Profile: General Motors (GM)
General Motors (GM) was a participant or observer in the following events:
Detroit’s Big Three CEOs testify for more than two hours in a hearing before the Senate Banking Committee, using dire language to describe the financial straits that are threatening to bankrupt their companies. Chrysler LLC CEO Robert Nardelli says that without immediate help, his company could be forced into bankruptcy. “We cannot be confident that we will be able to successfully emerge,” he says. General Motors (GM) Corporation’s CEO, Rick Wagoner, adds that the failure of the industry would be “catastrophic,” causing the loss of 3 million jobs. Ford Motor Company CEO Alan Mulally tells the committee that if one of the automakers failed, the whole industry could be disrupted. “You’re here to get life support,” says ranking minority member Richard Shelby (R-AL). “Why aren’t you making money? How would you pay this money back?”
Financial Losses Worse than Originally Believed - The automakers say that their financial losses were worse than they at first thought, with Nardelli testifying that his company ran through $5 billion this year, including $3.3 billion in the third quarter, with only $6.1 billion on hand to last through the end of the year. Wagoner says that his firm would spend $15 billion by the end of 2008, and another $10 billion in 2009. Wagoner wants $10-$12 billion for GM, while Mulally and Nardelli want $7 billion for their respective corporations. Both Wagoner and Nardelli say that their companies will run out of money in a matter of months. One senator asks if the automakers would be willing to make monthly status reports on cash flow if the Senate agrees to the loan. Nardelli offers to take $1 a year as salary compensation; neither Mulally nor Wagoner did not make the same commitment. Nardelli also committed to Chrysler’s agreeing to consider new fuel efficiency standards. “We’d be open to any requirements,” he says.
Already Cut Costs, Moved to Restructure - The automakers testify how aggressively they have moved to cut costs, restructure, and revamp their product lines to be more competitive with foreign rivals, and say their companies were making progress until they were derailed by the credit crisis that has stalled the global economy and dried up consumer confidence. Auto sales are at their lowest level in at least 15 years, they say, dropping nearly 32 percent in October. As a testament to the seriousness of their financial crisis, the three automakers assure the committee that they would spend the requested $25 billion in the United States; however, they refuse to say that they would not come back for further bailout funding. Wagoner testifies that GM has cut $9 billion in costs since 2005. He touts labor agreements with the United Auto Workers that will further cut wage and health care expenses, and says that improvements in designing and manufacturing vehicles as well as developing fuel-saving technologies will also assist in reining in manufacturing costs. “As a result of these and other actions, we are now matching—or besting—foreign automakers in terms of productivity, quality and fuel economy,” he says. Wagoner assures the committee that the company was moving quickly to right its business. “We have more work to do in all aspects of our business,” Wagoner said. “This is hard stuff.” He said that GM would use some of the money to pay suppliers and pay for part of the Chevrolet Volt program.
UAW President Grilled - In his own testimony, United Auto Workers President Ron Gettelfinger ranks the relative financial health of the Big Three as Ford being the most solvent, with Chrysler at number two, while General Motors may be at or near insolvency by the end of 2008. The UAW chief faces tough questions as well, as Senator Bob Corker (R-TN) pushes back on union work rules and the jobs bank. “I understand Mr. Gettelfinger has done a good job on behalf of all workers not working and being paid,” Corker says, calling the practice unacceptable in other businesses.
