%PDF-1.5
%
1 0 obj
<>
endobj
2 0 obj
<>stream
0 G
0 J 0 j 0.3 w 10 M []0 d
/GS1 gs
1 i
147 154 m
465 154 l
S
BT
/F1 1 Tf
6.4 0 0 6.0925 238.98 172 Tm
0 g
0 Tc
0 Tw
(U)Tj
8 0 0 8 244.196 172 Tm
(.)Tj
6.4 0 0 6.0925 246.4199 172 Tm
(S)Tj
8 0 0 8 250.452 172 Tm
(. )Tj
6.4 0 0 6.0925 256.6599 172 Tm
0.275 Tw
(GOVERNMENT PRINTING OFFICE)Tj
2.0844 -1.9696 TD
0 Tw
(WASHINGTON )Tj
8 0 0 8 321.0655 160 Tm
(: )Tj
6 0 0 6 194.18 144 Tm
0.0533 Tw
(For sale by the Superintendent of Documents, U.S. Government Printing Office)Tj
-1.45 -1.3333 TD
[(Internet: bookstore.gpo.gov)-1000(Phone: toll free \(866\) 5121800; DC area \(202\) 5121800)]TJ
3.85 -1.3333 TD
[(Fax: \(202\) 5122104)-1000(Mail: Stop IDCC, Washington, DC 204020001)]TJ
-7.5967 5.3333 TD
(50418 PDF )Tj
ET
0.5 w
291 186 m
321 186 l
S
BT
6.4 0 0 6.0925 326 160 Tm
0 Tw
(2009)Tj
8 0 0 8 340.2336 160 Tm
( )Tj
7.4983 66.25 TD
0.2175 Tw
(S. H)Tj
6.4 0 0 6.0925 418.1117 690 Tm
0 Tw
(RG)Tj
8 0 0 8 427.7117 690 Tm
0.2175 Tw
(. 110876 )Tj
/F2 1 Tf
12.42 0 0 18 171.8 670 Tm
0.1997 Tw
(EXAMINING THE STATE OF THE DOMESTIC )Tj
2.5475 -1.1111 TD
(AUTOMOBILE INDUSTRYPART I )Tj
ET
147 639.24 m
465 639.24 l
147 641.44 m
465 641.44 l
S
BT
/F1 1 Tf
18 0 0 18 261 563 Tm
0 Tw
(HEARING )Tj
7.2 0 0 6.8543 280.92 546 Tm
[(BEFORE)-411.1(THE)]TJ
9 0 0 9 331.0771 546 Tm
( )Tj
/F3 1 Tf
15.3 0 0 18 245.36 524 Tm
0.1294 Tw
(COMMITTEE ON )Tj
-6.4013 -1.2222 TD
0 Tw
[(BANKING,)-274.5(HOUSING,)-274.5(AND)-164.7(URBAN)-164.7(AFFAIRS )]TJ
4.0444 -1.2222 TD
0.1294 Tw
(UNITED STATES SENATE )Tj
/F1 1 Tf
10 0 0 10 212.2 462 Tm
0.216 Tw
(ONE HUNDRED TENTH CONGRESS )Tj
8 0 0 8 267.8 444 Tm
0.2175 Tw
(SECOND SESSION )Tj
3.9775 -2.25 TD
0 Tw
(ON )Tj
-19.0775 -2.375 TD
0.41 Tw
(EXAMINING THE STATE OF THE U.S. DOMESTIC AUTOMOTIVE INDUS-)Tj
1 -1.25 TD
0.465 Tw
(TRY AND ITS OVERALL IMPACT ON THE NATIONS ECONOMY, THE )Tj
T*
0.5675 Tw
(AUTOMOTIVE WORKERS, AND THE COMPANIES INVOLVED IN THE )Tj
T*
0.2175 Tw
(SUPPLY CHAIN AND THEIR EMPLOYEES )Tj
ET
281 365.24 m
331 365.24 l
S
BT
8 0 0 8 263 347 Tm
(NOVEMBER 18, 2008 )Tj
ET
281 335.24 m
331 335.24 l
S
BT
8 0 0 8 151.68 317 Tm
(Printed for the use of the Committee on Banking, Housing, and Urban Affairs )Tj
/F4 1 Tf
32 0 0 32 289.64 252 Tm
0 Tw
(\( )Tj
/F1 1 Tf
8 0 0 8 168.28 203 Tm
0.2175 Tw
[(Available at: http:)-110(//www.access.gpo.gov)-110(/congress)-110(/senate/senate05sh.html )]TJ
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00001)-1076.9(Fmt 5011)-1076.9(Sfmt 5011)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
3 0 obj
<>/ExtGState<>>>
endobj
4 0 obj
<>
endobj
5 0 obj
<>
endobj
6 0 obj
<>
endobj
7 0 obj
<>
endobj
8 0 obj
<>
endobj
9 0 obj
<>
endobj
10 0 obj
<>
endobj
11 0 obj
<>
endobj
12 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
8 0 0 8 177.6 591 Tm
0 g
0 Tc
0.1625 Tw
(COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS )Tj
7 0 0 7 221.12 577 Tm
0.1629 Tw
(CHRISTOPHER J. DODD, Connecticut, )Tj
/F6 1 Tf
19.5048 0 TD
0 Tw
(Chairman )Tj
/F1 1 Tf
-30.0933 -1.4286 TD
0.1629 Tw
(TIM JOHNSON, South Dakota )Tj
0 -1.1429 TD
(JACK REED, Rhode Island )Tj
T*
(CHARLES E. SCHUMER, New York )Tj
T*
(EVAN BAYH, Indiana )Tj
T*
(THOMAS R. CARPER, Delaware )Tj
T*
(ROBERT MENENDEZ, New Jersey )Tj
T*
(DANIEL K. AKAKA, Hawaii )Tj
T*
(SHERROD BROWN, Ohio )Tj
T*
(ROBERT P. CASEY, Pennsylvania )Tj
T*
(JON TESTER, Montana )Tj
23.1429 10.2857 TD
(RICHARD C. SHELBY, Alabama )Tj
0 -1.1429 TD
(ROBERT F. BENNETT, Utah )Tj
T*
(WAYNE ALLARD, Colorado )Tj
T*
(MICHAEL B. ENZI, Wyoming )Tj
T*
(CHUCK HAGEL, Nebraska )Tj
T*
(JIM BUNNING, Kentucky )Tj
T*
(MIKE CRAPO, Idaho )Tj
T*
(ELIZABETH DOLE, North Carolina )Tj
T*
(MEL MARTINEZ, Florida )Tj
T*
(BOB CORKER, Tennessee )Tj
-7.5514 -1.7143 TD
0 Tw
(S)Tj
5.6 0 0 5.3341 260.55 483 Tm
(HAWN)Tj
7 0 0 7 282.3951 483 Tm
(M)Tj
5.6 0 0 5.3341 289.0032 483 Tm
(AHER)Tj
7 0 0 7 305.7971 483 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Staff Director )Tj
/F1 1 Tf
-15.2213 -1.1429 TD
0 Tw
(W)Tj
5.6 0 0 5.3341 211.1471 475 Tm
(ILLIAM)Tj
7 0 0 7 235.5848 475 Tm
0.1629 Tw
(D. D)Tj
5.6 0 0 5.3341 251.5091 475 Tm
0 Tw
