Stark Auto Warning: There's No 'Plan B'

(AP Photo)
More Photos

Automakers Plea for Bailout

Ford was the first out of the gate with a request this morning for a $9 billion line of credit from the federal government that the company said would help backstop its restructuring plans, including plant closures and the introduction of more fuel-efficient vehicles.

This afternoon, General Motors, which analysts say faces greater cash woes than Ford, asked for $12 billion in loans for 2009 as well as a $6 billion line of credit "to provide liquidity should a severe market downturn persist." Like Ford, the company also plans on continuing with plant closures and launching more fuel-efficient cars.

Both automakers' business plans call for cutting their CEOs' salaries to just $1, although Ford's Alan Mulally -- who earned $21.6 million in 2007 -- will only see his salary reduced if Ford does use the proposed government loans.

Chrysler, which is requesting $7 billion in government loans, said that its CEO, Robert Nardelli, already receives a $1 salary. The salary cuts are just one step that Detroit's automakers are taking to demonstrate their humility while asking for a public bailout. When the executives for Detroit's Big 3 visited Congress last month, each flew to Washington in a corporate jet, a move that provoked heavy backlash.

Related

RSS Feed: Send News to Your Computer

Can the Gov't Really Save Auto Industry?

Where Can GM Get Cash to Buy Chrysler?

This time, all three CEOs -- Chrysler's Nardelli, GM's Rick Wagoner and Ford's Mulally -- plan to drive down to D.C. in hybrid cars made by their respective companies. Ford said its new business plan also includes putting its entire fleet of corporate planes up for sale.

The plans came in response to orders last month by Senate Majority Leader Harry Reid, D-Nev., and Pelosi., who said that aid for the automakers was contingent on their success in outlining "a path to viability."

"It is all about accountability and about viability," Pelosi said. "Until they show us the plan, we cannot show them the money."

Ford, the first to publicly disclose its plan today, has said that it would ask Congress for $9 billion in financing as it continues "to accelerate through aggressive restructuring actions," including the closing or sale of 10 plants and the introduction of more new fuel-efficient vehicles.

But the company, which expects to return to profitability or at least break even by 2011, hopes it won't actually have to use the funding.

"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions," Mulally said in a statement issued by the automaker today.