Disagreement among Democrats, Republicans - Democrats support a plan to subtract $25 billion from the $700 billion Wall Street bailout package, known as the Troubled Asset Recovery Program (TARP), while Mitch McConnell (R-KY) has joined the White House call to speed up money previously authorized for the automakers through an Energy Department loan program. “To basically change the qualifications of the money that we have already appropriated is a sound way to go forward,” said McConnell. House Democrats and many environmentalists oppose the use of the Energy Department loan, since it is approved only for projects that lead to significant fuel efficiency improvements. Carl Levin (D-MI) says that in order to get a bill, Republicans must write language that explains how they would quickly get $25 billion from the Energy Department program to automakers. But Levin is realistic about the long road they face. “Progress: No. Effort: Hell, yes. Big-time effort,” he says. “We haven’t seen progress and won’t see progress until we see the language from those who want to see the [Energy Department] funds.” Debbie Stabenow (D-MI) says she will “very reluctantly” agree to reworking the retooling loans if that was the only way to get help now. Other Senate allies of the auto industry, including Claire McCaskill (D-MO) and Ken Salazar (D-CO), opposed the proposal to shift $25 billion from TARP. “I’m not sure we want to throw good money after bad,” Salazar says. Max Baucus (D-MT), chairman of the Senate Finance Committee, says it will be nearly impossible to make a deal before Congress adjourns for the year later this week. “Reading the tea leaves, I just don’t think it’s going to happen,” Baucus says. “There’s not enough time given the opposition of the White House and opposition of the other side of the aisle.” Corker echoes the belief that nothing would get done this year, calling the hearings “the first step in a loan application.”
Further Hearings Slated - The CEOs will return to Capitol Hill for a hearing before the House Financial Services Committee on Tuesday, November 25. [Detroit News, 11/19/2008]
Entity Tags: United Auto Workers, Ford Motor Company, Debbie Stabenow, Chrysler, Carl Levin, Alan Mulally, General Motors, Senate Banking Committee, Max Baucus, Rick Wagoner, Robert Nardelli
Timeline Tags: Global Economic Crises
Having received what the Obama administration calls “exceptional assistance,” American International Group (AIG), Citigroup, Bank of America, General Motors (GM), GMAC, Chrysler, and Chrysler Financial are now meeting with executive pay czar, Kenneth Feinberg, and must submit 2009 pay plans for their top 25 executives. In turn, Feinberg must perform a 60-day assessment while working with the seven companies on their salary configurations. Plans for the other 75 executives of the seven corporations are due later. Exorbitant executive pay and bonuses has its critics, with many outraged that the companies are collecting taxpayer money only to pay out expensive bonuses during a massive recession. Others fear that the feds have insinuated themselves too deeply into private business affairs. Feinberg himself admits that his job has built-in conflicts. “Historically, the American people frown on the notion of government insinuating itself into the private marketplace,” he says in an interview, one day after his appointment. “My answer to those critics is I understand that concern, I share that concern, and the question is how do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?” The Obama administration has already seen and experienced taxpayers’ fury; Feinberg hopes to avoid such outrage. Corporations must prove to him that they are rewarding good performance and discouraging undue risk-taking. “We are not going to provide a running commentary on that process, but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance,” say US Treasury Department spokespersons, while noting that Feinberg can’t force companies to renege on contract obligations executed prior to February 12, 2009. However, this hasn’t prevented cries of foul play by critics upset over excessive government interference in private businesses. “No matter which way I turn, you’re facing criticism either from those who are appalled at what these companies did versus those who question the value of the government getting involved,” Feinberg says. The recently appointed executive compensation czar is used to dealing with contentious sides having served as compensation fund chairman for the families of victims of the September 11 attacks. [ABC News, 8/12/2009]
Responding to a recent tirade by talk-show host Dr. Laura Schlessinger in which Schlessinger repeatedly used the racial slur “n_igger” in conversation with an African-American woman (see August 10-18, 2010), the progressive media watchdog organization Media Matters asks advertisers to stop purchasing advertising on Schlessinger’s show. Media Matters president Eric Burns says in a press release: “Dr. Laura’s offensive outburst provided listeners with a window into her true beliefs about race in America. By deliberately choosing to sponsor her program, Dr. Laura’s advertisers are not only funding her offensive radio show, but are implicitly endorsing its content. Companies must demonstrate that they won’t tolerate bigotry and immediately stop advertising on her show.” Media Matters identifies some of the companies purchasing advertising on Schlessinger’s show as Pfizer, Chase Bank, Netflix, Motel 6, and Home Depot. [Media Matters, 8/13/2010] General Motors and other advertisers will drop their advertising on Schlessinger’s show. [Media Matters, 8/18/2010]