(UHNKE)Tj
7 0 0 7 273.7012 475 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Republican Staff Director and Counsel )Tj
/F1 1 Tf
-2.6876 -1.7143 TD
0 Tw
(A)Tj
5.6 0 0 5.3341 264.9741 463 Tm
(MY)Tj
7 0 0 7 277.2826 463 Tm
(F)Tj
5.6 0 0 5.3341 281.9517 463 Tm
(RIEND)Tj
7 0 0 7 301.2375 463 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Chief Counsel )Tj
/F1 1 Tf
-10.4128 -1.7143 TD
0 Tw
(M)Tj
5.6 0 0 5.3341 239.9881 451 Tm
(ARK)Tj
7 0 0 7 255.5109 451 Tm
(O)Tj
5.6 0 0 5.3341 260.957 451 Tm
(ESTERLE)Tj
7 0 0 7 288.1273 451 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Republican Chief Counsel )Tj
/F1 1 Tf
-4.7113 -1.7143 TD
0 Tw
(D)Tj
5.6 0 0 5.3341 265.6261 439 Tm
(AWN)Tj
7 0 0 7 282.8064 439 Tm
(R)Tj
5.6 0 0 5.3341 287.8605 439 Tm
(ATLIFF)Tj
7 0 0 7 309.123 439 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Chief Clerk )Tj
/F1 1 Tf
-8.6536 -1.1429 TD
0 Tw
(D)Tj
5.6 0 0 5.3341 259.0261 431 Tm
(EVIN)Tj
7 0 0 7 277.0352 431 Tm
(H)Tj
5.6 0 0 5.3341 282.8663 431 Tm
(ARTLEY)Tj
7 0 0 7 306.408 431 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(Hearing Clerk )Tj
/F1 1 Tf
-8.0943 -1.1429 TD
0 Tw
(S)Tj
5.6 0 0 5.3341 259.1901 423.0001 Tm
(HELVIN)Tj
7 0 0 7 285.5989 423.0001 Tm
(S)Tj
5.6 0 0 5.3341 290.009 423.0001 Tm
(IMMONS)Tj
7 0 0 7 315.309 423.0001 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
0.1629 Tw
(IT Director )Tj
/F1 1 Tf
-7.1002 -1.1429 TD
0 Tw
(J)Tj
5.6 0 0 5.3341 274.532 415.0001 Tm
(IM)Tj
7 0 0 7 285.1774 415.0001 Tm
(C)Tj
5.6 0 0 5.3341 290.2315 415.0001 Tm
(ROWELL)Tj
7 0 0 7 315.6379 415.0001 Tm
(, )Tj
/F6 1 Tf
0.7189 0 TD
(Editor )Tj
/F1 1 Tf
6.4 0 0 6.0958 301.26 397.0001 Tm
(\(II\))Tj
8 0 0 8 310.732 397.0001 Tm
( )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00002)-1076.9(Fmt 0486)-1076.9(Sfmt 0486)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
13 0 obj
<>/ExtGState<>>>
endobj
14 0 obj
<>
endobj
15 0 obj
<>
endobj
16 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
12 0 0 12 247.76 577 Tm
0 g
0.555 Tc
0 Tw
[(CONTENTS)555( )]TJ
ET
0 G
0 J 0 j 0.4 w 10 M []0 d
1 i
281 563.8 m
331 563.8 l
S
BT
/F7 1 Tf
8 0 0 8 237.48 544.6 Tm
0 Tc
0.155 Tw
(TUESDAY, NOVEMBER 18, 2008 )Tj
/F1 1 Tf
6 0 0 6 451.4399 530.6 Tm
0 Tw
(Page )Tj
8 0 0 8 147 520.6 Tm
0.0525 Tw
[(Opening statement of Chairman Dodd )-460(..................................................................)-2160(1 )]TJ
0 -1.125 TD
(Opening statements, comments, or prepared statements of: )Tj
2 -1 TD
[(Senator Shelby )-345(..................................................................................................)-2166.5(4 )]TJ
T*
[(Senator Johnson )-480(...............................................................................................)-2162.5(5 )]TJ
T*
[(Senator Enzi )-532.5(.....................................................................................................)-2165(6 )]TJ
T*
[(Senator Schumer )-480(..............................................................................................)-2163.5(7 )]TJ
T*
[(Senator Bunning )-310(...............................................................................................)-2166.5(8 )]TJ
T*
[(Senator Carper )-532.5(.................................................................................................)-2166(9 )]TJ
T*
[(Senator Dole )-287.5(......................................................................................................)-1613(10 )]TJ
T*
[(Senator Menendez )-440(............................................................................................)-1612.5(11 )]TJ
T*
[(Senator Corker )-290(..................................................................................................)-1612.5(12 )]TJ
T*
[(Senator Brown )-437.5(..................................................................................................)-1613(13 )]TJ
T*
[(Senator Allard )-290(...................................................................................................)-1611.5(15 )]TJ
T*
[(Senator Casey )-437.5(...................................................................................................)-1612(15 )]TJ
