GM to taxpayers: Sorry we had to ask, but thanks for the money
The last few weeks may have been some of the worst in GM's 100-year history. Sales have tanked, CEO Rick Wagoner faced a firing squad in Washington -- twice -- and a CNN poll showed that 61% of Americans didn't want the automakers to get federal loans. It appears Congress is on the verge of approving up to $18 billion dollars to keep GM and Chrysler in business, and the General is thankful for the chance to keep the lights on. GM crafted a letter expressing its gratitude, and published it in today's Automotive News. In the two-page letter, available on the GM Facts and Fiction, GM admits that it has made mistakes. Among the list of items the General is asking forgiveness for are slips in quality, over-reliance on trucks and SUVs, and lackluster designs. GM also pointed out several steps to return to profitability, including streamlining its dealer network, advancing automotive technology, focus on core brands, and perhaps most importantly, build cars that Americans want to buy. Read the letter for yourself after the jump and let us know what you think in the comments.
[Source: GM Facts]
GM'S COMMITMENT TO THE AMERICAN PEOPLE
We deeply appreciate the Congress considering General Motors' request to borrow up to $18 billion from the United States. We want to be sure the American people know why we need it, what we'll do with it and how it will make GM viable for the long term.
For a century, we have been serving your personal mobility needs, providing American jobs and serving local communities. We have been the U.S. sales leader for 76 consecutive years. Of the 250 million cars and trucks on U.S. roads today, more than 66 million are GM brands - nearly 44 million more than Toyota brands. Our goal is to continue to fulfill your aspirations and exceed your expectations.
While we're still the U.S. sales leader, we acknowledge we have disappointed you. At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster. We have proliferated our brands and dealer network to the point where we lost adequate focus on our core U.S. market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in today's globally competitive industry. We have paid dearly for these decisions, learned from them and are working hard to correct them by restructuring our U.S. business to be viable for the long term.
Today, we have substantially overcome our quality gap; our newest designs like the Chevrolet Malibu and Cadillac CTS are widely heralded for their appeal; our new products are nearly all cars and "crossovers" rather than pick-ups and SUVs; our factories have greatly improved productivity and our labor agreements are much more competitive. We are also driven to lead in fuel economy, with more hybrid models for sale and biofuel-capable vehicles on the road than any other manufacturer, and determined to reinvent the automobile with products like the Chevrolet Volt extended-range electric vehicle and breakthrough technology like hydrogen fuel cells.
Until recent events, we felt the actions we'd been taking positioned us for a bright future. Just a year ago, after we reached transformational agreements with our unions, industry analysts were forecasting a positive GM turnaround. We had adequate cash on hand to continue our restructuring even under relatively conservative industry sales volume assumptions. Unfortunately, along with all Americans, we were hit by a "perfect storm." Over the past year we have all faced volatile energy prices, the collapse of the U.S. housing market, failing financial institutions, a stock market crash and the complete freezing of credit. We are in the midst of the worst economic crisis since the Great Depression. Just like you, we have been severely impacted by events outside our control. U.S. auto industry sales have fallen to their lowest per capita rate in half a century. Despite moving quickly to reduce our planned spending by over $20 billion, GM finds itself precariously and frighteningly close to running out of cash.
This is why we need to borrow money from U.S. taxpayers. If we run out of cash, we will be unable to pay our bills, sustain our operations and invest in advanced technology.
A collapse of GM and the domestic auto industry will accelerate the downward spiral of an already anemic U.S. economy. This will be devastating to all Americans, not just GM stakeholders, because it would put millions of jobs at risk and deepen our recession. By lending GM money, you will provide us with a financial bridge until the U.S. economy and auto sales return to modestly healthy levels. This will allow us to keep operating and complete our restructuring.
