The "American Leyland" News Thread

[Spectre]

Since it's pretty clear that GM and Chrysler will become a new American Leyland (just like I predicted), I thought we could finally just throw all the news posts about "Government Motors" or Obama Motors into one thread. I'll get it started.

From the Obama Motors department and Marketwatch:

Report: GM finds buyer for Hummer; Opel sale clears hurdle
By MarketWatch

SAN FRANCISCO (MarketWatch) -- General Motors Corp. reportedly is nearing a deal to sell its Hummer brand to an undisclosed investor, while the sale of its Opel unit to Magna International cleared another hurdle in Germany as the automaker moves to raise cash ahead of an expected bankruptcy filing on Monday.

According to a story in The Wall Street Journal citing people familiar with the matter, the Hummer sale could save as many as 3,000 jobs U.S. jobs in manufacturing, engineering and at dealerships.

The Journal noted GM (GM 0.75, -0.37, -33.04%) began a review of the Hummer brand a year ago and has been in talks with several potential buyers, including Chinese investors and parties in the U.S.

It has picked a buyer for the brand, and hopes to close the deal by the end of the September, according to the Journal report.

Recent offers for the Hummer brand were in the $200 million range, according to others involved in the bidding. It is unclear what the final price for the brand will be. The Journal also quoted a GM spokesman as saying the company is "working through the final details of an agreement," but said the company does not have an announcement to make at this time.

The report said the buyer has committed to invest in future Hummer products, according to people briefed on the deal. One potential condition of the deal could be a move by the new investor to acquire a manufacturing plant in Louisiana that builds Hummer models, the Journal reported.

Meanwhile, Reuters reported the budget and finance committees of two German states with large Opel plants OK'd the deal with GM's Opel unit, Magna and the U.S. government to save Opel from bankruptcy.

About 15,600 of Opel's 25,000 workers are based in Hesse and 5,200 in North Rhine-Westphalia.

Also from the Obama Motors department and Marketwatch:

GM to get $30 billion in bankruptcy financing
U.S. taxpayers to own 60% of pared-down GM

By Steve Gelsi, MarketWatch

NEW YORK (MarketWatch) -- Senior officials in the Obama administration said late Sunday the U.S. government will provide $30 billion in financing to General Motors Corp. to allow it to continue to operate through a historic Chapter 11 bankruptcy, expected to last an estimated 60 to 90 days.

Officials confirmed that a majority of GM /quotes/comstock/13*!gm/quotes/nls/gm (GM 0.75, -0.37, -33.04%) bond holders approved the deal to allow the ailing car maker to restructure $27 billion in debt. See full story on GM bondholders.

"For the better part of a century, the General Motors Corporation has been one of the most recognizable and largest businesses in the world," one senior U.S. official said in a prepared statement to reporters. "Today will rank as another historic day for the company -- the end of an old General Motors, and the beginning of a new one."

Describing the process as "painful but necessary," officials said GM will move ahead with plans to close 11 facilities will idle three more. Specific numbers of layoffs will come from GM, officials said.

The U.S. government will own 60% of equity in the new General Motors, with little or no control over day-to-day affairs. The U.S. government will receive approximately $8.8 billion in debt and preferred stock and will name some of the new company's board members.

Officials did not confirm or deny reports that Al Koch, a turnaround specialist, will serve as chief restructuring officer.

An additional $9.5 billion will be lent to GM by Canada and the Province of Ontario, with the Canadian government in line to own 12% of the new GM and receive approximately $1.7 billion in debt and preferred stock. The Canadian government will also have the right to select one initial director.

President Barack Obama is expected to speak about the GM bankruptcy on Monday, with the company also planning a formal announcement before the stock market opens.

Government says it's done lending to GM

Officials said the government would eventually sell its stake in General Motors, but did not lay out a target date. On the conference call with reporters, the officials said they didn't expect GM to require any more funding from the government.

"The government has no desire to own stakes in companies and will actively seek to dispose ownership interest," an official said. "The goal is to promote strong companies that can become profitable quickly."

As a result of this restructuring, GM will lower its break-even point to sales of 10 million cars per year. Before the restructuring, GM needed to sell about 16 million car sales a year to turn a profit.

The UAW made "important concessions" on compensation and retirees health care, Obama administration officials said.

The new GM will establish an independent trust, known as a voluntary employee beneficiary association (VEBA), to provide health-care benefits for GM's retirees. The VEBA will be funded by a note of $2.5 billion, payable in thee installments ending in 2017 and $6.5 billion in perpetual preferred stock. The independent trust will also receive 17.5% of the new GM and warrants to purchase an additional 2.5% stake in the company.

The UAW's existing $20 billion pension obligations will disappear as part of the bankruptcy.