T*
[(Senator Bennett )-330(................................................................................................)-1609.5(17 )]TJ
T*
[(Senator Tester )-532.5(..................................................................................................)-1610(18 )]TJ
T*
[(Senator Martinez )-365(..............................................................................................)-1612.5(19 )]TJ
T*
[(Senator Bayh )-515(....................................................................................................)-1608.5(20 )]TJ
T*
[(Senator Crapo )-420(...................................................................................................)-1611.5(22 )]TJ
/F7 1 Tf
14.625 -2 TD
0 Tw
(WITNESSES )Tj
/F1 1 Tf
-16.625 -1.75 TD
0.0525 Tw
[(Debbie Stabenow, a U.S. Senator from the State of Michigan )-465(............................)-1600.5(24 )]TJ
0 -1.25 TD
0.2475 Tw
(Ron Gettelfinger, President, International Union, United Automobile, Aero-)Tj
1 -1 TD
0.0525 Tw
[(space, and Agricultural Implement Workers of America )-307.5(..................................)-1606.5(29 )]TJ
1 -1 TD
[(Prepared statement )-405(..........................................................................................)-1609.5(78 )]TJ
T*
(Response to written questions of: )Tj
2 -1 TD
[(Senator Shelby )-292.5(...........................................................................................)-1052.5(109 )]TJ
-4 -1 TD
[(Alan R. Mulally, President and Chief Executive Officer, Ford Motor Company )-1914(31 )]TJ
2 -1 TD
[(Prepared statement )-405(..........................................................................................)-1609.5(81 )]TJ
T*
(Response to written questions of: )Tj
2 -1 TD
[(Senator Shelby )-292.5(...........................................................................................)-1052.5(110 )]TJ
-4 -1 TD
[(Robert Nardelli, Chairman and Chief Executive Officer, Chrysler LLC )-510(............)-1599(32 )]TJ
2 -1 TD
[(Prepared statement )-405(..........................................................................................)-1609.5(87 )]TJ
T*
(Response to written questions of: )Tj
2 -1 TD
[(Senator Shelby )-292.5(...........................................................................................)-1052.5(112 )]TJ
-4 -1 TD
0.3275 Tw
(G. Richard Wagoner, Jr., Chairman and Chief Executive Officer, General )Tj
1 -1 TD
0.54 Tw
[(Motors ...................................................................................................................)-1612.5(34 )]TJ
1 -1 TD
0.0525 Tw
[(Prepared statement )-405(..........................................................................................)-1609.5(90 )]TJ
-2 -1 TD
0.2575 Tw
(Peter Morici, Professor, Robert H. Smith School of Business, University of )Tj
1 -1 TD
0.3575 Tw
[(Maryland ...............................................................................................................)-1610(37 )]TJ
1 -1 TD
0.0525 Tw
[(Prepared statement )-405(..........................................................................................)-1052(105 )]TJ
T*
(Response to written questions of: )Tj
2 -1 TD
[(Senator Shelby )-292.5(...........................................................................................)-1052.5(113 )]TJ
-4 -1 TD
(Robert A. Ficano, Wayne County Executive, Detroit, Michigan )Tj
2 -1 TD
[(Prepared statement )-405(..........................................................................................)-1052(106 )]TJ
6.4 0 0 6.0958 299.96 141.6001 Tm
0 Tw
(\(III\))Tj
8 0 0 8 312.0368 141.6001 Tm
( )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00003)-1076.9(Fmt 5904)-1076.9(Sfmt 5904)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
17 0 obj
<>/ExtGState<>>>
endobj
18 0 obj
<>
endobj
19 0 obj
<>
endobj
20 0 obj
<>stream
/GS1 gs
BT
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tc
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00004)-1076.9(Fmt 5904)-1076.9(Sfmt 5904)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
