US Automotive bailout fails in US Senate

[Dave_au]

Breaking news, getting closer to Game Over:

Originally Posted by News.com.au

THE US Senate have failed to reach a deal on a controversial multi-billion dollar bailout for the beleaguered car industry, Senate Majority Leader Harry Reid said.
"I'm terribly disappointed that we are not able to arrive at a conclusion,'' Mr Reid said after lawmakers spent hours trying to hammer out a compromise over proposed federal loans for the Detroit automakers.

"We have tried very, very hard to arrive at a point where we could legislate for the automobile industry.''

"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight. Millions of Americans, not only the auto workers but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected,'' Mr Reid said.

Republican Minority Leader Mitch McConnell said his allies in the Senate felt that the rescue package which consisted of some $14 billion in short-term loans, would not succeed in rescuing major automakers from the brink of collapse.

"None of us want to see them go down but very few of us had anything to do with the dilemma that they've created for themselves,'' said Mr McConnell.

"And so the question was: 'Is there a way out?' and the administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work.''

The Senate failure to reach accord means that any Government backed bailout of the US auto sector will likely have to wait until next year.

The House of Representatives passed its version of the rescue plan for Detroit's automakers on Wednesday but the proposal met stiff opposition from Republicans, sending lawmakers hustling to make adjustments.

The legislation would have provided General Motors and Chrysler bridge loans to operate until March 31, and required a restructuring plan to ensure their long-term survival while repaying Government aid.

Republican Senator Bob Corker, who spearheaded the alternative proposal, attributed the breakdown to differences over employee compensation, and said that a union representative from the United Auto Workers was present for the talks.

"This is a highly technical matter, involved volunteer employed benefit accounts, it involved bonds, it involved all kinds of discussions that were technical in nature,'' Mr Corker said.

"And through all of that, and we had the United Auto Workers representative in the room, we had the three companies in another room. We were talking to bondholders on the phone. Certainly talking to our colleagues,'' he added.

"We are about three words away from a deal.''

Democrat Chris Dodd, chairman of the Senate banking committee, lamented the breakdown, particularly with the holidays approaching.

"We will leave here tonight and go home for the holiday recesses but for the literally hundreds of thousands of people whose jobs depend upon this industry, this will not be a joyous season wondering whether or not their jobs, their livelihoods, their homes, their children's futures are at risk,'' Mr Dodd said.

"It is disheartening to me, to put it mildly, that we were unable to come to that agreement.''

After warning it could run out of money within weeks, GM acknowledged ahead of the vote that it was considering "all options'' including bankruptcy, and had hired a team of legal advisers.

[SB076]

That last line is a concern. Funny you would think given the situation if they were that close to a deal they could have stayed that little bit longer and worked something out (one way or another) instead of taking holidays

[CAMS290]

Always two sides to the story, the American tax payers will be paying either way.....by bailing out the ailing car companies now, or having to pay BILLIONS more in unemployment benefits to the hundreds of thousand of direct and in directly employed auto workers.

[Dave_au]

GM will probably go into the chapter 11 bankruptcy protection, perform a major restructure and only concern themselves with their core business.

The big question for us is if this happens, what will GM do with Holden - is it a core business that they wish to continue, or would there be greater value in selling Holden, perhaps to the likes of chinese companies that GM has had previous working relationships with. For instance, there is Shanghai Automotive Industry Corporation, which GM had previously partnered with to form Shanghai GM, and currently produces the Buick Park Royal, which is the chinese version of our Stateman.

[madmelon]

The unions in that country are atrocious- a bunch of greedy mofo's who would rather see hundreds of thousands of job losses than a wage that is lower which matches competing foreign owned businesses. Maybe it's time the whole country went to hell in a bucket to teach people over there some lessons.

The great American dream- greed now, bankruptcy later.

[SB076]

Just read another article http://money.ninemsn.com.au/article.aspx?id=696172 GM are saying bankruptcy is now not an option. I wonder what other options they have?

It is a major concern (I read an article that some 3 millions people are employed in the US auto industry) However the US Government cant bailout every company during this financial crisis. Not sure what will happen with Holden

[blueoval]

Originally Posted by madmelon

The unions in that country are atrocious- a bunch of greedy mofo's who would rather see hundreds of thousands of job losses than a wage that is lower which matches competing foreign owned businesses. Maybe it's time the whole country went to hell in a bucket to teach people over there some lessons.

The great American dream- greed now, bankruptcy later.

Agree here. Unfortunately we live in a society of 'me first, screw you' attitudes. Sadly the americans have perfected that attitude more so and this is the result.

[HSE2]

Yes all well and good. How much does war cost again?

America wouldn't know cohesion if it bit them in the face.

[djst]

There seems to be so many political factors that are affecting a commonsense outcome,and if somebody does not come to the rescue there will be alot more problems that will ripple from this in the near future.