Premiere Radio Networks logo. [Source: Premiere Radio Networks]Premiere Radio Networks, the company that distributes radio shows by an array of right-wing hosts, including Rush Limbaugh, announces that 98 out of 350 advertisers, including a number of major corporations, have requested that their ads only appear on “programs free of content that you know are deemed to be offensive or controversial (for example, Mark Levin, Rush Limbaugh, Tom Leykis, Michael Savage, Glenn Beck, Sean Hannity).” The Premiere email says, “Those are defined as environments likely to stir negative sentiment from a very small percentage of the listening public.” Limbaugh vilified law student Sandra Fluke for three days on his radio show (see February 29, 2012, March 1, 2012, and March 2, 2012), and though he issued an apology on his Web site (see March 3, 2012), advertisers have dropped their sponsorship of his show in increasingly large numbers (see March 2, 2012 and After) following a widespread outcry of anger against Limbaugh’s rhetoric. Now, large advertisers such as Ford, General Motors, Toyota, Allstate, Geico, Prudential, State Farm, McDonald’s, and Subway Restaurants have asked that their advertising be removed from Premiere’s right-wing talk shows. Industry insider Valerie Geller tells a reporter: “I have talked with several reps who report that they’re having conversations with their clients, who are asking not to be associated with specifically polarizing controversial hosts, particularly if those hosts are ‘mean-spirited.’ While most products and services offered on these shows have strong competitors, and enjoy purchasing the exposure that many of these shows and hosts can offer, they do not wish to be ‘tarred’ with the brush of anger, or endure customer anger, or, worse, product boycotts.” For nearly two decades, Limbaugh has been at the forefront of the movement that insisted conservative talk shows on radio and television must counterbalance what he and others have termed the “liberal bias” of the mainstream media (see Summer 1970, October 7, 1996, October 9, 2002, October 8, 2003, December 2004, December 14, 2005, December 19-20, 2005, December 21, 2005, May 2008, October 23-24, 2008, February 24, 2009, and August 11, 2009). After cable television and Internet access fragmented the market, “niche” audiences such as Limbaugh’s have provided the most reliable listenership and viewers, and the highest comparative ratings. However, the demographics are changing for right-wing talk. Limbaugh, Levin, Savage, Hannity, and others generally rate best among aging white males, a demographic that is less profitable than it used to be. Now, the prize advertising demographic is women aged 24 to 55, a demographic that has been leaving the right-wing talkers in steadily increasing numbers, and now makes up the forefront of the angry pushback against Limbaugh over his public savaging of a young female law student over a political disagreement. Some, including Limbaugh’s brother, right-wing talk show host David Limbaugh, have complained of a “left-wing jihad” against conservative radio hosts. However, as reporter John Avlon writes: “[T]he irony is that the same market forces that right-wing talk-radio hosts champion are helping to seal their fate. Advertisers are abandoning the shows because they no longer want to be associated with the hyperpartisan—and occasionally hateful—rhetoric. They are finally drawing a line because consumers are starting to take a stand.” Moreover, the advent of social media has made the response time for protesters and angry consumers almost immediate. Geller says: “In the past, a letter, petition, or phone campaign took a few days to put together and longer to execute. But now customers [listeners] can instantly rally using Facebook, Twitter, and instant messaging to make their displeasure with a client, product, or service known immediately. These movements can happen fast.” Avlon concludes: “When big money starts shifting, it is a sign of a deeper tide that is difficult to undo, even if you are an industry icon like Rush Limbaugh. It is a sign that the times are changing. Let’s hope that what emerges is an evolution of the industry, away from stupid, predictable, and sometimes hateful hyperpartisanship and toward something a little smarter and more civil.” [Radio-Info.com, 3/9/2012; Daily Beast, 3/10/2012]
Entity Tags: Mark Levin, Valerie Geller, General Motors, Geico, Ford Motor Company, Allstate, John Avlon, Tom Leykis, Toyota Motor Corporation, State Farm, Premiere Radio Networks, Michael Savage, McDonald’s, Prudential, Subway Restaurants, Glenn Beck, Sandra Fluke, Sean Hannity, Rush Limbaugh
Timeline Tags: Domestic Propaganda
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