21 0 obj
<>/ExtGState<>>>
endobj
22 0 obj
<>
endobj
23 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
8 0 0 8 301.12 111 Tm
0 g
0 Tc
0 Tw
(\(1\) )Tj
/F7 1 Tf
12 0 0 12 157.76 587 Tm
0.1533 Tw
(EXAMINING THE STATE OF THE DOMESTIC )Tj
2.8983 -1.15 TD
(AUTOMOBILE INDUSTRYPART I )Tj
ET
0 G
0 J 0 j 0.4 w 10 M []0 d
1 i
281 561.8 m
331 561.8 l
S
BT
9 0 0 9 228.2 542.4 Tm
0.2067 Tw
(TUESDAY, NOVEMBER 18, 2008 )Tj
/F1 1 Tf
10 0 0 10 353.42 523.5 Tm
0.052 Tw
(U.S. S)Tj
8 0 0 7.6194 383.0295 523.5 Tm
0 Tw
(ENATE)Tj
10 0 0 10 412.2131 523.5 Tm
(, )Tj
-24.4253 -0.99 TD
(C)Tj
8 0 0 7.6194 175.1799 513.6 Tm
[(OMMITTEE)-412.5(ON)]TJ
10 0 0 10 241.331 513.6 Tm
(B)Tj
8 0 0 7.6194 248.5509 513.6 Tm
(ANKING)Tj
10 0 0 10 283.0703 513.6 Tm
0.052 Tw
(, H)Tj
8 0 0 7.6194 297.4801 513.6 Tm
0 Tw
(OUSING)Tj
10 0 0 10 331.2636 513.6 Tm
(, )Tj
8 0 0 7.6194 337.3435 513.6 Tm
(AND)Tj
10 0 0 10 359.1633 513.6 Tm
(U)Tj
8 0 0 7.6194 367.3131 513.6 Tm
(RBAN)Tj
10 0 0 10 394.4608 513.6 Tm
(A)Tj
8 0 0 7.6194 401.6807 513.6 Tm
(FFAIRS)Tj
10 0 0 10 432.2002 513.6 Tm
(, )Tj
/F6 1 Tf
-5.604 -0.99 TD
0.052 Tw
(Washington, DC. )Tj
/F1 1 Tf
-21.916 -1.19 TD
0.124 Tw
(The Committee met at 3:02 p.m., in room SD538, Dirksen Sen-)Tj
-1 -0.99 TD
0.116 Tw
(ate Office Building, Senator Christopher J. Dodd \(Chairman of the )Tj
T*
0.052 Tw
(Committee\) presiding. )Tj
/F7 1 Tf
9 0 0 9 150.44 455.8 Tm
0.0422 Tw
(OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD )Tj
/F1 1 Tf
10 0 0 10 157 441.9 Tm
0.052 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1191 441.9 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 441.9 Tm
0.052 Tw
(. The Committee will come to order. )Tj
-7.6791 -0.99 TD
(If I had known the interest, I would have held this at RFK. )Tj
T*
0.062 Tw
(Well, listen, thank you all for coming this afternoon, and I appre-)Tj
-1 -0.99 TD
0.122 Tw
(ciate the participation of our witnesses and our colleagues as well. )Tj
T*
0.112 Tw
(Momentarily, we will be asking our colleague Senator Stabenow to )Tj
T*
0.052 Tw
(share some opening comments. )Tj
1 -0.99 TD
0.062 Tw
(I would point out that Carl Levin, the senior Senator from Michi-)Tj
-1 -0.99 TD
0.056 Tw
(gan, is unable to be with us this afternoon, but has submitted testi-)Tj
T*
0.112 Tw
(mony and obviously has a very strong interest in this subject mat-)Tj
T*
0.28 Tw
(ter. And I have had numerous conversations with him over the )Tj
T*
0.12 Tw
(past number of days, and so we appreciate his contribution to this )Tj
T*
0.052 Tw
(afternoons proceedings as well. )Tj
1 -1 TD
0.164 Tw
(Let me just briefly say how we are going to proceed here. I am )Tj
-1 -1 TD
0.236 Tw
(going to make some opening comments. My friend and colleague )Tj
T*
0.15 Tw
(from Alabama will make some opening comments, and then I will )Tj
T*
0.146 Tw
(ask my colleagues here if they would please be brief, if you could. )Tj
T*
0.104 Tw
(I know everyone wants to be heard on this subject matter, at least )Tj
T*
0.158 Tw
(a couple of minutes. We will then turn to you, Senator Stabenow, )Tj
T*
0.166 Tw
(and then we will invite our witnesses up for their testimony here )Tj
T*
0.052 Tw
(this afternoon. )Tj
1 -1 TD
0.198 Tw
(This afternoons hearing is on Examining the State of the Do-)Tj
-1 -1 TD
0.132 Tw
(mestic Automobile Industry. This afternoon the Committee exam-)Tj
T*
0.114 Tw
(ines the condition of this important domestic industry to our coun-)Tj
T*
0.154 Tw
(try, and I want to thank Senator Shelby and our other colleagues )Tj
T*
0.092 Tw
(for accommodating their schedules to allow us to have this hearing )Tj
T*
0.268 Tw
(scheduled on such short notice. And although we may have dif-)Tj
T*
0.088 Tw
(ferent views on the ailments of the auto industry and the remedies )Tj
T*
0.108 Tw
(for them, I think we can all agree that its fate is a very important )Tj
T*
0.052 Tw
(subject matter for this Committees consideration. )Tj
1 -1 TD
0.16 Tw
(Our Banking Committee jurisdiction, I would point out to those )Tj
-1 -1 TD
0.144 Tw
(who may not be aware, extends to matters pertaining to economic )Tj
