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Automakers Deliver Plans To Congress

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Automakers Deliver Plans To Congress

Economy

Automakers Deliver Plans To Congress

Automakers Deliver Plans To Congress

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The Big Three automakers have presented their plans to Congress for how they will restructure themselves to make them worthy of a congressional bailout. Ford says it wants a $9 billion standby line of credit; GM has sought $12 billion. Chrysler is expected to ask for $7 billion.

MICHELE NORRIS, host:

From NPR News, this is All Things Considered. I'm Michele Norris. It's deadline for the Big Three automakers. They're headed back to Capitol Hill later this week minus the corporate jets. They're offering plans for how they will fix their companies, and they're hoping the second time will be the charm in their bid for billions of dollars in government loans. The CEOs will be arriving in Washington just as reports suggest cars did not sell well in the month of November. NPR's Brian Naylor is covering the auto CEOs' effort to win money from Congress, and he joins me now. Brian, what can you tell us about the proposals that the automakers delivered to Congress?

BRIAN NAYLOR: Well, Michele, let's start with Ford since they released their plan first. And what's most interesting is that Ford isn't actually asking for a bridge loan at this point, but what it calls a standby line of credit of up to $9 billion. Ford says if it takes any of that money that CEO Alan Mulally will take a token salary of a dollar a year. The company says it will also sell its five corporate jets. Ford says it's shifting production away from trucks and SUVs to smaller cars, and plans to return to profitability by 2011.

GM says it needs some $12 billion in bridge loans, including 4 billion alone this month and a $6 billion line of credit. It also says that Pontiac will become a specialty brand with reduced product offerings and that it's exploring alternatives for the Saturn brand. It's also trying to find some other takers for its corporate jet fleet that it's now leasing. Both the Ford and the GM CEOs say they'll be coming to Washington by hybrid car for this round of hearings. Chrysler is expected to be looking for some $7 billion in loans from the government.

NORRIS: I want to ask you about those bad sales figures for November. Do those numbers have any effect on how lawmakers view the bailout?

NAYLOR: Well, that'll be interesting to watch. Chrysler said its sales were down 47 percent; GM, 41 percent; Ford, 31 percent. So I think it certainly underscores for lawmakers the troubled times the industry is facing. Speaker Nancy Pelosi was asked today if she thinks Congress will act. Here's her response.

Representative NANCY PELOSI (Democrat, California; Speaker of the House): I believe that an intervention will happen either legislatively or from the administration. I think it's pretty clear that bankruptcy is not an option.

NAYLOR: I think, you know, the sales figures, as I say, add credibility to Detroit's argument that, hey, it's not us. It's the economy that's killing us.

NORRIS: We've all seen the CEOs there in the chamber on Capitol Hill, but they also work their relationships with the various lawmakers. How much is politics a part of this?

NAYLOR: Politics? In Washington? Well, you know, I think lawmakers were appalled by, you know, the tin ear that automakers showed the last time they were here, coming to Washington hat in hand via corporate jet and unable to answer the basic question about what they would do with the money. But on the other hand, members of Congress certainly realize that the automakers employ millions of their constituents around the country, and if plants are going to be closed and workers laid off, they'll be judged in the next election.

NORRIS: That's NPR's Brian Naylor on Capitol Hill. Brian, thanks so much.

NAYLOR: Thanks, Michele.

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Big Three Offer Restructuring Plans As Sales Plunge

UAW President Ron Gettelfinger (from left), General Motors Chairman and CEO Richard Wagoner, Chrysler Chairman and CEO Robert Nardelli and Ford President and CEO Alan Mulally appear before the House Financial Services Committee, Nov. 19. Chip Somodevilla/Getty Images hide caption

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Chip Somodevilla/Getty Images

UAW President Ron Gettelfinger (from left), General Motors Chairman and CEO Richard Wagoner, Chrysler Chairman and CEO Robert Nardelli and Ford President and CEO Alan Mulally appear before the House Financial Services Committee, Nov. 19.

Chip Somodevilla/Getty Images

Sales at Detroit's Big Three automakers plunged in November, with General Motors falling 41 percent, Chrysler 47 percent and Ford 31 percent, the companies said Tuesday.

The dismal numbers came as the automakers unveiled strategic plans Tuesday for their companies in a bid for a $25 billion government bailout.

When GM Chief Executive Rick Wagoner and Ford Motor Co. Chief Executive Officer Alan Mulally travel to make their second appeal to lawmakers for $25 billion worth of government loans, it will be by car — not corporate jets like last time.

A spokesman said Chrysler LLC CEO Robert Nardelli would not travel by corporate jet but cited security for not revealing his exact travel plans.

The three were submitting restructuring plans on Tuesday and were expected to present details of the proposals before members of Congress on Thursday and Friday.

Mulally also announced that he would cut his salary to just $1 a year if a taxpayer-funded loan for his company is approved.

Spokesman Tony Cervone said Wagoner will drive in a Chevrolet Malibu hybrid sedan when he makes the 520-mile road trip from Detroit to Washington, D.C.

The CEOs' contrition comes in sharp contrast to meetings on Capitol Hill last month that incensed many Americans after it was revealed that the three arrived in Washington aboard corporate jets to plead with lawmakers for loans.

The luxury travel for CEOs of companies on the verge of bankruptcy and asking for a bailout struck a sour note for average Americans and many in Congress.

American carmakers have struggled to survive as they head into 2009 amid an economic recession that has helped trigger the worst auto sales in decades. The three companies went through nearly $18 billion in cash reserves during the last quarter, and GM and Chrysler have warned of their imminent collapse.

Following the first round of auto bailout hearings, House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) told the executives to present a restructuring plan that would eliminate lavish executive pay packages and provide assurances that taxpayers would be reimbursed for any loans.

Ford's plan will cancel all management employees' 2009 bonuses and merit increases for its North American salaried employees next year, Mulally said in an interview Tuesday.

He said Ford will work with the United Auto Workers union to cut costs and accelerate plans to roll out electric cars. Mulally said the Dearborn-based company will seek $9 billion as its share of the loan money but may not need to use it. Ford has said it has enough cash to make it through next year without assistance.

Few details of the restructuring plans for the other automakers were available on Tuesday, but GM was expected to lay out plans for streamlining its product offerings.

During last month's hearings, the CEOs were asked what their companies were doing to make themselves more viable in the long term.

Meanwhile, UAW leaders have called a meeting of union leaders nationwide on Wednesday in Detroit to discuss concessions that would help secure the government loans.

The bad sales news wasn't limited to the Big Three automakers. Their overseas rivals posted abysmal results Tuesday as well. Toyota's November U.S. sales tumbled 34 percent, and Honda's fell 32 percent.

From NPR staff and wire reports