GMAC, the automobile financing company, said yesterday it would immediately resume financing to a wider range of car buyers, a day after the U.S. Treasury Department injected billions of dollars into the lender.

GMAC said it would modify its credit criteria to include financing for customers with a credit score of 621 or above, a significant expansion of credit compared with the 700 minimum score put in place two months ago. GMAC had significantly cut back on the number of loans it offered as it struggled to stay afloat.

And General Motors said yesterday it would begin to offer zero-per cent financing on some models as it tries to jump-start sales.

"That brings a lot more customers into play for us," said Mark LaNeve, GM's vice-president for North American sales and marketing.

"It's a strong signal that GMAC is back in the game, and that GM dealers are back in the game of financing vehicles."

On Monday, the Treasury Department injected $5 billion (U.S.) into GMAC as part of a deal that will let the lender convert itself into a bank holding company to reduce borrowing costs and thus borrow at low rates from the Federal Reserve.

"This is exactly what some of the government money was intended to do – stimulate credit, stimulate business," LaNeve said.

The deal came as the Treasury was preparing to provide General Motors and Chrysler with $4 billion each in the first part of a bailout plan for the car companies.

Under the financing deal, the Treasury will buy $5 billion worth of preferred equity shares in GMAC, which used to be the financing subsidiary of General Motors and is now owned jointly by GM and Cerberus Capital Management, the private equity firm that owns Chrysler.

A Treasury official said on Monday the deal had closed and that GMAC already had the money. In addition, the Treasury said it would lend General Motors $1 billion so it could purchase additional equity offered by GMAC.

"We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S.," GMAC president William Muir said yesterday.

GMAC said, however, that it would not finance higher risk transactions characterized by a credit bureau score of 620 or below.

The Treasury deal, using money from the $700 billion Troubled Asset Relief Fund set up for financial institutions, came after intense efforts to prevent a collapse of GMAC, a crucial source of automobile sales financing. It has been reeling from both the paralysis in credit markets and huge losses from its mortgage lending subsidiary, Residential Capital.

Billionaire investor Kirk Kerkorian has sold off his remaining shares of Ford Motor Co., a spokesperson for his investment firm, Tracinda Corp, said yesterday.

Tracinda, which ranked as Ford's largest outside investor earlier this year, said in a regulatory filing in October that it had started working with bankers to sell the 133.5 million shares it held at the time.

It was not clear when Tracinda had completed selling the stock.

The pullout from Ford completed a costly retreat for Kerkorian, who has a mixed investment track record at the Big Three automakers in Detroit.

Kerkorian surprised analysts and investors in April when he began buying Ford shares.

He spent more than $1 billion (U.S.) to take a stake in Ford at an average per-share price of $7.10.

Since then, Ford's shares have traded between a low of $1.02 in November to a high of $3.54 earlier this month.

Ford announces new
self-parking technology

NEW YORK – Sit back, relax and let your car parallel park itself – without a single scratch or ding to your bumper.

That's what Ford Motor Co. said Tuesday about its new self-parking technology, which it announced will debut as an option on the 2010 Lincoln MKS sedan and the new seven-passenger Lincoln MKT luxury crossover vehicle.

The technology uses ultrasonic sensors on the front and rear of the vehicle, combined with electric power steering to angle and guide it into a snug parking space – all with the push of a button.

Ford isn't the first to introduce cars that practically park themselves. Toyota Motor Corp.'s Lexus luxury line has a video camera-based parking system that can calculate whether the vehicle has enough clearance for a particular spot.

But Ford's technology is easier to use and works in downhill parking situations, unlike competing systems, according to Ford's president of the Americas, Mark Fields.

"This one-touch function will be much safer to use and less intimidating," Fields said. "It's all part of our strategy to introduce smart technology to a vehicle that will make our lives easier.''

The driver will still need to shift the transmission and operate the gas and brake pedals, as a visual or audible driver interface advises about the proximity of other cars, objects and people. Still, the driver never has to touch the steering wheel.

The sensor system also monitors blind spots, and can notify the driver with a warning indicator light in the side view mirror if something is detected or if traffic is approaching. Meanwhile, the electric power steering can improve fuel economy and reduce carbon emissions because it is powered by the vehicle's battery rather than hydraulic pump systems, Ford said.

The company plans to fit nearly 90 per cent of its Ford, Lincoln and Mercury vehicles with electric power steering by 2012.

The parking assistance technology will be featured at the North American International Auto Show in Detroit in January, and will be available in its new models in mid-2009.

Among Detroit's auto makers, Ford is considered the best positioned to weather the industry slump and has said it does not need federal loans to survive, but its sales have withered and its stock has plunged.

Fields said pricing on the new models wasn't available, but added he believes it's an affordable way to eliminate unease about parking.

"I don't know about you, but when I was taking my driving test, parallel parking was the most stressful part," he said.

Ken Lewenza, the chief of the Canadian Auto Workers, said yesterday the union felt no pressure to agree to wage concessions for its 27,800 workers at troubled automakers General Motors Corp., Chrysler LLC and Ford Motor Co.

"I don't imagine there will be anything happening until after the holiday season," said Mr. Lewenza, referring to when union officials meet with the Canadian arms of GM and Chrysler to begin hammering out restructuring plans required by Ottawa and Ontario in exchange for emergency loans.

Mr. Lewenza said the companies won't likely be in touch until Jan. 5, the date work usually resumes in the new year.

That leaves the automakers and union just six weeks to negotiate "acceptable" restructuring plans that are due on Feb. 20 and that "include specific actions sufficient to ensure long-term viability," according to the loan terms, "including agreement with all stakeholders of needed reductions in structural costs."

Six weeks to table plans designed to reinvent the companies, or the $4-billion loans could be called in.

But while there is no apparent pressure on union wage concessions, there will be pressure, when the time comes, on the union to accept massive clawbacks on at least non-wage benefits that have become an achilles heel for Canadian autoworkers, said Dennis DesRosiers, president of independent industry researcher DesRosiers Automotive Consultants Inc.

"You're going to have to see a very proactive approach in January," he said yesterday. "At one level, they have no choice. They'll have to give up a substantial amount of non-wage benefits."

Chiefly, "a very long list" of so-called penny funds that the companies pay a certain amount per hour per employee into to fund a litany of perks -- from workers' legal bills when buying a home to scholarship funds and charitable causes.

"All in, it amounts to millions and millions of dollars a year," said Mr. DesRosiers. "There's no negotiation ... gone."

The 10 or so Special Paid Absence -- or SPA -- days workers get on top of normal sick leave and paid vacation days will almost assuredly be cut, the analyst said.

Many of the targeted extras don't extend to United Auto Workers in the United States. Instead, they've been built up over years of bargain negotiations to offset health-care savings GM, Ford and Chrysler receive because of Canada's publicly funded systems.

Begun last year, the U. S. union started making arrangements to handle medical costs for workers and retirees with their Voluntary Employment Benefit Associations (VEBAs), Mr. DesRosiers said.

The result works out to be around a $15-per-hour cost advantage for U. S. assembly workers, he said, making Canada the "highest-cost location anywhere in the GM, Ford and Chrysler worlds for manufacturing vehicles."

"That's not a good position to be in."

Before the VEBAs were commissioned in Detroit, average compensation plus benefits -- the total cost -- for factory labour was about US$75 an hour, whereas in Canada it is US$67 at Big Three operations, the analyst said. With the implementation of the VEBAs, labour costs are heading toward US$55.

Canadian compensation fares worse against foreign-based suppliers such as Honda and Toyota, where costs stand at about US$45.

"This is why Canada is in so much trouble from a labour perspective," said Mr. DesRosiers.

"At the end of the day, the labour cost differential is very real and if they don't address it, they'll continue to lose market share."

Restructuring the North American auto industry is a complicated challenge. There are three different assembly companies involved (General Motors, Chrysler and Ford) with plants on both sides of the border, hundreds of suppliers of auto parts, tens of thousands of dealers and hundreds of thousands of employees.

That's why President-elect Barack Obama is considering the appointment of a "car czar" with powers not unlike those of a bankruptcy overseer to spread the pain of restructuring and make the sector viable again, with perhaps just two assembly companies instead of three emerging from the process.

Among those rumoured for the position is Paul Volcker, the redoubtable former chair of the U.S. Federal Reserve Board. He's someone who would command respect from all sides.

It's a good idea, one that should be picked up by the Canadian government. If Ottawa were to appoint someone of similar stature – say, David Dodge, former governor of the Bank of Canada – with similar powers, that person could work with the U.S. car czar to ensure that Canadian interests are given full consideration.

There is a real danger that restructuring – essentially a euphemism for closing plants and consolidating assembly in fewer locations – will be done at Canada's expense. Take, for example, Chrysler's minivans. Until two months ago, they were assembled at two different locations, St. Louis, Mo., and Windsor. With sales falling, Chrysler decided to idle the St. Louis plant and do all the assembly in Windsor. Under prodding from the U.S. car czar, that decision could be reversed.

A Canadian car czar could enter into tough negotiations with his or her U.S. counterpart to ensure that not all the trade-offs favour the Americans.

But Ottawa does not appear inclined toward such an appointment. Indeed, the governing Conservatives seem to be headed in the opposite direction. Last week, they severed connections with Jim Arnett, the corporate executive (former Molson CEO, current chair of Hydro One) whom they appointed just a few weeks ago to help them do "due diligence" on any auto bailout. "I'm not sure we need a new special adviser just yet," an unnamed "high-ranking" government official told the Star.

When asked directly this week whether consideration was being given to the appointment of a car czar, a spokesperson for federal Industry Minister Tony Clement replied that "there will be stringent oversight" of the auto bailout and added:

"As for a czar or any option to head up that oversight function on a long-term basis, we are looking at all options to determine what is best for the Canadian auto industry, as I understand Mr. Obama is in the United States. Given that, it is premature to say what will be best for either Canada or the U.S. in that respect."

This ambiguous response could be interpreted in one of two ways: either Ottawa is waiting for Obama to move first, or the appointment of a czar is not on Ottawa's agenda.

If the former, why not get ahead of the Americans by appointing our own czar before Obama does?

If the latter, will the auto bailout and restructuring be run out of the Prime Minister's Office? Now that is a frightening thought.

Bush's tough auto talk
puts CAW in crosshairs

GREG KEENAN
Tuesday, December 23, 2008

With just a few words, U.S. President George Bush has done what the Detroit Three were unable to achieve with decades of negotiating: eliminate the iron grip the mighty United Auto Workers union has held for decades on setting labour rates in the auto industry.

Chrysler LLC, Ford Motor Co. and General Motors Corp. have been effectively ordered to make their labour rates competitive with Japanese auto makers in the United States.

In the process, Mr. Bush has cast the future of those companies' operations in Canada into the hands of the Canadian Auto Workers union, which divorced from the UAW in 1986, but now will have to find ways to match what the UAW does or risk watching about 30,000 jobs in this country vanish.

Prime Minister Stephen Harper echoed Mr. Bush's thoughts in announcing a $4-billion rescue package for Chrysler Canada Inc. and General Motors of Canada Ltd. on Saturday when he said all stakeholders will have to make sacrifices.

The CAW "would have to sign on to the same deal" as the UAW, said Sean McAlinden, an expert on automotive labour issues and chief economist of the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.

The problem for the unions, Mr. McAlinden noted yesterday, will come during the GM restructuring talks, when the largest Detroit company asks holders of its debt to trade that debt for equity.

"The bondholders are going to say: 'Why should we swap debt for equity, unless we see a really rich, big union concession in Canada and the United States?' " he said.
But the key question is which labour rate will set the benchmark: Will it be the approximately $49 (U.S.) hourly costs at the Georgetown, Ky., operations of Toyota Motor Corp., or will it be the new Honda Motor Co. Ltd. plant in Indiana, where wages are about $21?

The $49 Toyota figure creates a competitive gap of about $18 an hour at unionized Canadian plants, using the CAW figure of $67 (Canadian) an hour for labour costs in this country based on the two currencies trading at par and excluding payments to retired workers.

CAW economist Jim Stanford argues that labour costs here equate to $53.60 when the dollar is trading at 80 cents (U.S.). Given the volatility of currency markets, however, and wild fluctuations in the commodity prices that propel the Canadian dollar, that advantage can be wiped out virtually overnight.

The Detroit Three will find it impossible to invest in their Canadian operations if the UAW agrees to cut labour costs and the CAW does not, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

Talks with GM Canada will likely begin in early January, Chris Buckley, president of CAW local 222 in Oshawa, Ont., said yesterday.

He said he's confident the CAW can reduce costs without touching base wage rates of $35 (Canadian) an hour.

Sticking deeply in the craw of Canadian managers are the so-called SPA days, or special paid absense: two weeks off the job that have been criticized in the vocal public debate about whether to offer financial assistance to Detroit.

Even if the CAW agrees to cut costs to match new UAW labour rates, some assembly plants operated by the companies in Canada are in danger as the three auto makers slash production over the next few years to make themselves more competitive.

Detroit Three production will drop by about two million vehicles between 2008 and 2010, Michael Robinet, vice-president of global vehicle forecasts for consulting firm CSM Worldwide Inc., said in a presentation in Detroit earlier this month.
That's the equivalent of about eight assembly plants. Some of those have already been announced, such as the GM truck plant in Oshawa as well as Chrysler and Ford factories in the U.S. Midwest.

The obvious decisions about plant shutdowns have already been made.
"The facilities that are going to have to close from here on out, it's going to hurt," Mr. Robinet said yesterday.

Ottawa and Ontario offered the loans in part to ensure Canada maintains its 20-per-cent share of North American production, but as that production shrinks, the Canadian plants become vulnerable.
One of the wild cards is whether Chrysler can survive even with the $4-billion (U.S.) in loans Washington earmarked for it on Friday and the $1-billion (Canadian) Ottawa outlined the next day.

There is a widespread belief in the industry that Chrysler will be forced into bankruptcy and its assets sold off. Its minivan plant in Windsor, Ont., is viewed as a valuable asset, but there is uncertainty about whether a buyer would be interested in its Brampton, Ont., large-car facility.

FORD (F)
Close: $2.59 (U.S.), down 36¢
GENERAL MOTORS (GM)
Close: $3.52, down 97¢

© The Globe and Mail

Ford Will Likely
Benefit From Bailout

GM, Chrysler Will Seek Concessions From
Suppliers, Unions, Dealers and Debt Holders

DETROIT -- As the lone Big Three auto maker passing on a federal bailout, Ford Motor Co. won't have to undergo an intrusive government review of its books and its business plans to become a viable company in order to qualify for --and keep -- the low-interest loans authorized by the Bush Administration Friday.

At the same time, the Dearborn, Mich. car company is likely to benefit from many of the concessions that General Motors Corp. and Chrysler LLC exact from the suppliers, unions, dealers and debt holders shared by all three companies.

"The clear winner in this game is Ford," Kimberly Rodriguez, a principal at Grant Thornton consulting firm and an adviser to Ford senior management, said in an interview Friday.