T*
0.138 Tw
(stabilization and financial aid to commerce and industry. As such, )Tj
T*
0.052 Tw
(todays hearing is very timely and appropriate. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00005)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
24 0 obj
<>/ExtGState<>>>
endobj
25 0 obj
<>
endobj
26 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(2 )Tj
-14.622 -2 TD
0.104 Tw
(The automobile industry, of course, has made an urgent request, )Tj
-1 -1 TD
0.1 Tw
(as we are all aware, that Congress provide some emergency assist-)Tj
T*
0.134 Tw
(ance to their companies. Without that assistance, we are told that )Tj
T*
0.106 Tw
(one or more of the Big Three automobile makers could become sig-)Tj
T*
0.068 Tw
(nificantly impaired or collapse altogether. Were that to happen, the )Tj
T*
0.202 Tw
(repercussions, of course, would be severe. Hundreds of thousands )Tj
T*
0.268 Tw
(of people who assemble these automobiles would lose their jobs. )Tj
T*
0.056 Tw
(Many more who supply auto parts would face layoffs. As well, auto-)Tj
T*
0.182 Tw
(mobile dealers would be shuttered, and countless others who rely )Tj
T*
0.312 Tw
(on the auto industry for their livelihoods, from the people who )Tj
T*
0.096 Tw
(work in restaurants near these auto factories to those who, in fact, )Tj
T*
0.12 Tw
(clean the offices of these executives, could find themselves without )Tj
T*
0.052 Tw
(a job. )Tj
1 -1 TD
0.16 Tw
(There are those who believe that the partial or total collapse of )Tj
-1 -1 TD
0.11 Tw
(the domestic automobile industry would have repercussions far be-)Tj
T*
0.208 Tw
(yond those whose work is directly or indirectly connected to that )Tj
T*
0.06 Tw
(industry. They argue that if this major industry goes down, it could )Tj
T*
0.11 Tw
(take down huge sloughs of the Nations economy with it; and in so )Tj
T*
0.084 Tw
(doing, it could create new and profound risks to the stability of our )Tj
T*
0.092 Tw
(entire economy, which, as we all know, is already in a very precar-)Tj
T*
0.052 Tw
(ious state. )Tj
1 -1 TD
0.112 Tw
(None of us relishes being here today to consider these prospects. )Tj
-1 -1 TD
0.2 Tw
(That goes for our company and labor witnesses who are going to )Tj
T*
0.086 Tw
(be testifying later this afternoon. Their discomfort in coming to the )Tj
T*
0.214 Tw
(Congress with hat in hand is only exceeded by the fact they are )Tj
T*
0.11 Tw
(seeking treatment for wounds that I believe to a large extent were )Tj
T*
0.26 Tw
(self-inflicted. No one can say that they did not see this coming. )Tj
T*
0.286 Tw
(Their companies have been struggling for years. They are hem-)Tj
T*
0.224 Tw
(orrhaging jobs; 450,000 have been lost in the last 8 years alone. )Tj
T*
0.082 Tw
(They are losing market share. For the first time, the domestic auto )Tj
T*
0.248 Tw
(share for Ford, Chrysler, and GM has slipped below 50 percent, )Tj
T*
0.342 Tw
(going from 66 percent in 2001 to just 47 percent today. Their )Tj
T*
0.16 Tw
(boardrooms and executive suites, in my view, have been famously )Tj
T*
0.052 Tw
(devoid of vision. )Tj
1 -1 TD
0.172 Tw
(Certainly there have been exceptions. Ford was arguably ahead )Tj
-1 -1 TD
0.174 Tw
(of the market when in the early years of this decade, they saw a )Tj
T*
0.12 Tw
(big future in the fuel-efficient and alternative energy vehicles. But )Tj
T*
0.18 Tw
(for the most part, the top echelons, in my view, of the Big Three )Tj
T*
0.154 Tw
(turned a blind eye to such opportunities. They have been content, )Tj
T*
0.146 Tw
(in my view, to not only satisfy but in too many respects drive the )Tj
T*
0.238 Tw
(demand for inefficient gas-powered vehicles that Americans have )Tj
T*
0.152 Tw
(been going broke to gas up. They derided hybrid vehicles as mak-)Tj
T*
0.154 Tw
(ing no economic sense. They have dismissed the threat of global )Tj
T*
0.156 Tw
(warming, the role played by their products in creating it, and the )Tj
T*
0.24 Tw
(strong desire of the American people to do something to stop it. )Tj
T*
0.098 Tw
(The prices of GM and Ford shares have declined steadily and have )Tj
