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Automotive Industry

• The Insurance Institute of Highway Safety named six Ford vehicles as top safety picks.
• Consumer Reports has recognized Ford as the only American car company with world-class quality.
• JD Power has ranked Lincoln and Mercury brands in the top 10 for long-term reliability.
• Motor Trend Magazine named Ford Fusion the 2010 Car of the Year.
• Ford has increased its U.S. market share one full percentage point.

Through September the Dearborn automaker is showing a profit of $1.8 billion, a dramatic turnaround after three years of losses (2006 to 2008) that topped $30 billion.  Ford started out 2009 (January) with a staggering loss of $14.6 billion. Some pundits predicted bankruptcy, but Ford survived without it.  Earlier this year Ford stock dipped below $2 a share; it has since quadrupled.  Major credit should be given to Ford CEO Allan Mulally for navigating the company through the most difficult automotive period since the Great Depression. The reinstatement of salaried employee benefits is another sign of stability and emerging strength at Ford Motor Company.

2010 U.S. AUTO SALES PREDICTED @ 11.5 MILLION
posted 12.14.09
Automotive research firm Edmunds.com is predicting U.S. auto sales in 2010 will grow to 11.5 million, an 11.6 percent increase over 2009 sales, which are estimated to come in at 10.3 million.  The recovery is good, but by contrast is low to the glory years of 16 and 17 million total vehicle sales.  Another positive development, U.S. carmakers will also lose their pricy legacy costs in 2010; most notably retiree health care expenses.  Those costs will now be paid for through health care trusts or VEBA (Voluntary Employee Benefit Association); set up and paid for by GM, Ford, and Chrysler.  The three separate health care trusts will be owned and managed by the UAW.  It is also the reason why the UAW holds substantial equity holdings in GM and Chrysler.

CHINA OVERTAKES U.S. FOR MOST VEHICLES SOLD
posted 12.11.09
It’s official.  In 2009, for the first time ever, China will outsell the United States in vehicle sales.  In fact it is the first time in history that any other country has sold more vehicles than the United States.  China will sell more than 12.7 million vehicles in 2009, compared to the 10.3 million forecast to be sold in the United States, a 26-year low.  After a downturn in 2008 auto sales the Chinese government became proactive by cutting taxes on small cars and spending $730 million on subsidies encouraging the sale of SUVs, pickups, and minivans.  For the year China’s auto sales are up a sizzling 44 percent.  Auto insiders have long predicted China would become the #1 auto market in the world, but not so quickly.  Just two years ago the respected J.D. Power and Associates predicted China would overtake the U.S. in auto sales by 2025.  China has a behemoth population of 1.3 billion and a huge emerging middle class that is driving robust vehicle sales.  One of the largest Chinese automakers is BYD Company; interestingly enough backed by investment icon Warren Buffett.  But both GM and Ford are well-positioned in China, and stand to strongly benefit from China’s exploding vehicle market. 

FORD NEEDS EXEMPTION FOR HEALTH TRUST posted 12.10.09
Ford Motor Company needs an exemption from the U.S. Labor Department for the new health care trust it is setting up to pay for retiree health care.  The health care trust will cover health care for 285,000 Ford retirees and their dependents.  Specifically the exemption would allow Ford to transfer company stock into the health care trust.  That of course raises the value of the trust, provided the stock has any…which Ford does: Ford’s stock has quadrupled since dropping below $2 a share.  Current federal law prohibits benefit plans from owning significant quantities of employer stock and securities.  GM and Chrysler received similar exemptions during bankruptcy.  All three auto companies established health care trusts (a.k.a.VEBA) to pay for retiree health care, which is also known as legacy costs.  The VEBA will be owned and managed by the UAW, and is the reason the union has a 55 ownership stake in GM and 17 percent ownership in Chrysler.

FIRST WAGONER, NOW HENDERSON posted 12.02.09
DETROIT -- The GM board of directors has forced the resignation of CEO Fritz Henderson.  The reason cited, “it was time to accelerate the pace of rebuilding the largest U.S. automaker.”  A new international search is planned for a new company CEO and President.  General Motors Chairman Ed Whitacre Jr., who was hired in June by the Obama administration’s auto task force, will serve as interim CEO.  Before being named GM Chairman by the government, Whitacre ran AT&T for 17 years.  Henderson’s firing comes just eight months after the Obama administration removed Rick Wagoner as CEO.  Many Americans, perhaps the majority, believe the Wagoner and Henderson dismissals are just.  After all, under their leadership GM failed and had to be saved by the federal government.  But the removal of both Henderson and Wagoner is precarious and troublesome, and not necessarily a positive move.  The auto industry is unique in that it takes a period of years to develop and put a vehicle on the market.  Wagoner and Henderson have accelerated that time frame.  The new, hot-selling GM cars on the market today such as the Chevy Cruze (sold in  Australia and soon in the U.S. market), Chevy Malibu (the 2008 Car of the Year), Chevy Equinox, and the highly-anticipated Chevy Volt (the extended range electric vehicle) are all products of Wagoner and Henderson.  Though struggling in the U.S. market, the company is poised to win big in China and other emerging markets.  The company has made significant quality improvements.  Losing Fritz Henderson’s experience and expertise at this critical stage feels risky. One disagreement between the board of directors and Henderson was the proposed sale of the European Opel division to Canadian auto parts supplier Magna International and Russian state-owned Sberbank.  Henderson was for the sale but the board opposed it.  The theory is that selling Opel to Sberbank would provide the Russian company with valuable engineering, which they currently do not have, and as a result would create a new global competitor in Europe and Russia.  The Obama administration has released a statement saying this decision (firing Henderson) was made by the board of directors alone, with no involvement from the administration.  That seems disingenuous given the fact the President’s auto task force hired Chairman Ed Whitacre Jr., who will now serve as the interim CEO.  When Rick Wagoner was fired many rose to his defense including Governor Granholm, who called his removal a sacrificial offering in the automotive crisis.  You can now add Fritz Henderson to the same category.

THE OLD GM STRUGGLES posted 12.01.09
DETROIT -- With one exception (Hummer), General Motors’ plan of selling off its discarded car companies is not working.  The first casualty was Saturn, when the deal with racing mogul and entrepreneur Roger Penske went south.  The plan was to have GM continue to produce Saturn models for the first two years, and then Penske would have another manufacturer supply him with Saturn vehicles.  That deal broke down when Renault-Nissan got cold feet about supplying Penske with cars under the Saturn name.  Now it appears a deal to sell Saab is stalling.  Media reports indicate the alliance of Swedish carmaker Koenigsegg Group AB and Beijing Automotive Industry Holdings will not purchase Saab.  The one success story from the old GM is Hummer; the oddly-shaped SUV line derived from the U.S. military’s HumVees.  Hummer has been sold to Sichuan Tengzhong Heavy Industrial Machinery Company of China.  They plan on establishing the brand’s corporate headquarters in Metro Detroit with a $9.4 million investment and will initially employ 100 people.

NEW FORD MUSTANG GETS 30 MILES PER GALLON
posted 12.01.09
DETROIT -- Ford Motor is touting its all-new 2011 Mustang, which company officials say will get an impressive 30 highway miles per gallon and 19 in the city.   The iconic sports car, which includes a V-6 engine, will debut this week at the Los Angeles Auto Show.  The new Mustang will hit dealer showrooms in the spring of 2010.  Through October of 2009 Ford sold 56,469 Mustangs - down 32.4 percent from the same period last year.

GM FIRED UP ABOUT CHEVY CRUZE  posted 11.30.09
DETROIT – Slated as GM’s small car savior, the Chevy Cruze will finally make it to the U.S. market in the third quarter of 2011. The five-passenger compact has already debuted in Europe and Asia.  The Cruze--which replaces the Chevy Cobalt--delivers an impressive 40 highway MPG with a range pushing 600 miles.  In addition to world-class fuel efficiency GM officials tout the vehicle’s safety, buoyed by 10 standard airbags including frontal, side-impact, roof rail head curtain, rear seat side, and new knee air bags.  Other noteworthy features include a spacious interior with two-toned cockpit design and unparalleled quietness.  Currently the small car segment is dominated by foreign manufacturers with a commanding 78.1 percent of the market.  GM officials are hopeful the Chevy Cruze, which will be built in Lordstown, Ohio, will compete effectively with Honda Civic and Toyota Corolla.

PONTIAC BUILDS ITS LAST CAR posted 11.27.09
LAKE ORION -- After an 82-year run it’s over for Pontiac in the United States.  The last Pontiac rolled off the assembly line on November 26th at GM’s Lake Orion plant; it was a white G-6 sedan.  There was no fanfare or media attention, but some workers did pose for photos as the last Pontiacs moved down the assembly line.  In April of 2009 General Motors announced it would phase out Pontiac as part of its restructuring plan.  Pontiac debuted in 1926 at the New York Auto Show.  Over its lifetime the brand sold 41 million vehicles.  Pontiac sales peaked in 1984 when nearly 850,000 vehicles were sold.  In the U.S. market, Pontiac is the third-best selling automobile line of all time behind Ford and Chevrolet. The Lake Orion plant which employed 2400 workers will be idled and re-tooled to manufacture a new small car starting in 2011.

FORD MAKING BIG NORTH AMERICAN COMEBACK
posted 11.23.09
In the North American market Ford has been taking it on the chin since 2005, with a staggering $16.8 billion in losses.  But things are looking much brighter for the Dearborn-based automaker.  Though still in the red for 2009, the North American division reported a $357 million pre-tax profit for the 3rd quarter.  Other recent positive developments include:

• Six Ford vehicles being named top safety picks by the Insurance Institute for Highway Safety.
• Consumer Reports recognizing Ford as the only American car company with world-class reliability.
• JD Power ranking the Lincoln and Mercury brands in the top 10 for long-term vehicle reliability. 
• The Ford Fusion being named Car of the Year by Motor Trend Magazine.

Ford has gained market share in 12 out of the last 13 months in the U.S. market.  All three brands—Ford, Lincoln and Mercury--are on track to achieve annual market share gains for 2009.  In addition, the company’s average transaction price in the U.S. has increased $2156 in the last twelve months to $30,647.  The company has spent less on incentives to lure buyers and instead loaded vehicles with more enticing options.

FORD FUSION: MOTOR TREND ‘CAR OF THE YEAR’
posted 11.18.09
DETROIT -- Fabulous news for Ford Motor Company: the Ford Fusion mid-size sedan has been named ‘Car of the year’ by Motor Trend Magazine.  The Fusion beat a field of almost two dozen contenders – all of which went through intensive driving tests.  The Fusion was first introduced in 2005, and was redesigned in March of 2009 with a new engine, transmission, and improved fuel mileage.  Fusion is the top-selling car manufactured by an American auto company.   The news helped Ford stock reach a two-year high of $9 before settling at $8.98 a share.  Meantime the investment group representing billionaire financer George Soros announced they purchased $52.9 million in Ford stock.

GM TO PAY BACK FEDERAL LOANS AHEAD OF SCHEDULE posted 11.17.09
DETROIT -- Take it as a sign of stability -- GM has announced it will begin to pay back $6.7 billion in federal loans ahead of schedule.  In December GM will make its first payment to the feds, a payment of $1.2 billion.  The working plan is to have the loans paid off within two years; but GM CEO Fritz Henderson said if things are going well the federal loans could be paid in full by next summer.  GM is required to have the loans paid in full no later than 2015.  The good news comes at the same time GM announced its first financial report since emerging from bankruptcy on July 10th:  a report showing a $1.2 billion loss in the third quarter.  While it is a loss, the company said it had $3.3 billion in cash flow from July 10th to September 30th -- and did earn $1.5 billion before interest, taxes, depreciation, amortization, and special items.  Looking at GM’s recent history, losing $1.2 billion in the third quarter is a marked improvement.  For example, in 2008 GM lost $30.9 billion, and in 2007 the auto giant lost $38.7 billion.  Obviously big-time challenges remain for GM, but the fact that the company will start to pay off its federal loans ahead of schedule is a very positive signal for Detroit and the state.

GM POSTS FIRST MONTHLY SALES GAIN IN ALMOST TWO YEARS posted 11.04.09
DETROIT -- General Motors’ October sales increased by 4.7 percent from October 2008, a sign the industry may be stabilizing after the worst sales environment since the Great Depression.  Ford also saw a 3 percent improvement in October, while Chrysler’s sales slipped by 30 percent.  Toyota’s sales were up slightly, less than a percent, while Honda experienced a slight decrease.  Meantime South Korea-based Hyundai was a huge winner in October as sales jumped by 49 percent, anchored by the fuel-efficient Elantra sedan. Subaru, based in Japan, was also a big winner with sales improving by 41 percent, helped by strong sales in its Outback and Forester models.

FORD 3Q PROFIT = $1 BILLION posted 11.03.09
DETROIT -- Thanks to increased market share, cost cuts, and Cash for Clunkers the Ford Motor Company posted a $997 million profit in the third quarter.  The company’s North American division posted a pre-tax profit of $357 million – and so far for 2009 the company is showing a $1.8 billion profit.  Ford has gained a full percentage point in U.S. market share this year, representing 100,000 additional car and truck sales.  It’s a remarkable performance for Ford, and a tribute to CEO Allan Mulally for turning around the giant automaker.  It also comes just a week after Consumer Reports named 46 of 51 Ford cars and trucks as average or better in reliability.  Despite the positive developments Mulally remains concerned about 2010 as the economy struggles from low consumer confidence and high unemployment -- which in turn will hold down demand for new vehicles.  He is confident Ford Motor will be profitable by 2011.  The news of Ford’s quarterly profit also comes at the same time UAW members have rejected a new contract which would have provided the same concessions GM and Chrysler earned in bankruptcy.  Those concessions include reducing the number of skilled jobs classifications from 20 to 4.  It means tradesmen such as electricians or pipe-fitters could perform multiple jobs, translating in less people per shift for the automaker.  Other provisions in the contract were a wage freeze for entry-level workers and an agreement to enter binding arbitration on wage and benefit issues.  Without those concessions Ford is at a competitive disadvantage, a position even UAW President Ron Gettlefinger agrees with.  Gettlefinger pushed hard for ratification, and the rejection by the rank and file is considered a setback by many including Dr. David Cole, Chairman of the Ann Arbor-based Center for Automotive Research.  Ford’s $1 billion 3Q profit is a fabulous turnaround.

FORD RANK & FILE REJECT FORD CONTRACT
posted 11.02.09
DETROIT – Regrettably Ford rank and file UAW members have soundly rejected a contract that would provide Ford the same concessions granted to GM and Chrysler during bankruptcy.  Specifically the new contract terms called for a wage freeze for entry-level workers, a reduction of skilled trades’ classifications, and an agreement to enter binding arbitration (no strike clause) on wage and benefit issues.  It is a major setback for UAW President Ron Gettlefinger and Vice-President Bob King, who both pushed hard for ratification.  It also places Ford at a distinct disadvantage with cross town rivals GM and Chrysler.  Though improved, Ford’s financial condition remains perilous. The company lost $14 billion last year, but did post a $2 billion profit in the 2nd quarter.  However excluding debt reduction and other one-time items, analysts believe Ford would still have posted a loss in the 2nd quarter.  David Cole, Chairman from the Center for Automotive Research, said the Ford contract rejection is not welcome news.  "The labor harmony that we had achieved seems to be falling apart.  This really reinforces that negative image of Michigan, and that impacts more than just the auto industry.  It really reflects poorly on the whole industrial Midwest."

GM OCTOBER SALES ARE LOOKING GOOD
posted 10.29.09
DETROIT -- According to a company spokesperson, General Motors is about to post its first monthly sales increase in 21 months.  While the official figures will not be released until next week, it appears October sales activity has been strong.  Mike DiGiovanni, GM’s executive director of global market and industry analysis, was quoted as saying, “We’re really having a good October.” In October of 2008 GM sold 168,719 vehicles, which was a 45 percent plunge from October 2007.  The monthly October sales increase-- though modest--couldn’t come at a better time.  It is great news for GM and Michigan.  Accolades to CEO Fritz Henderson and his team at General Motors!