The Bush administration said it would provide a total of $17.4 billion in loans for GM and Chrysler. As part of the bailout, GM and Chrysler will have to open their books to the government and meet restructuring targets such as reducing their debt and hammering out deals with the United Auto Workers to cut labor costs.

Ford is still seeking a $9 billion line of credit from the government, though it adds it may not need to tap it. In addition, Ford wants $5 billion from the Energy Department program.

Most experts agree that Ford is in better shape than GM and Chrysler, in large part because it mortgaged almost all of its assets in 2006 to raise $24.5 billion.

"As we told Congress, Ford is in a different position. We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford Chief Executive Alan Mulally said in a statement Friday.

Still the company needed the Bush Administration to rescue GM and Chrysler because of fears that a failure of one or both of those companies could imperil their shared base of auto-part suppliers. "The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy," Mr. Mulally said.

In the third quarter, Ford burned through $7.7 billion in cash, which left it with $18.9 billion. At the current rate Ford is using up cash, however, the company would have enough money to last only until April. Ford also has $10.7 billion in available credit lines, which could give it another four months of breathing room. But the auto maker has said that the company does not expect to continue to burn cash at the same rate in the fourth quarter.

To conserve cash, Ford is laying off salaried employees and cutting between $500 million and $1 billion in capital expenditures in both 2009 and 2010. Company officials have said the cutbacks would only slightly delay -- and not irreparably harm -- the auto maker's ability to bring new products to showrooms.

As part of their plan submitted to Congress earlier this month, Ford pledged to accelerate their efforts to bring new gas-electric hybrids and plug-in electric vehicles to market.

Still the overall decline in sales for cars and trucks continues to weigh Ford down greatly. The company this week confirmed it would extend its two-week holiday shutdown by an extra week at 10 plants in order to meet a goal of lower production.

The federal and Ontario governments increased the pressure on thousands of auto workers at General Motors, Chrysler, Ford and scores of suppliers yesterday to accept concessions in efforts to keep the reeling automakers alive.

In announcing $4 billion in loans to GM and Chrysler, Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty emphasized that in exchange for the money, all stakeholders – including unionized workers – would need to cut costs soon.

Pressure had been building for weeks as the automakers pleaded for public aid. On Friday, the Bush administration announced a $17.4 billion (U.S.) rescue package in exchange for major concessions from auto industry employees there.

Ottawa and the provincial government underlined the need for cuts in labour costs as a condition of the aid packages. They also noted that even with the reductions in those costs, there would be unidentified job losses.

In Canada, that would mean a reopening of contracts and concessions from the tens of thousands of unionized auto workers at GM, Chrysler and Ford.

Ford didn't seek any immediate aid but it has sought a $2 billion line of credit, if necessary.

Production technicians at the three automakers currently earn $33.90 an hour, including cost of living allowance.

Harper and McGuinty also said the automakers would need reductions in costs from their suppliers. That could affect the wages and benefits of more than 20,000 parts workers who are primarily represented by the Canadian Auto Workers and the United Steelworkers unions.

Many of those workers have already accepted concessions in recent years as the automakers tried to stay competitive against surging foreign-based companies.

CAW president Ken Lewenza said yesterday there would be "pain" but it was difficult to comment on the extent of concessions.

He noted the United Auto Workers union in the U.S. is hoping president-elect Barack Obama will soften conditions for concessions when he assumes power next month and that could affect the situation here.

"The automakers haven't specifically indicated what they want from us," he said. "But we will be part of any solution to retain our competitive edge in productivity."

Meanwhile, Ontario NDP Leader Howard Hampton, who attended the Harper-McGuinty press conference, told reporters that workers shouldn't have to bear the brunt of the restructuring.

PM, McGuinty pledge
$4B in auto aid

Dec 20, 2008 11:05 AM

Robert Benzie
Queen's Park Bureau Chief
Tony Van Alphen
Business Reporter

Prime Minister Stephen Harper and Premier Dalton McGuinty have announced a $4 billion (Cdn.) bailout for General Motors Canada and Chrysler Canada.

Following the $17.4 billion (US) rescue package announced yesterday by President George W. Bush, the two leaders this morning announced the long-awaited deal.

"This is a regrettable but necessary step to protect the Canadian economy," the Prime Minister said.

"Today's announcement is not a blank cheque."

McGuinty, who has been fighting for such an aid plan for weeks, praised the agreement.

"Here in Ontario, we've got thousands of people and their families who rely on the auto industry to be on firm ground so they can put food on the table and keep a roof over their heads," the premier said.

The accord, which represents 20 per cent of the U.S. scheme, will loan GM $3 billion and Chrysler $1 billion. Ford, which has been seeking a standby line of credit if necessary, is not part of today's announcement.

It's not immediately known how many jobs are guaranteed under this deal.

As stays of execution go, the Detroit Three bailout unveiled yesterday by U.S. President George W. Bush was done on the cheap.

Time was, the $17.4 billion (U.S.) with which Washington rescued General Motors Corp. and Chrysler LLC would have been considered a lot of money.

But that sum works out to a mere 1.1 per cent of the combined $700 billion effort by the U.S. to bail out its crippled banking system and the $850 billion stimulus package that U.S. President-elect Barack Obama is preparing to roll out soon after his inauguration Jan. 20, rumoured in yesterday's Washington Post.

Previous estimates have put Obama's planned stimulus only as high as $700 billion. But U.S. economic conditions are deteriorating rapidly. So this might not be the time, in a year when the American workforce already has shed 2 million jobs, to let GM and Chrysler go to the wall, jeopardizing Ford Motor Co. as well since it shares key suppliers with its rivals. The result would be to risk inflating the dole by another million or so auto assembly workers, parts-plants employees and dealership personnel.

The American taxpayer is spending a comparatively small sum to spare the U.S. the fate of Canada and Britain in being the only G8 nations without a substantial domestically owned auto sector. But Bush has been crafty enough to provide only just enough emergency loans to get GM and Chrysler through the year – a mere $13.4 billion upfront for GM and Chrysler combined, with another $4 billion to come in February.

Bush won't be president then, of course, and The Economist was quick to observe that the automakers' plight is now "Barack Obama's problem." The Detroit automakers will be back for more – tens of billions of dollars more – to finance their urgently required restructuring. With Obama as president, Detroit is likely to get its money. But the individuals asking for it might not be around to collect it.

Every year for the past two decades, Detroit has vowed to reconnect with American motorists and offer them the vehicles they want to buy. And every year it has reneged. America's domestic auto industry has few rivals for insularity. Can a century-old industry long protected from foreign competition learn new tricks? Is it willing even to try? Evidence suggests no.

Last year, Candidate Obama, in a Motown speech, blasted the Detroit Three for "failing to make changes they should have made 30 years ago," and offered that federal assistance should he become president would be tied to meaningful progress on fuel efficiency and a focus on the small cars the U.S. market now demands. More recently, President-elect Obama has vowed to save Detroit, but neither with a "blank cheque" nor the same Detroit management that so stubbornly resists change.

To save Detroit – the city and its mainstay industry – will require a radical transformation that could see its three players merged into one. Or just the opposite, the breaking up of GM, Ford and Chrysler into nimbler competitors.

What appears certain is that the change will have to be imposed from outside Detroit, where countless layers of middle management know things that are no longer true. With a "car czar" waiting in the wings – often rumoured to be Paul Volcker, the most successful chairman in the history of the U.S. Federal Reserve Board – Detroit either will propose its own radical restructuring next spring or have one forced on it by a president elected by lunch-bucket votes in the auto-producing heartland of the U.S. Midwest.

David Olive writes on politics and economics.

PM, McGuinty to announce Canadian bailout

Dec 19, 2008

Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty will announce an aid package for the Canadian auto industry tomorrow after the U.S. government announced a $17.4-billion (U.S.) bailout package for its own auto industry today.

No details of the Canadian aid package have been issued but it is expected to be worth several billion dollars, since both the federal and Ontario governments have said they would provide a package proportional to the size of the industry in Canada.

That would be about 20 per cent of production capacity in North America.

Kory Teneycke, communications director for Prime Minister Stephen Harper, said that McGuinty and Harper "will address the Canadian response tomorrow."

Asked if the Canadian bailout will include the kinds of concessions and controls the United States is insisting on, he said: "You'll see similar things in a Canadian package," that will give governments a larger say in how the companies restructure.

"We're a partner, but a minority partner in this, and we'll be a partner to the extent to which we are a part of this industry. Canada will work to maintain its market share in the North American auto industry."

Harper will make the announcement alongside McGuinty in Toronto.

McGuinty's aides at Queen's Park were scrambling today to organize the event. There were concerns about whether the prime minister could make it from Winnipeg to Toronto in the fierce winter storm.

U.S. President George W. Bush said earlier today that his government will provide the beleaguered automakers with emergency loans while they implement plans to restructure. The aim is to prevent an industry collapse that could send the economy into a deeper and longer recession.

The Detroit Three - General Motors Corp, Ford Motor Co and Chrysler - have been hit hard by the sharp slowdown in U.S. demand.

GM and Chrysler have asked for bridge loans and credit guarantees to keep them alive while restructuring. Ford has asked for a line of credit to tap into in case their finances worsen more than expected.

The companies have until the end of March to present viable restructuring plans.

"We don't know what GM or Chrysler has put on the table in terms of Canadian operations," said Richard Cooper, executive director of Canadian operations at J.D. Power & Associates.

"For GM to remain viable, they are going to have to make a lot of changes. For Chrysler to remain viable, they are going to have to make a lot of changes and we don't know what those changes are going to look like and how they will impact the Canadian operations."

The sudden announcement of the U.S. government package appeared to send aides to Harper and McGuinty scrambling to put together a joint announcement of the Canadian package. Harper, in Winnipeg today, was scheduled to travel to Calgary to begin Christmas holidays with his family but will instead head to Toronto for the announcement.

Details were still not available about where they would unveil the package.

As late as last night, while taping an interview to air tomorrow, Harper told CTV that no deal had been reached.

"The truth is we haven't settled on a dollar figure nor have we have we settled on a package. We're working with the United States Administration with them on what they are putting together."

Harper said the Canadian and American auto industries are so entwined that "we cannot have a solution unless we have an integrated approach and an integrated action with the United States administration."

But Harper suggested the Canadian package will mirror much of the controls that the U.S. is prescribing.

"I think it's safe to say if you look at what's on the table in the United States right now, there will be some significant say of governments in the future of those companies."

Harper said the Canadian government and the government of Ontario "have concluded we either do our share of the restructuring or we will have no share of that industry in Canada."

"If the United States does all the restructuring themselves, the industry will move to the United States. That's not acceptable to the government of Canada. So we will work with the Americans, make sure that we get our share of a restructured industry.

"Obviously as public money goes into that, there will be more public say about how that money is used, but we should be under no illusions: there is going to be significant restructuring. And the aim at the end of this is to make sure that, while those companies will be smaller, they will be viable and they will make money."

Harper admitted he finds himself "uneasy" as a small-c conservative at all the government intervention in the economy that he finds himself forced to adopt.

"As a conservative, not ideal circumstances, but this is — my training as an economist tells me — that these are the policies we must adopt under these circumstances."

He said his main goal is to help ordinary people and communities in transition. He also said he wants the country to emerge from the recession without a "permanent deficit."

Washington Bureau Chief

Dec 19, 2008

WASHINGTON–President George W. Bush threw the staggering U.S. auto industry a short-term $17.4 billion (U.S.) lifeline today.

With General Motors and Chrysler on the verge of collapse, the U.S. president stepped in after Republicans in the Senate last week blocked congressional approval of a similar bailout plan.

The White House plan gives automakers three months to restructure themselves and make themselves "viable,'' Bush said, but if that cannot be done, these loans would allow them to make the necessary preparations to declare bankruptcy.

If new, acceptable business plans are not completed by March 31, Bush said, the money must be repaid.

The $13.4 billion in short-term financing will be drawn from the $700 billion Wall Street rescue program, White House officials said, with another $4 billion to be made available in February.

"The American people want the auto company to succeed and so do I,'' Bush said.

He said he grappled with a thorny question involving the proper role of government in grim economic times.

"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy,'' Bush said.

Under ordinary circumstances, Bush said, he would allow the collapse, but in the current economic crisis, he cannot allow that, the president said.

"These are not ordinary circumstances,'' he said.

"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.

Bankruptcy at this point would not be an option, Bush said, because consumers would shun the companies.

Ford will receive none of the money and, in submissions to the U.S. Congress, the company said it would seek taxpayers help only if one or both of its competitors declared bankruptcy, creating a ripple effect throughout the industry.

General Motors is expected to receive $9.4 billion of the money immediately available, with Chrysler receiving $4 billion.

Bush also stressed that a responsible business plan will include concessions from management, unionized workers and industries which depend on the automakers.

"The convergence of (economic) factors means there is too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies,'' Bush said.

"My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry.

"It would worsen a weak job market and exacerbate the financial crisis.

"It could send our suffering economy into a deeper and longer recession.''

Chrysler announced an extended shutdown earlier this week, idling their plants beginning today and keeping them dark until the third week of January.

Canadian government reaction is expected later this morning.

DETROIT–Two Ford Motor Co. large vehicles are finalists for the 2009 North American Car and North American Truck of the Year awards.

The Ford Flex, a seven-passenger crossover vehicle will be considered for top car of the year. Ford's F-150 truck is a finalist for best truck of the year.

Winners will be announced on Jan. 11, the first press day of the North American International Auto Show in Detroit.

Both the 2009 Flex and the F-150 made the Insurance Institute for Highway Safety's list of the safest new cars last month.

Other finalists include the Hyundai Genesis luxury sedan and Volkswagen Jetta TDI in the car category. The Mercedes-Benz ML 320 Bluetec and Dodge Ram pickup were the other finalists in the truck category.

Ford's Lincoln MKS, a luxury crossover vehicle, was a candidate in the car category, but did not make the finalist list.

Shares of Ford dropped 30 cents or 9.6 per cent Thursday to $2.84.

The proposed $3.4 billion auto industry bailout from Ontario and Ottawa is just the beginning of help for the troubled Detroit Three, Premier Dalton McGuinty acknowledged yesterday.

"This is a bit of a lifeline at this point in time to sustain the industry," the premier said as the White House in Washington continued to mull the size of an aid package for General Motors, Ford and Chrysler.

The Canadian money – designed to help the automakers stay afloat while they restructure – is contingent on the U.S. providing assistance first.

When asked how big the Canadian bailout could be, McGuinty said: "We don't know right now because we haven't completed our due diligence, and neither has Washington, to get a good sense of what's going to be involved ultimately."

The Canadian Taxpayers Federation continues to oppose a bailout, saying the automakers have been loaned or granted $782 million from taxpayers in the last five years.

"Throwing good money after bad won't fix big auto but it will drive Canada and Ontario further into deficit," warned spokesperson Kevin Gaudet, calling GM, Ford and Chrysler a "bottomless pit."

