Automakers ready more detailed loan request

updated 7:05 p.m. ET Nov. 25, 2008

DETROIT - A list of job cuts, shuttered factories, canceled bonuses and commitments to fuel-efficient cars won’t be enough next week when U.S. automakers get another shot to persuade Congress to give them $25 billion in loans.

Through the Thanksgiving weekend, teams will be tagging more meat to throw at skeptical lawmakers who vilified the automakers’ top executives the last time they went to Washington. That means executive pay cuts, union concessions, and perhaps even higher fuel economy requirements and a glimpse at top-secret product plans.

At General Motors Corp., the largest of the Detroit Three and probably the most needy, teams are preparing a detailed plan, first for GM’s board on Monday, then for delivery to Congress by a Dec. 2 deadline. The House Financial Services Committee plans to hear testimony on the loan requests Dec. 5.

Steve Adamske, a spokesman for committee chairman Barney Frank, D-Mass., said Tuesday that each company is expected to submit a report that will be made public to “give confidence to the people that we’re not giving good money after bad.”

People with knowledge of the plans being built by GM and Chrysler say they will contain more than just details of past restructuring. At GM, the company has slashed production and cut its U.S. payroll from 177,000 eight years ago to the current 104,000. Chrysler LLC’s worldwide work force has been slashed from 123,180 10 years ago to about 66,000 today.

The person briefed on GM’s preparations, who didn’t want to be identified because of the plan hasn’t been finalized, says it is likely to include new, more visible sacrifices from top executives, even working for $1 per year. Also on the table are concessions from the United Auto Workers, including elimination of the much-criticized jobs bank in which laid-off workers keep getting most of their pay.

Video   Stuck in reverse: Auto dealerships fight to survive Nov. 23: The U.S. auto industry’s troubles have rippled to car dealerships. As NBC’s Kevin Tibbles reports, of the more than 20,000 new car dealers in America, 700 have gone out of business this year. Nightly News

Executive pay cuts are almost a certainty, given the language in a letter House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., sent to the automakers last week demanding detailed plans.

“In return for their additional burden, taxpayers also deserve to see top automobile executives making significant sacrifices and major changes to their way of doing business,” the letter said.

During last week’s congressional hearings, only Chrysler Chief Executive Robert Nardelli committed to working for $1 per year, while GM CEO Rick Wagoner and Ford’s Alan Mulally didn’t directly answer the question.

Besides getting called out for flying to Washington on separate corporate jets, a lack of answers from the CEOs was a big part of the problem last week and a big reason why the CEOs were chastised by hostile lawmakers, said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight.

“All of that information that was requested should have been communicated during the first round of hearings,” Bragman said. “The communication job that they’ve done thus far to the public and the Congress to get the bailout has been very poor.”

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