We submitted a plan to Congress Dec. 2, 2008, detailing our commitments to ensure our viability, strengthen our competitiveness, and deliver energy-efficient products. Specifically, we are committed to:
- produce automobiles you want to buy and are excited to own
- lead the reinvention of the automobile based on promising new technology
- focus on our core brands to consistently deliver on their promises
- streamline our dealer network to ensure the best sales and service
- ensure sacrifices are shared by all GM stakeholders
- meet appropriate standards for executive pay and corporate governance
- work with our unions to quickly realize competitive wages and benefits
- reduce U.S. dependence on imported oil
- protect our environment
- pay you back the entire loan with appropriate oversight and returns
These actions, combined with a modest rebound of the U.S. economy, should allow us to begin repaying you in 2011.
In summary, our plan is designed to provide a secure return on your investment in GM's future. We accept the conditions of your loan, the commitments of our plan, and the results needed to transform our business for long-term success. We will contribute to strengthening U.S. energy and environmental security. We will contribute to America's technical and manufacturing know-how and create high quality jobs for the "new economy." And, we will continue to deliver personal mobility freedom to Americans using the most advanced transportation solutions. We are proud of our century of contribution to U.S. prosperity and look forward to making an equally meaningful contribution during our next 100 years.
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Reader Comments (Page 1 of 4)
Frank 9:03AM (12/08/2008)
...and by the way, we'll be back for more of your money after we burn through this in a few months...ahh...make that weeks.
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geo.stewart 9:14AM (12/08/2008)
well, I havent seen one note of thanks from any of the effin financial institutes taking our money (300+ Billion to date) and running, as opposed to GM asking for a loan.
With the TARP, I feel like I got raped with a baseball bat without the vaseline. The Auto deal seems like a lopsided relationship.
I'll take the auto deal anytime.
Consider, the $700B is costing every person in the country $2400, so a family of 4 is forking out 10K.
For the auto industry, its costing $81 a head.
Noidor 9:23AM (12/08/2008)
Quite a number of credible economists are predicting that total cost just keep automakers afloat (forget actually turning a profit) will at best total $125bil.
They are unleashing inflationary holocaust upon us and no one sees this. Money will soon cease to be a commodity altogether.
Tool 10:33AM (12/08/2008)
This could have been a really powerful letter at an important time.
The interesting thing was that it was missing two crucial things:
1. A Real Apology. Instead it was just a corporate-speak "mistakes were made" mea culpa. You don't get the sense here that this was anything other than a PR move to shore up a hostile public.
2. A Real Promise. GM could have said "we are absolutely committed to building a sustainable GM--a GM 2.0, if you will--and we promise that we will operate consistent with the values of delivering excellence, high-value, high-quality, fuel efficiency to everything we do from this point forward.
Americans are generally forgiving. But this, like most things GM does, never goes far enough.
Dr. Nick 9:04AM (12/08/2008)
Sounds like Commandant Rick is about to be shown the door as well. What an ineffective period of leadership!
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Torrent 6:05PM (12/08/2008)
I will gladly welcome a new CEO.
Josh 9:04AM (12/08/2008)
As a GM employee, I can attest that these comments are not simply window dressing or worse. The men and women of GM have worked their butts off to save every nickle to protect not only the future of GM but American manufacturing at large. We won't let you down America!
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Sea Urchin 9:08AM (12/08/2008)
"We won't let you down America!"-------------Interesting, did you take that line straight from Republican play book? Link your cause for love of America. I don't know if you read the article, but in the first few lines in says "nd a CNN poll showed that 61% of Americans didn't want to the automaker to get federal loans."
Foose1397 9:36AM (12/08/2008)
Sea Urgent.....
You have any pride in your country? or is that to redneck for you? Listen don't get me wrong there is a lot of things that need to be fixed in this country but that doesn't mean a worker can't take pride in his job. In fact that is what all workers should be doing, taking pride in what they do. If workers demand a better product right from the beginning the end result will be that much better.
61% of Americans (out of a poll of a small number), is a crappy stat. Half of those people don't know anything about business and even more probably don't know the products that these companies are putting out now.