"Each announcement of government cash support was followed by downsizing, layoffs of Canadian workers, and the demand for even more cash by the Big Three. Be assured, these companies will be back for more before spring."

The $3.4 billion in aid from Canada was based on last week's failed U.S. plan for $14 billion (U.S.) in emergency cash for the automakers – a 20 per cent share when the exchange rate is taken into account. That plan was rejected in the Senate, leaving the White House scrambling for alternatives.

McGuinty said he wants to ensure that the Detroit Three's operations in Ontario come out with a 20 per cent share of their parent companies' North American production following the restructuring.

Meanwhile, NDP Leader Howard Hampton urged McGuinty to do an immediate $2 billion made-in-Ontario stimulus package without waiting for Ottawa or the U.S. to rescue the Detroit Three.

"Ontario simply can't afford to wait for Washington to act," Hampton told a news conference yesterday at Queen's Park.

He implored McGuinty to expedite auto aid, accelerate spending on infrastructure, expand a "buy Ontario" policy for transit and other expenditures, implement an industrial hydro rate to provide cheaper power to manufacturers and mills, and raise the minimum wage to $10.25 right away to inject cash into the economy.

In a sign not every segment of the economy is suffering, the premier attended an unpublicized $5,000-a-plate Ontario Liberal fundraiser at a Forest Hill mansion with about 20 guests last night. Liberal sources told the Star the event was a chance to give lobbyists private face time with the premier. The dinner was left off McGuinty's official itinerary because it was deemed "private."

Ford builds image as
strongest of Big 3

But a GM bankruptcy could sink Blue Oval; suppliers grow jittery.

Bryce G. Hoffman / The Detroit News

DEARBORN -- Ford Motor Co. is trying to pull itself up by its own bootstraps, and it hopes America notices.

As crosstown rivals General Motors Corp. and Chrysler LLC ask the White House for $14 billion in emergency loans just to tide them over until March, the Dearborn automaker maintains it has enough cash to weather the current economic crisis. It is still asking the federal government for a $9 billion line of credit, but it is not asking the Bush administration for immediate cash assistance.

Ford executives think this fact has not been lost on the American people, and it is hoping to use its comparative financial strength to position itself as the most viable of Detroit's Big Three. That might not be saying much -- particularly given that Ford does not expect to post a profit until at least 2011 -- but experts agree that the situation represents an opportunity for Ford to begin rebuilding its brand image.

But this strategy is not without its risks. The biggest danger facing Ford today is a GM bankruptcy, which could pull Ford into bankruptcy court, too. It also knows that suppliers are becoming increasingly jittery about the state of the entire domestic automobile industry and could begin demanding quicker payments than Ford could make. The last thing Ford wants is to be too heavy-handed with its message and risk exacerbating these problems.

"We are trying to tell our story, but we also think it's very important that we don't appear to be turning our back on our industry," Executive Chairman Bill Ford Jr. said Tuesday. "The good news for us is we're starting to get some separation in the customers' minds and people see that we're trying to make it on our own. We're hearing comments in the showroom to that effect."

December is "starting off relatively well," Bill Ford said, noting that his company has already gained a point of market share over the past couple of months -- a significant accomplishment for a business that has seen its share steadily erode for more than a decade.
Analyst Erich Merkle of Crowe Horwath says Ford stands to gain even more market share.

Like most analysts, he thinks Ford has enough cash to make it through until next year when the full benefits of its landmark labor agreement with the United Auto Workers kicks in. As GM and Chrysler struggle just to stay out of bankruptcy court, consumers are less inclined to consider their cars and trucks. And Merkle says Ford has a slew of new products coming out over the next year that should demonstrate just how much progress it has made in its turnaround campaign.

"They're very well positioned for when we come out of this and people start buying cars again," he said, though he added the company needs to be careful not to be too assertive. "Ford can separate itself, but to do that now with everything the industry is going through -- particularly GM and Chrysler -- could hurt everyone."

Ford Americas President Mark Fields says it is all about striking the right balance. "Our job going forward is to be confident, but not arrogant," he told The Detroit News Tuesday.

The recent Congressional hearings have focused the national spotlight on the domestic automobile industry like never before. For the first time in a long time, the American people want to hear what Detroit's Big Three have to say. Ford sees that as an opportunity to speak to millions of potential customers.

"They clearly understand that Ford is in a different place," said Ford CEO Alan Mulally. "The most important thing is that we help everybody understand where Ford is and where it's going. We're looking at every medium we have to tell that story."

Over the past couple of weeks, the Dearborn automaker has been making its executives available -- not only to major media outlets, but also to newspapers and television stations around the country. Bill Ford himself was the scheduled guest on Larry King Live last night. The company is also being more aggressive in trying to get its message out through online social media Web sites like Facebook.

But analyst Jim Hall of 2953 Analytics LLP says the company could do more. He says Ford needs to make consumers feel like they are part of its solution.

"What you do is say, 'We're working through this with " he said. "You make the your help. Vote for Ford with your dollars,' customer one of the winners. And you can do that without taking the mallet to anyone else."

Even with the right marketing message, Ford still needs to contend with the economy. Its market share may be up, but like every other automaker its sales are down sharply, and there is no sign of a recovery anytime soon.

"At a certain point, if customers are just completely stressed out and tapped out, all the messaging in the world isn't going to get them in," Bill Ford said.

Moreover, while Ford may not need government help today, its finances are still a disaster. The company has lost $24 billion since 2005, its stock is trading for just over $3 a share and its bonds are worth pennies on the dollar.

But Ford continues to aggressively restructure its business to match the actual demand for its cars and trucks, to consolidate its global operations and shed what it calls "non-core operations" like Jaguar and Land Rover to concentrate its resources on saving the Blue Oval itself.

It is finally getting credit for the strides it has made in quality, safety and reliability. And Ford is about to begin one of the most aggressive product launch cycles in recent automotive history.

Jim Farley, Ford's global sales and marketing chief, says that's the story Ford needs to share with the American people.

"They're all ready to listen and they're all paying attention," he said. "It may not be the best starting point, but Americans love a good underdog."

Detroit's Problem:
It's Health Care,
not the Union

by Christopher R. Martin

The Senate's failure to pass the bailout of the U.S. auto industry strikes a big blow at one of labor's last stands in manufacturing in the U.S.

What's at stake? According to the bill: 355,000 workers in the U.S. directly employed by the automobile industry; 4,500,000 employed in related industries (the auto industry has the highest job creation multiplier effect of any industry); 1,000,000 retirees (with pensions and health care benefits).

Vice President Dick Cheney, mindful of his administration's economic legacy, reportedly pleaded to fellow Republicans in the Senate, "If we don't do this, we will be known as the party of Herbert Hoover forever."

Welcome to forever, Dick.

It's too late for Cheney, as his party and their think tank associates celebrated the opportunity of Detroit's woes to pin blame on their perennial target, labor unions. In September, the conservative Heritage Foundation, with a barely concealed smirk, was already spreading disinformation:

"There are plenty of auto industry jobs being created every day right here in America - and with no government help. Toyota recently opened a new plant in Texas, and is building another factory in Mississippi. Toyota already produces more than 1.5 million cars in America, and that number is set to soar as more factories like those in Texas and Mississippi come on line. Unlike the Detroit automakers, Toyota has a union-free workforce, which gives the company a huge competitive advantage. Toyota still pays good wages but its workforce is younger, not burdened by seniority rules, and the company has smarter and lower benefit costs."

Two contentions - that foreign automakers in the U.S. have received no government help, and that union workers are grossly overpaid - are either misleading or completely untrue.

First, let's start with government assistance. It's easy to forget that there are government subsidies other than the ones asked for in Congressional hearings. For foreign automakers such as Toyota, Nissan, Honda, Hyundai, Mercedes, and BMW, the better way of wringing out public subsidies is to get Southern states to battle for your plants by offering a bevy of tax abatements, infrastructure projects, and even employee recruitment, screening and training. According to the Center for Automotive Research at the University of Michigan, between 1998 and 2003, the Southern states paid out an average of $87,700 in "government help" per nonunion auto job created - an average of $143 million per facility - compared to $50,180 per job created in the haplessly unionized North.

The second contention - that the unionized autoworkers of the north are grossly overpaid - is misleading. In fact, Sen. Bob Corker (R-Tennessee), one of the opponents of the bailout, encouraged the deception. The Chattanooga Times Free Press reported the Senator "said the automakers pay their rank-and-file employees an average of $70 to $74 an hour, including benefits, while foreign automakers pay an average of $42 to $44 an hour." The quote, repeated nearly everywhere in the news media over the past few weeks, obscures the situation.

Only a very few news organizations - Jonathan Cohn at the New Republic and David Leonhardt at the New York Times, among the few - bothered to break it down. As it turns out, the base wages are fairly close - about $29 an hour for Detroit's three automakers, and about $26 for the foreign automakers in the U.S. What nearly every Republican politician and news report fails to mention, though, is that wages in Detroit are already dropping. The UAW gave major concessions to GM, Ford, and Chrysler in 2005 and 2007, setting a new second tier starting wage at $14. This lower wage will continue to decrease the base wage cost going into the future.

Another difference in North vs. South autoworker wages is benefits. Adding in things like healthcare, training, vacation, and overtime, Big Three autoworkers make about $55 compared to about $46 for nonunion workers. True enough, unionized workers do better here. But a big part of this expense is healthcare.

Healthcare also is part of the largest difference between North and South: what the industry calls "legacy costs" - the pensions and health care of retirees. The foreign auto companies currently don't have these costs, since they've been operating in the U.S. for only about 25 years or less, and have few retirees. But, the Big Three have more than a million retirees and their families to cover. Corker and others unfairly lump this into average wage costs and arrive at something over $70 an hour.

So, when the Senate Republicans are talking about equalizing wages, what they are really talking about is taking pensions and healthcare away from retirees. That doesn't sound as nice as "equalizing" the wage of current workers, so they never say it that way.

The UAW has made a number of concessions over the years, but that's where they said no. They wouldn't sell out the dignity and well being of their retirees.

Back in 2006, GM vice president Bob Lutz famously said, "Sometimes it feels like we're a health-care company that tries to sell enough cars to pay the bills."

Exactly. Hello Washington? This is a primarily a health care problem, not an auto problem.

Corker and his colleagues might begin with a better comparison for the Big Three's unionized autoworkers -- their union colleagues in Canada. Their work and wages are similar, except that Canada has a public healthcare system that evens the playing field for all companies. According to the Canadian Labour Congress in 2006, health benefits for unionized autoworkers in Canada cost $120 per car. In the same year, health benefits for Big Three autoworkers cost $1,500, and they're still rising.

If Corker and his colleagues are truly serious about changing the structure of the auto industry, they should start by working to give people health care, not take it away. And if the news media wants to get to the bottom of Detroit's problems, health care is what they should be writing about.

Christopher R. Martin is an associate professor in journalism at the University of Northern Iowa in Cedar Falls, Iowa. His research has been published in Journalism Studies, Journal of Communication Inquiry, Communication Research, Labor Research Journal, Popular Music and Society, Journal of Communication, Z magazine and the Web journal Images. With Richard Campbell and Bettina Fabos, he is co-author of Media and Culture: An Introduction to Mass Communication (Bedford/St. Martin's, 2008), now in its 6th edition update, and author of an award-winning book on how labor unions are covered in the news media, Framed! Labor and the Corporate Media (Cornell University Press, 2004). Martin previously taught at Miami University (Ohio), and holds a Ph.D. from the University of Michigan.

Ontario would lose 517,000 jobs within five years if the Big Three automakers went out of business, according to a new provincial report obtained by the Star.

The review, prepared for the Ministry of Economic Development and to be released today, warns the collapse of General Motors, Ford and Chrysler would send lasting shock waves through the economy.

If auto output by U.S.-based manufacturers in Canada were cut in half, at least 157,000 jobs would be lost right away, 141,000 of them in Ontario. By 2014, job losses would rise to 296,000 nationally, including 269,000 here.

If production were to cease completely, 323,000 jobs would be lost immediately in Canada, including 281,800 in this province, rising to 582,000 nationally and 517,000 in Ontario by 2014.

The Ontario Manufacturing Council, an arm's-length provincial government panel, commissioned the 11-page report, which was prepared by the Centre for Spatial Economics. The report paints a gloomy picture if governments at Queen's Park, in Ottawa, and in Washington do not bail out the automakers.

"The depreciation of the dollar, lower interest rates, and lower production costs eventually help the economy to partially recover (over the following five years, 2015 to 2019) but the loss of the Detroit Three leaves a permanent dent in Canada's economy in terms of jobs and output," the report says.

"For any Canadians who feel that the auto industry is expendable to our economy, this report is a wake-up call," Economic Development Minister Michael Bryant said in an interview yesterday.

"This report suggests that even under a scenario where half the auto sector is lost, our economy (in Ontario) basically craters and brings the whole rest of the (Canadian) economy with it," Bryant said.

The damage would extend well beyond the auto and related parts industries to housing and a broad range of consumer spending, said Jayson Myers, an economist who is president of Canadian Manufacturers and Exporters.

Myers is a co-chair of the manufacturing council with Jim Stanford, economist for the Canadian Auto Workers union.

"We were surprised how big the impact is. ... It shows the importance of ensuring we maintain production here."

The impact on citizens would be huge, Bryant predicted.

"If the auto industry is somehow allowed to part (from) our economy, it's the equivalent of a nuclear winter with lasting effects ... and would require enormous cuts to public services plus massive deficits every year."

North American automobile demand is already down to 11 million vehicles from a previous 19 million.

"Let's hope that doesn't last long," said Myers. "I'm pretty certain we will see demand rebound, but certainly it won't rebound to 19 million units."

Because automakers have been offering plenty of sales incentives and rebates in the past few years, which eat into future sales, "it's not going to be easy" to get demand up given the economic crunch facing consumers, Myers said.

Nor could Japanese-based automakers like Toyota and Honda, which already build cars and trucks in Ontario, be expected to fill the void left by GM, Ford and Chrysler.

"The economic impacts estimated by this analysis are likely to understate the true economic impact for several reasons, despite the possibility that foreign vehicle producers could expand production in Canada," the report states.

First, "a permanent contraction of the motor vehicle industry would negatively impact the U.S. and, indeed, the global economy, reducing the demand for Canadian exports from all industries."

That would depress prices of commodities such as oil and minerals, hurting resource-rich provinces like Alberta and Saskatchewan.

Second, the bankruptcy of any of the Big Three automakers might have serious implications for their pension funds and retirees' incomes.

Third, the study suggests "more than 80 per cent of the parts industry would vanish in the event of the failure of all three Detroit companies," which would temporarily disrupt foreign automakers' production in North America.

A subsequent housing slump would cast a pall over construction jobs as well as hurt the retail, insurance, real estate and financial services sectors, the report said.

Bryant said it underscores the necessity of keeping the Big Three in business.

"We have to mitigate the impact as much as possible."

