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

The White House issued a statement today saying it opposes legislation that would compel General Motors and Chrysler to keep open some of the 2,000 dealerships the companies have slated for closure.

Both of the automakers, now partially owned by the U.S. government, have sought to close dealerships in an attempt to shrink their sales networks in proportion to the drop in car sales.

Some of the rejected dealers say the closures are unfair and needlessly sacrifice jobs. The proposed legislation would force the companies to keep the dealerships open.

But the White House said the bill, which now has more than 240 sponsors in the House, could set a "dangerous precedent." The statement from the administration noted that other constituencies of the automakers -- unions, retirees, shareholders, suppliers -- have granted concessions as the companies have made painful cuts.

"The decision to invest taxpayer dollars into these companies required all stakeholders to make difficult sacrifices," the statement said.

A bill that would prevent General Motors and Chrysler from cutting dealerships from their respective franchises was introduced in the U.S. House of Representatives last week.

The Automobile Dealer Economic Rights Restoration Act of 2009, sponsored by Rep. Daniel Maffei (D-NY) and co-sponsored by 147 others, including Rep. Denny Rehberg (R-Mont.), has been sent in for committee review.

The bill, HR2743, would force GM and Chrysler to restore dealership franchises, at the owner’s request, as they existed before GM and Chrysler began bankruptcy proceedings, June 1 and April 30, respectively. The bill would also preserve dealers’ rights to recourse under state law.

The newly-formed Presidential Task Force on the Auto Industry is encouraging Chrysler to close one-fourth of its 3,150 dealerships nationwide, while GM closures could amount to 40 percent of its 6,300 dealerships.

Libby’s Cabinet Mountain Chevrolet Pontiac was notified last month that it may become one of the GM dealerships cut from the franchise, though it is too early to tell.

“The Montana dealers I’ve spoken with have serious concerns over the way the Auto Task Force has handled these closures, especially when many are reporting profitable bottom-lines,” Rehberg said. “Car dealerships are often one of the largest employers in rural communities, and these job cuts are counter-productive to economic recovery efforts.”

WASHINGTON — A House committee asked the Obama administration Friday to release documents on the federal bailouts of General Motors Co. and Chrysler Group LLC, seeking more details on decisions that led to the auto industry bankruptcies.

"They negotiated, they reviewed and they approved every aspect of the Chrysler and General Motors reorganization," Rep. Spencer Bachus, R-Ala., said of the White House. "We don't know how the president's auto task force reached its conclusion."

The resolution, proposed by House Republican Leader John Boehner, R-Ohio, underscored lingering resentment in Congress over the government's work to push GM and Chrysler into bankruptcy. The House approved legislation Thursday pressing GM and Chrysler to restore closed dealerships. Auto task force head Ron Bloom was scheduled to testify before a House panel next week as part of a two-day hearing.

The request to the White House, approved by the House Financial Services Committee on a voice vote, seeks information about the work of the Obama administration's auto task force, the billions in federal aid to GM and Chrysler and reductions in benefits to auto parts supplier Delphi Corp.'s workers and retirees.

Committee chairman Barney Frank, D-Mass., said the resolution "does suffer from a certain selective memory approach," noting that the Bush administration provided the initial funding in late December to the companies. But he supported the request.

The resolution does not compel the White House to turn over the documents. It moves next to the full House for consideration.

The White House declined comment.

Lawmakers said many questions remained about how the president's auto task force reached its decisions on GM and Chrysler. They said it hurt many dealerships, workers and retirees.

"These decisions were implemented without the auto manufacturers or the task force presenting evidence publicly that these (dealer) closings would actually benefit the auto companies financially," said Rep. Dan Maffei, D-N.Y., who has pushed GM and Chrysler to restore shuttered dealerships.

Chrysler emerged from bankruptcy in June and GM exited bankruptcy on July 10, helped by billions in federal aid. The government now owns nearly 61 percent of GM and 8 percent of Chrysler.

The bankruptcies required concessions from union workers, retirees, dealers and bondholders. The moves have brought loud protests from dealers, who have sought help in Congress to restore the companies' dealer networks.

GM is reducing its 6,000-dealer network by more than 2,000 by not renewing franchise agreements next year and winding down stores with outgoing brands such as Pontiac, Saturn, Saab and Hummer. Chrysler cut 789 of its dealers as part of its restructuring plan, reducing its dealer count to about 2,400.

DETROIT (Dow Jones)--Ford Motor Co. (F) returned to profitability in its second-quarter and slowed its cash burn amid speculation that it may issue more equity to reduce its debt.

