Automakers' plans due today

by Frank James

Today's the deadline for the Big Three automakers to send their restructuring plans to Congress as they attempt to get a $25 billion taxpayer bailout they say they need to avoid insolvency.

Congress requested the plans after the chief executive officers of Ford, GM and Chrysler failed to have ready answers to the straight-forward question "what would you do with the money," when they appeared before Congress last month.

Chastened, the automakers now not only have their plans in hand but they also intend to leave behind the flying public-relations disasters known as their private jets. Flying by private jet to Washington the last time they came seeking money turned out to be not such a good idea.

Ford's CEO Alan Mulally plans to ride in a Ford hybrid all the way to Washington to make the point that he's a true penitent. The others apparently intend to fly commercial for their appearances before congressional committees later this week.

As the Associated Press reports:

GM will outline efforts to negotiate swapping some of the company's debt for equity stakes in the automaker, either shares or warrants for them, said two people briefed on the company's plan.

With eight separate brands, GM will also discuss efforts to shed brands but it would prefer to sell them instead of shutting down Pontiac, Saturn or Saab, said one of the people briefed on the plan. Killing off brands, like GM did with Oldsmobile in 2004, would require cash the company doesn't have, the person said. The people briefed on GM's preparations didn't want to be identified because the plan hadn't been completed.

Some members of Congress have urged the Big Three executives to take major pay cuts as part of the deal. Chrysler Chief Executive Robert Nardelli said he would work for $1 a year, and a similar commitment is expected from GM CEO Rick Wagoner. Ford plans to include a pay cut for Ford CEO Alan Mulally, although the size of the cut was not immediately available.

Ford, meanwhile, is not expected to immediately seek the loans. Mulally told Congress last month that the company would only seek funding if the U.S. market continued to deteriorate. He mortgaged factories to arrange a $23.4 billion credit line shortly after taking over the company in 2006 and he has said Ford can last at least until 2010.

Ford plans to emphasize a major shift towards green auto technology, which has long been an interest of William Ford Jr., the most high-profile descendant of the company's founder. As the Wall Street Journal reports:

In a phone interview Monday, Mr. Mulally said Ford will explain to Congress it is rushing to launch new hybrids and electric vehicles by 2011, including a battery-powered commercial van and compact sedan. A plug-in electric vehicle that can be recharged from a standard electrical outlet should follow in 2012, he said.

In a separate interview, Ford Chairman William Ford Jr. said the company is looking beyond survival to opportunity. "We want to come blasting out as a global, green, high-tech company that's exactly where the country and the Obama administration want us to head," he said. Ford's recovery plan "isn't just about slashing -- we've already done that slashing and burning -- but about building for the future."

While AP reported that the issue of the salary of Ford's Mulally was still a work in process, the Journal reported that will concede like the other Big Three CEOs to work for one dollar a year which is probably good for him since it's unlikely Congress would have been happy with him remaining CEO based on his answer at one of last month's hearings when he was asked if he would take a pay cut.

Another WSJ excerpt:

Mr. Mulally added that he would work for $1 a year if Ford received any federal loan or other aid, a change from the view he expressed last month. While testifying before Congress, he was asked if he would be willing to cut his annual salary to that amount and responded, "I think I'm OK where I am." He took home $21.67 million in 2007.