workers shoulder the lion’s share of the costs of any restructuring plan.”

In an interview Friday morning on CNBC, Mr. Corker suggested the union, not Republicans, bore the burden for the measure’s failure.

“I offered them a solution,” he said of discussions with union representatives. “Our caucus was 100 percent behind it. Do we own it, or does the U.A.W. own it?”

Mr. Corker said he spoke with Mr. Gettelfinger on Thursday morning and suggested he participate in the discussions. “I asked him to come to the table, not assign somebody to come back and forth. It didn’t work out,” Mr. Corker said.

Mr. Gettelfinger, at a news conference Friday, said he was wary of Mr. Corker’s offer to join the talks.

“We wondered if we were just being set up,” Mr. Gettelfinger said. “We did not know who Senator Corker was representing on the Republican side, and if he could deliver votes.”

He said Mr. Corker admitted to the union’s representatives that discussions over wages were “largely about politics in the G.O.P. caucus.”

Mr. Corker said he proposed that wages and benefits of U.A.W. members be competitive with lower rates at American plants run by foreign rivals — Toyota, Honda, Nissan and B.M.W. — during 2009, and offered the union the opportunity to pick the date next year when the changes, which would be certified by the Labor Department, could be put in place.

Without that agreement, Mr. Corker said he could not sell a compromise to other Republicans.

“We just could not get a date,” Mr. Corker said of his discussions with the union. “It was an amazing thing to me.”

Mr. Gettelfinger said Friday that there was no way to tell what Mr. Corker meant by competitive wage and benefit rates, which differ depending on the company and the location of the automakers’ plants. He went on, “The G.O.P. caucus was insisting the restructuring had to be done on the backs of workers and retirees rather than have all stakeholders come to the table.”

“We could not accept the effort by the Senate G.O.P. caucus to single out workers and retirees for different treatment,” he said.

Union members said Friday that they supported Mr. Gettelfinger for standing up to Mr. Corker.

“It’s not an attack on the U.A.W., it’s an attack on the labor movement and the whole working class,” said Martha Grevatt, who has worked at Chrysler’s stamping plant in Twinsburg, Ohio, for 21 years.

“Politicians don’t dictate union wages, and I would have felt the same way, even if I was working,” said Marty Shawl, of Bay City, Mich., who retired from a G.M. plant in May.

In 2007, the U.A.W. agreed to sharply lower starting wages and benefits for newly hired autoworkers at the Detroit companies, as well as for workers in jobs away from the assembly line, like janitors and maintenance personnel.

But the cuts did not affect most long-time union members, whose hourly pay and compensation is about $55 an hour. The figure ranges above $70 an hour when the automakers’ costs for health care for retired workers and retirement benefits is factored in.

By contrast, workers in plants run by foreign companies in the United States earn about $45 an hour, and the nonunion companies do not have the hefty burdens for future “legacy costs” that are faced by the Detroit companies.

Gov. Jennifer M. Granholm of Michigan expressed anger Friday morning at the failure of the Senate to act on the bailout package. “It’s such an unbelievable stab at workers across the country,” she said in an interview on WJR-AM in Detroit.

Washington gave a bailout to the financial institutions, and did not ask a single question, the governor said, “then lay the blame for the auto industry, which is a victim of this financial meltdown, on the backs of the people who are working on the line.”

WASHINGTON (AP) — The White House sought Tuesday to play down prospects for an imminent bailout for distressed U.S. automakers and suggested any deal requiring taxpayer money will require major concessions by the parties involved.

"We are not going to be rushed into it," presidential press secretary Dana Perino declared.

Only a day earlier, President George W. Bush suggested that a bailout package would come sooner rather than later. "An abrupt bankruptcy for autos could be devastating for the economy," Bush said on Monday. "This will not be a long process because of the economic fragility of the autos."

Perino said the administration was still working on details of the package and wants to hear more from all those involved, including key lawmakers and those in the industry. She said concessions need to be made in exchange for a rescue package that reportedly could reach $15 billion for General Motors Corp. and Chrysler LLC.

"If we're going to use taxpayer financing to assist the automakers, all stakeholders are going to have to come to the table and be willing to show that they are capable and willing to make really tough decisions about the way forward," Perino said.

Perino did not specify what concessions need to be made and by whom, but said, "I don't think that there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future. I just do not think that will happen."

GM and Chrysler have said they will run out of cash within weeks if they don't get help. Ford Motor Co. has said it has enough cash to survive 2009.

The administration indicated it would extend a helping hand to the domestic automakers after a $14 billion aid package to the auto industry failed in Congress last week in part because of a contention that the industry was largely to blame for its own problems.

Perino said at her daily news briefing that "I don't know of an imminent announcement coming from us," suggesting expectations for a quick decision were premature. "We are taking the time to try to do it right and weighing all of the options," she said.

"We will do it if we decide to do it, and we'll do it in the time that we think that is right," Perino added.

Asked about her use of the word "if," when Bush had appeared to signal that some form of U.S. aid would be forthcoming, Perino said: "Because I don't have an announcement for you."

She said she didn't want to appear to signal that help was on its way "if at the end of the day, we don't do something."

Bush himself refused to answer shouted questions about the timing of any auto deal during an unrelated event in the Oval Office earlier Tuesday morning.

Perino said the prime goal remained to "prevent a disorderly bankruptcy."

Perino did not specify what concessions need to be made and by whom, but said, "I don't think that there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future. I just do not think that will happen."

Sen. Carl Levin, D-Mich., has said he expects GM to get $8 billion and Chrysler $7 billion from the Bush administration. He said the Treasury secretary likely would be tapped as a "car czar" to oversee restructuring of the companies.

Vice President Dick Cheney, in an interview with conservative talk show host Rush Limbaugh, cautioned that "if the automobile industry goes belly up now, there's a deep concern that that would be a major shock to the system."

The administration is weighing several options. They include using money from the $700 billion financial bailout fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans the automakers could get from the Federal Reserve.

House Speaker Nancy Pelosi, D-Calif., said the bailout funds were "the only recourse that they have" because of the failure to pass legislation in Congress. She said "something will have to happen imminently" but said requirements for restructuring should be attached to the funds.

"Otherwise, we're just giving life support, rather than a lifeline for viability into the future," Pelosi said.

The White House is keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler.

Bush is drinking again. Has to be it.