The study comes as Ottawa and Queen's Park are preparing a $3.4 billion (Cdn.) emergency aid package if Washington comes through with a $14 billion (U.S.) rescue.

The U.S. Senate last week rejected a $14 billion bailout, but President George W. Bush is expected to resurrect it as early as this week.

In Canada, both levels of government are still determining how much money Ottawa and Queen's Park would each contribute.

Both Prime Minister Stephen Harper and Premier Dalton McGuinty have been in constant contact and Ottawa is talking with the White House to track the status of the U.S. bailout, Bryant said.

In the wake of Harper's offer of help for automakers, Alberta Premier Ed Stelmach yesterday urged assistance for his province as well.

Stelmach asked Ottawa to match the $2 billion Alberta is spending on carbon capture and storage technology to fight climate change, saying it would generate tax revenue and create manufacturing jobs across the country.

Canadian governments must intervene to prevent the loss of whole auto assembly plants to the United States, says the president of the Canadian Auto Workers.

Despite $3.4 billion in conditional emergency aid promised to Canada's ailing auto makers Friday by the Ontario and federal governments, Ken Lewenza says excess capacity at Canadian auto plants must be protected or General Motors, Ford and Chrysler could move plants and equipment south of the border.

"If the Canadian government doesn't do anything ... you've got to believe that over time, our products would be moved," Lewenza said yesterday in an interview. "We don't want GM to pick up and say, it's been nice doing business in Oshawa but sorry we've got a better deal in the United States. We want to ensure that when the Americans put their legislation together, it isn't on the backs of Canadian jobs."

Lewenza also said that thousands of jobs could still be lost even with additional aid unless the money is contingent on manufacturers keeping workers in jobs and plants open.

Lewenza's warning comes on the heels of Federal Industry Minister Tony Clement's announcement late Friday of the conditional $3.4 billion for Canadian operations of General Motors, Ford and Chrysler based on the $14 billion (U.S.) the White House is contemplating in rescue money for the Detroit Big Three.

The Bush administration spent yesterday weighing its options, but details were scarce as to how much interim financial aid the U.S. government would provide to stave off a collapse of the troubled industry. On Thursday, Republicans in the U.S. Senate refused to pass a $14 billion (U.S.) rescue bill, throwing the future of the Big Three into doubt. GM and Chrysler have already warned they could run out of cash in a matter of weeks without immediate government aid.

But Ontario's assembly plants are already on the brink. Chrysler's Windsor minivan plant will be shut down for the month of January, while GM's car plant in Oshawa is scheduled for a six-week closure starting at the same time. Lewenza said Ford's Oakville plant is also anticipating shutting down operations for two weeks early in the New Year. The three companies employ more than 30,000 people in Ontario.

  Gettelfinger blasts GOP's tactics

Louis Aguilar / The Detroit News
December 13, 2008

Union Auto Workers President Ron Gettelfinger and Senate Republicans from the South spent Friday blaming each other for killing the congressional bailout that would have provided emergency loans to keep the domestic auto industry going until January.

Hours after the Washington deal fell apart, Gettelfinger was at Detroit's Solidarity House charging that a minority of southern Republicans was trying to "set up" the union by demanding concessions no other party -- the automakers and bondholders, for example -- were being asked to accept.
The breaking point of the negotiations was the UAW's refusal to agree to lower wage and benefit rates as soon as next year, Gettelfinger said.

"The GOP 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," Gettelfinger said. "They were trying to pierce the heart of organized labor while representing foreign brands," that have plants in the southern United States and use non-union workers.

Shortly after the UAW press conference in Detroit, Republican Sen. Bob Corker of Tennessee roared back at the union from Washington. Corker suggested the union bore the burden for the measure's failure.

"I offered them a solution," Corker said of the Thursday talks. "Our caucus was 100 percent behind it. Do we own it, or does the UAW own it?" Corker chided Gettelfinger for not participating in the discussions. "I asked him to come to the table, not assign somebody to come back and forth. It didn't work out."

Corker said he proposed that wages and benefits of UAW members be lowered next year to match rates at American plants run by foreign automakers, and gave the UAW the chance to pick the date when the pay cuts would be made. He could not sell a compromise to other Republicans without that agreement. "We just could not get a date," Corker said of his Thursday discussions with the UAW. "It was an amazing thing to me."

Gettelfinger countered there is no way to tell what Republicans mean by competitive wage and benefit rates. In the 2007 labor agreement, the UAW agreed to slash starting wages and benefits for newly hired autoworkers at the Detroit automakers to as low as $14 an hour. Those cuts don't affect current workers, whose hourly pay and compensation is about $55 an hour. The figure climbs to more than $70 an hour when automakers' costs for health care for retired workers and retirement benefits are factored in.

The hourly pay and compensation at foreign automakers is about $45 an hour, labor analysts say. Gettelfinger said that excluding benefits, UAW workers earn just over $28.12 an hour in wages, on average. That compares with $30.45 an hour, which includes profit-sharing bonuses, for non-union workers at Toyota's Georgetown, Ky., plant.

The UAW's back is up against the wall, said Gary Chaison, labor professor at Clark University in Massachusetts.

"This whole bailout, at least today, has become a debate that is very ideological and geographical, and the UAW is in a very difficult position now," Chaison said. "It's become about the American labor movement, about North versus South, about labor and anti-labor, about free trade versus regulation. Gettelfinger must be frustrated because he's a practical guy, but, with this ideological fight now, it limits his options and how much he can bargain."

Gettelfinger indicated Friday "we were prepared to make further concessions" but didn't provide details.

The debate over UAW wages and benefits is something that's often argued, even in Detroit. UAW members such as Local 22 President George McGregor say they occasionally have to defend themselves to other working-class residents.

"I get it sometimes from the cashier where I buy my groceries over on the east side," of Detroit, McGregor said, who represents workers at GM's Hamtramck Cadillac plant. "I'm wearing my shirt with the UAW logo, and I'm paying cash, when the cashier asks, 'How come you all make so much money? " McGregor said. It's unfair,'

In the student center at Wayne State University on Friday, a group of classmates also were discussing the pros and cons of UAW wages and benefits.

"If you put in the seniority, I don't see why you should lay blame towards them," said Courtney Griffith Jr., 18, of Detroit, whose father is a GM hourly worker.

Tens of thousands of anxious workers in Ontario's auto industry will be off the job during the next few months as plunging sales in the U.S. hammer production here.

Company and union officials confirmed yesterday a new round of production cuts for December and the first few months of next year that will hit every assembly plant in Ontario for some time.

The lengthy downtime at some assembly plants in Oshawa, Oakville and Windsor will also trigger significant layoffs at scores of parts makers who supply them.

"All of our (auto) workplaces in Canada are experiencing reductions and temporary layoffs," said Ken Lewenza, national president of the Canadian Auto Workers. "Every company is being very stringent on overbuilding now."

Industry leader General Motors of Canada Ltd. said it will idle its Oshawa car plant for three more weeks in January and February, in addition to the two weeks announced earlier. The plant, which primarily builds Chevrolet Impalas, is also reducing output from three to two shifts.

The company, whose U.S. sales have crashed more than 40 per cent in recent months, has already scheduled four weeks of downtime at its adjacent Oshawa truck plant in the first few months of next year. That plant will close later in the year.

The growing cuts are increasing anxiety among workers. At My Sister's Place, a popular bar around the corner from the Oshawa complex, much of the talk centred on the pending shutdowns.

"I mean, it's only people's lives that they're playing with, but who cares about that?" said Gregg Barton, 49, taking a swig of beer. "The company is not telling us anything."

It's not only the uncertainty that has left him shaken. Barton, who is eligible for retirement next year, fears GM may declare bankruptcy and his pension will be in jeopardy.

"A lot of people don't realize just how serious this," said Barton, whose comments were greeted with nods from fellow workers.

"This is going to impact everyone," added Mike Moher. "The whole economy is going to be hurt."

Debbie Comartin, a 21-year GM veteran, always thought she would have a "stable job" with the company, but the shutdowns have shaken her confidence.

"I just assumed I'd be here for 30 years, but will I be here for nine more years?" said Comartin, 46.

CAMI, a joint venture between GM and Suzuki Corp. in Ingersoll, disclosed that it will extend downtime from three weeks to six in January and February.

In another huge production cut, Ford Motor Co. of Canada Ltd. will stop building crossover utility vehicles, including the Edge, at its Oakville complex for 10 of 19 weeks between Monday and the end of April.

Ford is also idling its sputtering car assembly plant in St. Thomas next week and the week of Jan. 5. It was down this week, too.

Chrysler Canada Inc. is halting production at its minivan plant in Windsor during January. It will also close some engine operations for two weeks this month and next.

The company is slashing output at its Brampton plant, which builds the Chrysler 300 and two sports cars, for two weeks in January.

Laid-off workers at GM, Ford and Chrysler will get about 65 per cent of their gross pay through a combination of company benefits and federal employment insurance.

Honda Canada said it's slowing output in Alliston by about 9 per cent during the next three months – despite producing the Civic, one of the most popular vehicles in North America. Workers will have the option of taking vacation time or extra training.

Toyota is also curbing January production at its Cambridge operation and a new plant in Woodstock.

Canada's struggling automakers will get roughly $3.4 billion in emergency aid to "keep the doors open" – but only if the Americans put money on the table first, says federal Industry Minister Tony Clement.

The aid is also conditional on restructuring plans by the Canadian arms of General Motors, Ford and Chrysler meeting government approval, Clement told a news conference last night.

"The federal and the Ontario governments are prepared to move quickly if and when the Americans approve a support package," Clement said following weeks of talks between Ottawa and Queen's Park.

"It's absolutely not a blank cheque ... we have to protect the interests of the taxpayer. This is about conditional support based on their long-term plans, based on them working with the parts suppliers, based on the unions being at the table, based on the United States continuing to be part of the solution."

The U.S. government pulled the auto industry from the brink of collapse earlier yesterday with a pledge for interim financial aid, although an amount is still being worked out.

In an escalating crisis, the Bush administration said it would step in to provide billions of dollars in loans and lines of credit for the next few months to reeling GM, Ford and Chrysler in the United States.

The move came after Republicans in the U.S. Senate stunned the industry by refusing to pass an interim $14 billion (U.S.) rescue bill late Thursday.

The Canadian aid package will be proportional to any U.S. assistance, based on the Canadian share of North American auto production, putting the price tag to taxpayers at about $3.4 billion (Canadian) based on the $14 billion American proposal.

The final amount "depends on what the U.S. administration comes up with," Clement said.

In total, the Canadian automakers are seeking up to $6.8 billion in emergency and long-term aid to cope with plunging sales and the need to restructure operations.

Hopes for a bailout didn't stop the automakers from announcing yesterday a slew of production cuts and temporary layoffs later this month and into the new year.

The governments still need to work on details of conditions that the automakers will face, said Clement, who walked away from reporters when asked how soon the companies could expect to receive money. A source close to the federal-provincial negotiations said the auto companies should not expect cheques immediately, because they will have to prove they have met the conditions first and that will take time.

"There will be some back and forth with the auto companies after the announcement's made," the source said.

The Canadian announcement detailing the amount of aid and how it will be shared among the automakers will come "a short time" after a U.S. package is finalized, the source added.

Both GM and Chrysler have said they need emergency cash before year's end to stay afloat. Ford does not have an immediate cash flow crunch and is seeking a government-backed line of credit for future needs.

Clement made the announcement in Toronto shortly after Premier Dalton McGuinty and Prime Minister Stephen Harper met secretly in Ottawa for an hour late yesterday afternoon.

McGuinty said the two governments had to intervene given the huge number of auto assembly, parts and related jobs at stake.

"If 400,000 folks were to go on employment insurance that would cost us billions and billions," the premier told CTV.

While Ontario had been arguing that emergency aid should be solely a federal responsibility, with the province providing money later to help the automakers retool their plants, it appears Ontario taxpayers will be on the hook after all.

"We are in this together," said a provincial source.

That means Ontario's forecast $500 million deficit for this fiscal year could balloon because of the auto aid deal.

Earlier in the day, the New Democrats were critical of any plans to wait for American aid.

"That's a very dangerous game for Ontario workers and Ontario communities because you can end up with a pattern that works against Ontario," warned party leader Howard Hampton.

GM and Chrysler have indicated they will run out of cash to operate their U.S. and Canadian plants within weeks, which would also cripple hundreds of parts companies and stall production at other automakers who rely on them.

That would push the U.S. and Canadian economies into a deeper recession and trigger heavier job losses. Lack of aid could also force one or more automakers and many suppliers into temporary court protection from creditors, creating a crisis in consumer confidence that would eventually lead to their demise.

Even as the U.S. and Canadian governments work on details of interim and long-term aid packages, the downturn in the two economies prompted more major production cuts.

Chrysler will close its giant Windsor minivan plant for more than a month; GM is extending a stoppage at its Oshawa car factory and Honda said it would slow Civic production in Alliston. Ford is curbing production at its Oakville plant by a total of 10 weeks. In the U.S., the Detroit Three were seeking $14 billion immediately and more than $35 billion in total aid from the U.S. government. None of the automakers and their Canadian subsidiaries have revealed publicly how they would spend government aid nor provided any details of plant closures, shrinkage of operations or job losses. That has led to opposition demands for more transparency in talks for aid.

The Canadian Auto Workers union, which represents more than 30,000 production workers and skilled tradespeople at the three companies, had urged the federal and Ontario governments to move quickly in confirming aid.

"It has been a roller-coaster for our members ... and for our communities who rely so heavily on the auto industry," said union president Ken Lewenza.

Outside the sprawling GM operations in Oshawa, auto worker Debbie Comartin's voice began to choke and her eyes welled up in tears because of some public opposition to government aid.

"They're not looking at what we've put back into the community," Comartin said, adding she feels the public has turned its back on auto workers.

Comartin, a 21-year GM veteran, said she is willing to take a pay cut but now worries about losing her benefits and pension.

"The worst fear is that if they go bankrupt, we will lose everything."

In Washington, administration officials offered no information on what funds it would tap for interim aid, or the amount, terms and conditions for the automakers, workers and other stakeholders.

The U.S. Senate rejected the $14 billion aid plan after the United Auto Workers union refused demands from primarily southern Republicans for wage cuts at the three companies. The UAW charged that Republican senators who oppose the aid hail from states where governments have used billions of dollars in incentives to attract plant investments from non-unionized foreign-based automakers.

Lewenza, whose union is also under pressure to accept some concessions, said U.S. politicians are using workers as "scapegoats" in the battle for public aid.

"We could work for free for the next month and it wouldn't sell one more car," he said.

The downturn in the North American economy, tighter credit and soaring fuel prices have hammered auto sales this year in the U.S. and created a liquidity crisis for the Detroit-based companies.

However, other automakers are now also feeling the pain and slashing output.