FORD BUSTS THROUGH IN NEW CONSUMERS REPORTS
posted 10.28.09
According to a report released by Consumer Reports (October 27th)  Ford Motor Company has scored very high in reliability ratings, putting the company on par with rivals Toyota and Honda in some categories.  That’s fabulous news for Ford, the only American auto company that did not declare bankruptcy.  Ford CEO Allan Mulally is making determined progress for the company, albeit during one of the most difficult periods the industry has ever faced.  Of the 51 Ford, Lincoln and Mercury vehicles in the survey, 90 percent were rated average or better.  Specifically the Ford Fusion and Mercury Milan mid-sized sedans ranked second best in ‘family sedans’ just behind the Toyota Prius hybrid. GM did not fare quite as well.  20 of 48 GM models had average reliability scores, although Chevy Malibu was a stand-out with well above average reliability rankings.  Chevrolet Silverado and GMC Sierra 1500 pickups showed significant improvement and earned a Consumer Reports recommendation. The report did recommend one vehicle built by Chrysler: the four-wheel drive Dodge Ram pickup.  Despite Ford’s progress overall, the Asian car companies dominate the top 10.  Consumer Reports averages the overall reliability results for the last three model years.  Here are the rankings by nameplate:

1. Scion
2. Honda
3. Toyota
4. Infiniti
5. Acura
6. Mitsubishi
7. Lexus
8. Hyundai
9. Porsche
10. Mercury
 
Click here to see the Consumer Reports 2009 Annual Car Reliability Survey: 

SOME FORD UAW RANK & FILE REJECT CONTRACT
posted 10.27.09
DETROIT – Some UAW autoworkers in Missouri and Michigan have rejected a new contract with Ford Motor Company.  If ratified, the contract would bring Ford’s labor costs in line with GM and Chrysler, which won the same critical labor concessions with the UAW during their recent bankruptcy filings. Specifically the contract language addresses a wage freeze for entry-level workers, a reduction of skilled trades’ classifications, and an agreement to enter binding arbitration on wage and benefit issues.  UAW President Ron Gettlefinger has recommended that all locals ratify the language, which will even the playing field among the domestics and also reward each Ford UAW member with a $1000 one-time bonus.  But workers at the Kansas City Assembly Plant voted no, in addition to Ford plants in Livonia and Plymouth.  That’s a potential major headache for Ford; it needs the concessions to remain competitive with rivals General Motors and Chrysler.  There are some UAW locals that have passed the new contract, two in Wayne, Michigan and two in Ohio.  Voting is scheduled to end November 2nd.

AUTO EXEC PAY CUTS WILL BE COUNTERPRODUCTIVE
posted 10.22.09
President Obama’s pay czar is expected to slash top executive pay by 50 percent at seven companies that borrowed or were given money (bailed out) by the federal government.  GM and Chrysler, who borrowed $80 billion from the government, are part of that group.   General Motor’s CEO Fritz Henderson will make $1.26 million this year, down 27% from his 2008 compensation.  
Rick Wagoner, meanwhile, has already been unfairly forced out of GM.  The Watchdog’s take is that slashing the pay of the top 25 executives could cause noteworthy defections within the companies when they need leadership the most.  There may be a case for reducing executive pay at AIG, which received a whopping $180 billion -- a one-time gift from the federal government that does not have to be paid back.  AIG has since paid out millions in bonuses which incensed U.S. taxpayers, and justifiably so.  However the law of unintended consequences is at play here.  Chrysler’s situation is even more complicated.  Fiat--which now owns 20 percent of Chrysler--is exempt from the pay czar’s authority.   A wide disparity of income has the potential to create division amongst top Chrysler and Fiat executives.   From a free market perspective, having government officials set the pay for executives in any company is unsettling, but particularly for GM and Chrysler, who are fighting to survive in a very difficult market.  These executives didn’t get to their positions by accident; they are talented, driven, savvy, and capable.  Chopping their pay will not benefit the company; contrarily it will probably hurt, particularly if it causes significant defections by top executives.

WILL FORD SHOW A PROFIT IN 3RD QUARTER?
posted 10.20.09
A JP Morgan analyst is going against the grain, saying he expects Ford Motor Company to report a profit of 16 cents per share for the 3rd quarter. 
(This ended September 30th)  Himanshu Patel cited Ford’s improvement in pricing and sales in the United States, plus a better performance in the European market.  He also credited a surge in Ford F-150 pick- up sales and reduced incentive spending. Patel’s prediction is rejected by Wall Street analysts, who expect a loss of 24 cents a share.  September was a very good month for Ford in China, which saw its sales swell 32 percent over the same month last year.  Ford is the only American car maker not to declare bankruptcy. Its stock bottomed out below $2 a share earlier this year, but now trades in the $7 to $8 range.

CHINA SEPTEMBER AUTO SALES UP 78% posted 10.14.09
SHANGHAI -- China’s September 2009 auto sales increased by a stunning 78 percent, aided in part by Beijing’s tax cuts and subsidies.  So far through September 2009 GM China sales are up 55 percent to 1.3 million, and Ford sales are up 32 percent to 316,639 units.  Nothing is official yet, but for the first time in history China this year will likely outsell the United States in total vehicle sales.  With a 1.3 billion population and an emerging middle class, the demand for new cars in China is robust and is reason for optimism for both GM and Ford, which are well-positioned in what soon could be the #1 auto market on the planet.

UAW SHOWS REAL LEADERSHIP! posted 10.14.09
Great news for Ford Motor Company!  It has reached a tentative agreement with the UAW on three critical measures: a wage freeze for entry-level workers, a reduction of skilled trades classifications, and an agreement to enter binding arbitration on wage and benefit issues.  The UAW made similar concessions with GM and Chrysler earlier this year during their bankruptcy process.  Ford did not declare bankruptcy, but didn’t want to be left in a competitive disadvantage with rivals GM and Chrysler.  To his credit UAW President Ron Gettlefinger and union leaders have agreed to the measures.  They could have waited, which would have likely decreased the chance of an agreement, particularly in light of Ford’s improvement in the marketplace.  In exchange for the concessions Ford will pay a one-time bonus of $1000 to every UAW-represented worker at the company -- and there are 41,000 UAW-represented workers worldwide employed by the Dearborn automaker. Ford will also agree to extensive job and product commitments at American plants.  Ron Gettlefinger deserves much credit for moving ahead and approving this agreement, which will now be voted on by the rank and file. By historic standards, labor relations between Ford and the UAW are very good…maybe the best ever.  This is a selfless move on the part of the UAW; they clearly have the best interests of the company in mind on this one.  It is also worth noting that in March of this year, the UAW made concessions that will save Ford $500 million annually. If the auto companies and the UAW continue to work together, productivity can and will improve.  Detroit is not dead yet.

DELPHI EMERGES FROM BANKRUPTCY posted 10.09.09
Delphi, which spent four years struggling through the bankruptcy process,
has finally emerged from court protection. The bankruptcy was long and difficult, highlighted by intense fights with the UAW, major investors pulling out at the 11th hour, and a global credit crisis. The new company is Delphi Holding LLP, a leaner and more focused company owned by General Motors and Delphi’s bankruptcy lenders.  At its peak, Delphi owned and operated more than 40 plants with 211,000 worldwide employees.  Four years ago, just prior to entering bankruptcy, Delphi’s U.S. workforce was 50,600.  By June 2009 its workforce had shrunk to 14,000.  At one time Delphi was the all-inclusive supplier for GM, but the new company has narrowed its attention to electronics, power-train, heating, and cooling systems.  The bankruptcy process was very costly for Delphi -- almost $500 million.  It was also costly for salaried employees who lost company-paid health care.  Retiree pensions were also dumped on the federal Pension Benefit Guarantee Corporation.

POST-CASH FOR CLUNKERS, SEPTEMBER AUTO SALES NOSE DIVE posted 10.02.09
The resounding sales success generated by the Cash for Clunkers program this past summer may have come at the expense of September auto sales.  General Motors sales were off 45 percent, Chrysler down 42 percent, while Ford slipped only 5.1 percent, a moderate win given the huge Cash for Clunkers sales the month before. Despite a slump in numbers, there were some positive developments in September.  For example, Ford’s sales of the new Taurus sedan increased by 60 percent, and sales of the F-150 pick-up sales jumped 3.5 percent, the second consecutive monthly gain for the popular truck.  Total U.S. auto sales are tracking to come in at 9.4 million for the year, Depression-level sales according to Dr. David E. Cole, Chairman for the Center for Automotive Research.  There was one company that bucked the trend in September: Hyundai reported a sales increase of 27 percent over last year.

ROGER PENSKE BAILS ON SATURN DEAL posted 10.02.09
Billionaire racing legend and Detroit Diesel owner Roger Penske has bailed on his plan to purchase Saturn from General Motors.  The deal has been in the works since this summer and leaves 350 dealerships and 13,000 employees in a lurch.  The plan called for GM to supply Penske with three current Saturn models: the Aura sedan, Vue, and Outlook SUV for at least two years.  Penske’s plan was to then contract Renault-Nissan to produce vehicles that would be branded as Saturn.  Negotiations recently broke down with Renault-Nissan, which prompted Penske to withdraw his purchase offer.  The news stunned GM, and ignited speculation that another suitor could be pursued.  Earlier this summer Telesto Ventures, which includes the Oklahoma City-based private equity firm Black Oak Partners, and several Saturn dealers had expressed interest in Saturn.  For the year, Saturn sales are down 59 percent.

GM WILL INCREASE 2010 PRODUCTION BY 45%
posted 09.23.09
DETROIT – GM Group Vice-President Tim Lee says the auto giant will increase its 2010 auto production by 45 percent, or from 1.9 million vehicles to 2.8 million. The company has announced plans to recall 3000 workers at three factories including Kansas City, Lansing, and Fort Wayne.  Lansing’s Delta Township plant will recall 800 workers to produce the Chevy Traverse, which is now being manufactured in Tennessee.  GM will go to 24-hour operations at all three plants to meet increased demand and to make up for production lost from large-scale factory consolidations announced earlier this year.  The announcement is fabulous news for the auto industry and Michigan!

CHINESE AUTO FIRM MAY INVEST IN DETROIT --100 NEW JOBS posted 09.23.09
DETROIT -- Sichuan Tengzhong Heavy Industrial Machinery Company, the firm on track to purchase Hummer from GM, says they hope to establish the brand’s corporate headquarters in Metro Detroit.  Spokesperson Nick Richards says the company would initially employ 100 people and invest $9.4 million in the first five years of operations.  Plans also include expanding employment to as many as 300 people.  The headquarters would include several departments including design, engineering, product planning, purchasing, sales, marketing, and finance. On September 21st the Michigan Economic Development Corporation approved a $20.6 million state tax credit in hopes of enticing the company to choose Michigan for its headquarters.  The MEDC also estimates the Hummer headquarters will create another 641 jobs with other companies.

CHEVY CRUZE -- BIG HIT IN AUSTRALIA posted 09.18.09
The Chevy Cruze, which came on the Australian auto market in July, is off to a fabulous start.  According to General Motors, right out of the gate it zoomed to the 8th best-selling car in Australia.  Chevy Cruze, which sports an impressive 45 highway MPG, will hit the U.S. market in mid 2010; it will replace the Chevy Cobalt compact car.  GM is pinning its small car hopes on the new vehicle, which will be built at the Lordstown, Ohio assembly plant.  So far for 2009 U. S. auto sales are down 27.9 percent.  The Australian auto market is off 14.2 percent.

GM OFFERS 60-DAY MONEY BACK GUARANTEE posted 09.11.09
DETROIT -- In a bold move, General Motors will unveil a new advertising campaign offering a 60-day money back guarantee to new car buyers. 
The campaign will start September 14th and will feature its new CEO Ed Whitmore as spokesperson.  It will be called the “May the Best Car Win” campaign and will urge customers to choose from GM’s remaining four core brands: Chevrolet, Cadillac, Buick and GMC.  If customers are unhappy, they can return the vehicle within 60 days.  The 60-day money back guarantee is much more than a new advertising campaign; it’s a first in the 100-year-old industry. It’s an aggressive strategy and demonstrates that GM is ready shake up the market.  Kudos to GM for trying something new and standing behind their product. 

LABOR DAY 2009 MARKS HUGE GAINS FOR UAW
posted 09.08.09
DETROIT -- The United Auto Workers is the majority shareholder of the new Chrysler, controlling 67.7 percent of the company.  The UAW also owns 17.5 percent in the new GM.  Both developments are a direct result of the establishment of a retiree health care trust fund, also known as a VEBA (Voluntary Employee Benefits Association). Though paid for by the auto companies, the VEBA is owned and controlled by the UAW.  Retiree health care costs, also known as legacy costs, have been draining the auto companies for years.  Originally the VEBA was to be funded by all cash, but when the bottom fell out of the auto business and the cash went dry, that became a problem.  The UAW was coaxed by both the Bush and Obama administrations to accept a mix of cash and stock to fund the health care trust fund.  Ironically the UAW resisted the idea for months, sticking to their desire for all cash to fund the health care trust fund.  But when the Obama administration helped circumvent bond holders in favor of the UAW in terms of redistributing equity in the new GM and Chrysler, the union became agreeable, and why not, because now they really do own the company.   The VEBA is estimated to save the auto companies $88 billion in health care costs, an absolute requirement to give the industry a chance to survive.   It will begin to pay for retiree health care costs starting in January 2010.  There are 800,000 UAW retirees and their spouses in the United States -- almost twice as many active UAW members. Though UAW membership has fallen to 431,037, down from a peak of 1.5 million in 1979, in some ways the union has never been stronger.  Their ownership stakes in GM and Chrysler gives the UAW even more power, more money, and more influence -- but only if the auto companies can survive and ultimately thrive once again.  True, the UAW has agreed to a no-strike clause, new work rules, lower pay for new workers, and conceding cost of living adjustments. However on balance, and with their substantial ownership stakes in the new GM and Chrysler, a little humility from the UAW seems in order.

FORD AUGUST AUTO SALES UP 17.2% posted 09.02.09
DETROIT -- Buoyed by the Cash for Clunkers program, Ford improved its August sales 17.2 percent over last year.  GM and Chrysler however did not fare quite as well, down 20 and 15 percent respectively.  In total, the government-sponsored Cash for Clunkers program resulted in 690,114 new vehicle purchases at a taxpayer cost of $2.88 billion.  As a result inventories plummeted and several dealers were left with little to no inventory on their lots. Even the Ford F-150 pick-up posted August sales gains of 13 percent, and the smaller Ford ranger was up a whopping 57.4 percent. Foreign manufacturers also saw positive gains for the month: Honda lead the way, up 9.9 percent in August; Toyota sales were up 6.4 percent over last year.

GM SALES IN CHINA ARE ON FIRE! posted 09.01.09
While GM’s United States sales may be down 37.7 percent for 2009, its sales in China are on fire -- up 42.8 percent so far this year.  General Motor’s July sales in China were up a whopping 77% compared to the same month last year.  China is on track to sell 10 million total vehicles this year.  Earlier this year it looked like China would outsell the U.S. market for 2009, but the U.S. market has made a moderate comeback  The leading GM brand in China is Buick.  There is little doubt China will soon become the most important automotive market in the world, fueled  by the country’s double digit GDP growth and its population of 1.6 billion, most of whom do not own vehicles.

UAW CAUTIOUS AGAINST NEW FORD CONCESSIONS
posted 08.28.09
DETROIT -- Ford Motor Company will soon be asking for additional concessions from the UAW, similar to ones negotiated with GM and Chrysler earlier this year.  The concessions are regarding work rules, strike provisions, and wages for new hires.  According to the Associated Press union officials have said some rank and file members have no interest in accepting any further concessions from the company.   Ford wants to be on parity with its rivals, and does not want to be disadvantaged when it comes to labor costs.  The UAW and Ford Motor Company started meeting this week.  In March of this year Ford workers gave up cost-of-living increases and performance bonuses for 2009 and 2010.  They also agreed to shelve the much maligned Job Banks program (where laid off UAW members were still paid for up to two years).  The total savings for Ford is around $500 million per year.  By comparison, concessions approved by the UAW for General Motors are expected to be close to $1.2 billion per year.  Ford Motor Company has worked well with the union as of late, and hopes to maintain its good relationship with the powerful UAW.  Ford saw a dramatic sales turnaround in July with a 2.4 percent jump in sales, the first monthly sales gain in almost two years…and signs of life for the American auto industry.