T*
0.052 Tw
(now reached historic lows. )Tj
1 -1 TD
0.136 Tw
(In short, the auto makers have failed to adapt to change, in my )Tj
-1 -1 TD
0.222 Tw
(view, and the shareholders are rendering judgment for that fact. )Tj
T*
0.298 Tw
(They have approached 21st century challenges with decidedly a )Tj
T*
0.128 Tw
(20th century mind-set, and we are all paying the price for it. This )Tj
T*
0.242 Tw
(is not the first time that the leaders of our automobile industry )Tj
T*
0.206 Tw
(have presented Congress with a doomsday scenario in connection )Tj
T*
0.132 Tw
(with a cry for help. It happened in the late 1970s as well. At that )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00006)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
27 0 obj
<>/ExtGState<>>>
endobj
28 0 obj
<>
endobj
29 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(3 )Tj
-15.622 -2 TD
0.122 Tw
(time this Committee, under different leadership, and the Congress )Tj
0 -1 TD
0.282 Tw
(responded with the Chrysler Loan Guarantee Act. The law pro-)Tj
T*
0.208 Tw
(vided $1.5 billion to Chrysler in loan guarantees to help it avoid )Tj
T*
0.064 Tw
(bankruptcy. But it did so with several very tough conditions. It cre-)Tj
T*
0.082 Tw
(ated a Federal oversight board to review and approve funding deci-)Tj
T*
0.098 Tw
(sions. It required Chrysler to become energy efficient. It prohibited )Tj
T*
0.284 Tw
(the company from paying dividends on its common or preferred )Tj
T*
0.12 Tw
(stock. It required buyouts that resulted in the loss of thousands of )Tj
T*
0.128 Tw
(jobs, and the company was required to come up with a nearly dol-)Tj
T*
0.1 Tw
(lar-for-dollar match in private funds in order to qualify for Federal )Tj
T*
0 Tw
(guarantees. )Tj
1 -1 TD
0.25 Tw
(Unlike 1979, however, today the tools already exist to provide )Tj
-1 -1 TD
0.12 Tw
(meaningful and appropriate assistance to the industry. I am refer-)Tj
T*
0.42 Tw
(ring to the Emergency Economic Stabilization Act, which was )Tj
T*
0.158 Tw
(signed into law barely 6 weeks ago. This legislation confers broad )Tj
T*
0.14 Tw
(authority on the Secretary of the Treasury, including, in my view, )Tj
T*
0.082 Tw
(the authority to purchase any financial instrument, such as stock )Tj
T*
0.104 Tw
(from any institution, if necessary, to promote financial market sta-)Tj
T*
0.11 Tw
(bility. The Secretary of the Treasury has until now declined to use )Tj
T*
0.144 Tw
(that authority, and I regret that, focusing the resources of the act )Tj
T*
0.162 Tw
(on financial companies. It is hard to explain how you can provide )Tj
T*
0.178 Tw
(massive assistance to AIG, but manage to find no room at all for )Tj
T*
0.052 Tw
(assistance for our three major automobile manufacturers. )Tj
1 -1 TD
0.17 Tw
(Similarly, the Federal Reserve has declined to use its authority )Tj
-1 -1 TD
0.072 Tw
(under Section 13-3 of the Federal Reserve Act to assist the auto in-)Tj
T*
0.258 Tw
(dustry. That provision allows the Fed to lend to any individual, )Tj
T*
0.464 Tw
(partnership, or corporation if, due to unusual or exigent cir-)Tj
T*
0.156 Tw
(cumstances, that person, partnership, or company is unable to se-)Tj
T*
0.052 Tw
(cure adequate credit. )Tj
1 -1 TD
0.082 Tw
(I support efforts to assist this industry, not because their leaders )Tj
-1 -1 TD
0.378 Tw
(necessarily deserve taxpayer helpon the contrary, deserve no )Tj
T*
0.128 Tw
(more help than do the leaders of the financial companies that cre-)Tj
T*
0.074 Tw
(ated the subprime mortgage mess that has exploded into the global )Tj
T*
0.14 Tw
(financial crisis. Rather, I support action as a way to minimize the )Tj
T*
0.128 Tw
(possibility of such a destabilizing event in our overall economy. At )Tj
T*
0.13 Tw
(a time like this, when our economic future is so tenuous, we must )Tj
T*
0.058 Tw
(do all we can to ensure stability. None of us wants to look back and )Tj
T*
0.112 Tw
(ask if we were penny-wise and pound-foolish at a moment of great )Tj
T*
0.072 Tw
(peril economically. That said, I am only one of 100 Members of this )Tj
T*
0.064 Tw
(body. It will take more than my support to pass meaningful legisla-)Tj