With files from Isabel Teotonio and Robert Benzie

U.S. auto bailout deal collapses

Dec 12, 2008

WASHINGTON–A $14 billion emergency bailout for U.S. automakers collapsed in the Senate last night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over Republican demands that the UAW union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

The Senate rejected the bailout 52-35 on a procedural vote – well short of the 60 required – after the talks fell apart.

The White House said it was evaluating its options in light of the breakdown.

"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable.''

Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.

The collapse followed unprecedented marathon negotiations at the Capitol among labour, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans balked at giving the automakers federal aid.

Reid called the bill's collapse "a loss for the country,'' adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight.''

Last night's bailout collapse left Canada's situation in limbo.

The Detroit Three are seeking at least $6 billion (Cdn.) in public money, but have released few details about restructuring plans, including the future of plants, jobs or how they would spend the money.

Any financial help from the federal and Ontario governments was likely to have been piggybacked with the U.S. legislation, which would have given automakers until the end of March to submit restructuring plans, Ontario Economic Development Minister Michael Bryant said earlier yesterday.

The lack of disclosure about the impact on operations and employment has sparked criticism from the Ontario government and opposition politicians who remain in the dark about the future of some plants and thousands of jobs.

Last night's collapse was reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued post-election Congress.

In Ottawa earlier yesterday, a senior official for the Conservative government said it was expecting to offer a "stimulus" package to the automakers before the Jan. 27 budget to be "in sync" with U.S. aid.

Supporters of aid in both countries say failure by governments to approve the rescue would trigger the collapse of the North American auto industry and push the economies in the U.S. and Canada into deep recession.

The parents of GM and Chrysler have told Congress they will soon run out of money to operate their plants. If one automaker fails, it would cripple parts makers who also supply other vehicle companies.

The U.S. legislation had set a March 31 deadline for GM Corp., Ford Motor Co. and Chrysler LLC to agree with a new U.S. "car czar" or presidential designate on restructuring plans that would make the automakers viable.

A summary of the U.S. legislation revealed the auto loans were for seven years or longer at interest rates of 5 per cent in the first five years and 9 per cent after that.

Bryant said governments on both sides of the border will have to set "tough terms" for aid "to make sure this is not throwing good money after bad."

Bryant said the North American auto industry is integrated between the two countries so it makes sense to manage the restructuring in the same way, with Canadian action mirroring the U.S.

With files from Rob Ferguson, Tonda MacCharles and Tony Van Alphen

Toronto Star

Canada's three struggling automakers must come clean on plans to cut jobs if they hope to win taxpayer support for the $6 billion in aid they're seeking, Premier Dalton McGuinty says.

General Motors, Ford and Chrysler submitted their restructuring plans to Queen's Park and Ottawa last Friday but have yet to publicly reveal what would happen to their Ontario factories.

McGuinty signalled his patience is wearing thin with the companies, which employ more than 30,000 workers.

"We're on a two-way street here," the premier said yesterday. "Ontarians are people of goodwill and they do want to lend a hand ... but don't try to pull the wool over our eyes, be honest with us."

American legislators battled yesterday over a proposed $14 billion (U.S.) emergency aid package that would increase pressure on Canada to respond in kind.

The House approved bailout legislation last night that forces U.S. automakers to restructure or fail. The 237-170 vote sends the measure to the Senate where a vote could come as early as today. But some Republicans have vowed to slow or even block the legislation.

Ford and Chrysler did not respond to inquiries from the Star yesterday seeking comment on McGuinty's request, but GM pledged to release its 35-page plan by week's end after meetings with government officials, said vice-president David Paterson.

Overall, GM is seeking $800 million by year's end and $1.6 billion later, Ford wants a "standby" line of credit worth $2 billion and Chrysler $1.6 billion. GM, which is Canada's largest automaker, has signalled it may need another $1 billion if the rapid vehicle sales decline continues.

Federal Industry Minister Tony Clement said officials were going to the "data centres" of the Detroit 3 to go over their most confidential financial information as part of the decision-making process.

"I haven't seen anything on timelines," said a spokesperson for Clement.

McGuinty's push for details followed days of criticism from opposition parties worried that an aid deal could be cut with taxpayers knowing nothing about the fate of thousands of auto jobs and how their money will be spent.

"Everything is done in secret," said NDP Leader Howard Hampton. "This is the wrong way to do it."

Ontario's economic development minister said time is running short for the automakers to go public with details of their plans.

"If the industry won't do it, the government will do it," Michael Bryant said yesterday, noting the automakers have been worried that any leaks could jeopardize U.S. aid.

McGuinty noted the automakers have made public far less information about their plans in Canada compared with their U.S. parent companies, leaving lawmakers here in a difficult position in trying to sell an aid plan to taxpayers already feeling the pinch of the economic downturn themselves.

"I think Ontarians ... are entitled to know," McGuinty said.

Chrysler has already warned its car assembly plant in Brampton and minivan plant in Windsor may not be able to survive without financial help soon.

Meanwhile, a top U.S. auto watcher said yesterday Chrysler Canada's U.S. parent likely won't survive the current financial crisis.

"A controlled wind down of Chrysler is in everybody's interest," said Michael Robinet, an analyst for CSM Worldwide, adding a probable scenario would be the sale of some assets. McGuinty also reiterated the Canadian Auto Workers union must step up to help if the public is to be sold on aid. CAW president Ken Lewenza said this week the union doesn't need to cut benefits and pay because it's already agreed to wage freezes.

- With files from Tonda MacCharles and Star wire services

The Canadian Auto Workers is insisting the union doesn't need to cut wages and benefits to become "part of the solution" for massive public aid packages to the country's reeling automakers because employees are already competitive.

Union president Ken Lewenza said he told federal Industry Minister Tony Clement yesterday that current pay for workers at General Motors of Canada Ltd., Ford Motor Co. of Canada Ltd. and Chrysler Canada Inc. would not scare away future auto investment or jeopardize existing assembly plants.

"We are pretty comfortable knowing we are competitive with the U.S., Europe and Japan" Lewenza said in an interview after a 30-minute meeting with Clement and senior government staff. "Our compensation will not put us at a disadvantage when it comes to investment. In fact, our labour rates should encourage investment."

Clement called the meeting as the federal and Ontario governments work to craft an emergency aid package for the automakers.

Last week, the automakers made submissions seeking $6 billion in government aid in the form of loans, loan guarantees and lines of credit.

Clement, who could not be reached for comment last night, has indicated the union and such other stakeholders as parts suppliers would need to show their willingness to help save the automakers before Ottawa provided any multibillion-dollar aid package.

A spokesperson for Clement said after the meeting the government is still conducting "due diligence," but acknowleged Ottawa is waiting to see what U.S. lawmakers will offer the Detroit-based automakers.

The U.S. Congress could vote on a $15 billion (U.S.) interim package today.

Some union critics have said the CAW must lower labour costs to save the automakers in Canada and in view of concessions by the United Auto Workers in the U.S.

But CAW officials say the arguments are based on inaccurate information.

In talks with U.S. lawmakers, the UAW has modified a jobs bank that pays laid-off workers almost full wages. Furthermore, the union has agreed to allow the companies to delay payments to a union retirement trust.

But the CAW, which represents more than 30,000 active workers at Canadian Detroit Three plants, does not have such funding plans here.

At the meeting, Lewenza said he informed Clement that this spring, the union negotiated savings of between $750 and $900 million for the three automakers in contracts during the next three years to help them cope with looming financial problems.

Under those contracts, production technicians currently earn about $33.90 an hour and receive numerous benefits.

Lewenza added he also pressed Clement on the need to revitalize the sputtering Canadian Automotive Partnership Council; design a national auto policy to lure and nurture the industry, and deal with unfair trade that has led to a flood of imports with no corresponding access to foreign markets.

Meanwhile, Ontario Premier Dalton McGuinty said the government is still in the "investigative phase" of examining auto aid possibilities and the public will see any packages including corresponding commitments from the companies.

But McGuinty also noted again that taxpayers should brace themselves for job losses, even with government aid.

"Governments alone can't make up for a dramatic decline for auto products," McGuinty said. "There will be some more restructuring in the auto sector. I think we need to be honest about that."

But Lewenza said it's too early to predict what the industry will look like here during the next few years and whether the Canadian industry will suffer serious job losses.

McGuinty said the federal and Ontario governments will have to step up with interim aid quickly if the U.S. does so to protect the Canadian industry.

"I know that there's a real state of urgency here and I expect that if Washington comes forward with an interim support package, `a bridge to Obama as they're calling it,' there will be heightened pressure on us to respond with an interim package."

In the Ontario legislature, opposition MPPs expressed concern about a lack of transparency from the automakers about their restructuring plans, including plant and job losses.

"It's undue pressure and irresponsible on their part to expect taxpayers to come running when they're not prepared to give assurances that this money will be well spent," said Bob Runciman, who acts as leader of the Progressive Conservatives in the Legislature.

Tentative deal reached
in US auto bailout talks

WASHINGTON, Dec 9 (Reuters) - The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers, officials said.
A Bush administration official and a Democratic leadership aide said the accord covered key points but a few final details still needed to resolved and put in writing.

Democrats have arranged to have the U.S. House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.
President Bush and President-elect Barack Obama were both urged by a key Democrat to help rally support by Democrats and Republicans for the pending measure.

"Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan, whose home state headquarters General Motors Corp , Ford Motor Co and Chrysler LLC.

"I understand an agreement has been reached," Levin said in a statement.
The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co is not requesting immediate help but would like a line of credit in case its finances worsen.

The parties agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel efficient cars.

China automaker eyes Ford's Volvo
December 9, 2008

BEIJING–A Chinese partner of Ford Motor Co. is talking to the U.S. automaker about the possible purchase of its Volvo unit, a Chinese newspaper reported Tuesday.

Changan Auto Co.'s president, Xu Liuping, talked with Ford executives about a possible sale at an auto show last month in China, the National Business Daily said, citing an unnamed source at Changan. It gave no other details.

A spokeswoman for Ford Motor (China) Ltd. said Ford was evaluating possible options for Volvo Car Corp. including a possible sale but declined to comment on the Chinese report.

"It will take some months to assess all of our available options," spokeswoman Lynn Ouyang said in a written statement.

Employees who answered the phone at Changan referred calls to a spokesman who they said was unavailable.

Ford is trying to raise money to see the company through a severe slump in the U.S. auto industry. Ford and rivals General Motors Corp. and Chrysler LLC are seeking government aid.

Ford bought Volvo, based in Goteborg, Sweden, in 1999.

Changan and Ford have been joint venture partners in China since 2001.

China's small but ambitious automakers have acquired other foreign brands in an effort to expand abroad.

Nanjing Automobile Group bought Britain's MG-Rover brand in 2006 after its owners went bankrupt. Shanghai Automotive Industries Corp. owns 51 per cent of South Korea's Ssangyong Motor Co.

Car sales in China, the world's second-largest auto market, have weakened but not as severely as in the United States.

China's auto sales fell 10.3 per cent in November from a year earlier, state media reported Monday, citing industry data. It was the third month out of four that car sales have contracted. Sales rose in October.

Ford sold its Jaguar and Land Rover units to India's Tata Motors Ltd. in March for $1.7 billion.

WASHINGTON–White House and congressional negotiators sought yesterday to remove remaining differences over an emergency rescue for the auto industry, a wounded giant of the struggling U.S. economy.

Prodded by shock jobless data that showed the U.S. shed more than half a million jobs in November alone, negotiators tried to forge an agreement in principle to provide ``The Detroit Three" automakers with at least $15 billion (U.S.) in short-term loans.

Negotiators hope to reach a final deal today and win congressional passage this week. The measure would then be sent to President George W. Bush to sign into law before Democrat Barack Obama succeeds him as president on Jan. 20.

The Senate is due back in session today and backers hope to have a package ready that can win quick approval.

Lawmakers fear a recession will deepen if any of the three collapses. Primarily Republican critics contend market forces ought to determine the fate of the auto industry, not intervention from a government saddled with a record deficit.

In addition to reorganizing and protecting taxpayer investment, possible conditions include creating a government "car czar" to oversee the bailout, new corporate leadership and additional concessions by the United Auto Workers union.

Senate banking committee chair Christopher Dodd said GM Corp. chair Rick Wagoner should resign to allow new leadership to restructure the faltering company.

"He has to move on," Dodd, a Connecticut Democrat who is leading efforts to craft bailout legislation, told CBS's Face the Nation.

Faced with plummeting sales they blame largely on the credit crunch and recession, GM, Chrysler LLC and Ford Motor Co. sought $34 billion from Congress last week to avoid possible collapse. A deal negotiated by the White House and Congress would provide no more than $17 billion to last into March.

Critics have said any loans would be a waste of money unless automakers cut costs and better compete with more fuel-efficient, foreign-made cars.

 Bad Mouthing
American/ Canadian
Vehicles Get the
Facts Straight !

Here are some facts from the WEB that don't get the press they deserve - next time you hear negative comments about domestic this may come in handy it also has the sites that the info came from as well. Pay particular attention to #13 - It says a lot

1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?
a. Germany
b. Japan
c. Korea
d. United States

2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?
a. Chrysler
b. Ford
c. GM
d. Nissan
e. Toyota
f. Volkswagen

3. Pick the brand from each group that has the highest initial quality.
a. Acura, BMW, Cadillac (all luxury makes)
b. Honda, Mercury, Nissan (all non-luxury makes)
c. Acura (lux), Chevrolet (non-lux), BMW (lux), Mazda (non-lux)

4. Which midsize sedan has the highest initial quality?
a. Accord (Honda)
b. Altima (Nissan)
c. Camry (Toyota)
d. Malibu (Chevrolet)

5. Which large sedan has the highest initial quality?
a. Avalon (Toyota)
b. Grand Prix (Pontiac)
c. Sable (Mercury)

6. Which midsize pickup has the highest initial quality?
a. Dakota (Dodge)
b. Ranger (Ford)
c. Tacoma (Toyota)

7. Which car is the most economical overall?
a. Aveo (Chevrolet)
b. Fit (Honda)
c. Prius (Toyota)

8. Which car did the LA Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?
a. A6 (Audi)
b. CTS (Cadillac)
c. RL (Acura)

9. Which company makes the winner of the 2008 “Green Car of the Year” award?
a. Chevrolet
b. Honda
c. Toyota

10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?
a. Aura (Saturn)
b. Camry (Toyota)
c. Fit (Honda)

11. Which car won the same award for 2008?
a. Accord (Honda)
b. Altima coupe (Nissan)
c. Malibu (Chevrolet)

12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?
a. Chrysler
b. Ford
c. General Motors
d. Hyundai
e. Toyota
f. Volkswagen

ANSWERS:

1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?

Answer: United States.
Per J.D. Power Vehicle Dependability Study, Mercury and Cadillac are in the top 3, along with Lexus. And in 2007, Buick was tied with Lexus for the top spot.
www.jdpower.com/corpor...

2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?

Answer: Volkswagen.
According to Business Week, Volkswagen had the most recalls at this time a year ago. The second worst was Toyota.
www.businessweek.com/a...