GM BALKS AT SELLING OPEL posted 08.27.09
General Motors has a tentative deal to sell Opel--its European car division--to Canadian auto parts maker Magna International and Russian state-owned Sberbank.  Now the auto giant is having second thoughts.  According to an article by the Associated Press, GM’s reservations are based on fears that American innovation and technology will end up in the hands of a Russian competitor.  GM is the #2 car company in the growing Russian market and wants to flank their position.  GM’s Russian rival is GAZ, a state-owned automaker stuck producing vehicles with 1970’s technology.  GAZ is years behind world standards, and remains in business only through government subsidies and very low prices.  Germany is also firmly behind the sale of Opel, and the German government has offered $4.5 billion in credit for the proposed deal.  GM’s Opel operations are based in Germany and features an employment base of 25,000. General Motors is also considering selling to a Brussels based investor group.  The auto company could also decide to keep Opel.  Stay tuned.

U.S. SENATE AGREES ON CASH FOR CLUNKERS SUPPLEMENTAL FUNDING posted 08.06.09
WASHINGTON D.C. -- The U.S. Senate has reached an agreement and will vote today on another $2 billion in funding for the almost-broke Cash for Clunkers program. The U.S. government has said $775.2 million of the original $1 billion program has already been exhausted, representing 185,000 new vehicle purchases.  President Barack Obama has said the program will dry up by Friday if not replenished with additional funding.  Passage in Senate means the cost of the program will triple to $3 billion, and thus allow opportunity for another 500,000 Americans to purchase a new fuel-efficient vehicle.  The program awards vouchers of $3500 to $4500 to consumers who trade in their clunker (which must average 18 miles per gallon or less) for a new fuel-efficient vehicle.  Among manufacturers, GM has the largest share of Cash for Clunkers’ sales with 18.7 percent, followed by Toyota with 17.9 percent, and Ford Motor with 16 percent.  Overall U.S. automakers have 45.3 percent of Clunker sales, while Japanese manufacturers have 36.5 percent.  Dealer inventories are low and the replenished funding means an increase in production for the auto companies and calling laid-off auto workers back to work. Cash for Clunkers is credited for driving a wave of buyers into dealer show rooms.  As a matter of fact, it has helped Ford Motor Company achieve its first monthly sales increase in two years.  Ford Motor increased its July 2009 sales over the same month last year by 1.2 percent.  And in this market, any increase is good news.  

6 of 10 CASH for CLUNKERS SALES GO TO FOREIGN COMPANIES posted 08.05.09
Cash for Clunkers has been working well for GM, Ford, and Chrysler…but it’s been even better for the foreign car companies.  Six of ten vehicle purchases made through Cash for Clunkers have gone towards a new Toyota, Honda, or Hyundai.  According to reports by the Associated Press, the Obama administration has been reluctant to release complete government records on the program.  The White House has been pressing the U.S. Senate for a quick vote authorizing an additional $2 billion for Cash for Clunkers. The U.S. Congress has already passed a similar measure.  According to the Department of Transportation 157,000 rebate requests are in the system. Some Senate republicans are opposed to approving the additional $2 billion until they know more about the results of the first billion spent on Cash for Clunkers.  It is clear the program helped Ford Motor Company post the first monthly sales gain in almost two years, with June 2009 sales up 1.2 percent from last year.

FORD JULY SALES UP 1.2 % FROM LAST YEAR posted 08.03.09
For the first time since November 2007 Ford Motor Company saw a monthly sales gain from the previous year, the companies July U.S. auto sales increased 1.2 percent over last year.  Most analysts had figured early fall would be the earliest any of the domestics would see a monthly increase from the previous year.  In an article posted on www.freep.com, Ford Vice President of Marketing Ken Czubay stated, “Our July business got off to a good start, and then with Clunkers, it went into high gear.”   July sales figures puts industry on track to sell 11 million vehicles for all of 2009, which is appreciably better than the 9 million units the industry was tracking for previous to the July sales figures release. 

CASH FOR CLUNKERS IN DOUBT? posted 07.31.09
According to an article from the Associated Press, the government plans to suspend the popular Cash for Clunkers program due to concerns that the program will quickly exhaust the $1 billion set aside in vouchers to purchase fuel-efficient vehicles. Through Wednesday, July 29^th, there were 22,782 vehicles purchased with $96 million in total sales.  But another 25,000 deals have been submitted but not yet approved by the National Highway Safety Administration which is overseeing the Cash for Clunkers program.  In total, 250,000 vehicle sales were planned for under the one-billion dollar program.  Some are concerned that the number may have already been reached, which is why the feds plan on suspending the program.  The Watchdog thinks the government should step up and continue to fuel this program -- a program that is actually working! What about adding another billion or two to keep the cash flowing and remove gas guzzlers from the road?  U.S. car sales are off 35 percent in 2009, and the market is on pace to sell 9 to 10 million for the year, a far cry from the robust levels of 16 million vehicles per year the industry had grown accustom to.  The industry could use the additional stimulus to struggle through the most difficult sales environment it has ever faced. 

CASH FOR CLUNKERS RESPONSE OVERWHELMING posted 07.28.09
DETROIT -- The U.S. government’s initiative Cash for Clunkers program officially began on July 27th, 2009 -- and the consumer response has been substantial; so much so, that the program could quickly burn through the $1 billion set aside to fund it.  The program provides vouchers of $3500 to $4500 towards the purchase a new fuel-efficient vehicle when replacing their car or truck that averages less than 18 miles per gallon.  Dealerships from around the state including Detroit and Cadillac report strong showroom traffic and several deposits placed on new vehicle purchases through the Cash for Clunkers program.  According to an article posted on www.freep.com, the Demmer Auto Group in Metro Detroit had 70 pending deals. Several dealers have complained that the 136-page program is complicated and involves too much paperwork for both the auto dealer and the consumer.  As for the traded-in clunkers, dealers are responsible for removing the engine and transmission, disabling those components, transporting them to a junkyard, and then providing proof to the government that the clunker has been properly disposed of.  For more information, click on the following link (the official government website for Cash for Clunkers): http://www.cars.gov/.

THE NEW GM IS HERE posted 07.10.09
DETROIT -- According to www.freep.com, a July 10^th mid-morning GM press conference with CEO Fritz Henderson and incoming Chairman Edward Whiteacre Jr. is scheduled, during which they will make the official announcement that General Motors has emerged from Chapter 11 bankruptcy. The new GM will be comprised of four vehicle lines: Chevrolet, Buick, Cadillac, and GMC.  The old GM will focus on liquidating idle and underperforming assets.  In a surprise move, Bob Lutz--who had earlier announced his retirement--will stay on with the new GM.  Lutz had recently given up his position as the head of General Motors’ product development.  Lutz has had a colorful and successful career in the automotive industry, working the last eight years for GM, and previously serving as Vice-Chairman of Chrysler.  

MANY CHANGES POST-BANKRUPTCY FOR GM posted 07.09.09
GM will continue to downsize once it emerges from bankruptcy, which many believe will happen July 9th.  According to CEO Fritz Henderson the company will cut its executive ranks from 1300 to 850.  Total U.S. employment will be reduced from 29,650 to 23,500 by the end of this year.  Another change is the background color of the GM logo, which will change from blue to green -- illustrative of a leaner and greener company focused on fuel efficiency.   There is also speculation that GM will build a new subcompact car in Michigan, thought to be the four-seat mini-car Chevy Spark, which is currently sold in China. The U.S. government is expected to give General Motors $50 billion as it emerges from bankruptcy.

GM WILL SELL 8 FLINT FACILITIES – 100 TOTAL NATIONWIDE posted 07.08.09
As part of its bankruptcy plan of selling assets, General Motors hopes to sell about 100 properties nationwide including eight in Flint. The list includes the 235-acre Buick complex also known as Buick City.  For years there has been a plan to transform Buick City’s massive concrete into a multimillion-dollar transportation hub, but that plan has stalled due to a lack of willing investors.  According to an article posted on Bloomberg.com, GM spokesperson Tom Wilkinson said the old GM will be selling property it has accumulated over the last 100 years and that it will be like a big garage sale.  Wilkinson asserts there will be some good real estate opportunities for investors and communities.  One concern however is the possibility of environmental issues affecting any property transfer and as a result potentially scaring off viable investors.  Both the federal government and the state would be wise to cooperate with any potential investors instead of wanting to stick them with environmental culpability.  Some of the sites will fall under the federal government’s Brownfield classification, which does ease the burden to investors that purchase older manufacturing plants and sites.  Selling these plants and parcels of land is important for Michigan’s economy…as well as the nation’s economy.  At some point assets have value and when the price gets low enough entrepreneurs and investors are willing to step in, take the risk, and purchase the asset.  Whilst feeling the heat of bankruptcy, GM will be forced to sell at prices low enough to get investors attention.  To view a Google map of the Flint properties GM wants to unload click here.      

THE NEW GM IS READY TO ROLL posted 07.07.09
After navigating through the most arduous time in its history, General Motors is about to emerge from bankruptcy.  On July 5th U.S. Bankruptcy Judge Robert Gerber approved spinning off the good assets to create the new GM; comprised of Chevrolet, Buick, Cadillac, and GMC.  The judge’s order will not go into effect until Thursday, July 10th, in order to allow time for GM creditors and objectors to appeal.  Most experts believe there is no chance that the objectors will succeed and that the bankruptcy agreement will move forward.  In terms of the future, the pipeline is loaded with new product at General Motors highlighted by the Chevy Cruz, which boasts an impressive 45 miles per gallon, and the revolutionary Chevy Volt, which can travel up to 40 miles on electric power.  Both vehicles will be available in 2010. The new GM will be majority-owned by the U.S. government with a 60.8 percent stake, followed by the UAW retiree health care trust with 17.5 percent, the Canadian government with 11.7 percent, and the old GM stakeholders (comprised mostly of bondholders) will have 10 percent ownership.  Should GM prevail and pay off the government loans, Uncle Sam stands to make a ton of dough, and General Motors will redeem itself.   That would be outstanding.

JUNE AUTO SALES -- SIGNS OF RECOVERY? posted 07.02.09
There was a silver lining in the June auto numbers. The biggest positive news came from Ford Motor: in June they had the smallest sales decline of the year, down 10.7 percent compared to last year. This is actually very good news because in May Ford sales were down 24 percent -- and for the first five months of the year they were off a whopping 37 percent.  General Motors--which is in the middle of bankruptcy--was off 33.4 percent for June, and Chrysler--which just emerged from bankruptcy on June 10th--saw its sales slip by 42 percent.  Despite the down numbers, there are some positive signs.  Analysts say it now appears the U.S. market may top the 10 million mark for total overall 2009 sales.  Previous to June’s sales numbers the U.S. market was tracking to finish 2009 with just nine million total sales.  Granted, those numbers are a far cry from what the U.S. market is capable of, more like 16 or 17 million units per year. The foreign automakers are not immune.  All of them experienced major drops in their June auto sales: for example, Toyota slipped 32 percent and Nissan was off 23 percent.  What is clear  is that the U.S. market is experiencing the worst sales levels in 27 years.  But perhaps Ford's June sales numbers shows some light at the end of the tunnel.

FORD MOTOR SEES TURNAROUND – WILL INCREASE PRODUCTION posted 06.30.09
Ford has announced it will increase vehicle production in the 3rd quarter
(July through September) by 15,000 cars and 10,000 trucks.  By the raw numbers Ford will manufacture 485,000 vehicles in the third quarter, a 16 percent increase compared to the same period last year.  Ford officials cited an up tick in consumer confidence, reduced jobless claims, and the federal “Cash for Clunkers” campaign.  Cash for Clunkers is a national program which entices owners of gas guzzlers to trade them in for more fuel efficient vehicles.  New car buyers will be rewarded with vouchers of $3500 to $4500.

TOTAL LOANS FOR GM & CHRYSLER = $80 BILLION!
posted 06.11.09
Skeptical lawmakers were reassured by President Obama’s auto task force that there will be no more auto loans for General Motors and Chrysler.  During hearings on Capitol Hill Ron Bloom--senior advisor of the auto task force--was peppered with questions before the U.S. Senate.  All together GM, Chrysler, and auto suppliers have received $80 billion in federal loans.  That’s just over half of what insurance giant AIG received, but that money of course was ‘free’ and does not have to be paid back.  We in Michigan will get over that double standard someday, especially when the loans ARE PAID BACK.   The U.S. Treasury has set aside $30.1 billion for GM and $8.1 billion for Chrysler to get through the bankruptcy process.   It appears the government will write off the $23 billion it lent to the automakers from January to March.  Senator Richard Shelby was particularly critical saying the government’s 8 percent stake in Chrysler and 60 percent ownership of GM has embarked on a disturbing and difficult road.   Other senators were critical of the 3000 dealerships that were closed.  When questioned on when the U.S. taxpayer will be reimbursed, Bloom stated, “Over time a very substantial portion and potentially all of the taxpayer investment in General Motors would be returned.”  He added, “By no means would I say I am highly confident that that would occur. I think there are reasonable scenarios where it could occur.”

SUPREMES CLEAR THE WAY FOR CHRYSLER BANKRUPTCY posted 06.10.09
A last-minute appeal by three Indiana pension funds and various consumers groups has been turned down by the U.S. Supreme Court, clearing the way for Chrysler to proceed with its bankruptcy plan.  At least four of the nine Supreme Court justices would have had to have been convinced that the issue raised was serious enough to warrant a full appeal, and also a majority of the court would have to believe the lower court’s decision was incorrect.  That was not the case and so the sale of Chrysler’s assets to Fiat will proceed.  Chrysler has been working feverishly to meet a June 15th deadline, a key element in its restructuring plan negotiated with the Obama administration auto task force.  On behalf of the auto task force, U.S. Solicitor General Elena Kagen stressed to the court that Chrysler is losing $100 million every day and that government financing would run out as soon as June 30th.   It was also argued that Chrysler’s bankruptcy plan automatically terminates in less than a week, and that there is no guarantee a new bankruptcy agreement could be reached. 

NEW GM CHAIRMAN HAS ZERO AUTO EXPERIENCE
posted 06.10.09
The Obama administration, which claims it wants nothing to do with the day-to-day operations of General Motors, has named Edward E. Whitacre GM’s new chairman. Though the announcement was made by GM itself, it’s hard to believe the hire was made without the approval of--or perhaps even the directive by--the Obama administration auto task force.  Whitacre has spent his entire career in the telecommunications industry and from 1990 to 2007 served as Chairman and CEO of AT&T.  He currently serves on the board of Exxon Mobil and Burlington Northern Santa Fe Corporation.  Whitacre is 67 years old and holds an industrial engineering degree from Texas Technological University.  He has zero experience in the automotive industry.  The new GM board will have 13 directors, of which four are yet to be named.  The UAW health care trust fund will also get one seat on the board, as will the Canadian government.  General Motors has said that six current board members will likely resign their position when GM’s bankruptcy plan is approved by the courts.  In fairness, Allan Mulally also had no automotive experience before starting as CEO with the Ford Motor Company.  However Mulally did bring years of experience in heavy equipment manufacturing.  He started with Boeing directly out of college in 1969.

CHRYSLER-FIAT SALE DELAYED BY SUPREME COURT
posted 06.09.09
Judge Ruth Bader Ginsburg has delayed the sale of Chrysler to the Italian auto maker Fiat.  She ruled the sale is ‘stayed pending further order,’ which is an indication the delay could be very brief.  She can decide herself to end the delay, or have the full Supreme Court decide.  The stay is being pushed by secured debt holders who--per the bankruptcy agreement--are scheduled to receive 29 cents on the dollar on an investment of $6.9 billion.  The fight in the Supreme Court has been lead by three Indiana state pension and construction funds, which has a $42.5 million investment in Chrysler.  They assert the UAW has received preferential treatment, due to the detriment of itself.  In addition, they challenge the constitutionality of the Treasury Department’s $3.4 billion loan from TARP (Troubled Asset Recovery Program) to Chrysler.  They claim the government did so without congressional authority.  In December of last year Congress passed emergency loan legislation for the auto industry, specifically targeted for GM and Chrysler.  But a similar measure in the Senate was defeated in a bitter Senate battle, primarily lead by right-to-work Southern states.  That’s when President Bush--who supported the defeated legislation, but was determined to help the industry--tapped the TARP fund for the $13.4 billion requested by GM and Chrysler to stay afloat.

