The weekend is over and perhaps more than any other week – given that this week will see the Detroit CEOs present their business plans to their new bank managers – this week is going to see pundits falling over each other to offer you the latest and best advice on how this Detroit mess should be fixed. Me included.
I’ve been invited to edit/rewrite my Hell in a handbasket piece for Sweden’s english-language news service, The Local. Hopefully I’ll get it done in time.
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Here’s how this week’s hearings will play out. Unfortunately, despite the seeming potential for it to occur, I don’t think we’re going to much wiser about Saab’s future by next weekend.
The Detroit CEOs have to have their detailed plans for the future handed in to the US congress by Tuesday, December 2. The relevant people will then mull over these papers for a few days, no doubt subjecting themselves to the odd massage courtesy of a number of auto industry lobbyists along the way.
The CEOs won’t appear before hearings of the relevant committee until Friday, December 5. At that time they’ll be grilled about their plans so I hope they’ve got their I’s dotted and their T’s crossed.
The CEOs are going to submit a 10-or-so page summary of their plans that will be released for public view, as well as a bigger document that won’t be open for scrutiny by anyone other than the committee members. One question I haven’t heard an answer to is when we’ll see the 10-page public document – straight away or when the CEOs appear on Friday. I guess we’ll know soon enough. With the hearings and grillings happening on Friday, the legislation to grant the loans (if there is to be any) won’t go up for review or voting until next week.
Consequently, I guess the main point of interest will be whether Rick Wagoner’s written plans include Saab as part of the future of General Motors.
If they do, then the next point of interest will be whether the loans are forthcoming. If they don’t, then we’re all looking for Saab’s new owners anyway.
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The big successful Volvo (the ones making trucks, buses and stuff) are not interested in buying out the less successful Volvo (the one that makes cars).
They would, however, consider joint financing of research projects with the little Volvo, and would even go so far as to being part of a consortium to buy the company if it came to that. They just don’t want to play a lead role in such a consortium.
And the Big V is dead-set against government ownership:
[Big V Chairman Finn] Johnsson said he was opposed to calls for the Swedish state to acquire Volvo Cars.
“The state knows nothing about the car industry and Volvo needs an owner that can increase sales and cooperate with suppliers on components and development,” he said, suggesting French carmaker Renault as a good owner for the Swedish company.
Full story at AFP
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If you read nothing else today, read this piece from Daniel Howes of the Detroit News.
Last week, Pete DeLorenzo juxtaposed the attitudes of US lawmakers to Wall St and Detroit in brief.
Howes makes it the focus of his article and it’s well worth a read.
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I’m sure any bailout package (sorry ‘bridging loan’) would be solely targeted at GM Noth America. I doubt if Congress would be too happy if any of it filtered throught to GM Europe including Saab. Keeping GM NA running and protecting jobs in the US would be of prime consideration.
Maybe Volvo AB (trucks) would consider being part of a consortium (to buy Volvo Cars) which included a small stake held by the Swedish government?
I think a consortium of Investor AB, the Swedish Government and another company (prefereably a car manufacturer) would be a good interim step for Saab if GM decide to let it go. Perhaps even GM could retain (something like) a 25% stake and continue to be an OEM parts supplier to Saab.
Any comparison between the financial bailout and the auto bailout is misguided. Finance has been a directly regulated biz for over 70 yrs in the USA. You can argue its been mis-regulated or under/over regulated.. but you can’t argue that “Adam Smith” rules should apply. Those died circa 1933. Through deposit insurance and other New Deal mechanisms we are ALL truly on-the-hook whether we want to be or not.
Citibank going under would result in over $1 trillion in deposits losing substantial value. Its very possible that currently solvent non-USA govts and major banks would become insolvent as a result. So Citi going under is GM * 1000…. AND BTW if Citi went under all 3 (GM, F, C) would go under within hours. There would be no chance of any size DIP or re-org financing post Citi going under and all financing of any kind would stop for them. TARP would also then have to be 2x or 3x bigger…
There’s no doubt that dumb/bad/nefarious govt regulation has hurt the US auto industry over the years. But IMO it’s been secondary to bad mgmt and bad union decisions. There is no automotive ministry in the USA govt charged with regulating industry activities.
BOTTOM LINE : Financial industry with all its pluses and minuses is a creation of US govt policies. US auto industry is a creation of post-war USA (Midwestern variety) corporatism. Unfort for all of us both are found very wanting at the moment.
Will the CEOs arrive in corporate jets, I wonder?
He seems to be exactly as incompetent as the managers of GM USA. Congrats GM; you still make the worst cars ever existed and one day you have to suffer from it. GM is not worth a penny in goverment support. GM should be shut down and the assets should be sold to manufaturers that knows how to make cars. My wish is that they sell GME to a company with managers that are at least not retarded. End of story!
According to Swedish media now: Ford just announced that they are looking into what to do with Volvo Cars, evaluation different options. First time they said that openly. Saab next…?