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More Problems for GM and Chrysler

Skeptical Americans want the U.S. out of the auto business.

by on Jun.09, 2009

A majority of Americans, according to a new poll, want the government out of the auto business ASAP.

A majority of Americans, according to a new poll, want the government out of the auto business ASAP.

While the protestors have yet to take to the street, chanting and waving banners proclaiming, “U.S. Out Now,” a new study suggests that a vast majority of Americans want the country out of the auto business as quickly as possible.

More than half of those surveyed by the automotive research firm, AutoPacific, said both General Motors and Chrysler should have been allowed to fail. An even larger percentage feels the government’s involvement in running the two companies will not result in their producing the right cars and trucks for the market.

“People believe the government should get out of the auto business as soon as possible,” said AutoPacific President George Peterson. “They certainly do not believe that government involvement will result in cars and trucks that Americans will want to buy.”

Using the firm’s “VehicleVoice,” an Internet-based survey panel, to poll over 900 American drivers, AutoPacific found 81% want the government to sell off its stake in GM and Chrysler as quickly as possible. (more…)

Q&A: General Motors CFO Ray Young

Full transparency from GM's numbers man.

by on Jun.09, 2009

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

Call it trial by fire. Last year, as General Motors began the meltdown that ultimately led to its bankruptcy filing, last week, senior company officials frequently sat down with reporters to outline the latest cutbacks in jobs and production. There were the familiar faces, like former CEO Rick Wagoner, as well as the man who replaced him, in March, Fritz Henderson. But less familiar was Ray Young, the traditionally soft-spoken veteran who was appointed Chief Financial Officer, in March 2008.

It was clearly not a great time to be counting the beans at the fast-failing automaker, but it puts Young in a key strategic position, now that GM is shedding billions of debt, half of its North American brands and more than a third of its dealers under a court-managed restructuring largely crafted under the heavy hand of the Obama Administration.

A 23-year GM employee, Young was born in Guangzhou, China, emigrating to Canada as a youngster.  After earning an MBA at the University of Chicago, in 1986, he signed on with GM and has followed an increasingly familiar career path that included the GM Treasurer’s office, in New York, and several stints overseas. Young spoke with TheDetroitBureau’s Paul A. Eisenstein about opening GM’s books to its shareholders – the American taxpayer – the lessons learned in bankruptcy, and the threat of a GM boycott by the right wing.

TDB: When the White House forced out CEO Rick Wagoner, in March, there seemed to be a change in attitude by GM towards accepting a bankruptcy.  Is this accurate?

Young: It’s hard to say when it became more evident. Time worked against us. The Obama Administration set some pretty tough targets. In March, $26 billion worth of debt had to be converted into equity.  If you recall the original, December 31st agreement, Treasury had called for a two-third reduction.  When President Obama increased that to 90%, that increased the risk that bankruptcy would have to be the tool to reach those objectives.  So, March 30th, the stakes got raised.  Without being able to restructure the unsecured debt, we would not be able to restructure outside bankruptcy. (more…)

What’s Right About GM?

Despite going into bankruptcy, there are plenty of things right about General Motors that could support an eventual revival.

by on Jun.01, 2009

GM needs to stop launching two dogs for every one hit, admits CEO Henderson. The Chevy Malibu is a sign the maker does have something going for it.

GM needs to stop launching two dogs for every one hit, admits CEO Henderson. The Chevy Malibu is a sign the maker does have something going for it.

“There are no second chances,” stressed General Motors CEO Fritz Henderson, as he wrapped up a media briefing called to detail the bankruptcy of the 101-year-old automaker.

The automaker today filed for bankruptcy protection, a process that is expected to take it at least 60 to 90 days to pass through before emerging as a “new” GM.  To prop up the giant maker during its transition, and to keep it going while the economy recovers, bondholders and union workers have agreed to billions of dollars in sacrifices, while the Obama Administration will invest another $30 billion, bringing the value of the government’s aid to a total of $50 billion.

Is it worth it?  Will taxpayers, in particular, get their money back out? President Barack Obama insisted the automaker had come up with “a viable and achievable plan that will give this iconic brand a chance to rise again.”

Not everyone is convinced. Analyst Joe Phillippi, of AutoTrends Consulting, said “A lot of folks are rather skeptical” about GM’s plans, particularly when it comes to the 18% to 18.5% market share it hopes to maintain.

Yet despite some concerns, analysts say there are also reasons to feel upbeat about GM’s chances.  The automaker’s CEO, Fritz Henderson, acknowledged that even though critical elements of the turnaround plan had come together without a bankruptcy filing, the move into Chapter 11 helps clear out some of the other chains that bind the company. It will, among other things, make it easier to shed unprofitable assets and to reduce its bloated retail network. (more…)

Breaking News: the White House Speaks on GM

Obama Administration briefing planned for this evening.

by on May.31, 2009

TheDetroitBureau.com will have the latest, inside update on the seemingly imminent GM bankruptcy, with a posting scheduled for 10 PM EDT tonight.

TheDetroitBureau.com will have the latest, inside update on the seemingly imminent GM bankruptcy, with a posting scheduled for 10 PM EDT tonight.

With the clock ticking down the hours until an expected General Motors bankruptcy, the White House will provide a preview of what’s to come, on Monday, during a Sunday evening background briefing. 

TheDetroitBureau.com will be there and have the inside story at 10 PM EDT, tonight.  Make sure to check back in a few hours for that breaking news.