RICK WAGONER REPORTEDLY UPSET OVER FIRING 
posted 06.08.09
In an article on posted on www.freep.com people who know former CEO Rick Wagoner say he is still upset about being fired.  They add that since his ousting from GM, Wagoner is spending his time at the family vacation home in Daufuskie Island, South Carolina.  For most automotive insiders, not to mention free market capitalists, Wagoner’s ouster was a slap in the face.  It’s also completely contrary to the Obama administration’s position of not wanting to run GM.  Please…if you fire the CEO, you are running the company.  It was at a March 27th meeting at the U.S. Treasury Department in Washington D.C. where Wagoner learned he was being fired by the President of the United States.  Steven Rattner, leader of the automotive task force, was the person that actually told Wagoner he had to step down.  Wagoner immediately told COO Fritz Henderson and CFO Ray Young that he was being fired.  They were shocked, as were several board members.   Wagoner served almost nine years as CEO of General Motors.  He assumed the position in June of 2000.  Michigan Governor Jennifer Granholm strongly objected to his firing, and characterized it as a sacrificial offering in the automotive industry crisis.      

HUMMER SOLD TO CHINESE COMPANY?  posted 06.03.09
Declaring bankruptcy is triggering several moves for GM.  According to an article posted on www.freep.com GM is close to selling Hummer to the Chinese firm Sichuan Tengzhong Heavy Industrial Machinery Company.  The company is China’s leading manufacturer of road, construction, and energy industrial equipment.   It will be the first Chinese-owned company to sell vehicles in the U.S. market. No selling price was released, but last year General Motors was hoping to sell Hummer for around $500 million.   In a joint press release by the two companies, Hummer will continue to be headquartered in the United States, which will save 3000 U.S. manufacturing, engineering, and dealership jobs. The agreement also calls for GM to provide manufacturing and business services (which includes the building of the H3 SUV at Shreveport Louisiana) during a transitional period through next 2010.  CEO Yang Yi said the company will invest heavily in Hummer including the development of more fuel-efficient vehicles that will be sold in both the U.S. and China.  GM is also actively pursuing a buyer for Saturn, and according to CEO Fritz Henderson there are currently 16 interested parties.  General Motors is also hoping to sell Saab, and currently has three possible suitors.

MAY GM SALES BETTER THAN EXPECTED posted 06.03.09
General Motors May sales slid 29.6 percent, but that number is substantially lower than the 36 percent decline expected by analysts.  By the raw numbers
GM sold 191,875 new cars and trucks, compared to 272,363 vehicles sold last year -- making May the best performing month of the year.  Also on a positive note, on a month-to-month basis, GM’s May sales increased 11 percent over
April sales.  There was also good news from Ford Motor Company (which saw
May sales slip 24.2 percent): Ford Fusion sales increased 9.4 percent.  
Most importantly Ford has announced it will increase 3rd quarter production by
10 percent (over 2008 levels), meaning it will manufacture 460,000 vehicles.

GM BANKRUPTCY MIND-NUMBING FOR STATE posted 06.02.09
According to an article on www.mlive.com the state of Michigan has lost a staggering 700,000 auto manufacturing jobs since 2000.  Now with GM officially in bankruptcy Michigan will brace for even more job losses, including 3000 white collar jobs announced by CEO Fritz Henderson. GM will close 12 factories including six in Michigan, which puts another 9000 jobs at risk.  General Motors will also close 2100 car dealerships in addition to the 1100 it announced last week.  When taken fully into consideration, it’s a wonder the state is holding up as well as it is. In a statement, Governor Jennifer Granholm said, “We know now we are hitting bottom.”  According to the bankruptcy filing, the U.S. government will loan General Motors $30.1 billion and the Canadian government will lend $9.5 billion to the auto maker.  Chrysler has quietly moved through its bankruptcy process and could emerge from it as soon as June 15th.  Experts say GM--which is twice as large as Chrysler--will have a much tougher time in bankruptcy.  For example, in its filing GM reported that it has over 100,000 creditors, $172.8 billion in liabilities, and $82.3 billion in assets.   The automotive industry continues to struggle with depression-level sales fueled by erratic gas prices.  Should present sales trends continue, nine to ten million vehicles will have been sold in the U.S. market in 2009.  By comparison, last year U.S. auto sales were just over 16 million. That alone is a reduction of 40 percent.  According to David Cole from the Center for Automotive Research, the good news is therecontinues to be pent-up demand, and at some point the buyers will be back.

BANKRUPTCY FOR GM posted 06.01.09
The U.S. Treasury Department has given the go-ahead for General Motors to proceed with its bankruptcy organization plan.  Down the stretch the company convinced 54 percent of bondholders to support the plan, which will give them a 10 percent stake in the new company.  Bondholders have $27 billion invested in General Motors.  Getting that many bondholders to sign on with the plan is a huge help and will make bankruptcy a little smoother.  The bondholders will also get a warrant for an additional 15 percent stake in the company if things go well for GM post-bankruptcy.  Still, there are many bondholders that will fight in bankruptcy court claiming the UAW health care trust has received favored treatment which goes against current U.S. bankruptcy laws.  According to the bankruptcy filing, GM will receive an additional $30 billion in loans which is in addition to the $19.4 billion General Motors has already borrowed from the federal government.  The U.S. government will forgive all but $8 billion of the loans, but will also take a 60 percent equity position in the new company.  The Canadian government will have 10 percent of the new GM; the UAW health care trust will get a 17.5 percent stake with a warrant to receive an additional 2.5 percent; again it’s contingent upon how things go for the company post-bankruptcy.   The company is expected to close 12 manufacturing facilities and eliminate 21,000 jobs.   GM shares closed last Friday at 75 cents.  General Motor shares peaked in 2000 at $93.62 a share.  At one point in time GM had just over 50 percent of all U.S. auto sales.  Today the company has around 19 percent of the U.S. market.  With Monday’s bankruptcy filing, GM will be taken off the Dow Jones Industrials on the New York Stock Exchange.  The company is an American industrial icon that has provided millions of jobs, tons of engineering innovations, and made numerous contributions to the country and the world.  One of its greatest accomplishments was during WWII when GM manufactured the armament that helped win the war.  While the auto giant has been humbled, GM has a chance to redeem itself.  Chrysler, which filed from bankruptcy in late April, is expected to emerge from bankruptcy protection on June 15th and operate as the new Fiat-Chrysler.

WILL GM RELOCATE TO WARREN? posted 05.28.09
WARREN -- If he has his way, Jim Fouts will convince GM to move its corporate headquarters from the Renaissance Center to the city Warren.  To provide incentive Fouts, the Mayor of Warren, will offer tax breaks and other perks to GM.   In addition Fouts says that Warren--the third largest city in the state--has no city income tax and less crime.  The suggestion is sure to draw fire from the city of Detroit, which is already facing a $300 million deficit this year.  Losing GM would be a huge loss for Detroit.  GM currently operates the Warren Tech Center, a sprawling research and development facility (constructed in the 1950’s), which features ample room for thousands of employees.  It looks like newly-elected Detroit Mayor Dave Bing can add keeping GM in the Motor City to his long list of things to do.

MAJOR UAW CONTRACT CHANGES posted 05.27.09
In a new settlement agreement just agreed to by the leadership of the United Auto Workers there are substantial contract changes with General Motors.  The measure will be voted on by UAW membership this week. Part of the settlement agreement offers buyouts for all UAW-GM workers in a variety of payouts, including one program as high as $115,000.  Also new is the amount of stock the UAW health care trust fund will receive, which is $6.5 billion in preferred stock.  That amount will give the union a 17.5 percent stake in the company, substantially lower than a previous plan which would have given the UAW a 39 percent stake in GM.  Also new is a 9 percent dividend structure, where the health care trust will receive $585 million every year for as long as the stock as held.  GM will also commit $2.5 billion to a note payable in cash in 2013, 2015, and 2017.   The settlement agreement also says that five Delphi facilities will be returned to GM ownership, including two plants in Michigan: Delphi Saginaw Steering and Delphi Power Train Systems in Grand Rapids.  To review documents released by the UAW, click here. The UAW and GM are scrambling to avoid bankruptcy.  GM borrowed $13.4 billion from the federal government last year and faces a June 1st restructuring deadline from the Obama auto task force.  Other changes from the settlement agreement include reduced retiree health care benefits and the elimination of vision and dental benefits for retirees.  To help offset health care costs, cost-of-living increases and performance bonuses will be suspended in 2009 and 2010. The traditional Easter Monday holiday will be suspended in 2009 and 2010, and payment of unused vacation entitlement will be discontinued.  Also break time length will be reduced to 40 minutes per eight-hour shift and 50 minutes per 10-hour shift.

UAW-FEDS-GM MAKE A DEAL posted 05.22.09 
The United Auto Workers has reached a tentative agreement with the Obama administration auto task force and General Motors.  No details have been released but it is a crucial step in avoiding bankruptcy.  However another major hurdle remains, and that is the GM bondholders who hold $27 billion in unsecured debt.  90 percent of the bondholders would have to agree to receive a 10 percent stake in the company -- a scenario most experts feel is unlikely.  Bondholders don’t like the idea that their $27 billion is only worth 10 percent of the company.  Per the plan outlined by the Obama administration auto task force, the UAW will receive 39 percent of the company.  The problem is the value of their stake is only $10 billion, far less than the bondholders.  The bottom line is that it isn’t fair. Furthermore, the only reason the UAW will even have an equity position is that General Motors graciously agreed to establish a trust fund (or Voluntary Employee Benefits Association) which is owned and operated by the union which pays for retiree health care costs.  When it became clear to everyone that GM did not have the cash to fully fund the health care trust, company stock was considered a logical alternative…and indeed it is. The UAW is being aided and abetted by the Obama administration; their political ties are a matter of public record. The GM bondholders are within their rights to hold out: they should not be forced to make any sacrifice, particularly when the UAW is receiving preferential treatment from the Obama administration.  On a side note, the stock market did react favorably to the UAW tentative agreement: GM shares traded up on the day, rising 10 percent to $1.60 a share.

STABENOW INTROS CASH-4-CLUNKERS posted 05.22.09
Michigan U. S. Senator Debbie Stabenow has introduced cash-for-clunkers legislation -- a voucher of up to $4500 toward the purchase of a fuel-efficient vehicle. The idea has been discussed more than once as of late as the auto industry struggles.  An identical measure is being worked on in the House.  According to an article on www.freep.com the voucher will be good for both domestic and imported vehicles.  Under Stabenow’s bill the program would last for one year.  Trade-in vehicles will be accepted, but must be drivable, insured, and registered to the same owner for at least one year.  The trade-in must have a combined fuel rating of 18 m.p.g. or less.  The amount of the voucher is determined by the difference in miles per gallon from the trade-in to the new fuel-efficient vehicle.  For example, a trade-in getting 18 m.p.g. compared to a new vehicle with a 22 m.p.g.-rating, qualifies for a $3500 voucher.  New cars with a 10 m.p.g. or better rating will get a voucher of $4500.  The Senate will debate the legislation next week.   

GM SHAKEDOWN CONTINUES posted 05.21.09
Last week 1100 GM dealers were notified their dealer agreements would not be renewed.  Major events are coming daily for the auto giant, and how General Motors will be structured--assuming it goes to and emerges from bankruptcy protection--is beginning to take shape.  The U.S. government will be the largest shareholder, followed by the UAW (with 39 percent of the company).  The UAW gets that equity from its union-owned health care trust fund, paid for by General Motors, through cash and lots of stock…enough to give the union a 39 percent stake in the company.  That’s the same circumstance that gave UAW workers a 55 percent share in Chrysler. Like some Chrysler bondholders, many GM bondholders are resisting the proposed 10 percent stake, claiming they will do better in bankruptcy court. That sets up another showdown between bondholders and the Obama administration auto task force.  Both GM and Chrysler are out of money.  As part of its bankruptcy agreement Chrysler requested and received $8 billion in government loams.  General Motors has said it will need an additional $11 billion to continue operations. 

CHRYSLER BANKRUPTCY -- UNION VERSES UNION
posted 05.21.09
In an ironic twist, the Chrysler bankruptcy proceedings have pitted teacher and police unions against the United Auto Workers.  It all stems from the so-called holdout hedge funds of bondholders, some which include major stakes from the Indiana State Teachers Retirement Fund and the Indiana State Police Pension Trust.  Attorneys for the hedge funds claim the UAW is receiving preferential treatment, at the financial sacrifice of Chrysler bondholders.  They claim the Obama administration auto task force has made an unfair deal, which violates the bankruptcy code…and the Watchdog agrees.  That being said, the times and events are unprecedented, and it may not make any difference.  This week in New York, U. S. Bankruptcy Judge Arthur Gonzalez denied a motion from the Chrysler bondholders to delay the proposed sale of Chrysler’s assets to Italian car maker Fiat.  Chrysler attorneys argued any delay will only hurt Chrysler.  

OBAMA SQUEEZES BIG 3 – RAISES OPERATING COSTS
posted 05.19.09
WASHINGTON D.C. -- President Barrack Obama will announce tougher CAFE (Corporate Average Fuel Economy) standards of 35.5 miles per gallon by 2016.  That means increased operating costs for General Motors, Ford, and Chrysler.  The proposed legislation is being positioned as a favor to the car companies in return for California backing off its desire to set even higher standards than the federal government.  The new pact would increase existing mileage standards by five percent every year through 2016.   This is welcome news for the global warming supporters, but a disaster for the both domestic and foreign car makers.  With Chrysler in bankruptcy and GM perhaps days from declaring, the move couldn’t come at a worst time.  According to an Obama administration official, the new standards will raise the cost to purchase a car from $600 to $1300 dollars per vehicle.   Because they accepted federal loans to stay solvent last December, GM and Chrysler are in no position to object.  Regardless, the new standards are another example of the incessant chipping away at the American auto industry when it can least afford it. For some time, California and 13 other states have been pushing to raise their respective state’s mileage standards above the national standard.  Raising CAFE standards requires more engineering and innovation from the car companies.  It also forces the manufacturers to build lighter vehicles, while simultaneously maintaining complex safety standards.  Lighter-weight vehicles are less safe, and put the driver and passenger at more risk.  Improved mileage standards and maintaining safety are conflicting objectives.  Until the recent surge in gas prices Americans clearly chose larger vehicles like trucks and SUVs.  For an inclination of what the government requires of the American car companies, click here: www.nhtsa.dot.gov.

1100 GM DEALERS DROPPED posted 05.18.09
GM has informed 1100 dealers (20 percent of total GM dealers) that their franchise agreements will not be renewed.   According to 24/7 Wall Street, with the total number of Chrysler and GM dealers slated to close, that will mean another 100,000 jobs lost in the auto industry. The move comes as GM scrambles to avoid bankruptcy, which seems almost inevitable at this stage.  The company is working against a June 1st deadline to resubmit its restructuring plan to the Obama administration auto task force.  Like Chrysler, trimming the number of dealerships was a painful but necessary step for General Motors.  GM is also seeking concessions from bondholders and the UAW.   In addition to the 1100 dealers that were just pink slipped, GM expects another 400 dealers to close voluntarily.  Closures are also likely at Hummer and Saturn locations.  GM’s dealer agreements do not renew until October of 2010; presumably if the automaker avoids bankruptcy those dealerships can remain open until next year.  However if Chapter 11 bankruptcy does occur, those 1100 dealers could lose their franchise agreements in a matter or weeks.  GM wants to reduce the number of its dealers by 2600 by 2010.   