The new GM will pursue a commitment to build a new small car in an idled UAW factory, which, when in place, will increase the domestic-sales share of U.S.-produced vehicles from its current level of about 66% to over 70%.

Officials confirm $27 billion debt deal

The steering committee for a portion of GM creditors has confirmed that bondholders representing at least 54% of GM's unsecured debt have agreed to exchange their portion of the company's $27.1 billion unsecured paper for their pro-rata share of 10% of equity in the new GM, plus warrants for an additional 15% of the new company.

"The bankruptcy court process will be used to confirm this treatment for those bondholders and other unsecured creditors that failed to accept or did not participate in the offer that was accepted by the aforementioned majority," the U.S. officials said.

GM will continue to honor its consumer warranties. This past week, the U.S. Treasury made available the Warranty Support Program to GM, with $361 million in funding to provide a backstop for the orderly payment of warranties for cars sold during the restructuring period.

Employees will continue to receive regular compensation, including salary, wages and ordinary benefits. GM will seek authority at its first-day hearing to continue to pay suppliers as normal.

Steve Gelsi is a reporter for MarketWatch in New York.

From the "We told you idiots that this was a bad idea but you wouldn't listen" department and the notoriously left-wing Washington Post:

The GM Quagmire
Congress should question the need for nationalization.
Saturday, May 30, 2009

IN MARCH, we cheered President Obama when he extended a federal lifeline to General Motors and Chrysler. He was risking a fair bit of tax dollars -- $6 billion, on top of $17.5 billion in emergency loans tendered since December -- but he said he was setting tough conditions for anything beyond that. "We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars," he said. "These companies -- and this industry -- must ultimately stand on their own, not as wards of the state."

So how did we get from there to here? Here, according to media accounts this week, is an imminent transformation of General Motors into a government-owned company, infused with upward of $50 billion in federal money. The United States will accept stock in lieu of the cash the company owes, and Washington -- that is, you, the taxpayer -- will become the owner of 70 percent of the new GM. When might the company stand on its own, to paraphrase Mr. Obama? When would the government exit the stage? The Post reports today that administration officials hope to depart within five years, but the truth is that nobody knows when or whether taxpayers would recover their investment. If you think the federal government is well equipped to manage a failing automobile manufacturer into profitability, you should jump at this deal.

The bailouts were distasteful from the beginning, in December, but with the economy so fragile, a GM implosion might have been calamitous. Dealerships and auto-parts suppliers would have followed the once-mighty manufacturer into bankruptcy, taking a huge toll on employment. Even today, with the economy looking less shaky, that logic may still hold. Economists have warned against assuming too soon that the recession is waning. It could be too dangerous even now to leave GM to its own devices.

But is a massive, unbounded federal commitment to a company that evidently still can attract no private capital really the only option? It doesn't take much imagination to forecast the political pressures that will buffet the government-as-auto-executive. We've seen one effect already in the preferential treatment of the autoworkers' union at the expense of private creditors. The government sweetened its offer to creditors in the past couple of days, but they're still getting less return on their debt than the union is. Meanwhile, the union can boast that it has been promised no loss in "base hourly pay, no reduction in . . . health care, and no reduction in pensions." Influential members of Congress will insist on jobs in their districts; environmentalists will want electric cars; overseas sourcing will be frowned upon. How such decisions affect profits could become secondary.

In an essay this week on http://theatlantic.com, federal Judge Richard A. Posner argued that a further bailout may be justified -- if GM's failure to attract private investment stems from continuing problems in the overall credit market and not its own inefficiencies. If so, he wrote, the aid should take the form of additional loans, not ownership. "We should be concerned lest GM become a kind of economic Vietnam, where the federal government throws good money after bad, year after year, in a vain quest for victory."

When the Bush administration first assessed its unpalatable options, Congress played an active and constructive role. Where are the legislators now? They should at least be pressing the administration to explain why nationalization is the best option.

[MadCat360]

Where is your God now?

[Spectre]

I just wonder who they found to buy Hummer off GM.

[MadCat360]

Probably the Governator.

[MacGuffin]

A history of Opel in pictures:

http://www.spiegel.de/fotostrecke/fo...cke-42909.html

[JipJopJones]

Originally Posted by MacGuffin

A history of Opel in pictures:

http://www.spiegel.de/fotostrecke/fo...cke-42909.html

Damn the Opel Manta is a good looking piece of steel!

[kaBOOMn]

Meh it might work out. I still think they took the pragmatic option at the time...I actually do hope it does work out, since I live near Holden's factory here (know a lotta local people that work there) if the shit hits the fan....

