[CreativeSuiteDown]

Auto team drives imports
Fed task force has few new U.S. cars

Monday, February 23, 2009
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The vehicles owned by the Obama administration's auto team could reflect one reason why Detroit's Big Three automakers are in trouble: The list includes few new American cars.

Among the eight members named Friday to the Presidential Task Force on the Auto Industry and the 10 senior policy aides who will assist them in their work, two own American models. Add the Treasury Department's special adviser to the task force and the total jumps to three.

The Detroit News reviewed public records to discover what many of the task force and staff members drove, but information was not available on all of the officials, and records for some states were not complete.

At least two task force members don't own a car, and there are still two open slots on the 10-member panel that will be filled by the secretaries of labor and commerce, who have not yet been appointed.

Steve Rattner, the managing partner of a $6 billion New York hedge fund who will lead the Treasury Department's auto efforts, has three imports and one domestic vehicle.

He owns a 2008 Lexus LS 460 sedan, a 2007 Audi S4 convertible, a 2006 Mercedes-Benz R350 sport-utility vehicle and a 2005 Lincoln Town Car, according to public records.

The co-chairs of the task force -- Treasury Secretary Timothy F. Geithner and White House National Economic Council Director Lawrence Summers -- both own foreign automobiles.

Geithner owns a 2008 Acura TSX, registered in New York. He once owned a 1999 Honda Accord and a 2002 Acura MDX, according to public records.

Geithner is the president's designee for purposes of enforcing loan agreements with GM and Chrysler and must approve or reject any proposed transactions by either company that would cost $100 million or more.

His maternal grandfather, Charles Moore, was a vice president at Ford Motor Co. from 1952-63, according to Peter Geithner, the secretary's father. But Geithner wasn't very interested in cars growing up -- in part because he graduated from high school in Asia, his father said.

Summers owns a 1995 Mazda Protege that's registered in Massachusetts. He previously owned a 1996 Ford Taurus GL.

What other task force members drive:
• Office of Management and Budget Director Peter Orszag owns a 2008 Honda Odyssey and a 2004 Volvo S60. He previously owned a 1997 Jeep Grand Cherokee and 1982 Datsun.

• Carol Browner, the White House climate czar, said earlier this month at the Washington Auto Show that she doesn't own an automobile. Public records show she once owned a 1999 Saab 9-5 SE.

• Energy Secretary Steven Chu doesn't own a car, his wife, Jean Fetter, said in a telephone interview on Sunday. Cabinet officials are typically transported to and from work by security officials in government vehicles.

• Environmental Protection Agency Administrator Lisa Jackson owns a 2008 Toyota Prius and a Honda Odyssey minivan, she said Sunday. "It's great," she said of her Prius.

• Vehicle information was not available for Transportation Secretary Ray LaHood or Christine Romer, head of the Council of Economic Advisers.
Here's what task force policy aides drive:
• Austan Goolsbee, staff director and chief economist for the White House Economic Recovery Advisory Board, owns a 2004 Toyota Highlander.

• Joan DeBoer, the chief of staff to LaHood, said in an interview Sunday she drives a 2008 Lexus RX 350. She doesn't consider herself "a car buff" and views her car as a way to get around town.

• Heather Zichal, deputy director of the White House Office of Energy and Climate Change, owns a Volvo C30, according to public records and officials.

• Gene Sperling, counsel to the Treasury Secretary, owns a 2003 Lincoln LS, and previously owned a 1993 Saturn SL2.

• Edward B. Montgomery, senior adviser to the Labor Department, owns a 1991 Harley-Davidson and previously owned a 1990 Ford Taurus L station wagon, public records show.

• Lisa Heinzerlingra, senior climate policy counsel to the head of the EPA, owns a 1998 Subaru Legacy Outback station wagon, according to her husband.

• Diana Farrell, the deputy National Economic Council director, doesn't own a vehicle. Her husband, Scott Pearson, owns a 1985 Peugeot 505 S.

• Dan Utech, senior adviser to the Energy Secretary, owns a 2003 Mini Cooper S two-door hatchback.

• Rick Wade, a senior adviser at the Commerce Department, owns a 1998 Chevrolet Cavalier and previously owned a 1998 Toyota Corolla.

• Jared Bernstein, Vice President Joe Biden's chief economist, owns a 2005 Honda Odyssey.
The White House declined to comment.