789 CHRYSLER DEALERS TERMINATED posted 05.18.09
Once Chrysler declared bankruptcy all 3,188 dealer contracts became null and void.  That fact hit home on Thursday, May 14th when 789 Chrysler, Dodge, or Jeep dealerships were notified they were being terminated as dealers by the company.  The move was criticized by Michigan Congressman Dave Camp, who felt the process should have taken place over a longer period of time. Listen to Congressman Camp’s latest MIwatchdog interview here. Congressman Camp also expressed concerns about the ability of the Pension Benefit Guaranty Corporation’s capability to handle GM and Chrysler’s pension obligations.   The Pension Benefit Guaranty Corporation is the government agency that steps in when private pensions go bad and can’t pay their financial obligations.  The 789 dealerships slated for closure were notified by letter via UPS.  Officially their franchise agreement will be terminated on June 9th, which leaves the dealers 23 days to contest the decision in court.  Chrysler has stated it will not buy back any vehicles, parts, or tools from the terminated dealers. To view the entire list of dealers go to the following link:  http://msnbcmedia.msn.com/i/msnbc/sections/business/
Chrysler_dealers_list.pdf.

WILL CHRYSLER DROP 800 DEALERS? posted 05.13.09
In U.S. Bankruptcy Court, Chrysler will soon file a list of dealers that it wants to maintain.  Currently there are 3200 Chrysler dealerships in the United States. By way of comparison, Toyota--which has more market share than Chrysler in the U.S.--has 1460 dealers.  There is speculation that as many as 800 dealers will be dropped.  According to an article published on MLive (www.mlive.com), bankruptcy attorney Steven Lerner has informed dealers that at least 800 franchise agreements are at risk.  However, Chrysler spokesperson Kathy Graham says the 800 number was pure speculation.  Chrysler filed for bankruptcy on April 30th and has been surviving on a $4 billion emergency loan from the federal government.  The company has already lost 400 dealers since the beginning of 2008.  Most experts believe dealerships in larger metro areas are most vulnerable. Evaluations will be based on how well-capitalized and how profitable the dealership is, the condition of the dealership’s facility, whether or not the dealer has hit its sales goals, and whether the dealership carries Jeep and Dodge in addition to Chrysler.

CAR DEALERSHIPS GET PINK SLIPS posted 05.12.09
DETROIT -- In an ongoing series of negative events, General Motors will soon notify individual car dealerships that it wants to close.  Notices will be sent this week.  The statement alluding to the closures was made by GM President & CEO Frittz Henderson.  He also indicated that a bankruptcy filing was more probable.  Just two weeks ago GM announced plans to reduce its number of dealers by 42 percent, from 6,246 to 3,605 by the end of 2010.  The NADA (National Automobile Dealers Association) has launched an aggressive advertising campaign questioning the move.  The ads target President Obama and his auto task force who have pushed for reducing the number of dealerships.  With all due respect to car dealership owners, most experts agree there are simply too many dealerships to support the current market share of the domestics.  For example in the 1950’s GM had a robust 50 percent share of all U.S. auto sales.  Today General Motors U.S. market share is 20 percent. On the positive side – in the long run, those dealerships that do survive stand to benefit from less competition.       

GM BANKRUPTCY COMING SOON? posted 05.12.09
DETROIT -- The evidence is mounting.  In a May 12th statement, GM CEO Fritz Henderson said bankruptcy is a more likely scenario for the automaker. Also on Monday, six GM executives sold 200,000 shares of General Motors shares on the open market for prices ranging form $1.45 to $1.61 per share.  According to press accounts in the Detroit Free Press (www.freep.com) General Motors is getting ready to issue massive amounts of new equity in which large stakes will be given to the U.S. government and the United Auto Workers retiree health care trust fund (a.k.a.VEBA -- or Voluntary Employment Benefits Association).  GM plans to issue 62 billion new shares of stock and then do a 100-for-1 reverse stock split.  The plan will make Uncle Sam the largest GM shareholder, followed by the UAW health care trust fund.   Unbelievable!

TOUGH TIMES FOR GM posted 05.08.09
DETROIT -- GM celebrated its 100th birthday last summer.  Almost one year later the auto giant is fighting to avoid bankruptcy in the midst of a depression-level sales environment.  General Motors’ revenue has taken an amazing 50 percent fall so far this year.  First quarter revenue was $12.3 billion, down from $24.5 billion in the first quarter of last year.  Officially it’s a $6 billion dollar loss in the first quarter for General Motors.   All this looms as the company scrambles to meet a June 1st government deadline to submit a revised restructuring plan.  Their original plan, submitted earlier this year, was rejected by the Obama administration auto task force.  As it stands now with the current restructuring plan that is on the table, the U.S. government will become the largest shareholder in GM, followed by the United Auto Workers.   These are very tough times for all the stakeholders in the company: executives, salaried workers, shareholders, bondholders, and yes…the UAW.  GM Chief Financial Officer Ray Young said although it is hard to quantify, bankruptcy fears are driving customers away from GM.  In a nationwide survey by AutoPacific (www.autopacific.com) taken between March 31st and April 1st, 52 percent of consumers were concerned about buying a GM vehicle because of a possible bankruptcy.

23 GM FACTORIES TEMPORARILY CLOSING posted 05.07.09
DETROIT -- General Motors has announced it will temporarily close 23 engine, transmission, and parts factories across the country.  Some of those will be partial shutdowns, but others will be the entire factory. According to a GM spokesperson, the move is directly related to the closing of 13 assembly plants for up to 11 weeks.  That move was announced two weeks ago and affects 24,000 GM workers.  The new closures will affect around 18,000 hourly and salaried workers.  Members of the United Auto Workers will still receive most of their pay, thanks to the union contract that requires the company to cover the difference between state unemployment benefits and their wages.   General Motors will also pay salaried workers 75 percent of their pay, providing they are furloughed under a new company policy.  Those factories most greatly affected are in Baltimore, Toledo Ohio, and Michigan’s Ypsilanti Township.  At the end of March, GM had a 123 day supply of vehicles.   According to www.wardsauto.com U.S. auto sales are off 37.3 percent so far in 2009. 

UAW WILL SELL STAKE IN CHRYSLER posted 05.05.09
DETROIT -- United Auto Workers President Ron Gettlefinger has stated the union has no intention of keeping its 55 percent stake in Chrysler.  The union  will sell the shares on the open market (when they have value) to fund the trust that will pay for retiree health care costs starting next year.  Gettlefinger said the trust—or VEBA (Voluntary Employees Benefit Association)--will start with $1.5 billion from an existing health care trust, and will receive $300 million from Chrysler next year.  The total health care obligation for Chrysler is $10.9 billion for 82,000 retirees, in addition current workers who will eventually retire.  At a news conference in Detroit Gettlefinger said the trust has already eliminated some benefits including dental and vision coverage.  He also challenged those who claim the union is getting a better deal than the secured debt holders because the union is taking a big risk with Chrysler stock which is currently worth nothing.  Those debt holders are fighting back, read about it in the story below this one. Chrysler filed for bankruptcy protection last week and hopes to emerge in 30 to 60 days as a stronger company with alliance partner Fiat.  

CHRYSLER LENDERS FIGHT BACK posted 05.05.09
A group of 20 lenders—who have $1 billion invested in Chrysler, that refused to accept 30 cents on the dollar for their investment--will fight the company’s planned bankruptcy sale.  The group is lead by Tom Lauria, bankruptcy attorney for White and Case, based in Albany, New York.  Lauria stated the proposed plan inverts the classic priority scheme referenced in the bankruptcy code where senior creditors are paid first, followed by junior lenders, administrative claims, unsecured lenders, and equity holders.  Lauria asserts the senior secured creditors will receive 29 cents on the dollar while unsecured creditors are going to get $10 billion.  He said this scenario has senior secured creditors subsidizing junior creditors, which conflicts with the United States bankruptcy code.  The group of lenders Lauria represents includes Oppenheimer Funds, Stairway Capital, and other secured lenders including teachers’ credit unions, pension funds, retiree plans, college endowments, and retirement funds. In an interview on WJR radio in Detroit, Lauria claimed the Obama administration has put major pressure on one of his clients, claiming if they did not agree to the bankruptcy terms that the full force of the White House press core will be brought to bear against them.   Fox News reports the person making the threat was auto task force member Steve Rattner.  

HOW & WHY UAW OWNS CHRYSLER posted 05.04.09
Some are framing the Chrysler bankruptcy as a steal for the UAW and unjust treatment for the secured lenders who refused 33 cents on the dollar for their investment in Chrysler.  They have a point.  Under current bankruptcy law secured lenders or bondholders are to be paid before stockholders, but President Obama wants to change the rules.  The bondholders have firm legal ground on which to object, and it's good that they are. There is no doubt that the UAW--with 55 percent of the shares of the company that emerges from bankruptcy--is the big winner. The Obama Administration was instrumental in making it happen.  

The entire episode began with $4 gasoline which catapulted the automotive industry into the worst sales environment since the Great Depression.  GM, Ford, and Chrysler were not prepared for such a sudden gyration in market demand; moving from hot-selling trucks and SUV’s to smaller, fuel-efficient cars, overnight.  Critics would counter that for years the domestic industry has not paid enough attention to or provided sufficient resources to the development of smaller, fuel-efficient vehicles.  $4 dollar gas was bad enough but when the housing crisis and foreclosure debacle ensued, people really quit spending money.  The root cause of the housing crisis really dates back to the Carter and Clinton administrations, as both democrat presidencies wanted banks to eliminate the practice of red-lining, where banks would intentionally not lend to selected neighborhoods they deemed 'high risk'.  Then, during the Bush administration, Congressmen Barney Frank and Senator Chris Dodd pushed hard to loosen up lending practices and insisted banks loan to higher-risk applicants.  In the meantime government corporations Fannie May and Freddie Mac took some of these high-risk loans, bundled them with other mortgages, and sold them as derivatives to investors on Wall Street…and they were gobbled up like popcorn.   When the foreclosures started (during the Bush administration), Wall Street knew the derivatives were bad, and thus began the bona fide banking bailout. 

While $4 gas and the banking crisis played out, GM, Ford, and Chrysler were finally dealing with their own crisis which was legacy costs -- most notably retiree health care costs.  It was a foregone conclusion that legacy costs had to be dealt with or the companies would fail.  The concept of a VEBA (or trust fund), which would pay for retiree health care, was agreed to in principle by the companies and the UAW.   The union would own and operate the trust fund but it would be paid for by the auto companies.  Initially the plan was to fund the VEBA with cash and very little company stock, but then cash got tight, and the idea of funding a portion of the VEBA with more company-issued stock was pushed for by both the Bush and Obama administrations.  In Chrysler’s case, so much of the VEBA is to be funded by company stock (close to $6 billion) that the VEBA trust fund will soon be the largest shareholder in the company.  

From any measure, this is a huge victory for the UAW, and one that--given their record of labor strikes and adversarial relations with Chrysler--doesn’t seem deserved or just.  But when a big company like Chrysler seeks and receives emergency loans from the federal government to stay solvent, they are subject to the whims and directions of who is in charge, President Barack Obama.  $4 gas and the housing crisis put Chrysler in a very tough market situation that they simply could not climb out of.  They needed a life-line from the U.S. government to stay in business.  President Obama is saving Chrysler and simultaneously giving the UAW a huge prize.  Timing and the convergence of these events has given the UAW a contemptible victory.   They will have one seat on the board of directors and a 55 percent controlling interest in the company. UAW President Ron Gettlefinger has said the only way the VEBA will make it is if they can sell some company shares on the open market.  Presumably those proceeds would be invested back into the VEBA, helping secure health care costs for existing and future Chrysler retirees.    

FIAT MAY ACQUIRE GM EUROPE posted 05.04.09
Italian car maker Fiat has confirmed that they are in talks to acquire GM’s European operations.  Fiat automobiles include Fiat, Alfa Romeo, and Ferrari brands.  It is about to take a 35 percent in Chrysler without putting up any cash.   Purchasing General Motor’s European operations, including Opel, is another bold step in making Fiat a major global automotive player.  Like Chrysler in the United States, all is not well at Opel, which sells throughout Europe.  Based in Germany, Opel says it needs $4.3 billion to get through the present economic crisis.  The German government has said “no” to direct aid, but will assist a viable investor with loan guarantees.  Fiat is not the only suitor for Opel. Canadian car parts maker Magna International has expressed interest and presented the German Economic Minister with a rough concept of how they would purchase and run Opel. 

OBAMA IMPOSES BANKRUPTCY ON CHRYSLER posted 05.01.09
The breaking point for the Obama administration auto task force to impose bankruptcy was the holdout of hedge funds managers, who have a $7 billion stake in the company.  Unlike many other financial institutions and stakeholders they would not agree to accept 33 percent for the value for their investment in Chrysler, which would have equaled around $2.3 billion.  Now a bankruptcy judge will decide how much the hedge funds will receive.  As per the bankruptcy agreement, Chrysler will receive an additional $6 to $8 billion more in federal loans to stay afloat.  Chrysler had put itself in a tenuous position after borrowing $4 billion dollars from the U. S. Treasury Department in December of 2008.  Since then the government has been involved with Chrysler and that involvement is scheduled to increase.  For example, the U. S. government will appoint four new board members to the new Chrysler board of directors.   New alliance partner Fiat will name three and the UAW and Canadian government will each name one.  According to the Detroit Free Press one of the conditions of Fiat boosting its stake in Chrysler from 20 to 35 percent, was a requirement from the auto task force that Fiat-Chrysler design and build a 40-mile-per-gallon car in the United States. It’s plain to see that the Obama auto task force is taking an active and engaging role in running the company.  This should be a huge red flag to General Motors if it wants to remain autonomous and independent – and avoid bankruptcy. If GM does go Chapter 11, the company will receive equal scrutiny.  GM’s revised restructuring plan is due with the feds by June 1st.   The other huge major twist in the Chrysler bankruptcy is who will become the largest shareholder -- and that will be the United Auto Workers, with a 55% controlling interest.  That’s a result of the UAW agreeing to accept Chrysler stock instead of cash for a portion of the trust fund that will pay for retiree health care.  Both the Bush and Obama administrations had been pushing the UAW to accept a portion of the trust in company stock, and for some time the union resisted.  The VEBA, or Voluntary Benefits Association, is a $10 billion total amount for Chrysler, meaning the UAW is taking $6 billion in stock.  It is an odd turn of events as the United Auto Workers employed by Chrysler -- with an long and adversarial history with their employer, will soon own the company.  Some have suggested that President Obama made a sweetheart deal with the union, giving them controlling interest in the company.  The holdout hedge funds get the raw deal, unless they previal in bankruptcy proceedings.  It appears the union, ably assisted by the U.S. government has taken over the company.  Quite a victory, particularly when you consider the trust fund is being paid for by Chrysler -- to pay for UAW retiree health care.  The UAW will need to sell a good portion of their 55 percent share to fund their retiree health care trust fund. It will be interesting.  

FEDS & UAW -- LARGEST GM SHAREHOLDERS posted 04.29.09
DETROIT -- In a move that must turn the stomach of many automotive insiders, the U.S. government is on track to become General Motors’ largest shareholder.  The second largest shareholder is even stranger: the UAW retiree health care trust fund (VEBA).   For some time President Obama’s auto task force has been pushing the UAW to accept a portion of the health care trust in the form of company stock.  An agreement has been reached, and the result is the United Auto Workers will be second largest shareholder…right behind Uncle Sam. All this will come to fruition if GM’s restructuring plan is approved by President Obama’s auto task force, which is due by June 1st.  In December, GM opened Pandora’s Box when it borrowed $13.4 billion from the federal government to stay solvent.  One of the off shoots was the forced resignation of General Motors CEO Rick Wagoner, the designated    governmental sacrificial lamb of the automotive meltdown.  A GM spokesperson said he did not expect the auto task force to be in on day-to-day operations.  How ironic that the United Auto Workers--with a history of extreme work rules and painful strikes--will be the second largest shareholder of the company.  Does that mean the union will be able to strike or have a work stoppage against themselves?  GM will need an additional $11.6 billion in government loans to keep operating after May 1st.  If all goes well, long term the government loans willl be paid back, and the government will be out of the car business. We can hope.

