Should General Motors and Chrysler continue to get billions in federal loans? It's the question facing government officials as they prepare to review "viability plans" due to be submitted today by the ailing automakers.
Since December, GM and Chrysler have received $9.4 billion and $4 billion, respectively, to help them survive plummeting auto sales and mammoth debts. GM may be eligible for another $4 billion, while Chrysler is expected to ask for an additional $3 billion. Without government aid, both companies are at risk for bankruptcy.
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In return for the loans, the automakers were asked to present plans showing the government how they would change their operations to become viable businesses.
Under terms drawn up by the Bush administration, the two car companies would have to meet specific requirements to continue receiving aid, including trimming billions of debt and changing the funding for health care for retired workers. Both conditions have proven to be serious sticking points during negotiations with bondholders -- those who hold the automakers' debts -- and the United Auto Workers, the union that represents tens of thousands of employees.
Bill Schultz, 50, a worker at a GMC plant in Wentzville, Mo., said he just wants more auto plant employees to keep their jobs. Schultz said he saw some 150 of his co-workers lose their jobs at the Wentzville plant last week.
"We don't want anybody to lose their job -- that would be the ideal thing," he said. "We give and give and we're tired of giving."
But the automakers say that cutting jobs is one of the ways they've worked to meet some of the government's loan requirements.
Chrysler slashed 4,300 salaried positions in December through retirements and buyouts while GM is cutting 10,000 salaried jobs, including 3,400 in the United States. GM is also offering buyouts for 22,000 hourly workers. Some of GM's buyout packages include $25,000 for new GM cars.
GM spokesman Tom Wilkinson said that, in accordance with an agreement the automakers reached with the UAW in 2007, the workers replacing those who take the buyouts will be lower paid. That, he said, will bring down the company's average labor costs and help it comply with one of the government's loan terms -- that GM and Chrysler reduce workers' average pay so that it's competitive with U.S. wages for Toyota, Nissan and Honda employees.
GM and Chrysler have also ended their so-called job banks, which allowed laid-off workers to retain most of their salaries until they were offered new auto jobs.
Wilkinson said that GM also immediately complied with the government requirement that the company limit executive pay by slashing the salary of its CEO, Rick Wagoner, to $1. (Chrysler CEO Robert Nardelli has been receiving a $1 salary since joining the company in 2007.)
Wilkinson conceded that GM was less successful in fulfilling another government loan requirement -- that it sell its fleet of seven private jets. The jets are up for sale, he said, but no one's buying.
"The market for used aircraft is not so hot right now," he said.
Analysts say the hardest loan requirements for the automakers to meet stipulate that the companies reduce their unsecured debt, borrowings not backed by collateral, by two-thirds and that they change the way they contribute to the UAW's retiree health care fund.