Bush still has the power to use Tarp funds,otherwise they have to hold on until Obama gets in,which will probably be to late.

[madmelon]

Originally Posted by djst

There seems to be so many political factors that are affecting a commonsense outcome,and if somebody does not come to the rescue there will be alot more problems that will ripple from this in the near future.

Bush still has the power to use Tarp funds,otherwise they have to hold on until Obama gets in,which will probably be to late.

In a handful of news articles I've read about it, the new estimates put GM at 3 weeks till poo starts entering fan...

[MAD]

Originally Posted by Dave_au

GM will probably go into the chapter 11 bankruptcy protection, perform a major restructure and only concern themselves with their core business.

The big question for us is if this happens, what will GM do with Holden - is it a core business that they wish to continue, or would there be greater value in selling Holden, perhaps to the likes of chinese companies that GM has had previous working relationships with. For instance, there is Shanghai Automotive Industry Corporation, which GM had previously partnered with to form Shanghai GM, and currently produces the Buick Park Royal, which is the chinese version of our Stateman.

Holden locally designed the current platform of the camaro, so I guess they are directly tied to the parent company.

[Daymoe]

Originally Posted by HSE2

Yes all well and good. How much does war cost again?

America wouldn't know cohesion if it bit them in the face.

Funnily enough in todays Herald Sun, there was a section saying America's most expensive events:

4.6 Trillion - Credit Crunch
1.1 Trilllion - WORLD WAR II

Its cheaper to fight and win a world war, then to fix their economy lol. Those figures were adjusted for inflation too.

[CSV_LS1]

Originally Posted by Dave_au

The big question for us is if this happens, what will GM do with Holden - is it a core business that they wish to continue, or would there be greater value in selling Holden, perhaps to the likes of chinese companies that GM has had previous working relationships with. For instance, there is Shanghai Automotive Industry Corporation, which GM had previously partnered with to form Shanghai GM, and currently produces the Buick Park Royal, which is the chinese version of our Stateman.

I was told the Shanghai AI could likely buy Holden from GM. :

[tbearz]

Originally Posted by CSV_LS1

I was told the Shanghai AI could likely buy Holden from GM. :

Holden means a great deal to China..oops :P it seems the republicans have let the market take care of it self in the good old capitalism way except numerous pundits have mentioned that Bush might dip into the wall street bailout money and chump it over to the the ever so shrinking big 3

[madmelon]

Originally Posted by Daymoe

Funnily enough in todays Herald Sun, there was a section saying America's most expensive events:

4.6 Trillion - Credit Crunch
1.1 Trilllion - WORLD WAR II

Its cheaper to fight and win a world war, then to fix their economy lol. Those figures were adjusted for inflation too.

Not only is it cheaper, but people will undoubtedly learn more useful lessons faster.

Why is it that most countries look to the US as a sign of what's a good way of doing things? I'm not necessarily talking about business either- society trends, esp with people my age (early 20's) and younger, have a nasty habit following theirs, no matter how pathetic or wrong. How is it that such a poor example (in many areas but not all) is the one being followed?

[King Nothing]

Republican Senator Bob Corker, who spearheaded the alternative proposal, attributed the breakdown to differences over employee compensation, and said that a union representative from the United Auto Workers was present for the talks.

Sounds like the UAW has just shot itself in the foot. From what I understand, they are a large part of the reason why American manufacturers are at such a disadvantage compared to other manufacturers in the country. Now they may have been a large part in it's own industries downfall. Insane.

[SB076]

It was stated on the news that the reason the package failed because it was conditional on the unions accepting a pay cut - not sure how true that is, hopefully someone has more details

[madmelon]

Every article I've read so far lists the reason for failure as more or less: UAW won't accept a 2009 paycut deadline (contract expires 2011). Morons...

[Sprint XR8]

GM, Chrysler Face Immediate Cash Crisis As Senate Vote Fails
DETROIT -(Dow Jones)- General Motors Corp. (GM) and Chrysler LLC face an immediate cash crisis in the aftermath of the Senate's rejection of a $14 billion emergency loan package, analysts said Thursday.

The auto makers, which said they will run out of money by year's end without a government lifeline, will struggle to make massive payments to parts suppliers due at the beginning of January absent government assistance, said Gregg Lemos Stein, a credit analyst at Standard & Poor's Ratings Services.

"If anything, the automotive market has worsened since GM and Chrysler first said they may not have enough liquidity to make it into next year," Lemos Stein said. GM and Chrysler warned last month that liquidity is running dangerously low.

The U.S. auto makers are dealing with the weakest domestic sales environment in a quarter century, as well as deteriorating conditions in overseas markets that had until lately helped offset weakness at home in recent years. Sales have plunged in recent months as the economic outlook worsens and credit conditions remain tight.

Buckingham Research analyst Joseph Amaturo said failure of the loan package could force GM into bankruptcy.

In a note published earlier Thursday, Amaturo said that if the bill failed in the Senate, "GM is in a very precarious financial situation and likely files for bankruptcy by year-end."