3. Pick the brand from each group that has the highest initial quality.

a. Answer : Cadillac (better than both Acura and BMW)
b. Answer: Mercury (better than both Honda and Nissan)
c. Answer: Chevrolet (better than Acura, BMW, and Mazda)
This is according to J.D. Power’s Initial Quality Survey.
www.jdpower.com/corpor...

4. Which midsize sedan has the highest initial quality?

Answer: The Chevrolet Malibu has better initial quality than any competitor, including the Honda Accord, Toyota Camry and Nissan Altima. The Ford Fusion also beat all 3 Japanese competitors.

This too is from the J.D. Power Initial Quality Survey, which also reveals that above average are American brands Mercury, Ford, Cadillac, Chevrolet , Pontiac, Lincoln, and Buick. Below average are import brands Acura, Kia, Nissan, BMW, Mazda, VW, Subaru, and Scion (and several others).
www.jdpower.com/autos/...
www.jdpower.com/corpor...

5. Which large sedan has the highest initial quality?

Answer: Again per J.D. Power, the highest quality large car is the Pontiac Grand Prix, beating the Toyota Avalon. Two other Detroit cars that beat the Avalon are the Mercury Sable and Mercury Grand Marquis.
www.jdpower.com/autos/...

6. Which midsize pickup has the highest initial quality?

Answer: The Dodge Dakota has the best quality for midsize pickups, proving that Chrysler too can beat the imports. Both the Dakota and the Ford Ranger beat the Toyota Tacoma.
www.jdpower.com/autos/...

7. Which car is the most economical overall?

Answer: Per Edmunds.com, the premier automotive analysis site, the most economical car in America, taking into account not only mileage but all costs, is the Chevrolet Aveo. The Honda Fit is #3 and the Toyota Prius is a distant #34.
www.edmunds.com/help/a...

8. Which car did the Los Angeles Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?

Answer: “Cadillac makes a better car than BMW or Mercedes or Lexus or Infiniti, and that car is the 2008 CTS. No other car in the mass market dares so much as this expressive and audacious bit of automotive avant-gardism.” Dan Neil, LA Times.
www.latimes.com/classi...

9. Which company makes the winner of the 2008 “Green Car of the Year” award?

Answer: The Chevrolet Tahoe Hybrid is the winner of this award.. How could a full-size SUV defeat the media darling Toyota Prius? Read the link below and you will discover, “What’s equally eye-opening is that the Tahoe’s 21 mpg city fuel efficiency rating is the same as that of the city EPA rating for the four-cylinder Toyota Camry sedan. ”

Did you catch that? A huge, full-size SUV from Chevrolet that gets the same city mileage as a 4-cylinder Toyota Camry!! Chevy obtained this remarkable achievement through the use of its 2-mode hybrid system, a technology that Toyota does not have.
www.greencar.com/featu.../

10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?

Answer: Not only was the Saturn Aura picked by the automotive press corps as better than the Honda Fit and the Toyota Camry, “When a panel of 47 journalists named the Saturn Aura the North American Car of the Year over the Toyota Camry, the vote wasn't even close, 205-89.” Chicago Tribune, 1/15/07
www.northamericancarof...

11. Which car won the same award for 2008?

Answer: GM again crushed the Japanese competition in 2008 when the Malibu received 190 votes to the Honda Accord’s 95. The Accord actually came in 3rd since GM’s other finalist, the Cadillac CTS, received 165 votes.
www.northamericancarof...

12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?

Answer: Toyota’s much publicized quality problems resulted in Consumer Reports actually removing from their recommended vehicles list the Lexus GS luxury car, Camry V6 sedan, and Tundra pickup. This demotion occurred in October 2007.

13.If you are one of the many Americans & Canadians who gave up on Detroit’s cars because of a bad experience many years ago, it’s time to rethink your position. Rethink Detroit.

Detroit automakers: 79 U.S. jobs per 2,500 cars sold in America.
Foreign automakers: 33 U..S. jobs per 2,500 cars sold in America.
levelfieldinstitute.or.../

WASHINGTON–Racing to seal a deal with the White House, Democratic congressional leaders dispatched aides yesterday to draft an emergency $15 billion (U.S.) aid package to pull Detroit's Big Three automakers from the brink of collapse.

Capitol Hill leaders prepared to sell yet another bailout to a skeptical Congress. It is an uphill battle: The anger is fresh over how the Bush administration used the $700 billion Wall Street rescue fund and lawmakers are questioning whether the once-mighty auto giants actually can survive.

Still, with Washington spooked by massive job losses that provided the latest evidence of a deepening recession, the White House said it was in "constructive discussions" with both parties. Voting on the plan is expected this week.

The emerging measure would speed short-term help to General Motors Corp., Ford Motor Co. and Chrysler LLC, while empowering the government to order a wholesale restructuring of the industry and imposing tight restrictions on the Big Three, according to officials close to the talks.

They described the developing plan on condition of anonymity because the details are not final.

It is intended to tide the companies – particularly GM and Chrysler, which have warned they are just weeks from going bust – over into March, when Barack Obama is president and a new Congress can consider a longer-term solution.

A breakthrough came Friday when House Speaker Nancy Pelosi, yielded to U.S. President George W. Bush on a key point: allowing the aid to come from an existing $25 billion fund marked for producing environmentally friendlier cars.

The Canadian subsidiaries of the reeling Detroit Three automakers want a total of at least $6 billion in loans and credit lines from the federal and Ontario governments to stay alive, but won't go into much detail on how they would spend the money.

General Motors of Canada Ltd., the country's biggest automaker, is seeking $800 million by year's end and $1.6 billion later, while Chrysler Canada Inc. is asking for $1.6 billion, according to sources familiar with the submissions.

GM may need a further $1 billion if vehicle sales continue to slide at a rapid rate, vice-president David Paterson told the Star last night.

Ford Motor Co. of Canada Ltd. confirmed it would need a "stand-by" line of credit of up to $2 billion, but would use it only if necessary.

The company also urged Ottawa to get into the consumer car loan business and urged both governments, struggling with their own cash crunch, to boost sales through a "tax holiday" on new car purchases.

The three automakers submitted restructuring plans – GM's spanned 35 pages – and the requests for rescue packages to the federal government and Queen's Park yesterday.

The move came on the same day GM confirmed it will lay off 700 workers and cut the third shift at its Oshawa car plant indefinitely starting the first week of February.

The extra money GM might need would boost the overall industry aid package to $7 billion.

"The numbers are going to seem big to taxpayers because they are big," said Ontario Economic Development Minister Michael Bryant.

The lack of public detail from most automakers came as a surprise after Bryant had suggested earlier in the day that more specifics would be released.

"We're certainly not going to say to taxpayers that `we're going to provide assistance, trust us, thank you very much.' No way," he said.

"Obviously, we have to be very transparent and accountable in our decision."

GM is happy to make its plan public but is keeping it private for the weekend at the request of the Ontario government.

"It's in their court," Paterson said, noting GM would use its aid to bring a hybrid variant of a yet-to-be revealed new car model planned for Oshawa, and add transmission production to its engine plant in St. Catharines.

In contrast to its U.S. parent, Chrysler Canada would not publicly disclose how much it needs.

The historic requests come after the automakers' Detroit-based parents filed restructuring plans and requests to the U.S. Congress earlier this week for a total of $34 billion (U.S.) in aid.

The North American-based automakers face a liquidity crisis because of a crash in sales south of the border and worsening economic conditions.

Analysts warn that if one of the automakers fails, it could cause a domino effect among parts suppliers, shut down the entire industry and push the economy into a depression.

If governments in both countries approve the aid packages, it would mark the first major auto industry rescue since they provided hundred of millions of dollars in loan guarantees to Chrysler in 1980.

In that case, the company paid back the money eight years before it was due.

Automakers will have to be more forthcoming to win public support for aid, said Progressive Conservative Leader John Tory. "Taxpayers have a right to know, within certain broad paramaters, what the money is going to be used for."

Ford of Canada said it expects to be profitable by 2011 and has the cash to weather the storm, but needs access to government-backed loans in case the economy worsens or a major rival goes bankrupt, causing a "ripple effect."

CAW president Ken Lewenza said the union will "do what it takes" to help the automakers stay afloat

WASHINGTON–This time, they ditched the corporate jets, hit the Interstate in their hybrids and came armed with plans for deep cuts and a renewed commitment to fuel efficiency.

But it's not clear whether the Big Three – who have now rechristened themselves the Detroit Three – are any closer to a Congressional lifeline, one that will now cost American taxpayers at least $34 billion (U.S.), $9 billion more than the auto industry CEOs had sought just two weeks ago.

With time running out on both this Congress and at least two of the automakers, the Senate banking committee heard another stark warning yesterday.

"I believe we could lose General Motors by the end of this month,'' United Auto Workers president Ron Gettelfinger said a day after his union agreed to concessions on job security and health care for retirees.

Instead of focusing on the peril to the U.S. economy as they did in the first presentations to Congress, General Motors chair Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli outlined much more detailed plans to make their industry more competitive and cost effective.

It won them some plaudits from committee members, but no clear path to receiving the money.

And much skepticism remained.

U.S. public opinion polls are running heavily against any bailout.

"Inaction is unacceptable," said Christopher Dodd of Connecticut, the committee's Democratic chair.

"But we're not about to write a cheque and hand it over."

The auto executives, however, continued to resist suggestions they declare bankruptcy, even if all the terms of restructuring were handled ahead of the filing.

They said no one would buy cars from a bankrupt manufacturer and expressed skepticism they'd be able to emerge from bankruptcy.

Mark Zandi, co-founder of Moody's Economy.com, told the committee that while he backed a rescue, a $34 billion bailout would merely delay bankruptcy at some point over the next two years. "They would ultimately need ... somewhere between $75 billion and $125 billion to avoid this fate," he said.

Wagoner accepted GM has made mistakes, a change in tone from his testimony last month. He pledged a "renewed and expanded" commitment to new technologies, ramped-up production of fuel-efficient vehicles and a reduction in brands, models and retail outlets.

He said he'd take $1 per year in compensation from GM's board, reduce the salary of other executives and ground the corporate jet.

More than half the $34 billion, or $18 billion, is being sought by GM.

Wagoner promised to begin repaying the money by 2011 and have it fully repaid by the following year.

All the auto heads agreed to federal oversight of restructuring plans in return for federal money.

"It used to be that our approach to our customers was, if you build it, they will come," said Mulally, who heads the healthiest of the three firms, but is seeking $9 billion.

Chrysler is seeking $7 billion.

"Our plan also includes producing high-quality, fuel-efficient cars and trucks people want to buy while supporting our country's energy security and environmental sustainability goals," Nardelli pledged.

President George W. Bush told NBC News yesterday that "no matter how important the autos are to our economy, we don't want to put good money after bad." Any plan must ensure "long-term viability for the sake of the taxpayer."

CAW loses 'gentle giant'

Former Local 200 president mourned
Dalson Chen, Windsor Star

Thursday, December 04, 2008

Windsor's CAW family is mourning the loss of a "gentle giant" -- both in terms of physical presence and community impact -- in the passing of local labour leader Frank McAnally.

A CAW member for more than 40 years and past president of CAW Local 200, McAnally died on Wednesday morning of cancer. He was 63.

Ken Lewenza, CAW national president, said union members have been remembering McAnally's respectful way of dealing with others.

"He never once acted like the big man that he was. He always acted like a man that recognized and understood the opinions of others," Lewenza said.

"We lost one hell of a person in Windsor and Essex County."

A Windsor native, McAnally joined the union as a Ford worker in 1966, and was elected a union steward at the Windsor casting plant in 1971.

Over the years, he earned numerous elected positions in the union until he became president of Local 200 in 1984.

Lewenza described McAnally's presidency as one that improved thousands of lives through saving and creating Ford jobs. "He brought Local 200 through a time of despair, similar to what we're going through today," Lewenza said. "He was creative, he was innovative."

Mike Vince, Local 200's current president, described McAnally as a mentor and father figure. "It was absolutely a shock when we got the call this morning. Frank was an incredible trade unionist, but also an incredible human being.

"He sacrificed so much time away from his family to give back to the community and the country. He touched so many people, and some of them don't even recognize his assistance in certain things."

In 1995, McAnally joined the national office of the CAW. His positions included area director for British Columbia and Alberta, and then CAW national representative for all Ford members. He retired in 2003.

Outside of the union, McAnally played a key role in the building of the CAW Student Centre at the University of Windsor, and was a board member with the United Way and the Unemployed Help Centre.

Vince said McAnally will be sadly missed. "Frank was a very big man, and his heart was even bigger," he said. "His door was always open.... He had such a wonderful personality. He was able to deal with people at all different levels."

McAnally is survived by his wife Linda, his son Frank Jr., his daughter Jennifer and grandchildren.

Detroit 3 leaning on CAW

General Motors of Canada Ltd. is aggressively seeking help from the Canadian Auto Workers to reduce costs in support of efforts for a huge government aid package, the union's top leader says.

Ken Lewenza, the CAW's national president, confirmed yesterday the union has received individual overtures from the three reeling Detroit-based automakers, but GM is pressing harder for savings on the eve of submissions to the federal and Ontario governments for emergency aid.

"GM has been the most aggressive," Lewenza said in an interview yesterday. "They've told us we must be part of the solution and must be creative in reducing costs."

GM, the country's biggest automaker, has a policy of not talking publicly about talks with its union.

Lewenza's comments came after the United Auto Workers in the U.S. revealed it will revise contracts with GM, Ford and Chrysler to delay billions of dollars in payments to a union run health-care trust.

Furthermore, UAW president Ron Gettelfinger said the union would modify a jobs bank in which members on layoff receive up to 95 per cent of their pay.

The CAW does not have a similar health-care trust or jobs bank in Canada at the three automakers.

Lewenza, who represents about 30,000 workers at the three companies, said none of them had broached specific areas where the union could reduce costs.

"There are ongoing discussions in terms of the challenges we all face but there have been no proposals either way," he said.

Lewenza skirted questions about whether the union would consider concessions. "We have always shown a willingness to help and there are different ways of doing that," he said. "It doesn't mean we have to reopen contracts every time and cut wages and benefits.

In the last few years, the union has agreed to changes in local agreements at GM in Oshawa, Chrysler in Brampton and Ford in Oakville that altered work rules and pay schemes, he noted

Lewenza said that in talks with GM, the union reminded the company about the current freeze in wages for three years; suspension of a cost of living for almost two years and other cuts to benefits.

The union also negotiated a package for workers affected by the pending shutdown of GM's truck plant in Oshawa during the summer after the company agreed in May not to close it.

GM has suggested the Canadian industry needs as much as $3.5 billion in short-term loans, loan guarantees or credit lines.

The federal and provincial governments have instructed the three companies to make submissions for aid by today.

Submissions should include restructuring plans, cash positions, short-term liquidity details, future product programs, data on impact on suppliers and how the car firms will handle financing needs here, the governments said in letters to automakers last week.

