Sarkozy wrong on state aid for car industry 7 Jan 2009 The French president wants car makers to pledge they will stop exporting jobs to lowerwage countries before they can benefit from state aid. This is the wrong approach. Boosting profitability and productivity creates jobs. In the long run, jobprotection schemes backfire.
GM unlikely to meet positive NPV hurdle 5 Jan 2009 In return for its federal loans, the carmaker must present a plan to achieve a positive net present value. Even with cost cuts, debt restructuring and union concessions not to mention rosy assumptions about sales the arithmetic doesn t add up.
US automaker bailout skids down slippery slope 30 Dec 2008 To rescue GM, the Treasury has now ponied up $6bn for GMAC. But for the finance company to really crank up its lending, the Fed may have to take a liberal view of its capital levels. There are other signs the Treasury and Fed aren t in accord, further damaging their credibility.
Bush’s Detroit bailout looks like path to bankruptcy 19 Dec 2008 The government is lending GM and Chrysler $17.4bn that they must pay back if they don t meet high hurdles by the end of March. That ll be tough. The carmakers should use the time to cut deals with workers, creditors and dealers they ll need to get out of bankruptcy fast.
Crashed auto rescue causes economic pile-up 12 Dec 2008 US failure to approve $14bn of aid for its Big Three carmarkers does not make their bankruptcy inevitable, even if it s the least bad option. But political paralysis will have everyone bracing for a traumatic collapse. The knockon effect on consumer confidence will be dreadful.
Paulson should be tougher on carmakers than banks 12 Dec 2008 The US Treasury secretary agreed to use Tarp funds to prop up the Big Three after lawmakers didn't act. He should require strict terms certainly tougher than his overfriendly deal with banks to keep pressure on the carmakers and lay the groundwork for the next Congress.
Fiat swerves to avoid impending crash 9 Dec 2008 The Italian car maker has tried to jumpstart consolidation in Europe by announcing it cannot face the future alone. Boss Marchionne s doommongering may in the meantime elicit a shot of state aid. But it is clear that Fiat s days as the definitive Italian industrial are numbered.
Congress kicks Detroit’s problems down the road 8 Dec 2008 Lawmakers only plan to stump up $15bn of already committed funds $44bn less than the Big Three wanted. That will keep them rolling only until March, when Detroit will be Barack Obama s problem. Given their track records, it s probably wise to keep carmakers on a short leash.
Seat Pagine is LBO poster-child for wrong reasons 2 Dec 2008 The buyout of the Italian directories publisher was Europe s largest leveraged deal in 2003. Now the company is seeking breathing room on part of its E3.1bn debt mountain. Even if the banks oblige, the Silver private equity consortium which controls it faces difficult choices.
Detroit humbly asks for outrageous Federal largesse 2 Dec 2008 If Ford s plan, the first presented, is any indication, the automakers second turn at the trough isn't very encouraging. The bestoff of the Wobbly Three wants $9bn worth of 10year loans at the government s borrowing rates. That s outrageous.
Volvo sale plan may boost Ford’s bailout prospects 1 Dec 2008 It should have unloaded the Swedish car maker when it sold its other luxury brands. Buyers now will be hard to find. But showing sceptical US lawmakers that it s willing to take draconian steps to restructure may help Ford s case when it goes hat in hand to Congress this week.
Should Wagoner write a letter to Santa? 26 Nov 2008 The GM chief and his counterparts at Chrysler and Ford have been shunned by banks and investors. And Congress has, so far, rejected their pleas for aid. With Christmas upon us, Wagoner might consider penning a note to Saint Nick. Here s what he might ask for.
Tata feels the weight of its trophy UK deals 26 Nov 2008 The Indian conglomerate s highly leveraged bets on Corus, the former British Steel, and carmaker Jaguar have lost their shine. The economic slowdown is likely to have left both financially stretched putting Tata under pressure to make disposals elsewhere.
Detroit fails to browbeat Congress into bailout 20 Nov 2008 US lawmakers weren t cowed into submission by the Big Three s prophesies of doom. Nor did they hang Motown out to dry. They re offering the carmakers another chance to make their case in two weeks, and linking any handout to their viability. It s a promising start.
Ivory Tower trumps Motown on the Hill 19 Nov 2008 The CEOs of the Detroit Three tried to sway US lawmakers with forecasts of doom but gave little detail on how taxpayer money would help. Macroeconomist Peter Morici was more persuasive, arguing that a bankruptcylike restructuring looks the better bet.
Motown bosses make case for own dismissal 19 Nov 2008 Chrysler, Ford and General Motors are pleading poverty. Yet not only are they running expensivelooking ad campaigns to lobby for a taxpayer bailout, their CEOs each made their way to Capitol Hill by private jet. Such profligacy undermines their suitability to remain in charge.
Ford’s $540m Mazda sale shows folly of dithering 18 Nov 2008 The car maker has made a better stab at cutting its bloated brands than General Motors. But Ford is getting less than a third of what it might have received for its Mazda stake just four months ago. It s an apposite example of the cost of Detroit s failure to act with alacrity.
GM opens dark new chapter of credit crunch 13 Nov 2008 The automaker s crisis is longrunning the bonds were junked in 2005. But whatever happens bailout or bankruptcy the US government will have to make some tough decisions about reshaping the nation s largest manufacturing sector. Welcome to the financialindustrial crisis.
The US can’t avert Detroit’s catastrophe 7 Nov 2008 Ford s and General Motors results show just how dire their situation is. Government cash will just prolong their pain. The only support the US should offer is for a wellplanned restructuring under the cover of bankruptcy. But with GM on the brink time is running short.
Porsche’s wild ride on VW may not be such a triumph 30 Oct 2008 The luxury carmaker has made a gigantic paper profit on its stake in VW by precipitating a squeeze on shortsellers. But both the real situation and the extent of Porsche s hold over VW remain opaque. Besides looking clever, it s not clear what Porsche has achieved.