The auto maker is trying to avoid being pushed into filing for Chapter 11 bankruptcy protection, a move it contends will eventually lead to liquidation because consumers won't buy vehicles from a bankrupt auto maker.

GM, which burned through $6.9 billion in cash in the third quarter, said late Thursday that it will assess its options to ensure it remains viable. The company is likely to renew its request to the Bush Administration to tap the $ 700 billion in funds made available to rescue the financial system or approach the federal reserve, according to several sources familiar with loan negotiations.

The auto makers and supporters of the bill to provide emergency aid to the manufacturers have argued that failure to provide aid could have disastrous implications, leading to the collapse not only of the auto makers but also the massive supply chain and dealers.

Lemos Stein said S&P is "very concerned about the spillover effects on suppliers," adding, "in a worst case, Ford may have to utilize its liquidity to keep its supply base intact."

Ford Motor Co. (F) didn't ask for an immediate cash infusion but is requesting access to a credit line should the environment deteriorate further. Ford believes a failure of GM or Chrysler would ricochet through the U.S. auto industry and force a bankruptcy at one of both of the other auto makers.

Ford declined comment on the result of Thursday's Senate vote, while Chrysler representatives weren't immediately available for comment.

Shares of the auto makers and most suppliers plunged in New York trading Thursday as pessimism grew about the outlook for bill in the Senate.
http://money.cnn.com/news/newsfeeds/...0_FORTUNE5.htm

[snappy]

This really not good boys. The Government might aswell fire the bulldozers up and turn detroit in to one big trailer park .
Will no health insurance , an six weeks welfare there gonna be some empty christmas stockings this year and next .

[Gobes32]

What happens to Holden if GM file for bankruptcy? Do they get sold off? Are they still allowed to trade? And where does the money come from to pay wages, bills etc?

[Auslandau]

Originally Posted by Gobes32

What happens to Holden if GM file for bankruptcy? Do they get sold off? Are they still allowed to trade? And where does the money come from to pay wages, bills etc?

What ever happens to GM will directly effect Holden ..... they are the same company. One goes, they all go. GM can sell it of as a seperate entity though, to who ever wants it ...... to the Chinese if they want but Holden alone, set up to supply such a small market, showing no profit ..... why would you? It makes more sense to buy it, close it and then replace with imports.

Buy your competitors cheap, then close them gives you more market share or opens the door to a market that may not have been possible before.



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[Gobes32]

What about Ford Oz? I presume it's not as easy to sell off because essentially we are the same company? An editorial by John Mellor suggested that a sell off of Holden would be the best outcome for GM. If GM files for bankruptcy, does Holden still go back to work, I mean, how much cash do they have to keep the plants running?

[Windsor220]

If Holden did get sold off, what would happen with Holdens drivetrain? Would they most likely still keep GM engines and transmissions?

[Auslandau]

Same with Ford Oz. If the top office goes the rest follows. They can sell off Holden as a division, and also Ford US sell its Ford Aus division ..... but I really can't see who is out there to buy them.

Toyota Oz is doing well because of how they have been managed from the top. If the 2 go, plants, I beleive could be sold very cheap to continue ... but comes back to here being a very small market. China has the capacity ... and so does most Japanese companies ..... to supply this market offshore, extremely easily.

This is all very bad for the US ..... which of course will be felt everywhere. There housing market has collapsed, car industry and Wall street is going to take a pounding again. They are in the poo! Big time.



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[Auslandau]

Originally Posted by Torxteer

If Holden did get sold off, what would happen with Holdens drivetrain? Would they most likely still keep GM engines and transmissions?

No GM .... no Holden!



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[phillyc]

If GM go bankrupt and they fold i'm not saying they will then there is a good chance there will be no Commodore unless its a 6spd manual V6.

They might now make the Rattletech V6 here, but the 4/5/6spd autos, 6spd manual for the V8 are all and the V8 are all made in the US or Mexico.

The 6spd manual behind the V6 is an Aisan? (not a spelling mistake, but it may be the wrong supplier name) unit made in Japan.

As a comparison, the Falcon uses an Australian I6, 4spd in the Gas/ute/wagon models and a French 5spd, ZF German 6spd. The V8 is US though.

Hope it doesn't come to this...

[Gobes32]

Just been watching the sky business news channel. The sky is officially falling, GM shares will not be worth anything in six hours............. Very scary.

[Auslandau]

Originally Posted by Today's Financial Times

A Chapter 11 filing by GM will mark the biggest business failure in US history. Car industry lobbyists say that up to 3m jobs at the Detroit companies and their business partners, and 1m pensioners and their families, could be affected by the collapse of the US domestic motor industry.

The 'business Partners' will include Holden ......



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[Gobes32]

If GM files for bankruptcy, Holden have to stop production of all cars. The fallout is going to be huge. We have not seen anything yet.