The government did not ask for submissions from Honda Canada and Toyota Canada, who also have extensive operations here but don't face an immediate cash crisis.

Meanwhile, Detroit-based GM, Ford and Chrysler and the UAW worked yesterday to win support from a skeptical U.S. Congress for a $34 billion (U.S.) aid plan south of the border.

"If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow," Chrysler vice-chair Jim Press told the Associated Press. "It could trigger a depression.''

In submissions earlier this week, GM and Chrysler said they needed an immediate infusion of government cash until the end of the month and both noted they could drag the entire industry down if they fail. Ford wants a $9 billion ``standby line of credit" in case a competitor fails.

Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.

All three plans envision government taking a stake in the companies.

UAW plans emergency meeting today Wednesday

Union summons leaders to Detroit as firms give
survival plans to Congress.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The United Auto Workers has called an emergency meeting in Detroit on Wednesday during which the union could consider reopening its 2007 contracts with the automakers.

Union leaders representing workers at General Motors Corp., Ford Motor Co. and Chrysler LLC plants across the country have been called to Detroit for the session, according to sources familiar with the plan.

One local UAW official who has been invited to the meeting expects the union leaders are going to be asked for their support to reopen the 2007 contracts and to agree to concessions that would help make the automakers financially viable.

The business plans GM, Ford and Chrysler have prepared for Congress include seeking additional givebacks from the UAW as one way to cut costs, according to sources with knowledge of the plans.

A person familiar with one automaker's plan said a variety of topics are being explored. Key issues include reopening the contract, eliminating the controversial jobs bank that still pays workers even when they are laid off, and how much and how quickly the automakers will contribute to a trust fund to be run by the UAW that will take over responsibility for retiree health care beginning in 2010. The health care trust was a key part of the landmark contracts negotiated last year.

UAW spokesman Roger Kerson could not be reached for comment late Monday.

Harley Shaiken, a labor expert and professor at the University of California, Berkeley, was unaware of Wednesday's meeting but was not surprised it was called.

"We truly are in uncharted waters, the stakes are enormous and when you have a situation like that, to lead effectively, you need all the local people aware of the choices and hearing directly from the top leadership what the options are."

Wednesday's meeting was first reported by Bloomberg News.

UAW President Ron Gettelfinger was criticized for the jobs bank during congressional hearings last month about giving the automakers federal aid. The number of workers in the programs has been greatly reduced under tougher time restrictions in the 2007 contract but the benefit is derided as a relic of a bygone age that erodes the automakers' ability to compete and that they can no longer afford. Gettelfinger recently said Ford has taken 40,000 workers out since 2005 and GM has removed about 47,000. About 3,500 workers are in the programs today, he said.

"The jobs bank has become the poster boy of what's gone wrong with the industry," Shaiken said. "The union knows it's the reality they have to deal with. To defend the jobs bank is just not done in the current environment."

In addition to seeking more concessions from the union, Detroit's Big Three will pledge to cut executive pay, limit corporate jet travel and take sweeping steps to return to profitability in the plans they will deliver to Congress.

The chief executives of GM, Ford and Chrysler will return to Washington later this week to make their second plea for aid before House and Senate committees and could face calls for their ouster after a leading Democrat on Monday called for their resignation in return for federal help.

"If I had my way, all three of those guys would be in the unemployment line and I think that ought to be one of the conditions for us doing this," House Majority Whip Jim Clyburn, D-S.C., told reporters in South Carolina, according to the Associated Press.

As majority whip, Clyburn would be responsible for getting the votes needed to pass a rescue plan for the automakers.

South Carolina is home to a BMW plant in Spartanburg, which is set for a $750 million expansion by 2010. Detroit's Big Three have clashed with a growing number of southern lawmakers representing districts where foreign auto companies have factories.

On Monday, the Big Three were putting the finishing touches on the plans congressional leaders required last month when they delayed a vote on $25 billion in emergency assistance.

GM's board of directors approved its plan late Monday. It will be delivered to Congress after the markets close today and will include sacrifices from executives, hourly workers and debt holders.

GM will disclose it has been discussing a proposal with holders of its debt to offer them equity in exchange, a person briefed on the plan said. GM also may announce it is putting up for sale or shuttering Saab, Saturn and Pontiac -- on top of its earlier announced plans to sell its Hummer brand -- and shrinking its dealer network.

Ford said Monday it was putting its Volvo unit up for sale and is expected to detail reductions in executive compensation and corporate travel as part of a plan the company's board approved on Monday. It will highlight its small car strategy and shift to more fuel-efficient vehicles.

Chrysler had not finalized its plan late Monday, said spokeswoman Shawn Morgan.

The companies' revamped business plans are due to Congress the same day they will report November U.S. auto sales, which are expected to be nearly as dismal as October's, when demand plummeted nearly 32 percent. All Big Three members are expected to post sales declines of more than 30 percent, according to Wall Street forecasts. GM is expected to announce more production cuts in North America along with sales.

Some analysts said sales were hurt late in the month by the intense criticism the Detroit companies faced at the congressional hearings last month and talk of a possible GM bankruptcy filing, which the company has said isn't planned.

In making their second pitch for federal aid, the automakers will try to win over a skeptical Congress with substance and symbolism.

On Monday, Ford spokesman Mike Moran said CEO Alan Mulally would drive to Washington in an as yet unidentified Ford vehicle. GM CEO Rick Wagoner also will drive, likely in a Chevrolet Malibu hybrid. Chrysler's Robert Nardelli said earlier he would not return to Washington by corporate plane, but the company hasn't said how he will travel this week.

The CEOs flew to Washington on separate corporate jets last month for the first round of hearings and drew stinging criticism from lawmakers, as did the reluctance of Mulally and Wagoner to accept new pay cuts.

All three companies' plans will disclose how much cash they have on hand and how much they need in the short term to survive. Chrysler said it had burned through $5 billion in the first nine months of the year, and was down to $6.1 billion as of Sept. 30. GM lost more than $20 billion in the first nine months of the year and burned through $6.9 billion in the third quarter. Ford ran through $7.7 billion in the third quarter. .

GM and Chrysler have warned they could run out of cash by early next year. Nardelli said last month Chrysler is in "a very fragile position."

Chrysler's plan is expected to reiterate that it is seeking additional alliances with other automakers. GM and Chrysler held merger talks this fall, but dropped them last month. Chrysler also held talks with the Renault SA-Nissan Motor Co. alliance about a possible tie-up.

Automakers face a difficult road to win approval for the loans. Even if Congress likes their plans and the hearings go well, it is not certain that both houses of Congress will agree on a plan that can be signed into law by President George W. Bush.

House Speaker Nancy Pelosi, D-Calif., and Republicans are still at an impasse over where to get the money to help the companies. Pelosi wants to tap the $700 billion Wall Street rescue package, while Republicans want to drop the fuel efficiency requirements from a $25 billion Energy Department retooling program.

"We'll see what they come up with and what the two hearings yield," said Pelosi spokesman Drew Hammill.

Sen. George Voinovich, R-Ohio, on Monday urged Pelosi and Sen. Majority Leader Harry Reid, D-Nev., to move quickly.

"The time for Congress to act is now," Voinovich, who co-chairs the Senate Auto Caucus, wrote in a letter Monday to Pelosi and Reid. "We must work swiftly to allow the domestic automotive industry to gain access to emergency assistance. The risk in doing nothing is too great."

Voinovich pointed to a study by the Center for Automotive Research in Ann Arbor, which estimated "that if even one of the domestic automakers were to fail roughly 2.5 million U.S. jobs could be lost as a result of the cascading impact that such a failure would have on auto parts suppliers and related industries such as dealers."

Voinovich and Sen. Carl Levin, D-Detroit, co-wrote a compromise bill that they had hoped would get a vote last month.

Levin said Monday he was "confident" the plans the automakers submit will be "responsive to the request of the Congress" and that "the industry will make a compelling case for bridge loans that will allow the companies to return to firm financial footing."

Detroit News Staff Writer Christine Tierney contributed to this report.

Ford expects to break even in 2011

Dec 02, 2008 11:18 AM

Reuters

DETROIT–Ford Motor Co said Tuesday it expects to break even or be profitable in 2011 and seeks access to up to $9 billion of government bridge loans to support its restructuring.

The news sent Ford's shares soaring about 13 per cent in morning trading.

Ford, which burned through $7.7 billion of cash in the third quarter, said it submitted a business plan to Congress and does not anticipate a liquidity crisis in 2009, barring a bankruptcy filing by one of its U.S.-based rivals, General Motors Corp or Chrysler LLC.

Ford said it expects both its overall and North American automotive business pretax results to be break-even or profitable in 2011.

Ford Chief Executive Alan Mulally, who, along with other automaker executives, drew criticism from U.S. lawmakers over their compensation and luxury travel arrangements, called the bridge loan "a critical backstop" for Ford that it may not have to access.

Ford said its CEO would take a $1 annual salary if Ford does access government funds. The automaker also said it would sell its five corporate aircraft.

GM, Ford and Chrysler have to meet a Tuesday deadline for submitting detailed plans to congressional leaders outlining restructuring efforts and their prospects for survival in order to secure $25 billion in emergency funding.

In the plan submitted to Congress, Ford said it had entered into discussions with the United Auto Workers to further reduce its cost structure and expects to continue to reduce its dealer and parts supplier base. Ford expects to have 3,790 dealers at the end of 2008.

"The Ford news has given the market a lift as it indicates that the automaker within two years will be back to profitability," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," Mulally said in a statement.

Ford said Monday it could sell the luxury Swedish car brand Volvo as it scrambles to shore up cash amid a deep industry downturn.

Ford shares were up 33 cents, or 12.94 per cent, at $2.88 on the New York Stock Exchange.

DEARBORN, Mich.–Ford Motor Co. is considering selling Volvo Car Corp. as the struggling U.S. automaker seeks to raise cash and weather a global automotive sales crisis.

Ford said yesterday it expects its strategic review of the Swedish luxury automaker will take several months. The move is one of several actions Ford is taking to strengthen its balance sheet.

Spinning off Volvo into a separate entity may be a possibility, as both companies have already taken steps to allow Volvo to operate on a more stand-alone basis. That effort began in 2007, after a previous strategic review of Volvo.

The Swedish government has said it has been in talks with Volvo and with General Motors Corp.'s Saab unit following reports that the U.S. parent companies were seeking aid for their Swedish car makers.

Goteborg-based Volvo Cars, which Ford bought in 1999, has been struggling against a weak U.S. dollar and declining demand.

Even with a tight credit worldwide, Ford could pull off a sale because Volvo would be attractive to automakers in emerging markets such as Tata Motors Ltd. of India, said Kevin Tynan, an analyst with New York-based Argus Research Corp.

Tata in March bought Jaguar and Land Rover from Ford for $1.7 billion (U.S.) and the Volvo brand would complement Tata's two luxury brands, Tynan said.

Associated Press

Auto Facts – Pension Update

Why are Pension Plans in Trouble?

• Concerns have been raised about the implications for pension benefits given the current uncertainties and instability for the auto industry. The current financial crisis has highlighted concerns about the possible implications for pensions and has subjected pension plans and their members to two related risks.

First, the viability of many employers is being put into question by deteriorating financial conditions which are affecting their credit, the demand for their products, and the credit position of their customers.

Second, the meltdown of financial markets has meant that the various assets that pension plans have been invested in, have lost significant value.

Restructuring, Creditor Protection and Bankruptcy

There has been a great deal of speculation about the possibility of various employers becoming bankrupt, and what that would mean for pension plan members.

It is extremely difficult to speculate on the possible outcomes of these situations. In Canada, usually before recourse to any possible bankruptcy proceedings, companies often go through a restructuring process under the Companies' Creditors Arrangement Act (“CCAA”). There are many possible outcomes under a CCAA process, including a sale of some or all of the business, a restructuring of part of the business, and even the continuation of the Collective Bargaining Agreement and Pension Plan.

In the event of a bankruptcy of an auto or auto parts company, and in the event that restructuring does not involve the continuation of the Pension Plan, either with a restructured company or with some new corporate entity which would continue the operations in Canada, then there would be a wind-up of the Pension Plan. Depending on the assets available to satisfy the creditors, there may be some additional assets available for the Pension Plan, but quite often in bankruptcy proceedings, there are insufficient assets left after secured creditors have been able to satisfy their liabilities.

It is important to note however, that the current assets of Pension Plans are in separate trust accounts, and those assets are only available exclusively to pay for the pension benefits of the Plan members. These pension assets are not available for any creditors in bankruptcy proceedings, nor can they be accessed by companies prior to such proceedings. They can never be used for any other purpose than to pay the accrued liabilities of the Pension Plan, i.e. the pensions of retirees, and the future pensions of active workers.

Should any auto company or any auto parts company enter into the CCAA process, the final outcome is very difficult to predict? Few things are certain, except that the judge with jurisdiction over the CCAA proceedings has enormous discretion to fashion a restructuring or “exit” plan. There is nothing that the law requires to be included in an“exit” plan pertaining to workers’ wage, benefit and pension compensation. For example, to return to the Air Canada situation, Air Canada wanted to change its pension plan from a defined benefit plan to a defined contribution plan, and as well, reduce benefits. CAW-Canada adamantly refused to agree to such a proposal. The CCAA judge was able to direct the process so that Air Canada backed off its pension demands. The pension plan remained intact when Air Canada left CCAA proceedings.

Certainly, companies could try to use the CCAA statute to assist future restructuring initiatives. However, the union has direct input into such proceedings, and, in our view, the law does not permit the Court to amend a collective agreement or pension plan of any kind during CCAA proceedings without the union’s explicit consent.

Wind-Ups and Pension Protection

• Concerns have been raised about the funded status of many pension plans based in the auto industry. Below, we detail some of the implications of what may happen in worst case scenarios, and we also provide information about the protection which currently exists for Plan members.

• In Ontario if an employer sponsoring a defined-benefit plan becomes insolvent, and contributions to the plan cease, the plan will be subject to a wind-up, under the procedures established by the Pension benefits Act (PBA).

• In 1980 the Pension Benefits Act of Ontario was amended to establish the PBGF. Ontario became the only Canadian province to provide a system of governmental protection for the pension promises of private employers.

• In the event of a bankruptcy, if the pension fund has insufficient assets to provide the accrued pension benefits then upon wind-up those benefits would have to be adjusted to reflect the financial state of the pension fund and the application of the Ontario

Pension Benefits Guarantee Fund (PBGF).

• It is important to note that the PBGF applies not only to the benefits of those who have retired, but also to the benefits of active participants of the plan. The benefits which the PBGF guarantees are subject to certain restrictions.

• First, the PBGF guarantee only applies to the first $1,000 of monthly
pension income, (an amount that has not been increased since 1980)

• Secondly, it does not guarantee any benefit levels that have been in place
for less than 3 years prior to the date of wind-up

• In general, the first $1,000 of monthly income is fully guaranteed, while the “excess amount” above $1,000 would be paid out at the funded ratio of the Plan on wind-up.