President Barack Obama traded in his Chrysler 300C for a more fuel-efficient Ford Escape hybrid during the 2008 presidential campaign.

Joe Biden, the son of a car dealer, owns a 1967 Chevrolet Corvette -- a wedding present from his dad. He primarily commuted from Delaware to the Senate on Amtrak.

Ron Bloom, a special adviser to the Treasury Department who is also advising the task force, owns an aging Ford Taurus.

[Acalsenunse]

Rattner to assist on auto issues after all


Reuters
Quadrangle's Steven Rattner will lead a team advising
the Obama administration on the troubled auto sector.

HARRY STOFFER | AUTOMOTIVE NEWS
FEBRUARY 23, 2009 - 3:24 PM ET
UPDATED: 2/23/09 5:15 P.M. EST

WASHINGTON -- The White House today made official the appointment of financier Steve Rattner as a special adviser in the Treasury Department on automotive issues.

Rattner, long rumored to be President Barack Obama's car czar, didn't get that job because the administration decided to have a task force, rather than one person, oversee restructuring plans from General Motors, Chrysler LLC and potentially other automotive companies.

But Rattner is going to be working on the industry restructuring and aid programs, the White House confirmed today.

Rattner is a former journalist who became a Wall Street mogul. He is a founder and the managing principal of Quadrangle Group LLC, a multibillion-dollar private equity investment firm that has specialized in technology and media companies. He is well-connected in political and financial circles.

The administration's multi-agency task force will examine restructuring plans and determine if the automakers qualify for federal loans. It is led by Treasury Secretary Timothy Geithner and Obama's chief economics adviser, Lawrence Summers.

Ron Bloom, a former investment banker and United Steelworkers union official, also was named last week to assist the task force. He is known for helping reorganize struggling companies, including suppliers Dana Corp. and Goodyear Tire & Rubber Co.

GM and Chrysler have received $17.4 billion in federal loans and last week asked for $21.6 billion more. Suppliers say they need as much as $18.5 billion.

White House statement

The White House described Rattner's role and his background this way:

"Rattner will join the Treasury Department as Counselor to the Secretary where he will serve as an adviser on a variety of economic and financial matters, and will lead the Treasury's efforts with regard to the automobile sector.

"Rattner most recently was Managing Principal at Quadrangle Group, LLC since 2000. Prior to that, he was Deputy Chairman at Lazard Frères & Co. LLC. At Lazard Frères & Co. LLC he also served as Deputy Chief Executive from 1997-1999 and Managing Director from 1989 – 1997.

"From 1984 -1989, Rattner served as Associate, Vice President, Principal and Managing Director at Morgan Stanley and Associate, Vice President at Lehman Brothers Kuhn Loeb, Inc from 1982-1984.

"He was a correspondent for The New York Times from 1975 – 1982. Rattner received his B.A. with Honors in Economics from Brown University in 1974, and awarded Harvey Baker Fellowship for Graduate Study."

[PHOTOSHOPoem]

UAW reaches health care trust fund deal with Ford

By KIMBERLY S. JOHNSON – 1 hour ago

DETROIT (AP) — The United Auto Workers and Ford Motor Co. said Monday they agreed to let the automaker change how it pays for a health care trust fund for retired workers, a deal that could serve as the model for cash-starved General Motors Corp. and Chrysler LLC.

Ford said the agreement allows it to make payments to the union-managed trust with up to 50 percent of company stock instead of cash. Having the UAW take equity frees up cash for operations.

"We will consider each payment when it is due and use our discretion in determining whether cash or stock makes sense at the time, balancing our liquidity needs and preserving shareholder value," said Ford spokesman Mark Truby in a written statement.

Ford, like its Detroit and foreign competitors, is seeing a huge drop in sales as consumers shy away from purchasing new cars during a recession. However, the company has not asked for low-interest government loans. General Motors and Chrysler have asked for a total of $39 billion, and have received $17.4 billion so far.

Under terms of the government loans, the Treasury Department set targets for Chrysler and GM to exchange half their cash payments to the trusts, called voluntary employee beneficiary associations, or VEBAs, for equity in the companies. Money freed up by supporting the VEBA with equity would potentially pare down GM's and Chrysler's borrowings from the government.

For Ford, which isn't receiving government aid but is trying to cut costs, the agreement announced Monday is another in a series of concessions from auto workers.

