General Motors Falling Faster Than They Thought

Following the General Motors crisis the company announced on Tuesday that it is in dire need of financial assistance and is requesting $34 billion dollars in federal loans and lines of credit. The three major motor vehicle companies, General Motors, Ford Motor Company and Chrysler have all underestimated the slum that they are now enduring since their last evaluation in November. General Motors has told Congress that they plan to drastically shrink the companies “operations to ensure its long-term survival,” but with everything that is happening in the stock market can the country afford to loan such an immense amount of money?

Congress responded that the plans that had been put forth to revive the company was unimpressive and that dramatic changes had to be made in order for them to receive any kind of loan. General Motors retorted that, “it was in such sire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit.”

General Motors in the worlds largest automaker in the United States so what is happening to the rest of the motor vehicle companies? Chrysler another major business, is also asking Congress for similar requests and has asked for $7 billion dollars by the end of December in order to keep afloat. Although these two companies are suffering it is Ford Motors that seemingly has its priorities in order, but Ford’s chief executive, Alan R. Mulally said, “the prospect of a failure of G.M. would cascade through the entire domestic auto industry and put millions of jobs at risk,” he went on to say, “We are very, very concerned, and that’s why we went with G.M. and Chrysler to Congress even though we think we have sufficient liquidity.” Ford Motors has asked Congress for $9 billion dollars to be readily available if they enter the same situation as the other companies.

The plans and requests of these businesses are now being looked over very carefully by the White House and although no statement has been made yet on what to do but one thing is certain all of these companies must have a definite plan of what actions they wish to take in the future to avoid these kind of problems in the future.

Of course each of these companies would not be in a state of crisis if it were not for the fall of the stock market, and both chief executives of General Motors and Ford said, “they would sell their corporate aircrafts, and both said they would work for $1-a-year salary if federal assistance was forthcoming. But General Motors is planning on doing more to show that they seriously need the money that are asking for; it planned to, “reduce the number of salaried and hourly workers in the United States to 65,000 to 75,000 by 2012 from the current 96,000. The company also said it would reduce its number of factories to 36 from 47.” But with all of these cuts will it be ultimately beneficial for the American people?

http://www.nytimes.com/2008/12/03/business/03auto.html?pagewanted=2&hp&adxnnl=1&adxnnlx=1228266174-BMPbr3j4lElJEKz53KIaQg