T*
0.15 Tw
(tion this week or next week, and by meaningful, I mean legisla-)Tj
T*
0.102 Tw
(tion that would provide not only necessary financing to sustain op-)Tj
T*
0.166 Tw
(erations; I also mean legislation that imposes tough conditions on )Tj
T*
0.066 Tw
(the companies to sustain our planet and to maintain strict account-)Tj
T*
0.196 Tw
(ability to the taxpayers who are once again being asked to make )Tj
T*
0.08 Tw
(extraordinary sacrifices for those whose actions are costing our Na-)Tj
T*
0.052 Tw
(tion dearly. )Tj
1 -1 TD
0.176 Tw
(My view is that this moment presents not only a challenge but )Tj
-1 -1 TD
0.098 Tw
(also an opportunityan opportunity to reject the subsidy for failed )Tj
T*
0.162 Tw
(business practices, instead to generate meaningful, lasting change )Tj
T*
0.142 Tw
(that transforms a key piece of our manufacturing base for success )Tj
T*
0.052 Tw
(in the 21st century. )Tj
1 -1 TD
0.414 Tw
(Whatever path we ultimately chooseand we will have dif-)Tj
-1 -1 TD
0.146 Tw
(ferences about what it isthat ought to be our shared goal. So in )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00007)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
30 0 obj
<>/ExtGState<>>>
endobj
31 0 obj
<>
endobj
32 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(4 )Tj
-15.622 -2 TD
0.34 Tw
(a few minutes, I will be asking our friend and colleague from )Tj
0 -0.99 TD
0.188 Tw
(Michigan to share her thoughts with us, but before I do that, let )Tj
T*
0.052 Tw
(me turn to my colleague from Alabama, Senator Shelby. )Tj
/F7 1 Tf
9 0 0 9 187.22 605 Tm
0.0422 Tw
(STATEMENT OF SENATOR RICHARD C. SHELBY )Tj
/F1 1 Tf
10 0 0 10 157 591 Tm
0.052 Tw
(Senator S)Tj
8 0 0 7.6194 202.8993 591 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 591 Tm
0.052 Tw
(. Thank you, Mr. Chairman. )Tj
-7.5083 -1 TD
0.186 Tw
(Only 6 weeks ago, Congress hastily passed a bill that gave the )Tj
-1 -1 TD
0.256 Tw
(Secretary of the Treasury authority to spend $700 billion to ad-)Tj
T*
0.052 Tw
(dress the credit crisis. The key component of the Treasury plan was )Tj
T*
0.162 Tw
(the purchase of so-called troubled assets held by financial institu-)Tj
T*
0.14 Tw
(tions. At that time I expressed grave concerns with the wisdom of )Tj
T*
0.202 Tw
(the approach and questioned whether it would be an appropriate )Tj
T*
0.052 Tw
(use of taxpayer dollars. )Tj
1 -1 TD
0.062 Tw
(Instead, at that time I called for a serious examination of the ori-)Tj
-1 -1 TD
0.108 Tw
(gin and scope of the ongoing financial crisis so that we might then )Tj
T*
0.202 Tw
(craft a thoroughly considered and narrowly tailored solution. Un-)Tj
T*
0.052 Tw
(fortunately, we, the Congress, skipped that step. )Tj
1 -1 TD
0.128 Tw
(The Treasury Department has since abandoned the plan, as you )Tj
-1 -1 TD
0.176 Tw
(all know, to purchase troubled assets and is now using the funds )Tj
T*
0.148 Tw
(to purchase direct equity stakes in financial institutions. We were )Tj
T*
0.174 Tw
(told that this would be the best way to stabilize faltering institu-)Tj
T*
0.236 Tw
(tions and stimulate lending. Although interbank lending has im-)Tj
T*
0.196 Tw
(proved slightly in recent weeks, the series of )Tj
/F6 1 Tf
22.3467 0 TD
(ad hoc )Tj
/F1 1 Tf
3.688 0 TD
0 Tw
(Government )Tj
-26.0346 -1 TD
0.132 Tw
(measures intended to relieve stress in the credit markets have ac-)Tj
T*
0.248 Tw
(tually increased mortgage rates and placed additional strains on )Tj
T*
0.052 Tw
(demand. This has occurred despite intentions to the contrary. )Tj
1 -1 TD
0.174 Tw
(Today, as we consider altering the Treasury bailout program to )Tj
-1 -1 TD
0.168 Tw
(provide cash assistance to the domestic auto manufacturers, I am )Tj
T*
0.116 Tw
(concerned that once again we are about to employ the ready, fire, )Tj
T*
0.052 Tw
(aim approach to problem solving. )Tj
1 -1 TD
0.108 Tw
(Before we take that step, I believe we need to determine a num-)Tj
-1 -1 TD
0.16 Tw
(ber of things. First, we must examine whether diluting the TARP )Tj
T*
0.194 Tw
(program will fatally weaken an already flawed construct. Second, )Tj