Terms of previous deals were not announced, but they were expected to eliminate the jobs bank in which laid-off workers get most of their pay, as well as lift work rules and make other changes that the government loan terms set out. The goal is for the companies' labor costs to be competitive with Japanese rivals that have U.S. factories.

The UAW, meanwhile, said the health care trust deal helps save jobs, as a failure to help the auto companies cut costs could lead to a bankruptcy filing and massive layoffs.

Although Ford was not required to renegotiate terms of its VEBA with the UAW, the company entered talks with the union, and said it would not be "disadvantaged" as GM and Chrysler sought concessions.

The VEBAs were established as part of the landmark 2007 contract reached with the UAW. The trusts would pay health care bills for about 800,000 UAW retirees, spouses and dependents and move billions in liabilities off the companies' books. GM expects to save about $3 billion a year, while Ford says it will save $1 billion annually.

Ford owes $6.3 billion to its VEBA at the end of this year. GM has to pay roughly $20 billion into its health care trust, while Chrysler must pay around $9.9 billion.

The UAW's willingness to strike a deal with Ford first is significant, because it shows the union is acknowledging the challenges Ford is facing, said Hal Stack, director of the Labor Studies Center at Wayne State University in Detroit.

"The question is whether they make a similar agreement with GM and Chrysler," he said. "It adds a certain element of risk to the equation for the UAW at a time when most people are nervous about any (financial) risk."

The agreement between Ford and the UAW, along with other previously agreed to concessions, must be ratified by union members. The UAW is expected to meet with heads of its local branches this week. The change to the health care trust also requires court approval.

This is the second time this month Ford has reached an agreement with the UAW on cost-cutting initiatives. UAW struck a deal with Ford on other contract concessions after talks with GM and Chrysler briefly broke down. Talks resumed and all three automakers reached a deal with the UAW earlier this month.

GM spokeswoman Renee Rashid-Merem said negotiations between GM and the UAW are continuing but had nothing to announce related to the VEBA.

Chrysler declined comment.

A presidential task force will monitor the GM and Chrysler restructuring plans and decide if the companies will get more money. The Obama administration on Monday named Wall Street financier Steven Rattner to serve as auto counselor to Treasury Secretary Timothy Geithner.

Shares of Ford rose 15 cents, or 9.5 percent, to close at $1.73 Monday. Shares of GM were unchanged at $1.77 after hitting a 70-year low Friday.

AP Auto Writer Tom Krisher in Detroit and AP Writer Ken Thomas in Washington contributed to this report.

[GooogleGuy]

GM future in doubt after $31bn loss

By Bernard Simon in Toronto and John Reed in Detroit
Published: February 26 2009 13:14 | Last updated: February 26 2009 21:50

General Motors underlined its dire financial condition on Thursday as it reported an unexpectedly heavy cash drain in the final three months of 2008 and warned that Deloitte, its auditor, might cast doubt on its standing as a going concern.

The Detroit carmaker, dependent on government aid for survival, reported a fourth-quarter loss of $9.6bn, bringing the 2008 loss to $30.9bn. GM has racked up losses totalling $86.6bn during the past four years.

Adding to its woes, GM disclosed that its pension fund, one of the biggest in the US, has swung over the past year from a $20bn surplus to a $12.4bn deficit.

Kimberly Rodriguez, a restructuring specialist at Grant Thornton, described the going-concern tag as “a stamp on a situation that we all already recognise. The key is how people react. It does provide a vehicle for someone to get out of a lending situation or a commercial agreement.”

Ms Rodriguez said the doubt over GM’s status underlined the need for speedy decisions – one way or the other – on future government aid, not only for GM but also its parts suppliers.

GM has received $13.4bn in emergency loans from the US government, and last week applied for another $16.6bn.

In addition, its foreign subsidiaries have asked for aid from governments in Canada, Germany, the UK, Sweden, Thailand and South Korea.

Rick Wagoner, chief executive, on Thursday met the US government’s auto industry taskforce, which has taken charge of the company’s restructuring. It is due to decide by March 31 on future funding for GM and its smaller, but equally troubled, Detroit rival Chrysler.

GM burned through $19bn in cash last year, and has budgeted for a $14bn drain in 2009.