Sea Urchin 9:47AM (12/08/2008)
Foose, i am a PROUD American, and i do take pride in what i do.
But Josh was linking failures of the management to taxpayers wallet.
geo.stewart 10:01AM (12/08/2008)
sea urchin,
fyi the pollsters themselves admitted that the results of the poll are misleading in that the general public is suffering a hangover from the financial industry mess and weary of the term bailout.
Its all in how you phrase the questions.
And as has been mentioned too many times to count, the US is not alone in providing gov't support to its auto industry to keep it competitive in the global marketplace.
rubyred 3:26PM (12/08/2008)
What is CNNs audience percentage, all cable put together is probably only 12 pecent of the national viewers. I am sick of that statistic; how can they speak for the people?
Dsuupr 5:39PM (12/08/2008)
I know everyone at GM is committed to GM 2.0 and my entire family (non-auto industry supported) are behind you guys 100%. We know how important you are to America and the American economy.
Nick 2:16AM (12/09/2008)
Josh I would suggest you start looking for a new job. Maybe even go to college if you don't have a degree.
Flashpoint 9:05AM (12/08/2008)
The auto crisis is the perfect opportunity to force Chrysle, GM and Ford to create energy efficient/ alternative fueled cars.
America desperatly needs infrastructure upgrading. If we can upgrade to a $2T digital power grid, it will make us 6% more efficient and be the equivalent of taking 53 million cars off the road - in CO2 savings. It would also make self-repair simpler and we'd have far less blackouts with the exception of catastrophe caused Blackouts.
Many people look at this as a hinderance - I see opportunity. A chance to improve the country we've neglected for 8 years.
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Frylock350 9:48AM (12/08/2008)
GM and Ford are already doing that. Focus matches Corolla in fuel economy at 35mpg. The Escape Hybrid SUV gets nearly as good of mileage as the Camry Hybrid. The upcoming Fusion Hybrid will be more efficient than any vehicle Toyota sells save the Prius
GM currently beats Toyota in fuel economy in nearly every market segment. They don't need to be forced to make more energy efficient cars they are already doing it. GM's next compact will get 40+ mpg without the need for a hybrid powertrain.
Both GM and Ford are also already investing in alternative fuels. GM has fuel cell Equinox CUVs out on the road in testing. The Volt will be the first mass market electric car. Many of GM's vehicles (including my Suburban) run on E85 Ethanol.
I'd like to see more of a commitment from GM to push ethanol. Its the easiest alternative fuel to implement. We can reuse much of our existing infrastructure, and we can convert cars already on the road to use it. It doesn't require tons of toxic IMPORTED lithium like Electric and Fuel Cell (fuel cells are technically electric cars, using a fuel cell to power the motor rather than a battery) do. I don't see how trading imported oil for imported lithium helps anything. Ethanol offers no downside to gasoline. E100 is a 110+ octane fuel. If a vehicle was tuned to burn just E100 it would produce more power and be more fuel efficient than it would burning gasoline. A 5.3L V8 from GM makes 320hp on 87 octane fuel. When its running on E85 it makes ~335hp. If it was tuned to run on ONLY E100 it would make 360hp and get better fuel economy than the 320hp burning 87 octane. Its win-win.
1970Dodge 10:19AM (12/08/2008)
Just for Some Perspecticve... 2 Trillion Dollars, thats 2x10^12 Dollars. ....Thats 22.5million Dodge Vipers. Or staking 2T$'s worth of pennies on top of eachother would stretch 300million km. ...Or Roughly the distance from here to the Sun....and back.
I don't know about you, but I still can't fathom how big that is!
[Source: My Calculator]
Sea Urchin 9:06AM (12/08/2008)
LOL, Cry me a river. Fire Rick and save 17+ million dollars a year.
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Seminole 9:15AM (12/08/2008)
That money will last what, like 30 minutes at GM?
Sea Urchin 9:21AM (12/08/2008)
"hat money will last what, like 30 minutes at GM?"---is that a justification of his salary?