I spoze the problem now is: What do they honestly do to re-structure? And how will the various interest groups cope? (probably badly)

Hopefully the US government takes a hands off approach to owning both of these companies or at the very least if the government does impose some product "desires" put it through a 50%-50% split of US politicians down party lines. At least then nothing will sneak through without the media knowing about it.

...Personally I think the US government should stay the hell out of it (regarding products)...its a market driven field the automotive one....what would they know?

Maybe a Nissan Style re-structure may be the way forward? They need to axe a hell of a lot of crap...

I personally don't think it will work out, but I really hope it does for all involved (that kinda makes sense....)

.
..
...

Anyway Spectre, why call it American Leyland? If the shit hits the fan then you can call it American Leyland The jury is still out sunshine

[Spectre]

Well, "sunshine", the American government's record of failure at running businesses is 100%. Total, absolute, abject failure. No exceptions, no matter what party is in control. Both Republican and Democrat governments have thrashed and trashed any government-owned business.

Even the WaPo (article above) touches on the major problems.

But is a massive, unbounded federal commitment to a company that evidently still can attract no private capital really the only option? It doesn't take much imagination to forecast the political pressures that will buffet the government-as-auto-executive. We've seen one effect already in the preferential treatment of the autoworkers' union at the expense of private creditors. The government sweetened its offer to creditors in the past couple of days, but they're still getting less return on their debt than the union is. Meanwhile, the union can boast that it has been promised no loss in "base hourly pay, no reduction in . . . health care, and no reduction in pensions." Influential members of Congress will insist on jobs in their districts; environmentalists will want electric cars; overseas sourcing will be frowned upon. How such decisions affect profits could become secondary.

It's going to be run like Amtrak - poorly. The issues listed above are the same ones that affect Amtrak and render it a sick joke as a mass transit system. For example, Congresscritters will not let Amtrak close unprofitable stations in the back of beyond because they fear losing some rural constituent's vote. Quite literally there are thousands of stations in rural America that the Amtrak trains must stop at every single one of because sometime somewhen someone might want to get off or on the train there.

[prizrak]

The one good thing in all of this is government getting preferred stock over regular stock. IIRC preferred stock has no voting powers.

[Spectre]

Not in this case, from what I've read. This preferred stock will have voting rights.

[awdrifter]

I would rather the govenment have some say rather than having no say like when they bailed out the banks.

[nouseferaname90]

And in spite of what others said about GM affecting the entire economy, the Dow is up by 100 points already.

[TomCat]

Well, GM failed, so if the Government fails, what exactly is the difference?

It will be interesting, if nothing else, to see what happens here on out.

[JakeRadden]

Originally Posted by TomCat

Well, GM failed, so if the Government fails, what exactly is the difference?

It will be interesting, if nothing else, to see what happens here on out.

Well, if the government fails too, it will fail after dumping a whole shitload of our taxpayer money down the hole that is GM.

And my stupid parents still are in favor of this, I said that the government is taking control of a private company and they responded with a "so?". They think it is "worth it" and that the government won't fail at running GM. My dad is just complaining that I see the world as black and white and that I'm not a very clear-sighted person and I of course "KNOW" that the government is going to fail at running American Layland. They are just so... close-minded.

[MacGuffin]

I have a question:

In Germany there is a law that says you have to try to make profit, if you want to run a company or firm. You are not allowed to run a company just for fun, because you have too much money or feel generous and only want to give people jobs. You must try to earn money and run the firm economically.

Is that the same in the USA?

P.S.: I just read that it now is official. GM has filed Chapter 11.

[SpitfireMK461]

And my stupid parents still are in favor of this, I said that the government is taking control of a private company and they responded with a "so?". They think it is "worth it" and that the government won't fail at running GM. My dad is just complaining that I see the world as black and white and that I'm not a very clear-sighted person and I of course "KNOW" that the government is going to fail at running American Layland. They are just so... close-minded.

They're close minded because they think it might not fail, as opposed to you saying without a doubt they will?

While I'm not saying that the gov't won't fail at running GM, I'm not saying they will either. If this fails, I fully suspect it would be from the downward momentum GM has as opposed to bad government ownership. Just because GM will be owned by the government doesn't mean some politician is sitting there designing cars, or that Congress has to approve each year's new models. I don't see how the government can and would do more than restructuring.

It most likely will fail, because it's GM, but with so much money poured into them, I hope it succeeds.

[Leonidae]

Bye bye General Motors, welcome Government Motors.

Embattled US automaker General Motors has filed for bankruptcy protection in New York in the third-largest case in US history.

The court filing had been widely anticipated after Obama administration officials said a day earlier that the automaker would be taking the action before financial markets opened.

Based on its end-March assets of $US82 billion ($100 billion), the GM bankruptcy ranked behind only Lehman Brothers and WorldCom in terms of size.