Ray Young, chief financial officer, ascribed the unexpectedly high fourth-quarter outflow of $5.2bn from automotive operations to the sudden downturn in many hitherto buoyant overseas markets.

Output at GM’s European plants was 53 per cent lower in the fourth quarter than a year earlier. All four regional units reported quarterly losses.

JD Power, a consultancy, on Thursday underlined the challenges facing GM and the rest of the north American car industry with an estimate that US light-vehicle sales would drop to a new annualised low of 9.1m units in February, from 9.6m in January and 15.4m in February 2008.

Copyright The Financial Times Limited 2009

*****

Also: Video: Spencer Jakab on GM

[Rffkwfct]

Best way to help the U.S. auto industry is to repeal the Corporate Average Fuel Economy law. This onerous set of regulations is an unnecessary interference in the market.

[EbrsaRynleot]

Bob: why is it that other car making countries have healthy car industries and make beautiful high quality cars yet have even higher fuel economy laws?

[EspanaCamsInfo]

Consumer Reports' Automaker Report Cards

Honda Leads Again, Mercedes-Benz Improves, Chrysler Lags

YONKERS, N.Y., Feb. 26 /PRNewswire-USNewswire/ -- For the third consecutive year, Honda has earned class leader status for building the best all-around vehicles for American drivers, according to the Automaker Report Cards published in Consumer Reports' Annual Auto Issue. At the opposite end of the annual ranking is Chrysler, which fared even worse than last year. The company's poor performing products and sinking reliability results have kept all Chrysler, Dodge, and Jeep badged vehicles off CR's Recommended list.
With an overall score of 78 out of 100 points, Honda was followed closely by Subaru (75), and Toyota (74) in the overall score. Subaru is also the only automaker with 100% of its tested vehicles Recommended, although it has a relatively small model lineup. Mazda (73), came in 4th, followed by Mercedes-Benz, Nissan, Volkswagen, and BMW, all tied at 72.

While the top four overall scores belong to Japanese automakers, a Japanese nameplate is no guarantee that every car in a model range will be a reliable and good performer. For example, the Honda Element and Toyota Yaris scored too low in Consumer Reports' tests to be recommended. Conversely, despite overall scores of 63 and 57 respectively, that placed Ford and GM toward the bottom of the results, new models like the Ford Flex, F-150, Chevrolet Malibu, and Cadillac CTS have done well in CR's tests and rank near the top of their classes in its ratings.

Full details and rankings are available in the article "Who makes the best cars?" in the magazine on sale March 3 to May 4 and at www.ConsumerReports.org.
The overall score for each automaker is based on the average of its vehicles' overall scores in Consumer Reports' road tests and their average predicted-reliability ratings from Consumer Reports' Annual Auto Survey. Manufacturers received a report card only if five or more of its vehicles were tested.

Of the three class leaders, Toyota regained lost ground after last year's disappointment of having three of its vehicles fall below average in reliability. All three -- the Toyota Camry V6, the Toyota Tundra V8 4WD variant, and the all-wheel-drive Lexus GS -- improved to average reliability this year. Of the Asian automakers, Subaru, Nissan, Mazda, and Hyundai improved their overall scores. Nissan and Hyundai also improved their reliability rating. Of the four, Hyundai showed the most improvement, increasing its overall score from 66 to 70. The Hyundai Genesis also topped Consumer Reports' upscale-sedan ratings, contributing to the automakers continued progress.

European automakers, traditionally great performers overall, have lagged in reliability but there have been notable improvements with several models from Audi, BMW, Saab, Volkswagen, Volvo, and Mercedes-Benz. Mercedes-Benz showed the most significant improvement, moving up in the overall ranking (72) to tie with BMW and Volkswagen. Reliability was greatly improved across most of the Mercedes-Benz model line, with 67% of tested vehicles now recommended compared to none in the prior year.

All three Detroit automakers continued to be at the back of the class, although General Motors and Ford improved their overall scores. Chrysler disappointed the most -- it had the lowest overall test score and none of its vehicles are Recommended.

There was some positive news for the struggling domestic automakers. The latest models from General Motors now rank among the best in testing, and models like the Buick Enclave, Chevrolet Traverse, GMC Acadia, Saturn Outlook, Cadillac CTS, Chevrolet Corvette, and Chevrolet Malibu all scored well. Some Ford models now rival their competition from Honda and Toyota in reliability, perhaps a promising sign for new models now coming out of the product pipeline. For Chrysler, the sole glimmer of hope in the model-year is the new Dodge Ram, which is now very competitive with the other full size trucks.