PBGF Examples

Because there have been so many questions about what would happen to Pension Fund assets along with any entitlement from Ontario Pension Benefits Guarantee Fund (PBGF), we have prepared the following examples.

In the event of a bankruptcy, pension benefits would have to be adjusted to reflect the financial state of the pension fund and the application of the provisions of the (PBGF).

To illustrate the way the PBGF works, we will use some examples with differing wind-up ratios, that is, the amount of assets available compared to the total liabilities for all members of the pension plan, including active employees, as well as retirees and surviving spouses.

Although the calculation of how the PBGF works can be rather complex, the general rule is the first $1,000 of monthly income is fully guaranteed, while the “excess amount” above $1,000 would be paid out at various funded ratios of the Plan on wind-up.

Example: If a Big 3 production worker had retired on Oct. 1, 2005 with 30 years of service at age 65, they would be receiving a pension of $65.00 x 30 = $1,950 per month.

In this example, upon wind-up, the funded ratio is assumed to be 60%.
Of the first $1,000, the pension plan would be paying $600 and the PBGF would be paying $400, while the amount above $1,000, namely $950, would be paid by the plan at 60%, or $570.

Based on the above scenario, the retiree would be entitled to a total amount of $1,570 or 80.5% of their normal entitlement.

Example: If a Big 3 production worker had retired on Oct. 1, 2005 with 30 years of service at age 58, they would be receiving a pension of $3,335 per month until age 65 and $65.00 x 30 = $1,950 per month after age 65. In this example, upon wind-up, the funded ratio is assumed to be 75%.

Again, based on the above “worst-case scenario”, until age 65 they would be
getting $1,000 per month from a combination of the PBGF and the pension plan, plus 75% of the “excess amount”, i.e. 75% of $2,335, or $1,751 from the Plan, for a total amount of $2,751or 82.5% of their normal entitlement.
After age 65, this retiree would be receiving $1,462.50 from the Plan, plus $250 from the PBGF, for a total of $1,712.50, or 88% of their normal entitlement of $1,950.

Example: Using the same example as above, but with a wind-up ratio 90%, the retiree would be entitled to the following.

Until age 65 they would be getting 90% of $3,335, or $3,002 from the Plan and $100 per month from the PBGF, pension plan, for a total amount of $3,102 or 93% of their normal entitlement.

After age 65, this retiree would be receiving $1,755 from the Plan, plus $100 from the PBGF, for a total of $1,855, or 95% of their normal entitlement of $1,950.

Example: If an auto parts worker had retired on Oct. 1, 2005 with 30 years of service at age 65, with a benefit rate of $48 per month per year of service, they would be receiving a pension of $48.00 x 30 = $1,440 per month. In this example, upon wind-up, the funded ratio is assumed to be 70%.

Of the first $1,000, the pension plan would be paying $700 and the PBGF would be paying $300, while the amount above $1,000, namely $440, would be paid by the plan at 70%, or $308.

Based on the above scenario, the retiree would be entitled to a total amount of $1,308 or 91% of their normal entitlement

Example: Consider the surviving spouse of a retiree who had retired in 2004, and who is presently receiving a monthly pension of $1,200. If the wind-up funded ratio was 70%, then the surviving spouse would be entitled to a monthly pension of $840 from the pension plan, and an additional $300 from the PBGF. This spouse would be receiving a total $1,140 per month, or 95% of their original entitlement.

[For simplicity’s sake, in the above examples we have ignored indexing and any spousal options. Any indexing which has occurred 3 or more years prior to the wind-up date, and any such spousal options are both subject to the PBGF]

GM, Ford and Chrysler

Based on the most recently filed reports by the auto majors, the funded status of their pension plans is as follows; on a wind-up basis GM was at 57%, Ford was at 73.5%, while Chrysler was at 91%. On a going concern basis, which is based on the Plan continuing indefinitely, GM was at 81%, while Ford and Chrysler were both above 100%. Since the filing of these reports, market conditions have deteriorated, and the value of the investments in these Plans will have declined.

Non-Pension Benefits

Health Care, other insurance benefits as well as other benefits are provided on a pay as you go basis. That means that there is no fund set aside for the purpose of paying these benefits – they are paid for from the company’s general revenues, either through premiums to insurance companies or through direct payments. In a “worst case scenario”, a bankruptcy would mean that there would be no source of funding for benefits current and future retirees.

Here’s 29 Crucial
Things You Need
to Know About
the Auto Crisis

The Financial Crisis and the
Collapse of U.S. Sales

FACT 1: The Big Three’s U.S. sales fell 41% in
October, compared to the previous year. But they
weren’t alone. Other automakers were hit hard by
the credit freeze, including: Suzuki (down 49%) Isuzu
(down 49%) Kia (down 41%) Lexus (down 38%)
Nissan (down 36%) Hyundai (down 34%) Honda
(down 28%) Toyota (down 26%). No company is
immune from the terrible decline in auto sales
caused by the financial crisis. And European and
Asian automakers are also getting financial
assistance from their home governments to weather
the storm.

FACT 2: Canadian auto sales have actually increased
slightly in 2008, since our banking system hasn’t
experienced the same credit freeze. But 90% of the
vehicles we assemble go to the U.S. market, which
is collapsing.

FACT 3: The Big Three operate their own internal
“banks”: large internal finance divisions that lend to
car buyers and car dealers. But until now, they
haven’t been able to access the $700 billion bank
rescue package approved by the U.S. Congress.
With no loans or leases available, car sales are
collapsing, and now the automakers are on the verge
of failure.

The Importance of Auto

FACT 4: For every job in a major auto facility
(assembly or powertrain), a total of 7.5 jobs depend
on that job – including “upstream” jobs in the supply
and parts industries, and “downstream” jobs in
consumer industries and services.

FACT 5: A total of 440,000 Canadian jobs depend
directly or indirectly on the auto industry.

FACT 6: Autoworkers alone pay $2.2 billion in federal
and provincial income taxes yearly.

FACT 7: Informetrica Inc. (economic consultants)
has estimated that a 25% decline in auto exports
(resulting from the bankruptcy of just one of the Big
Three) would eliminate 155,000 Canadian jobs, and
cost governments $6 billion per year in lost
revenues.

FACT 8: Canada has already lost 35,000 auto jobs
since 2002.

One-Way Trade

FACT 9: North America imports over 4 million vehicles
from offshore per year. This year, offshore imports
will consume almost 30% of Canadian vehicle sales.
The import market share has tripled since 1996, and
this explains most of the loss of Big Three market
share in the same period.

FACT 10: In 1999 Canada generated an auto trade
surplus of $15 billion – our best ever. But with
growing imports and falling exports, that surplus has
evaporated. We slipped into deficit for the first time
in 2006. The deficit reached $7 billion in 2007, and
will double this year to over $12 billion.

FACT 11: Since 1996, Canada’s auto imports from
Japan have grown 118%. But our auto exports to
Japan have declined 69%. Our auto trade deficit with
Japan equals $6.3 billion. For every dollar we export
to Japan, we import $135.

FACT 12: Since 1996, Canada’s auto imports from
Korea have grown 710%. But our auto exports to
Korea have declined 75%. Our auto trade deficit with
Korea equals $1.7 billion. For every dollar we export
to Korea, we import $177.

Helping Banks
(and Other Companies!)

FACT 13: Since September, the federal government
and its agencies have announced financial support
for Canadian banks totaling over $100 billion. This
includes loanguarantees, emergency low-interest
loans, “swaps” of assets to free up operating cash,
and relief from regulatory requirements.

FACT 14: The federal government owns several
banks which can provide loans and other funding to
companies (like automakers) directly, without costing
taxpayers a cent. That’s not a “bailout.” These banks
include the Bank of Canada, Export Development
Canada, the Business Development Bank, and the
Canada Mortgage and Housing Corporation.

FACT 15: In 1979 the U.S. and Canadian
governments participated in a rescue package to
prevent Chrysler from going bankrupt. It involved
guaranteeing loans from private banks, in return for
certain commitments by the company. The
Canadian government received share options in
the restructured company in return for its role. Also,
Chrysler committed to build a new assembly plant
here (which became the Windsor minivan plant).
Once Chrysler recovered, the Canadian
government sold its share options for a significant
profit. The restructuring didn’t cost taxpayers a
dollar– but if Chrysler had failed, our government
would have lost billions in tax revenues.
Labour Costs in Context

FACT 16: CAW members at the Big Three make an
average of about $35 per hour – not $70 or more
as is commonly reported in the media. CAW
members in auto parts companies make less: an
average of $24 (and often much lower). The media
often reports “total labour cost” numbers as if they
were actual wages. But in fact “total labour costs”
include all labour-related charges, including
pensions, benefits, statutory rights, and even
payroll taxes (like CPP and EI) paid to
government.

FACT 17: According to the U.S. Bureau of Labor
Statistics, hourly labour costs for Canadian
autoworkers are significantly lower than in
Germany, Japan, and the U.S.

FACT 18: Workers at Toyota and Honda’s nonunion
facilities in Canada earn hourly wages, pensions,
and other benefits virtually identical to those
earned by CAW members at the Big Three.

FACT 19: In its 2008 contract with the Big Three
(now being implemented), the CAW negotiated
cost savings that will total over $300 million per
year (once fully in place).

FACT 20: Savings from the CAW 2008 contract are
larger than would result from a two-tier wage
system (especially since the auto industry is not
hiring new workers.)

FACT 21: The decline of the Canadian dollar since
July, to a normal long-term level, reduces the Big
Three’s Canadian labour costs (in $U.S. terms) by
$750 million per year.

FACT 22: CAW members in the auto parts sector
have made dramatic changes in efficiency and
contract provisions to maximize the chances for
survival of Canadian parts plants, despite the
current crisis.

FACT 23: According to Statistics Canada and
company financial reports, direct labour costs
(including management!) make up only 7 percent
of total vehicle production costs in Canada.

FACT 24: The Big Three’s losses, centred in the
U.S. market, are so large that workers in Canada
cannot possibly rescue them through wage cuts.
CAW members could agree to work all year
without wages, and the resulting savings would
offset the Big Three’s average 2008 losses for only
11 days.

Our Productivity Advantage

FACT 25: Measured in physical output (eg. vehicles
per worker, or hours per vehicle), Canadian auto
facilities are 10-15% more productive than U.S.
plants. The auto industry is one of just four
manufacturing sectors where Canada is more
productive than the U.S.

FACT 26: Even this underestimates Canada’s true
productivity advantage. Canadian auto facilities
produce a mix of higher value-added products. In
value-added terms, our productivity advantage is
even larger.

FACT 27: Companies focus on unit labour costs,
which equals labour costs divided by productivity.
At current exchange rates, Canadian autoworkers
are 10% less expensive than in the U.S., and we
have a productivity advantage of over 10%.
Therefore, it is 20% cheaper to produce a unit of
output in Canada.

Fighting Back
Makes a Difference

FACT 28: The CAW is a mature and responsible
union. We have ensured that our facilities remain
competitive with other industrialized countries for
new investment, and we will continue to do so.

FACT 29: We don’t know what the next weeks and
months will bring. But we do know this: sticking
together in our union to fight for our shared
interests will win the best deal possible, for our
families and communities.

Please use these facts when talking
to your family & friends about what
this crisis is all about!

STOCKHOLM, Sweden – The Swedish government confirmed Monday it is in talks with General Motors Corp. and Ford Motor Co. after a report that the U.S. auto makers are seeking support for their struggling Swedish brands Saab and Volvo Cars.

"We are obviously in talks with Saab, Volvo, GM and Ford all the time, considering the difficult situation," government spokeswoman Lisa Warn said.

Warn declined to give details on the talks, but said the European Union's tough competition regulations restrain the options for the Swedish government should it wish to support the Swedish-based car industry.

Officials at GM-owned Saab and Ford-owned Volvo weren't immediately available for comments.

Ford, General Motors and Chrysler LLC have been lobbying the U.S. Congress for financial assistance as the companies are being squeezed by falling sales amid the world economic crisis. However, the Swedes doubt U.S. lawmakers would be willing to support the companies' international operations.

"If GM gets money from the American government, then we're convinced that it will be earmarked for American interests," said Paul Akerlund, a union representative at Saab.

U.S. legislators have demanded plans from the car makers before they will schedule votes on any new federal aid. The plans are expected Tuesday and will be scrutinized at a Senate hearing Wednesday and a House hearing on Friday.

Volvo Cars has already said it will cut some 6,000 jobs worldwide, of which more than half are in Sweden. Ford was seeking buyers for Volvo last year, but the Dearborn, Michigan-based auto maker later said Volvo is no longer for sale.

Magna International Inc., one of the world's sturdiest auto parts makers, is starting to feel the impact of the crash of the North American vehicle industry.

While rivals slid into the ditch and turned to writeoffs during the past few years, the Aurora-based parts powerhouse has avoided a lot of the damage sweeping the sector because of a solid balance sheet and strong entrepreneurial culture.

But the industry's problems have begun to catch up to Magna and legendary industrialist Frank Stronach, who built the company and remains its chair.

Magna, a growing company for more than a decade and one of the biggest auto parts makers in the world, posted its first net quarterly loss in 17 years earlier this month. It also lowered sales forecasts.

The company lost the financial muscle of its Russian partner Oleg Deripaska, who bought a big stake for $1.54 billion in Magna last year but got squeezed out by the global credit crisis. Magna wanted to use the merger to make a big foray into Russia's emerging auto market.

Magna chopped the quarterly shareholder dividend in half to 18 cents after reporting the third quarter loss of $215 million. Furthermore, the company's stock has lost more than 60 per cent of its value this year. The shares rose 62 cents yesterday to close at $32.70 in Toronto.

And yesterday, it announced two more plant closures in York Region, the hub of Magna's operations in Canada. That followed consolidation of two powertrain operations there two days earlier. In September, Magna cut a shift from its biggest plant in the country.

The job losses are piling up and analysts expect more as Magna absorbs hits from its heavy exposure to General Motors, Ford and Chrysler – the three automakers in the deepest trouble.

The Detroit Three, whose sales have dropped dramatically this year, still account for more then 50 per cent of Magna's revenue.

However, Magna has also seen increasing business from surging Japanese-based automakers in recent years.

Don Walker, Magna's co-chief executive officer, acknowledged recently the company is not immune to the industry's problems and was already focusing on running leaner and more efficient operations through the downturn.

The company's strong cash position and relatively low debt allow an opportunity to buy struggling competitors, possibly for bargain prices, to complement existing operations.

But at the same time, one or more of the Detroit Three could fail if they don't get a multibillion-dollar aid package from the U.S. and federal governments soon.

Analysts say that would throw a major monkey wrench into the Magna machine and create a managerial nightmare as the company tries to operate, consolidate and close parts plants to align production with reduced demand – and still make money.

One industry watcher, who requested anonymity, said while Magna is dealing with the current economic headwinds, it is also preparing for what the sector will look like after the storm.