Senator, can you spare a dime?
The Detroit Three automakers go to Washington today, armed with fresh restructuring plans they hope will convince federal lawmakers to open the bailout spigot. For General Motors, Ford and Chrysler the stakes couldn’t be higher.
GM has been reviewing its already revamped business plan and may take steps that include dropping or selling off the Pontiac, Saab and Saturn brands. Ford, seen as the strongest bet to survive of the three because of its better cash position, is considering the sale of Volvo. And Chrysler, seen as the most vulnerable of the bunch, finds itself having to spell out the reasons it needs federal funds even though it’s also looking to hook up with foreign automakers.
As IHS Global Insight analyst Aaron Bragman says: “Just as General Motors is too big to fail, Chrysler is too small to survive on its own.”
GM, Ford and Chrysler have all declined to discuss their restructuring plans before submitting them to key lawmakers today.
The cap-in-hand CEOs will be making their cases against a dire background for automakers globally. Consumers, shocked into hiding by the credit crisis, are reluctant to part with cash. Sales have registered double-digit drops in Germany, Europe’s largest car market, and South Africa, Africa’s top economy. U.S. auto sales, due later on Tuesday, are expected to be just as bad. Toyota Motor Corp, the world’s biggest auto manufacturer, has unveiled new production cuts to deal with the slowdown.
The last time the Detroit Three visited Washington to beg for help, they were heavily criticized for flying in on their corporate jets. Not quite the image of a sector under siege. It’s going to be different this time. Ford’s CEO, Alan Mulally, will actually drive to Washington from Detroit. That’s a 500-mile haul. Talk about trying to make an impression.
More Deals of the Day:
** Coca-Cola Co said it had filed an application for anti-trust approval in China for the company’s $2.5 billion bid for top domestic juice maker China Huiyuan Juice Group.
** Singapore Airport Terminal Services (SATS) will pay state investor Temasek up to US$333 million for control of Singapore Food Industries (SFI), and said it was open to making more acquisitions.
** Memory chip maker Numonyx delayed a purchase of a small stake in its Chinese joint venture with Hynix Semiconductor, Hynix said, as chip makers grapple with a major industry downturn and cash shortage.
** The owners of fast-growing Russian lender Ursa Bank and top-30 bank MDM are eyeing a merger that would create Russia’s second largest private bank, Vedomosti reported, quoting members of the banks’ boards.
** Kuwait’s troubled Gulf Bank has received “numerous” merger offers but believes the time is not right for a deal, its chairman said.
** French advertising giant Publicis announced the latest in a series of acquisitions in China as it looks to boost its presence in fast-growing emerging markets.
** Banks that lent money to the core shareholders of Spanish property firm Metrovacesa have taken a 54 percent stake in the company in exchange for debt, the Sanahuja family said in a statement.
** South Korea’s third-largest steel maker Dongkuk Steel Mill said it would ask a government agency to delay sealing Dongkuk’s $321 million offer for a small domestic builder for “at least one year.”
** French utility Electricite de France said it had made commitments to European regulators as part of its proposed 12.5 billion pound ($18.55 billion) takeover of nuclear operator British Energy Group Plc.
** Sierra Wireless Inc said it was launching a friendly 8.50 euros per share offer for Wavecom, topping a hostile 7 euros per share bid by France’s Gemalto .