GOODBYE PONTIAC posted 04.28.09
DETROIT -- In a much speculated move, General Motors has announced it will drop Pontiac as part of it restructuring plan.  Not all is completely lost, as GM will likely try to find space for some of its more popular models like the G8.  There is also speculation that the Vibe and the Solstice will become Chevrolets.  Pontiac had some real winners in its past, most notably the GTO (designed and pushed by whiz kid John DeLorean) -- which remains one of the most popular muscle cars ever produced.  The GTO was so popular it inspired the Beach Boys to write a hit song based on the American automotive icon.  Most experts agree that Hummer and Saturn will either be sold or also shut down, leaving GM with four core brands: Chevrolet, Buick, Cadillac, and GMC.  In a related move General Motors also announced it will eliminate 21,000 U.S. factory jobs.  GM must submit its restructuring plan to the Obama administrations auto task force by June 1st.

UAW-CHRYSLER-FIAT-FEDS AGREE posted 04.27.09
DETROIT -- The United Auto Workers has reached an agreement with Chrysler LLC, Fiat, and the Obama administration regarding how to survive.  Details have not been released, but according to the UAW the terms meet government requirements for reducing Chrysler’s debt.  At issue for some time now has been how Chrysler will fund the $10.6 billion trust set up to pay for retiree health care.  The Obama administration task force has been pressing the UAW to accept half of $10.6 billion in the form of stock rather than cash or debt for the trust.  The trust fund, or VEBA, (Voluntary Employee Benefits Association) will be owned and managed by the UAW, and is an innovative step in helping resolve the legacy costs crisis that has so burdened the automotive industry.   According to UAW President Ron Gettlefinger the deal/agreement will be presented to and voted on by members this week.  Chrysler is facing an April 30th deadline to reduce debt and complete its alliance with Fiat, or face Chapter 11 bankruptcy.

GOVT PREPS FOR CHRYSLER BANKRUPTCY posted 04.24.09
NEW YORK CITY -- The New York Times is reporting that the U.S. Treasury Department is in the midst of preparing a Chapter 11 bankruptcy filing for Chrysler.  Speculation is that proceedings could begin as early as next week.  Chrysler, who borrowed $4 billion last year from the federal government, is facing an April 30th deadline to reduce debt and meet other terms laid out by the Obama administration’s auto task force.  In order to stay solvent Chrysler has asked for additional emergency loans from the U.S. Treasury.  The Times’ report says the Treasury Department has already worked an agreement in principle with the United Auto Workers which will protect pensions and retiree health care benefits.  The Italian automaker Fiat would be allowed to complete its proposed alliance with Chrysler while the Detroit automaker is under bankruptcy protection.

GM WILL SHUT DOWN FOR NINE WEEKS posted 04.23.09
DETROIT -- General Motors is reportedly going to shut down most of its U.S. factories for up to nine weeks this summer.  The reasons for the shut down are slumping sales and ample inventory of unsold vehicles. The exact date of the shutdown is not known, but sources say it will be around the normal two-week shutdown date in July as the automakers transition to the 2010 model year. GM has also been vigorously working to convince bondholders to voluntarily exchange $28 billion they are owed for a stake in the company.  Regardless of the outcome General Motors has announced it will not pay June 1st-owed bond payments.  So far this year industry sales have slipped 38.4 percent and GM’s U.S. sales are down 48.8 percent.  During the nine-week idling, laid-off UAW workers will receive state unemployment benefits and company supplemental pay equal to roughly 70 percent of their gross pay. 
General Motors operates 47 U. S. manufacturing facilities which employ 55,000 UAW members.  In the last two years (2007 and 2008) GM has lost $70 billion.

AUTO TASK FORCE OUT OF CONTROL posted 04.20.09
DETROIT – The Obama administration’s auto task force is setting up a meeting with representatives of salaried retirees of GM, Ford, and Chrysler.  The purpose is to hear the concerns of the salaried retirees who are deeply worried about their pensions, supplemental payments, and health care benefits -- particularly in light of possible bankruptcy.  Unlike members of the UAW salaried retirees have little protection.  A prime example is what happened to the salaried retirees of Delphi Corporation who lost their health care and life insurance benefits in 2005 as a result of bankruptcy.  Sidenote, the cost savings for Delphi was $70 million per year.  The auto task force has required Chrysler to complete their merger with Italian automaker Fiat by April 30th and show how the alliance of the two car makers would be profitable.  The Obama administration has offered up to $6 billion in loans to the Chrysler-Fiat alliance, and it has been reported the government would also have a significant role in naming the new board of directors.  Beyond having a the ability to loan--or more accurately, print--money, what qualifies the Obama auto task force to name who will sit on the board of Chrysler-Fiat?  It’s a scary notion, and is only scarier when one considers the lack of any meaningful public outcry.  General Motors faces a June 1st deadline to attain tougher concessions from bondholders and the UAW.   GM will propose a bond exchange offer, which will be due by April 27th.    No word on whether the auto task force has the courage or the will to help General Motors gain additional concessions from the United Auto Workers -- who still make $29 an hour plus benefits for unskilled labor at General Motors. Most analysts believe the wage should be closer to what foreign-owned car makers pay at plants in the U.S., which is around $10 less per hour. The salaried retirees will get the shakedown, as will the bondholders…but what about the UAW?  It should be no wonder that the UAW has a pitiful public perception -- they deserve it.  The auto task force should not treat the UAW as if it was a sacred cow, but at this point, it sure seems like they are. 

AUTOS FACE SURGICAL BANKRUPTCY posted 04.14.09
DETROIT -- During a speech in Detroit Governor Jennifer Granholm said a surgical bankruptcy may be in the offing for the auto industry.  Part of what the governor is hoping for is a willingness on the part of bondholders to bargain in good faith with the auto companies.  She believes the deal bondholders will receive in pre-bankruptcy will be far superior to what they would receive from the courts in actual bankruptcy.  Speculation has been heavy that GM or Chrysler will declare Chapter 11 bankruptcy.  The auto companies need to gain concessions not only from bondholders but from active UAW members, who still are paid $29 per hour, plus benefits, at General Motors.  Just like bondholders, the UAW will also get a better deal in pre-bankruptcy.  The rank and file will be far better off to make a deal now, and give the auto companies a chance to survive without declaring Chapter 11.  Bankruptcy court will not be anywhere near as accommodating.  It’s time for both the bondholders and UAW to wake up and smell the coffee.

FEDS INVADE GM posted 04.09.09
DETROIT -- When a company borrows money from the federal government it leaves itself open to interference.  Call it what you will, but the Obama administration has sent 15 members of the auto task force to Detroit under the supposition to help the company restructure by the June 1st federal deadline.  An anonymous administration official says the auto task team members are being sent to accelerate the restructuring process.  The group is lead by Harry Wilson, a former hedge fund executive.  Other members include “experts” from the Boston Consulting Group and the investment bank Rothschild.  Last week the Obama Administration rejected General Motors’ viability plan and also removed CEO Rick Wagoner in the process.   The auto task force wants GM to gain further cuts from its bondholders and the UAW.  The Obama Administration apparently has an idea of what the UAW wage should be, so why not circumvent GM and go directly to UAW President Ron Gettlefinger?  Does the administration have the political will to deal with the UAW itself or will they leave that task to GM?  From how it appears today, if GM is unable to gain wage concessions from the UAW, the Obama Administration may opt to force bankruptcy.  If President Obama has the political will to remove Rick Wagoner then he should also have the courage and fortitude to help GM force wage concessions from the powerful UAW.  New GM CEO Fritz Henderson says he expects members of the auto task force to be working at GM headquarters in Detroit straight through to the June 1st deadline to reorganize or else.  Tough times at General Motors.

INTENSE BANRUPTCY PREPARATIONS @ GM posted 04.08.09
DETROIT -- According to Reuters, General Motors is in intense and earnest preparations for a possible Chapter 11 bankruptcy filing.  A possible plan would be to split the company into a group of profitable units and a second entity comprised of less profitable units.  Most experts agree GM’s successful units include Chevrolet, Buick, Cadillac, and GMC.  Less profitable units include Pontiac, Hummer, Saab, and Saturn. Filing for bankruptcy protection would allow GM to start over with the UAW, dealers, and bondholders.  While the UAW has made many substantial concessions, the one concession they have not backed down from is their hourly wage of $29 per hour for active UAW members -- which is about a third higher than what foreign automakers pay workers at U.S. plants.  Moodys Investment Service believes there is a 70 percent probability of a bankruptcy in the automotive sector. Some experts believe the auto companies are just too big to emerge from bankruptcy and that the process will take longer than what people realize.  In a Sunday appearance on Meet the Press GM CEO Fritz Henderson said that General Motors would not rule out the bankruptcy option, but that the company's preference would be to win in the markeplace.  

MARCH AUTO SALES DOWN 36.8% -- ROCK BOTTOM? posted 04.03.09
DETROIT -- March 2009 U.S. auto sales dropped 36.8 percent from one year ago, but the overall sales slide actually significantly improved 24 percent from February 2009.  Some feel that could be a signal the worst is over and that April sales could be stronger, aided by warmer weather which brings out more car buyers.  The annualized selling rate in March was 9.9 million vehicles, contrasted with an annualized selling rate of 8.9 million last month. Specifically, GM was down 44.7 percent, Ford off 40.8 percent, and Chrysler’s sales slid 39.3 percent.  By the raw numbers, in March 2009 U.S. car and truck sales were 857,735.  That compares with March 2008 total U.S. vehicle sales of 1,356,926.  The auto slump was clearly felt by foreign automakers as well.  For March Toyota was off 37.7 percent, Honda down 36.3 percent, Nissan slipped 37.7 percent.  Kia sales however were off just .6 percent, and its share of the U.S. market increased from 1.8 percent to 2.9 percent.  Experts are unsure if the auto market has hit bottom, but point to the 24 percent increase in sales from February to March as a very positive sign.

CHRYSLER VIABILITY PLAN REJECTED posted 03.31.09
The Obama administration has rejected Chrysler’s viability plan. It listed several reasons for doing so including an over-reliance on North America for sales, shortcomings in quality, lack of products in the critical small car segment, and too little investment in vehicle architecture.
The auto task force did pledge $6 billion to Chrysler and allowed the automaker 30 days to complete its proposed alliance with Italian automaker Fiat. Fiat Group CEO Sergio Marchionne has said the alliance was forthcoming, which will improve Chrysler’s ability to offer smaller, fuel-efficient vehicles. While the report credited Chrysler for making some progress, it stated the automaker’s viability plan was insufficient due to several structural issues that the company faces--and is unlikely to overcome--as a stand-alone entity.  The auto task force also said the viability report is based on overly optimistic assumptions.  Some analysts have said bankruptcy is now more likely for Chrysler.  Although the company itself may not survive analysts do believe some of its products will.   

GM HAS 60 DAYS posted 03.31.09
The Obama administration’s auto task force will provide General Motors with an undisclosed amount of interim financing and 60 days to restructure the company. As part of the new government loan plan, it was required that GM CEO Rick Wagoner resign -- a move many claim will do more to impede than facilitate the automaker’s recovery. Michigan Governor Jennifer Granholm characterized Wagoner’s forced resignation as being tantamount to that of a sacrificial lamb.   It is also believed many members of GM’s board of directors will also step down. Obama’s auto task force wants GM to acquire additional concessions from the union, management, shareholders, bondholders, creditors, suppliers, and dealers. If those concessions are not acquired within 60 days, some type of bankruptcy may take place, that according to one official who spoke on the condition of anonymity.  GM borrowed $17.4 billion and Chrysler $4 billion from the federal government late last year and now find themselves in the worst sales environment in 27 years.   In its recently-submitted viability plan GM requested an additional $16.6 billion in government loans, and Chrysler an additional $6 billion. Together both companies employ 140,000 U.S. workers.  Last month General Motors announced plans to eliminate 47,000 jobs around the globe (almost 20% of its work force), close hundreds of auto dealerships, and focus on four core brands: Chevrolet, Cadillac, GMC, and Buick. 

GM'S WAGONER RESIGNS AT WHITE HOUSE REQUEST posted 03.30.09
Effective immediately General Motors Chairman Rick Wagoner will step down at the request of President Barack Obama.  Late last year GM and Chrysler borrowed $17.4 billion in government loans in order to avoid bankruptcy.  More recently the auto companies have requested an additional $21.6 billion.  On the CBS news show Face The Nation, President Obama said stakeholders in the companies need to take additional steps and restructure to become more competitive.  According to David Cole, Chairman of the Center for Automotive Research, Wagoner’s departure is tantamount to taking one for the team, and that he was disappointed because he believes Wagoner is a very capable leader.  Many industry analysts credit Wagoner with doing more to restructure the industry than any other executive, most notably gaining historic concessions from the UAW on wage and retiree costs.  Critics say GM has relied too heavily on truck and sport utility vehicles and that the companies were not prepared for the drastic market shift when gas hit $4 a gallon.   Members of the auto task force say bankruptcy is still an option if management, workers, creditors, and shareholders fail to make sacrifices. Both GM and Chrysler are required to present their restructuring plans to the auto task force by March 31st.   Since the President and his auto task force have the influence to remove the General Motors Chairman, it seems only appropriate they take the same action against UAW President Ron Gettlefinger.  To date, the union has still not backed off it's $29 an hour wage plus benefits.  Apparently the task of dealing with the over reach of union is GM's problem, not the president's auto task force. General Motors has lost an excellent dedicated chairman and executive, and there will likely be more resignations.  Wagoner started with GM in 1977 and became Chairman in 2003.

GM WORKERS CALLED BACK posted 03.27.09
Some positive news from the auto industry: General Motors plans on bringing back to work an unspecified number of laid-off employees starting sometime in April.  This is partly due to a new round of 7,600 hourly workers agreeing to a buyout or opting for retirement. Those agreeing to a buyout receive $20,000 in cash and $25,000 towards the purchase a new GM vehicle.  Workers retiring will receive those same benefits plus health insurance and $3,150 a month pension.   Since 2006 General Motors has shed 60,500 hourly jobs--approximately half of its work force--through buyouts and sweetend retirement offers.  On another very positive note the automaker will also soon rid itself of retiree health care expenses, or legacy costs.  GM is paying for a trust fund, or VEBA, which will be union-owned and managed, and will be responsible for covering retiree health expenses.  The fact that GM is starting to call back some of its 7500 laid-off employees is a very positive development. Once all laid-off workers are called back, or retire, or accept a buy out, all new hires will start at $14.50 an hour; that’s about half of what active UAW members at GM currently make. The challenge is far from over, but recalling workers is a very encouraging sign for GM, and in that regard, also for the rest of the country.

BUICK #1 FOR DEPENDABILITY posted 03.23.09
In a JD Power vehicle dependability survey, Buick is the most reliable vehicle on the road, unseating Lexus after a 14-year reign at the top. The survey showed Buick and Jaguar had 122 problems per 100 vehicles, Lexus with 126, Toyota 129, and Mercury 134.  The average was 170 problems per 100 vehicles.  Despite Buick being rated number one for dependability, analyst say the market still has a negative bias against American car companies, and that it may take some time for the perception to change.  The Buick Lacrosse was the highest rated mid-size car, while the Ford Ranger the most dependable midsize pickup.  The Mercury MKZ was the top rated entry-level premium vehicle, and the Lincoln Mark LT was the most dependable large premium vehicle, a category comprised of trucks and SUVs.  JD Power’s 2009 vehicle dependability measured problems experienced by owners of 2006 model year vehicles.

DECISION TIME FOR AUTOWORKERS posted 03.12.09
Autoworkers for GM and Chrysler have until March 24th and March 27th, respectively, to stay with their companies or accept a buyout.  Sticking with their respective employer means taking a chance on whether GM and Chrysler will survive, or at least survive bankruptcy.  Taking a buyout, meanwhile, means agreeing to a lump sum payment, but also looking for employment in a very tough job market.  Chrysler's UAW members make about $29 per hour, or a base pay of $60,000.  GM's UAW-represented workers make around $28 per hour.  Right now Chrysler is offering buyouts of $50,000 to $75,000 plus a $25,000 car voucher.  General Motors at one time offered buyouts of $140,000, but those numbers have been substantially reduced to $20,000 and a $25,000 car voucher.  In a contract signed in 2007 the UAW agreed to allow some new hires to be paid $14 per hour with lower-cost pension and health benefits than older UAW workers.   The auto companies are highly motivated to replace older workers with new workers at lower wage and benefit rates.