The auto maker reported a net income of $2.3 billion or 69 cents a share, compared with a loss of $8.67 billion, or $3.89 a share for the same period a year earlier.

The company burned through about $1 billion in cash - down from $3.7 billion in the first quarter - during the quarter as it controlled incentive spending around the world while increasing output in its North American plants.

Chief Financial Officer Lewis Booth said all of the company's divisions are now focused on preserving cash, and new product introductions have allowed the auto maker to sell vehicles at higher pricing without resorting to incentives.

Ford's profit came largely from a $3.4 billion gain it received related to debt-restructuring actions in April. Excluding the one-time gains, the company would have narrowed its quarterly loss to $424 million compared with a loss of $1.03 billion a year earlier. It would have been the company's fifth consecutive quarterly loss.

The results split analysts' reaction. Bank Of America analyst John Murphy rated the stock as a "buy" and credited Chief Executive Alan Mulally with putting the company in a "strong position relative to its competition."

However, JP Morgan analyst Himanshu Patel said the results were not the massive "positive quarter" some had expected. He said the auto maker leaned on one-time items, such as Ford Motor Credit's profit, to produce the numbers.

Still, Ford shares rose as much as 9.4% or 60 cents to $6.98 in earlier trading Thursday before falling back to $6.85.

"With everything we see now, we believe the market will start coming back in the third quarter with more momentum in the fourth quarter, but it is still fragile," Mulally said Thursday without revising the goal of returning to profitability in 2011.

On a regional basis, Ford North America narrowed its pre-tax loss to $851 million from a loss of $1.3 billion a year earlier while Ford Europe - traditionally its strongest segment - saw its pre-tax profit shrink to $138 million from $582 million a year earlier. Last quarter, the North America unit reported an operating loss of $637 million while Europe had a $550 million loss.

Excluding some items, the company posted a loss of 21 cents which was narrower than the 50-cent average loss estimate of analysts surveyed by Thomson Financial. Revenue dropped to $27.2 billion, compared to $38.6 billion for the same time period a year earlier.

While the results show some improvement, Ford remains in a precarious spot as it continues losing billions of dollars as it waits for a rebound in the worldwide economy. The company refused U.S. federal aid and filing for bankruptcy, which may have created consumer goodwill but has allowed Chrysler Group LLC to merge with Fiat SpA (FIATY) and General Motors Co. to dump about $40 billion in debt.

Ford's debt was $26.1 billion as of June 30.

"We are aware of our debt but we are not going to speculate on what we will or won't do," Booth said. However, the company said in its press release that it will continue to pursue actions to improve the balance sheet.

There may also be a growing concern about supplier weakness. Booth said providing financial aid to more suppliers could hurt the auto maker's profits "a bit" during the last half of the year. He didn't provide details.

"We are watching closely because we think our supplier cash flow will be most under pressure in the end of the third quarter and toward the start of the fourth quarter," Booth said.

Ford is already providing debtor-in-possession financing to its former subsidiary, Visteon Corp. (VSTN), which filed for bankruptcy protection in May.



Buyouts, Credit And Market Share



During the second quarter, Ford reduced its U.S. hourly headcount by 1,000 workers through a buyout program.

"We are now comfortable with our work force level," Ford spokesman Mark Truby said.

Ford also reached a new deal with the United Auto Workers that will allow the company to pay off its retiree health care obligations by either cash or stock at the current market price.

Ford was originally locked into cashing in its stock at about $2 a share if it wanted to use shares to make one of its payments due in 2009, 2010 and 2011.

Ford Motor Credit, the company's lending arm, reported a pre-tax profit of $646 million, compared with a pre-tax loss of $294 million a year earlier. The improvement came from lower depreciation expenses for leased vehicles due to higher auction values.

However, Ford Motor Credit expects its second-half results to be lower than the first half. The lending unit doesn't expect the net gains from lease residual values in the second quarter to continue.

Ford now expects its full-year market share to improve in the U.S. and Europe in 2009 rather than remain flat. Ford's second quarter Europe market share was 9%, up from 8.5% for the same period a year earlier. It is now the highest second-quarter level in 10 years. Driving the increase was the introduction the Fiesta and Ka cars.

In the U.S., market share in the second quarter was 16.4%, up from 14.4% for the same time period a year earlier. The company attributed the gain in share to sales of the F-150 pickup and Fusion as well as controlled incentive spending.

Not really if you look at the economic implications if these companies go belly up.

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You keep claiming this is about saving the economy yet the UAW keeps getting special favors while the average worker still gets the shaft.

