"This action will help to preserve many jobs," said a visibly more relaxed Rik Wagoner as he spoke of Friday morning's announcement of aid for the automakers. It's been a tense week, and not just for Detroit's CEOs. In recent days employees of the Big Three in Detroit have been going about their jobs as a life and death debate waged in Washington. Just this week, executives from General Motors Corp., Chrysler LLC and Ford Motor were offering reporters sneak previews of vehicles due out in 2009 and 2010 despite huge uncertainty surrounding their future. "We've got to stay focused on what we do," notes Ed Welburn, GM vice president of design, who says his designers have no choice but to keep the creative energy high. "We know they're in Washington. We can't ignore it," Welburn said.
Susan Docherty, the GM marketing executive responsible for selling the company's Buick, Pontiac and GMC brands, also tried to strike a positive note: "If you look at the brands I'm responsible for, our business was up 10% the first five months of the year," Docherty said. "It's frustrating," notes Docherty, adding the recession is speeding up the shutdown of dealerships. "We've got 6,100 dealers and we're going to go down to 4,500," she says. (See pictures of autoworkers.)
On Friday morning, though, GM chairman Rick Wagoner, was already envisioning a brighter future. "In many ways our restructuring plan [with the government] accelerates and expands the transformation that we've been driving in North America for the past several years. It's really a blueprint for a new General Motors one for our next 100 years," he said.
Bob Nardelli, chief executive officer of beleaguered Chrysler, which was forced to close all of its manufacturing plants for next month, thanked the White House and Treasury for their "confidence" in Chrysler. "A letter of intent was signed which outlines the specific requirements," he said, adding that "Chrysler is committed to meeting these."
Though Ford is not receiving any of the $13.4 billion TARP funds, President and CEO Alan Mulally also expressed gratitude. Mulally also reiterated Ford's intent to stick to the plan it recently submitted to Congress, calling for the company to return to pre-tax profitability by 2011. That plan includes introducing more fuel-efficient vehicles including a broader range of hybrid-electric vehicles. This week, Ford said it is doubling the output of hybrid vehicles in 2009. (See pictures of the remains of Detroit.)
Ford has asked the government for access to a line of credit of up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing these funds.
One problem the incoming Obama administration will face is an uptick in union militancy. Blue-collar workers went into December fearing GM and Chrysler might collapse but left angry that Republican demands for wage concessions came at a time when bankers were using federal bailout money for bonuses. "I don't make $74 per hour," says Bryan Larkin, who is employed at GM's truck plant in Pontiac, Mich.
Ron Gettelfinger, the UAW's president, has also suggested the union is particularly opposed to putting any more pressure on retirees. "The big sticking point for retirees is that we already paid for our health care. Why should we have to pay again?" says GM retiree Greg Shotwell.
GM President Fritz Henderson acknowledged the "Term Sheet" on the rescue package does require the automaker to obtain concessions from the union. But privately, union officials are saying that they didn't sign the term sheet, so they don't feel bound by it.
Still, as the confidence began returning to Detroit, President-elect Barack Obama was at a press conference issuing a sober reminder. Auto industry leaders, he said, should take note "that the American people's patience is running out," and that Detroit must seize on this opportunity and make tough reforms.