$71 AN HOUR FOR AUTOWORKERS posted 03.10.09
Press acounts have been wide-ranging regarding accurate hourly wages for an active UAW members of GM, Ford, and Chrysler.  Recently $71 per hour has been quoted from a liberal and conservative source, namely the Detroit Free Press and Bill O’Reilly of Fox News.  They both have cited that when retiree health care is factored in, the real number is $71 an hour, which equates to $156,000 per year.  That is an overwhelming amount of money.  The Free Press suggests that when retiree health is not factored in, the true hourly wage is less than $60 an hour…still a very attractive wage by any standard in this country.   That means getting the VEBA--the trust fund funded by the car companies to pay for retiree health care--in place is crucial.  Two years ago the car makers agreed to a figure of $56 billion which would fund the VEBA.  Though Ford has already reached terms with the UAW on their VEBA, the $56 billion may not be enough to adequately fund the VEBA for GM and Chrysler.  More than 540,000 retirees and spouses are expected to be covered by the VEBA, but that number will increase due to all the buyouts as of late.  The auto companies are now discussing all options with the UAW, bondholders, and federal government on how to best proceed.

AUDITORS DOUBT GM CAN CONTINUE posted 03.06.09
The auditing firm Deloitte & Touche LLP has said there is “substantial doubt” that General Motors can continue operations due to massive losses and an inability to generate enough cash to fund operations.  GM continues to battle on every front to survive and avoid Chapter 11 bankruptcy.  Last year the company received a $13.4 billion bridge loan from the federal government, and has asked to borrow as much as $16.6 billion more.  GM has until March 31st to submit a restructuring plan with the federal government, and many believe the deadline will be extended.  Also of great concern is the financial health of the auto companies tier-one suppliers, which are now seeking $25.5 billion in federal loans.  Experts say a breakdown in the automotive supply chain has the potential to drag down the industry by itself.

AUTO SLIDE CONTINUES posted 03.04.09
February auto sales continued to be dismal, with no improvement anticipated any time soon.  The numbers are ugly: GM down 53%, Ford off 48%, and Chrysler slid 44%.  For perspective, in raw numbers, GM sold 268,737 vehicles in February 2008, contrasted to 126,170 vehicles sold in February 2009.  As reported previously on the MIWatchDog, numbers for foreign car makers are also way down.  Toyota’s February sales fell 39.8%, Honda fell 38%, and Nissan was off 37%.    On a positive note, according to the Southfield-based R.L. Polk & Company, the median age of a car in operation in the United States was 9.4 years old.  This means that at some point, the pent-up demand for new vehicles may be the catalyst that lifts the industry out of its current slump.   Another positive development, at least for the Big 3, is the sight re-emergence of a “Buy American” sentiment in the country, particularly in the automotive-driven states of Michigan, Ohio, and Indiana.  Car dealers near Grand Rapids report increased customer sentiment to buy American. 

GM LOSES $30.9 BILLION IN 2008 posted 02.27.09
General Motors reported a staggering $30.9 billion loss for 2008, the fourth straight annual loss for the automaker.  The loss is emblematic of how tough times continue to rattle Detroit, the UAW, and the state of Michigan.  Michigan leads the nation in unemployment at 10.6%.  Since 2005 General Motors has lost $73 billion.   Last year the company borrowed $13.4 billion from the government, and more recently GM has requested an additional $16.6 billion in additional federal loans.  The housing crisis, $4 gasoline, and the credit crisis have all played a role in the downturn, which now has even extended to foreign rivals including Toyota. Toyota officials have stated they expect to lose $1.6 billion in fiscal 2008 (which ends in March 2009).  Some press reports indicate the loss could be as high as $5 billion.  It should be noted that Toyota is sitting on a mountain of cash, and is well poised to weather the current economic downturn; a dramatically different scenario then what American car makers face.  Ford Motor Company posted a record loss of $14.6 billion for 2008.  Some good news though -- GM, Ford, and Chrysler have all gained important concessions with the UAW, which will make them more competitive.  However many of those concessions including lower hourly wages with the UAW will not kick in until 2010.

UAW & FORD AGREE ON VEBA posted 02.24.09
Ford has reached an agreement with the UAW on how to fund a trust that will pay for retiree health care costs.  The agreement allows Ford to make cash payments to the union-managed trust with up to 50% of company stock instead of cash.  This agreement frees up much needed cash for operations for Ford Motor.  GM and Chrysler had already been directed to fund their respective VEBA with up to 50% of stock instead of cash, under terms of the $17.4 billion government loan.  According to David Cole from the Center for Automotive Research, relieving auto companies from paying retiree health costs is a vital step in making them more competitive with foreign rivals.  The money it will take to fund these trusts is immense.  For example, Ford owes $6.3 billion to its VEBA at the end of this year.  GM will have to pay approximately $20 billion into its VEBA, and Chrysler will pay around $9.9 billion.   The trusts will pay health care for 800,000 UAW retirees, spouses, and dependents.  GM has said it expects to save about $3 billion a year, and Ford says it will save $1 billion every year. The UAW and the auto makers deserve credit for battling through many tough circumstances as of late.  Reaching an agreement on funding the Ford VEBA is another example of many concessions made by the union.  The VEBA also represents a tremendous opportunity for the UAW.   The union will be one of the largest purchasers of health care in the country, and could use the instrument of the VEBA and purchasing power to improve the nation’s health system and, in turn, the lives of millions of Americans.  Read more about the UAW and it’s recent historical changes in this MIWatchDog editorial: Historic changes for UAW.

GM CUTS 47,000 JOBS - REQUESTS ANOTHER $17 BILLION posted 02.18.09
General Motors’ proud 100-year history is being tested.   In a 100-page report (dated 02.17.09) submitted to the federal government, the automaker says it plans to close another five manufacturing facilities and eliminate 47,000 jobs.  With GM employing 244,000 workers worldwide – that translates to one out of every five workers losing their jobs. GM also said it may need another $17 billion in loans in order to remain solvent; this would be in addition to the $13.4 billion the government has already agreed to loan the car maker.  Chairman Rick Wagoner said the plan would make General Motors profitable within 24 months. On the flip side Wagoner said the bankruptcy option would actually require more funding -- as much as $100 billion to pull the company through bankruptcy proceedings.  By 2012 GM will eliminate another 20,000 U.S. jobs and close 14 additional plants. General Motors plans on phasing out the Saturn brand sometime after 2011 unless the dealer network can come up with a better idea.  The car company is also considering how to dispose of Hummer by the end of March. This is clearly the most difficult challenging time the American auto industry has ever faced.

CHRYSLER NEEDS ANOTHER $5 BILLION posted 02.18.09
In a report filed with the federal government, Chrysler LLC says it will need an additional $5 billion to remain solvent.   The automaker has disclosed it lost $8 billion in 2008, and claims that if it does not receive the federal money by March 31st, that it will immediately seek a court-supervised liquidation.  This sought after money would be in addition to the $4 billion that Chrysler received last year.    The car maker plans to cut an additional 3000 jobs and eliminate Chrysler Aspen, Dodge Durango, and the Chrysler PT Cruiser as part of its restructuring plan.  The company is also cutting costs by $700 million, will sell $300 million in assets, and slash its factory capacity by 100,000 vehicles.  In the event of bankruptcy, Chrysler officials say Chapter 11 bankruptcy would likely cost the company $20 to $25 billion.

UAW FIGHTS TO KEEP FREE LEGAL SERVICES posted 02.17.09
The coveted benefit of free legal services for UAW members could be on the chopping block.  In on-going talks with Ford Motor Company, the union is hoping to keep the benefit that has been used by three of four UAW members.  Fully-paid legal services provided include residential real estate, wills, adoption, personal bankruptcy, probate proceedings, and consumer debt.  The UAW Legal Services Plan was originally established in 1978 and currently provides personal legal services to 725,000 workers, spouses, and retirees.  It is the largest pre-paid legal services program in the nation, which currently operates from 69 locations and employs 290 attorneys.   The program is funded by automakers and is based on the number of hours worked by UAW members.  Companies that currently offer the UAW Legal Services Plan to its union employees include Ford, GM, Chrysler, Delphi Corporation, and American Axle & Manufacturing.  

AUTO COMPANIES-UAW-DEADLINE-PRESSURE posted 02.16.09
The pressure is on.  For example there is the February 17th deadline GM and Chrysler have to submit their plans to the federal government on how they will survive and re-pay billions of dollars in loans.  The plan could detail additional plant closures, potential elimination of brands, and the elimination of thousands of jobs.  A final version of the plan must be submitted by March 31st.  Also the car makers are in difficult and sensitive talks with the UAW regarding how to fund the new VEBA (Voluntary Employee Benefits Association) or trust fund that was set up to pay for UAW retiree health care. The auto companies want the union to accept company stock in place of cash payments to fund some portions of the VEBA, which the UAW will own and control.  Meanwhile, January auto sales got off to a slow start -- down 37% from last year…and now Toyota and other foreign makers are caught up in the economic downturn.  Toyota’s 2008 U. S. sales were down 15%, and the last two months have seen sales dip 34% and 37%, respectively.  However, Toyota has ample cash reserves and can withstand a slow down much easier U.S. automakers. 

JANUARY AUTO SALES HISTORIC AND MISLEADING posted 02.05.09
U.S. auto sales continued their poor performance; down 37% in January.  But after taking a closer look at the numbers, the news isn’t quite so grim.  For example, GM reported a sales decline of 49%, but retail sales through dealerships were actually off 38%.  What skewed the numbers for GM was the drop in large fleet sales, down 80% in January.  The car maker has vowed to reduce its fleet sales under the rationale that it lessens the appeal and value of vehicles sold at their dealerships.  Ford Motor Company, meanwhile, saw its January sales fall 40% while Chrysler was down 35%.  On a positive note, showroom traffic was up at Michigan dealerships.  Local dealers in Cadillac, Saginaw, and Detroit all reported higher traffic, particularly towards the end of the month.  On an annualized basis, January sales would equate to 9.8 million units sold in 2009.  Another noteworthy statistic is that foreign automakers as well continue to struggle in the U.S. market.  Toyota saw sales plunge 34% in January. Perhaps the most historic and overlooked statistic from January auto sales comes from China.  According to a GM official, due to the U. S. economic downturn, for the first time in history more cars were sold in China than in the United States on a monthly basis.   It is expected that January auto sales in China will reach 750,000 vehicles; that’s compared to 656,976 sold in the U.S. market for the same month -- the lowest monthly total in 26 years. 
It could signal that China is on the verge of becoming the largest automotive market in the world. The same GM official estimates 2009 total vehicle sales in China should reach 10.7 million.  2009 estimates for U. S. sales have ranged anywhere from 9 million to 12 million vehicles.  Both GM and Ford are well-positioned to compete in China.  In fact, the number one selling foreign import in China is Buick.  Due to historic and cultural differences, Japanese car makers are at a distinct disadvantage in China. 

GM TO ELIMINATE (SUSPEND) JOB BANKS posted 01.29.09
One of the mandates of the $17.4 billion bridge loan reads as follows: eliminate "the payment of any compensation or benefits to U.S. employees of the company or any subsidiary who have been fired, laid-off, furloughed, or idled, other than customary severance pay."  That language in effect invalidates job banks; so next Monday GM will eliminate its job banks program that pays laid-off UAW members up to 95% of their wage for up to two years.  A GM spokesman said the existing 1600 GM workers enrolled in the program will need to file for unemployment.  On January 26th Chrysler eliminated its job banks program.  UAW officials declined comment about GM’s announcement, but earlier this week stated that job banks will only be suspended while the government auto bridge loans are in effect.   Though Ford has not borrowed any money from the federal government, they too are expected to stop their job banks program.   Though staunchly defended by the UAW, job banks has been a very controversial program that has triggered intense criticism of the auto companies. 

STATES CLOSER TO INDIVIDUAL EMISSIONS STANDARDS posted 01.28.09
Following through on a campaign promise, President Barrack Obama has ordered the EPA to review California’s, and 13 other states, request to impose tailpipe emissions standards that exceed federal guidelines.  The auto companies have lost a series of lawsuits to block California from setting their own mileage requirements, and have asserted that varying standards would be cost prohibitive – tallying as much as $30 billion.  Under a 2007 energy law, the National Highway Transportation Safety Administration requires a fleet-wide average of 35 miles per gallon by 2020, but California’s standards go far beyond that to 42.5 miles per gallon by 2020.  A spokesman for the National Automobile Dealers Association said varying standards will only further endanger an already fragile industry. The auto companies find themselves in another difficult spot, just one month after the government loaned $17.4 billion to GM and Chrysler to avoid bankruptcy; that’s a tough position from which to negotiate.

CHRYSLER JOB BANKS PROGRAM SUSPENDED ON JANUARY 26TH
posted 01.26.09
In a letter authored by a UAW vice-president, the union announced it will suspend the controversial job banks program with Chrysler effective January 26th.  Stopping job banks, albeit temporarily, is necessary in order to comply with mandates in the federal loan agreement that gave Chrysler $4 billion in order to stay in business. Employees being paid in the job banks program will be placed on unemployment.  Meantime, negotiations continue with the UAW and General Motors to suspend its job banks program.  Last month UAW President Ron Gettlefinger agreed to suspend the job banks program, but also said the program had already been drastically scaled back and was a mere shadow of its former self.  There are 3500 UAW members currently being paid from the job banks program, 1400 from GM, 1400 from Ford, and 700 from Chrysler.  Going by statements made by Gettlefinger and other union officials it appears the UAW has every intention of reinstating job banks once the federal loans are paid back.  Job banks has been a real sore spot with the American people, because it pays UAW members 95% of their wage for up to two years for not working.  While some job banks participants volunteered in their local community, they are not required to volunteer. Chrysler and General Motors must present viability plans to the government by Feb. 17th and persuade the government they are viable by March 31 or face losing the loans.

UAW TALKS UNDERWAY WITH GM & CHRYSLER
posted 01.22.09
Only days ago UAW President Ron Gettlefinger said that reaching federally-mandated wage concessions by February 17th was unattainable.  His tone has changed and now Gettlefinger says talks are not only underway with GM and Chrysler, but also that an agreement will be reached by the February 17th deadline.  However, he stressed the union will not be the only stakeholder that makes a financial sacrifice.  Terms of the $17.4 billion government bridge loan require UAW members to have pay, benefits, and work rules similar to U.S. autoworkers at foreign-owned auto plants.  In a separate matter, Gettlefinger announced the UAW Chrysler National Training Center on Jefferson Avenue in Detroit is for sale. The center, which opened in 1985, was used for educating and training UAW members.

CHRYSLER & FIAT ALLIGN posted 01.21.09
In a huge development, Chrysler and Fiat have agreed to form a new strategic alliance. The agreement gives the Italian auto maker a 35% stake in Chrysler with the possibility of full control down the road.  Fiat will not invest any cash but will gain access to the huge U.S. market.  Chrysler benefits by having access to smaller cars made by Fiat in addition to a network of dealerships to sell vehicles outside the U.S. market.  Fiat shares on the Milan stock exchange were up 4% on the news, to $6.04 share.  The alliance provides both companies with crucial new market access that they need to be global players in the competitive automotive industry.  Chrysler sales were down 30% in 2008 and that includes a whopping 53% drop in December alone.   Fiat’s 3rd quarter sales were up 1.8%. However, since then, Fiat has laid off 50,000 workers for one month due to a sales slow-down in their key Italian home market.  This isn’t the first alliance Fiat has had with an American car company.  In 2005, Fiat dissolved an alliance agreement with General Motors, which was concluded with GM paying Fiat $2 billion. 