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You keep claiming this is about saving the economy yet the UAW keeps getting special favors while the average worker still gets the shaft.

A company keeping it's promise to it's retired workers is now considered a special favor?

When only some of the retired workers (the one in the politically connected union) have their promises honored while the other workers (the ones not in said union) don't, then, yes...that is a textbook example of a special favor.

Were the same promises made to both union and non-union members?

Made to both, but kept to only the union members. Again, the very definition of a special favor.

...Delphi has said it must shed its pension obligations to emerge from bankruptcy protection. GM, in the contract that won UAW support for the Delphi spin off in 1999, promised those workers it would make up for any shortfall in their pension payments while they worked for Delphi.


The automaker did not make that same promise to Delphi’s salaried workers. GM, which has been operating on government money, has said it cannot afford to do the same for salaried retirees.
...

MEM what about the millions of non union retirees who had their stock liquidated and weren't given fair market value?

freep.com

Generally a union is able to get a better deal because it's not one worker dealling with a company but a group working together to get a better deal.

UAW employees will have their pensions made whole by GM, which insists it is merely fulfilling its end of a deal made with the UAW in 1999 (when it spun off Delphi) to cover any future pension shortfall. Few such obligations usually survive bankruptcy....Less fortunate are smaller unions .... who already lost their health care and life insurance plans on April 1.... They would seem to lack the UAW’s clout inside GM and the Obama Administration....

As noted before, you're blinded by your own partisanship. So much so that you don't even realize that your argument was disposed of in my earlier post:



You claim that this is a simple matter of union bargaining. However, the UAW is getting better treatment than the other unions. Furthermore, the UAW is getting better treatment than a union normally gets in a bankruptcy.

Better treatment=special favors. This isn't difficult to see. Just take off your official DNC talking point blinders.

Matter-eater Man argumentative User Fair Play!
6000+ posts 07/26/09 10:18 AM Making a new reply
Forum: Politics and Current Events
Thread: Re: The UAW’s Defined Benefactor

Prediction. He'll repeat the same discredited talking points he's made in the past and change the tread title to something generic that doesn't mention his beloved UAW.

...Delphi has said it must shed its pension obligations to emerge from bankruptcy protection. GM, in the contract that won UAW support for the Delphi spin off in 1999, promised those workers it would make up for any shortfall in their pension payments while they worked for Delphi.


The automaker did not make that same promise to Delphi’s salaried workers. GM, which has been operating on government money, has said it cannot afford to do the same for salaried retirees.
...

Matter-eater Man argumentative User Fair Play!
6000+ posts 07/26/09 10:18 AM Making a new reply
Forum: Politics and Current Events
Thread: Re: The UAW’s Defined Benefactor

Prediction. He'll repeat the same discredited talking points he's made in the past and change the tread title to something generic that doesn't mention his beloved UAW.

I'll just repost this every once in a while ...

As noted before, you're blinded by your own partisanship. So much so that you don't even realize that your argument was disposed of in my earlier post:



You claim that this is a simple matter of union bargaining. However, the UAW is getting better treatment than the other unions. Furthermore, the UAW is getting better treatment than a union normally gets in a bankruptcy.

Better treatment=special favors. This isn't difficult to see. Just take off your official DNC talking point blinders.

I'll just repost this every once in a while and leave you to your obsession with the tranny pic that you run to whenever you get stuck.

freep.com

You must be a real controversial figure down at the local Lesbian, Gay, Bisexual & Transgender Community Center

I'll just repost this every once in a while and leave you to your obsession with the tranny pic that you run to whenever you get stuck.

Made to both, but kept to only the union members. Again, the very definition of a special favor.

Made to both, but kept to only the union members. Again, the very definition of a special favor.

...Delphi has said it must shed its pension obligations to emerge from bankruptcy protection. GM, in the contract that won UAW support for the Delphi spin off in 1999, promised those workers it would make up for any shortfall in their pension payments while they worked for Delphi.


The automaker did not make that same promise to Delphi’s salaried workers. GM, which has been operating on government money, has said it cannot afford to do the same for salaried retirees.
...
freep.com

Made to both, but kept to only the union members. Again, the very definition of a special favor.

...Delphi has said it must shed its pension obligations to emerge from bankruptcy protection. GM, in the contract that won UAW support for the Delphi spin off in 1999, promised those workers it would make up for any shortfall in their pension payments while they worked for Delphi.


The automaker did not make that same promise to Delphi’s salaried workers. GM, which has been operating on government money, has said it cannot afford to do the same for salaried retirees.
...
freep.com