GM asks German government for credit guarantee (Obama Union Payback Act of 2009)

WASHINGTON: As top Detroit auto executives prepared to make their most intense plea for aid to Congress on Tuesday, General Motors also pleaded Monday for a billion-euro credit guarantee from the German government to help its Opel subsidiary.

The request, greeted with some skepticism in Germany - Chancellor Angela Merkel promised a reply by Christmas - demonstrated how what had been building as a Washington drama involving efforts to save the venerable Detroit auto industry was fast becoming a story about how the international industry might be transformed by the spreading financial crisis.

Governments around the world, from Tokyo to Berlin, are mulling over pleas by auto industries that say their very survival may be at stake. In addition to GM's plea to the German government, the carmaker is selling its 3 percent stake in Suzuki Motor to raise $230 million.

"There's a high degree of urgency" for federal assistance if General Motors is to avert a full-blown crisis, Rick Wagoner, the company's chairman and chief executive, said in a joint appearance in Detroit with Ron Gettelfinger, who heads the industry's largest union, the United Auto Workers. "It's really time to move on this," Wagoner said.

Wagoner and Gettelfinger, who will be key witnesses at a hearing Tuesday before the Senate Banking Committee, are allies of convenience - particularly after President-elect Barack Obama said that any new aid should depend on automakers and labor coming together behind a plan to make the industry sustainable. Also testifying will be Alan Mulally, who heads Ford, and Robert Nardelli of Chrysler.

“Rick Wagoner, the company’s chairman and chief executive, said in a joint appearance in Detroit with Ron Gettelfinger, who heads the industry’s largest union, the United Auto Workers”
And therein is the problem. To throw any amount of money at GM is to throw good money after bad. The recent economic trouble isn’t what’s killing GM since GM has been sliding for two decades. A Chapter 11 bankruptcy would be a healthy thing since GM desperately needs to restructure to even have a chance of succeeding in the future. Without a major restructuring of liabilities and a viable plan to build fuel efficient cars, GM is dead in the water, no matter how much taxpayer money is thrown at the company. Investors and lenders know better than to put money in GM, absent major changes. The Congress is too stupid to know any better, or they don’t care if it buys votes.
As a minimum the Congress should demand a plan before holding a hearing, or even considering any bailout money for car makers. GM should negotiate with the UAW, and anyone else with ties to GM, before appearing before Congress. GM is asking for the loan, not the UAW, so the UAW has no business being at the meeting unless Congress is proposing to loan money directly to the UAW. And any money disbursement should be phased and contingent on satisfying specific goals acceptable to the American people. I still contend a Chapter 11 filing is the only thing that will provide the flexibility for GM to survive.

No idea about the real figures, but Opel employees have constantly complained about being abused to correct figures for the USA while themselves being in the black with their numbers. There is a lot of talk about letting it crash and then hopefully salvaging Opel from the wreck of GM, but I assume they are going to pay in the end, although I really don’t know whether prolonging this situation isn’t worse for Opel in the end.

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