Less than a quarter of Consumer Reports' recommended vehicles are from U.S. companies, a result of inconsistent reliability and performance. About half are Japanese.

"While Japanese automakers continue to set the standard for the industry in terms of real-world performance and reliability, many domestic, European, and Korean manufacturers are narrowing the gap by building better and more reliable cars," said David Champion, senior director of automotive testing, Consumer Reports. "While some automakers are still dragged down by old product investments, we expect the race for the front of the class to become even more competitive which may lead to some excellent values for consumers in the near future."

In the end, the companies that make the best vehicles are those that excel in performance, interior craftsmanship, safety, comfort, and reliability. The best continue to set a higher and higher standard, a competition in which consumers are the ultimate winners.

With more than 7 million print and online subscribers, Consumer Reports is one of the most trusted sources for information and advice on consumer products and services. It conducts the most comprehensive auto-test program of any U.S. publication or Web site; the magazine's auto experts have decades of experience in driving, testing, and reporting on cars. To become a subscriber, consumers can call 1-800-234-1645. Information and articles from the magazine can be accessed online at www.ConsumerReports.org.


APRIL 2009

[SkatrySkith]

Bob, that is BS.

It is like saying that removing all clean air laws will make it so that we do not have to depend on Foreign Oil....

GM is in trouble because its pensions were funded by investments in the stock market.

They had this HUGE profit one year because they did not have a safe base that would insure a decent income on investment for the expenses they had each year. IOW, instead of placing enough in things like Bonds to insure enough for the pensions currently enrolled, they placed it all ni something they could, at the time, get more money on.

Also, here's the killer. If they made $20B last year (or the previous) on the pension fund, where did that $20B go this year? They lost $12B, so basic math tells you that they are still UP $8B.... Unless they did not SAVE that surplus.....

They really need to start looking at the golden parachutes and start snipping lines before they declare bankruptcy and force those that planned their retirement on a substantially smaller pension are not left out in the cold when they freeze the entire thing.

Oh, freeze it AFTER paying off the big-wigs though..... Those golden parachutes weigh a lot! You don't want them hurting themselves falling from that height don't you know!!!

[Nppracph]

Answer me this: If, as so many claim, it would be good for the economy (or, perhaps more precisely, for their economy) that the US Govt should let GM and other automakers fail / declare bankruptcy so they can "start over" then what happens to all those former auto workers now living off their GM + other pensions (which will be nullified in the post-bankruptcy restructuring)?

Wouldn't the US taxpayer have to pick up those workers in some fashion so they don't rot in their houses, poor and unkept?

Or is that their idea: "'They've done their work and we don't need them anymore. No way they're going to cost me money. Die quickly & quietly behind closed doors for all we care."

Is this the country we want to become?

[Phlkxkbh]

The thing is Loft, the ones that CAN fight it will, and will get the lions share of whatever fund is left, leaving only scraps for the majority.

What I am suuggesting is a look at past salary records and other things and try to re-structure the pension plan to cut out that enormous balloon at the top end.

Will this ever happen? No.

As for letting GM flop, I am 50% with that. I would like to have more work done to see where the money is going. I would like to know who we would need to save to provide the most good and kep the support structure in place for a revamped company.

IOW, what would we need to do to help the supporting companies and other individuals available for when GM restarts so that they have the least amount of downtime? Paying to keep the sinking barge afloat is not the best way to solve this problem.

I also know what you are saying. Cutting it loose and letting whoever is tied to it sink as well is not the best either. But we have been presented with almost NO alternatives. Give them money or DOOM!!!!!!!

[Averti$ingGuru]

I would not mind seeing GM and Chrysler close. Bailout money should be reserved for their workers however.

Instead, help should be given to the company that is doing relatively well: Ford.

You put your money on a sure thing... not flush it down the toilet.

Did you all read that above?: "GM has racked up losses totalling $86.6bn during the past four years."

Shoot it.

[varrozans]

They have....


They keep missing the heart and brain though (they can't seem to find them).

[antonyandruleit]

No ideas as to how to deal with the "freed" autoworker pensioners?

Silence on the subject will sell them down the toilet.