GM said in a submission with its bankruptcy filing that its board of directors had voted on Sunday to approve the move to seek court protection in a reorganisation that will be funded by an additional $US30 billion from the US government.

The US Treasury plans to provide $50 billion in financing to GM and take a 60 per cent stake in a reorganized company.

The US government will fund a new company created to buy GM's best assets out of bankruptcy under a fast-track plan that officials hope to complete by the end of August.

Judge Robert Gerber of US Bankruptcy Court in Manhattan was assigned to handle the automaker's bankruptcy, expected to be one of the most complex such cases ever to be heard in the federal courts.

Senior analyst at IHS Global Insight, John Wolkonowicz, has told ABC1's Lateline Business that GM's future will depend on the condition of the auto market.

"They have the support of 54 per cent of the creditors, that's probably enough," he said.

"I think the Government will ramrod the rest of it through.

"I think the biggest risk now is if the auto markets in the US don't pick up on schedule."

But in a sign of progress in the government's high-stakes effort, a bankruptcy judge approved the sale of substantially all of US automaker Chrysler's assets to a group led by Italy's Fiat SpA in an opinion filed late on Sunday.

Chrysler's bankruptcy, also financed by the US Treasury, has been widely seen as a test run for the much bigger and more complex reorganisation of GM.

Lifeline

Since the start of the year, GM has been kept alive with US government funding as a White House-appointed task force vetted plans for a sweeping reorganisation that will be undertaken with $US50 billion in federal financing.

By taking a 60 per cent stake in a reorganised GM, the Obama administration is gambling that the automaker can compete with the likes of Toyota after its debt is cut by half and its labor costs are slashed under a new contract with the United Auto Workers union.

The governments of Canada and the province of Ontario agreed to provide another $US9.5 billion to GM in a late addition to the plans for the bankruptcy.

GM plans to close 11 US facilities and idle another three plants.

It has not provided an updated target for job cuts but had been looking to cut 21,000 factory jobs from the 54,000 UAW workers it now employs in the United States.

- Reuters

[watisdis]

It's been a long time comin'
It's goin' to be a Long Time Gone.
And it appears to be a long,
appears to be a long,
appears to be a long
time, yes, a long, long, long ,long time before the dawn.

Turn, turn any corner.
Hear, you must hear what the people say.
You know there's something that's goin' on around here,
the surely, surely, surely won't stand the light of day.
And it appears to be a long,
appears to be a long,
appears to be a long
time, yes, a long, long, long ,long time before the dawn.

[vikiradTG2007]

http://twitter.com/sniffpetrol/status/1992332884

Sniff Petrol must have been reading your posts, Spectre.

[Spectre]

Originally Posted by JakeRadden

Well, if the government fails too, it will fail after dumping a whole shitload of our taxpayer money down the hole that is GM.

And my stupid parents still are in favor of this, I said that the government is taking control of a private company and they responded with a "so?". They think it is "worth it" and that the government won't fail at running GM. My dad is just complaining that I see the world as black and white and that I'm not a very clear-sighted person and I of course "KNOW" that the government is going to fail at running American Layland. They are just so... close-minded.

You forgot to mention that if GM fails under government control, it won't just fail once, but repeatedly and will continue to be propped up again and again by those tax dollars. You also forgot to mention that the government will also pass legislation to protect "their" company and stifle competition.

If you don't think this will happen, it already has. Look at AMTRAK; AMTRAK is part of why building a privately-owned train system in the US is almost impossible.

Originally Posted by MacGuffin

I have a question:

In Germany there is a law that says you have to try to make profit, if you want to run a company or firm. You are not allowed to run a company just for fun, because you have too much money or feel generous and only want to give people jobs. You must try to earn money and run the firm economically.

Is that the same in the USA?

There is such a thing as a registered non-profit corporation here, for those that wish to give away money or employment, but if you have a for-profit corp you do have to run it in such a way as to attempt to make a profit.

However, this law does not apply to government owned entities. The government has owned AMTRAK for 38 years, and it has never made a profit.

Originally Posted by SpitfireMK461

They're close minded because they think it might not fail, as opposed to you saying without a doubt they will?

While I'm not saying that the gov't won't fail at running GM, I'm not saying they will either. If this fails, I fully suspect it would be from the downward momentum GM has as opposed to bad government ownership. Just because GM will be owned by the government doesn't mean some politician is sitting there designing cars, or that Congress has to approve each year's new models. I don't see how the government can and would do more than restructuring.

It most likely will fail, because it's GM, but with so much money poured into them, I hope it succeeds.

The government's past track record indicates that that is exactly what will happen. Politicians will decree what the company will do or make, regardless of what will make money. Again, I refer you to Amtrak and the USPS.