GETTLEFINGER, “UAW CAN’T MEET DEADLINE” posted 01.20.09
UAW President Ron Gettlefinger says the February 17, 2009 deadline to complete their restructuring plan with the auto makers is unattainable, and that no formal talks have even begun between union and the car makers.  Last month the Treasury Department gave $17.4 billion in loans to GM and Chrysler, and per the agreement the companies are required to submit a detailed restructuring plan by February 17th, which includes significant concessions from the both the UAW and bondholders.  Should GM and Chrysler not achieve “viability” by March 31st, the loans may be called back by the government.   Gettlefinger said that the union is currently reviewing the loan documents, but that the union is clearly opposed to wage concessions (which would make them competitive with U.S. employees at Japanese auto plants).  It’s appears the UAW will request the Obama Administration to re-open the agreement.  Gettlefinger stated, “All we want is for the Obama administration to be fair, as opposed to somebody taking a shot at organized labor”.

NEW GM PLANT IN MICHIGAN -- 100 NEW JOBS TO START posted 01.13.09
General Motors, Michigan’s largest corporation and the third largest in the world, will soon be reinvesting in the state by constructing a new battery plant at a yet-to-be- determined location in Southeast Michigan.   It means GM will be the first automaker on the planet to build its own lithium-ion batteries.  The facility will be small by automotive standards -- costing $30 million dollars to construct and employing 100 workers, at least initially.  Construction will begin later this year with the first batteries set to be produced sometime in 2010, which will be installed in the revolutionary Chevy Volt -- GM’s new extended-range electric vehicle.  The Chevy Volt can travel 40 miles by battery power, meaning many Americans with shorter commutes will not have to fill their gas tank again.    According to Michigan Economic Development Corporation President James Epolito, the GM battery plant could become the first of many alternative-energy manufacturing operations in the state, an industry that could employ as many as 50,000 workers in the next five years.  In addition to the new battery plant, GM will also be constructing a 31,000 square foot development and testing lab, the largest of its kind in the world.

UAW MUST LOWER WAGES...OR ELSE posted 01.09.09
Previously-undisclosed terms of the $13.4 billion auto bridge loan for GM calls for the UAW to agree to lower wages commensurate with those paid to auto workers at foreign-owned US plants.  Initial reaction from UAW President Ron Gettlefinger has been that the union will not re-open contracts.  Another provision of the bridge loan is that the UAW cannot strike against the auto companies (the union already has a no-strike clause in its contract with GM thru September 2011), and also that the union is required to accept two-thirds of the money due for the health care trust fund (VEBA) in company stock rather than cash or company debt.  The agreement requires the UAW to accept the terms no later than by February 17th, 2009 and that the new wage concessions take effect no later than December 31st, 2009.  GM has until December 29th, 2011 to pay back the $13.4 billion loan to the federal government.  The union has vowed to push congress and the incoming Obama administration to change the terms in the auto bridge loan.

DECEMBER AUTO SALES SINK 35.5% posted 01.06.09
As anticipated, 2008 December auto sales dropped 35.5% from 2007, culminating a miserable year for the industry.  Even the foreign manufacturers were down substantially in December; for example Toyota sales plunged 36.7%; Honda was off 34.7 %; and Nissan December sales fell 30.7 %.  For the domestics, GM fell 32.7 %; Ford down 32.2 %; and Chrysler off a whopping 53.1 %.  For the 2008 year, total industry sales were 13.2 million; that compares to 16.1 million vehicles sold in 2007, which represents an overall 18% drop -- the worst industry sales levels since 1992.  Analysts are predicting even lower sales for 2009, possibly around 12 million total vehicle sales.   On the positive side, lower gas prices have helped stimulate large pickup and crossover vehicle sales, which had previously been the lifeblood of the industry, prior to $4.20 per gallon gasoline.   In addition, the $5 billion cash infusion to GMAC by the US Treasury Department is helping to loosen up the credit markets.

SAGINAW HOPES TO LAND 500 NEW JOBS posted 11.27.09
SAGINAW – GlobalWatt, a California-based solar panel manufacturer, will soon invest $177 million in either Saginaw, Michigan or an unnamed community in Texas.  It will result in 500 jobs for the fortunate community.  The new facility will develop technology for solar collectors for roofs and farms.  It will also manufacture sun-powered irrigation material and military solar panel systems that can operate independent of traditional power sources.  Should GlobalWatt choose Saginaw it will locate at the closed Enterprise Automotive Systems facility at 1200 Leon Scott.  According to a company spokesperson 100 new jobs would be added every year from 2010 to 2015.  Saginaw could also gain another 500 jobs in nearby Thomas Township.  Norcross, a Georgia-based solar energy company, is considering investing $250 million to build a new facility near Hemlock Semi Conductor.

PONTIAC SILVERDOME SOLD FOR $583,000 posted 11.24.09
PONTIAC -- What a bargain...what a deal!  Canadian Company Triple A has purchased the Pontiac Silverdome for $583,000.  The 80,300-seat football stadium was built by the City of Pontiac in 1975 for the Detroit Lions at a cost of $55.7 million.  Triple A is a Toronto-based company lead by Andreas Apostolopoulos.  According to Pontiac Emergency Manager Fred Leeb, Triple A will attempt to bring professional soccer to the Silverdome.  Music concerts and other sporting events are also planned.  The deal had been held up in Oakland County Circuit Court from an injunction filed by Silver Stallion Corporation, which made a $20 million offer to buy the facility last year.  But Circuit Court Judge Edward Sosnick refused to grant the injunction, allowing the deal to move forward for Triple A.  The sale had also been challenged by an injunction filed by H. Wallace Parker, a Bloomfield attorney, which claimed he signed a $17 million purchase agreement in August of 2008 that was still valid. Wallace’s injunction was also denied.  In 2002 the Lions moved to Ford Field in downtown Detroit, leaving the Silverdome with no permanent tenant.  The Silverdome had been costing the City of Pontiac $1.5 million every year in maintenance and upkeep.       

U of M ECONOMISTS PREDICT AUTO RECOVERY posted 11.20.09
ANN ARBOR -- University of Michigan economists predict the U.S. economy will add 600,000 jobs in 2010 and another 2.5 million jobs in 2011.  That’s great news when you contrast it with losing five million jobs in 2009.  The information was released in the annual economic forecast during the Economic Outlook Conference in Ann Arbor.  To see the report click here. U of M economists also forecast modest growth in the gross domestic product, 2.3 percent next year and 2.6 percent in 2011.  On the positive side for Michigan, they project a mild recovery for the auto industry.  After dismal sales of 10.2 million in 2009, projections are that U. S. auto sales will increase to 11.2 million next year and 12.1 million in 2011.  Another bright spot for Michigan, the report recognized four consecutive months of job growth in the state.

MI OCTOBER UNEMPLOYMENT DIPS TO 15.1% posted 11.19.09
Michigan’s October unemployment rate fell slightly to 15.1 percent, down two-tenths of a percentage point from September’s jobless rate of 15.3 percent.  By the raw numbers the state gained 25,000 jobs.  A year ago--in October of 2008--Michigan’s unemployment rate was 9.3 percent.  According to the Michigan Department of Energy, Labor, and Economic Growth, Michigan has lead or at least shared the nation’s highest unemployment rate for three-and-a-half years.  In addition to the slight reduction in unemployment, total employment for the state rose for the first time since May 2007.Michigan’s unemployment rate for the last five months: June, 15.2 %; July, 15.0 %; August, 15.2 %; September 15.3 %; October, 15.1 %.

DETROIT TIGERS’ TICKET PRICES WILL NOT GO UP NEXT YEAR posted 11.19.09
DETROIT -- Due to the rough times the auto industry, Detroit’s Big 3 auto companies decided to pull their advertising at Comerica Park for the 2009 season.  But in a gesture of goodwill Detroit Tigers’ owner Mike Illitch waived the charges so GM, Ford, and Chrysler could maintain their advertising presence at Comerica Park.  For this coming season the Tigers have announced they will freeze season ticket prices and actually reduce some season tickets in two rebranded sections.  The new lower baseline box seat will be reduced by up to $9, and the upper base box seat will be reduced by $5. Discounts will be offered on season ticket packages of 81, 41, and 27 games.  In 2009 the Tigers drew 2.5 million fans, fifth highest in club history.  2008 was a record-setting year when 3.2 million attended Tigers’ games.  The 2010 baseball season opens on April 4th when Detroit will play at Kansas City.  The home opener will be April 9th against Cleveland.  GO TIGERS! 

MICHIGAN EXPORTS TO CHINA ARE BOOMING posted 11.12.09
Over the last nine years Michigan exports to China have exploded by 500%…from $212 million in 2000 to nearly $1.3 billion in 2008.  The increase largely stems from growing GM and Ford auto sales in China…and the trend is continuing.  So far for 2009 GM’s Chinese auto sales are up 55% to nearly 1.3 million, while Ford has increased by 32%, with sales of 316,639 vehicles.  With a population of 1.3 billion and an emerging middle class demand for autos in China will continue to be strong for several years.  GM is very popular in China, particularly Buick, which is a status symbol for many Chinese people.  Autos are not the only Michigan export to China, but it’s certainly the largest export by a wide margin. Gaylord-based Mark One recently sold a multi-million dollar steel cleaner to a U.S. company operating in China. Also Atwell-Hicks, an environmental consulting firm based in Ann Arbor, has been working with the Charlan Technology Development Group to improve water quality for municipalities in Chongquing, China’s largest provincial-level municipality.

$290 MILLION TO REVITALIZE MICHIGAN NEIGHBORHOODS posted 11.09.09
The state has applied for $290 million in federal grant money to revitalize neighborhoods in 12 Michigan cities.  The money would go towards redeveloping more than 6000 foreclosed, abandoned, and vacant properties; demolish 2500 structures, and rehabilitate 1500 homes.  Cities that would benefit include Detroit, Hamtramck, Highland Park, Wyandotte, Pontiac, Battle Creek, Benton Harbor, Kalamazoo, Lansing, and Saginaw. The application for funding is among hundreds seeking part of almost $2 billion to mitigate the effects of home foreclosures, vacancy, and abandonment.  The U.S. Department of Housing and Urban Development could decide on funding decisions as early as December 1st.

1500 JOBS FOR MICHIGAN posted 10.28.09
The Michigan Economic Growth Authority has approved another round of monthly state tax incentive packages which will clear the way for 1500 new jobs in Michigan.  Here is a summary of the new jobs:

DETROIT - 200 new jobs with Ohio Module Manufacturing at the former Arvin Meritor plant.  The company is investing $21.4 million and will manufacture chassis modules for Chrysler’s Jeep brand.  

DETROIT – 437 new jobs with Strategic Staffing Solutions.  The company will invest $7.3 million to open a new information technology center.

LANSING – 800 new jobs with Auto Owners Insurance Group.  The company is expanding its corporate headquarters in Delta Township.

OAKLAND COUNTY – 72 jobs will be maintained with aerospace engine manufacturer Williams International Company.  The company will make a $12 million renovation to its facility in Commerce Township.

HOLLAND – 1000 jobs over 15 years will be created by from a joint venture between Johnson Controls and Advanced Power Solutions LLC.  The partnership will be involved with lithium-ion batteries. 

WIXOM – 3250 jobs with Clairvoyant Energy Solar Panel Manufacturing and Xtreme Power at the idle Ford Wixom plant.  The companies work in the solar and energy-storage sectors. 

The Michigan Economic Growth Authority also approved three tax-capture Brownfield redevelopment projects…

SAGINAW – In nearby Buena Vista Township, just east of Saginaw, the Fort Saginaw Mall will be demolished for new development.  The project will generate $9 million in new investment

MOUNT CLEMENS – Tax captures will renovate the historic downtown fire station.  Officials has the project will create $820,000 in new investment and up to 10 new jobs.

KALAMAZOO – In nearby Parchment, tax captures will use close to $50 million to redevelop the contaminated 93-acre Crown Vantage paper factory into a 30,000 square-foot office building, along with a residential development.  
The $100 million project is expected to create up to 60 jobs.

MICHIGAN UNEMPLOYMENT UP SLIGHTLY TO 15.3%
posted 10.15.09
LANSING --The states jobless rate crept up slightly by a tenth of a percentage point in September to 15.3 percent. Since 2006 Michigan has had the dubious distinction of leading the nation in unemployment.  The nation’s September unemployment rate was 9.8 percent.  If there is a silver lining in the September numbers, it would be that the rate has stabilized and has not gotten appreciably worse in the last four months. 
Here’s a quick look at Michigan’s monthly unemployment numbers for 2009:
January 11.6%; February 12.0%; March 12.6%; April 12.9%; May 14.1%;
June 15.2%; July 15.0%; August 15.2%; September 15.3%.

MICHAEL MOORE’S NEW DOCUMENTARY DEBUTS IN BELLAIRE posted 09.21.09
BELLAIRE – Flint, Michigan-native Michael Moore debuted his latest film documentary, “Capitalism: A Love Story,” in Bellaire on September 19th. 
The film will open nationwide on October 2nd.  The premise of the film documentary is that greed and corruption have subverted the U.S. economic system.  There were two showings with more than 500 people in attendance.  By the way, $25,000 in proceeds will be given to the Antrim County Democrat Party.  According to an article by the AP, the film traces America’s economic woes to President Ronald Reagan’s deregulation policies and greedy business executives that undermined the free enterprise system.  Moore suggests business execs pushed policies that benefitted the richest one percent of Americans, while simultaneously hurting the lower and middle class.  Moore grew up in Flint, where his father worked for GM at a spark plug factory.  The filmmaker started his career with the documentary “Roger and Me”, which accused GM Chairman Roger Smith of fleecing his hometown and creating economic chaos.  His other films include “Bowling for Columbine”, which offered a critical view of America’s love affair with guns and “Fahrenheit 911”, which challenged the Bush Administration’s Iraq war effort.  Moore, who has a home in Antrim County, has been the driving force behind the renovation of the historic State Theatre in Traverse City and the Traverse City Film Festival.  He is also coordinating a future comedy event in Traverse City.  Even if you disagree with his liberal politics and persuasion Michael Moore is a self-made man with enormous worldwide influence that is very thought-provoking.   Michael Moore is opening the dialogue and making people think about issues that need debate and public discussion; no matter what side you’re on, that’s good for America and for Michigan.

NEW DETROIT-TO-WINDSOR BRIDGE APPROVED posted 01.15.09
In what could be a real economic boost to Metro Detroit, The U. S. Department of Transportation has given final environmental approval to build the Detroit River International Crossing -- a new bridge between Detroit and Windsor.  Technically referred to as “record of decision” the approval means Michigan officials can acquire and begin planning construction of the new bridge, which will be built about a mile downriver from the Ambassador Bridge. The project still faces challenges from some state legislators and from Warren-based businessman Manuel Matty Moroun, owner of the Ambassador Bridge.  Moroun has vowed to pursue litigation in order to stop the project.  He intends to build a second bridge close right next to the Ambassador, which would compete with the new Detroit River International Crossing, or the DRIC project.

GRAND TRAVERSE COUNTY #1 FOR NEW RESIDENTS posted 8.12.08
According to new census data, from 2006 to 2007, the Michigan county with the largest growth by raw numbers is Grand Traverse County in Northwest Lower Michigan.  This is based on people moving into the county, and not accounting for births and deaths.  Grand Traverse County had a net increase of 646 residents moving to the area, the largest in the state.  Only ten of Michigan's 83 counties had positive population growth; all others lost residents.  In West Michigan, Kent County lost 1656 residents and Montcalm County lost 541 residents. Experts say among the reasons for Traverse City bucking the trend are the area's natural beauty, clean lakes, plentiful cultural opportunities, and vibrant economy.  According to the University of Michigan's Institute and Industrial Relations, the population of Grand Traverse County which is now 86,384 will grow to 98,505 by 2020.

HOME SALES IN METRO DETROIT UP 13.4% posted 6.19.08
Buyers looking for bargains in the state's largest real estate market are speaking with their dollars and have driven up home sales in May by 13.4%. This is the fifth consecutive month that Metro Detroit home sales were up compared to the same month last year. The large number of foreclosed homes has driven the market up and those sales are forcing traditional sellers to lower their prices too, bringing even more buyers to the market.