T*
0.144 Tw
(I believe we must determine the current financial condition of the )Tj
T*
0.17 Tw
(domestic auto manufacturers and how they got that way. Finally, )Tj
T*
0.234 Tw
(Mr. Chairman, I believe we must determine both the short- and )Tj
T*
0.066 Tw
(long-term outlook for these firms. These are all fact-based consider-)Tj
T*
0.218 Tw
(ations, and we should look at the facts. Therefore, we can and I )Tj
T*
0.158 Tw
(think we must build a thorough record so that we can make fact- )Tj
T*
0.052 Tw
(based decisions here in the Congress. )Tj
1 -1 TD
0.062 Tw
(And while I recognize that the current economic situation has ex-)Tj
-1 -1 TD
0.174 Tw
(acerbated the problems of the Detroit auto makers, I think we in )Tj
T*
0.244 Tw
(the Congress must examine in greater detail the causes of their )Tj
T*
0.052 Tw
(longstanding problem. )Tj
1 -1 TD
0.1 Tw
(For example, industry analysts contend that the firms trail their )Tj
-1 -1 TD
0.226 Tw
(major competitors in almost every category necessary to compete )Tj
T*
0.07 Tw
(and make a profit. In fact, even when the firms were setting record )Tj
T*
0.052 Tw
(sales records, they were barely making money. )Tj
1 -1 TD
0.118 Tw
(I believe we need to understand why this has been the case. We )Tj
-1 -1 TD
0.144 Tw
(need to know what the firms are doing to enhance their ability to )Tj
T*
0.086 Tw
(compete in the future. How do they plan to deal with current man-)Tj
T*
0.15 Tw
(agement, labor, cost and quality control, and product development )Tj
T*
0.226 Tw
(shortfalls, which they know they have? How do they plan to ad-)Tj
T*
0.166 Tw
(dress changes in the marketplace such as long-term reductions in )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00008)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
33 0 obj
<>/ExtGState<>>>
endobj
34 0 obj
<>
endobj
35 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(5 )Tj
-15.622 -2 TD
0.146 Tw
(annual sales? How do they intend to reverse the continued loss of )Tj
0 -1.04 TD
0.31 Tw
(market share to foreign car companies? Yes, and how are they )Tj
T*
0.08 Tw
(going to adapt to an international market that demands greater ef-)Tj
T*
0.052 Tw
(ficiency and flexibility? )Tj
1 -1.04 TD
0.246 Tw
(I also, Mr. Chairman, have questions about the amount of re-)Tj
-1 -1.04 TD
0.196 Tw
(sources needed to address the current situation. Is $25 billiona )Tj
T*
0.114 Tw
(lot of money to meis that enough? Is this the end or just the be-)Tj
T*
0.232 Tw
(ginning? Some reports state that the firms appearing today may )Tj
T*
0.212 Tw
(each need at least $20 billion, some $50 billion apiece. If that is )Tj
T*
0.052 Tw
(true, we should be told that today. )Tj
1 -1.04 TD
0.094 Tw
(Finally, how is the money going to be used? That is a good ques-)Tj
-1 -1.04 TD
0.226 Tw
(tion. Will it be used to improve their business model, which has )Tj
T*
0.052 Tw
(been a failure, and product lines? Or is this just life support? )Tj
1 -1.04 TD
0.206 Tw
(I understand that each firm may use their entire share to pay )Tj
-1 -1.04 TD
0.128 Tw
(preexisting claims to stay afloat. In other words, the money would )Tj
T*
0.138 Tw
(be used just to keep the lights on. If that is the case, there would )Tj
T*
0.132 Tw
(be nothing left to make changes that might actually help turn the )Tj
T*
0.152 Tw
(firms around. I believe this begs the question: Are we here in the )Tj
T*
0.16 Tw
(Senate being asked to facilitate a stronger, more competitive auto )Tj
T*
0.052 Tw
(manufacturing sector or to perpetuate a market failure? )Tj
1 -1.04 TD
0.134 Tw
(Todays witnesses need to assure this Committee and the Amer-)Tj
-1 -1.04 TD
0.214 Tw
(ican people that they are able to do what they have failed to do )Tj
T*
0.052 Tw
(in the last 10 years. I look forward to their answers. )Tj
1 -1.04 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 401.8001 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 401.8001 Tm
0.052 Tw
(. Thank you very much, Senator. )Tj
-7.6791 -1.04 TD
(Senator Johnson. )Tj
/F7 1 Tf
9 0 0 9 203.22 371.2001 Tm
0.0422 Tw
(STATEMENT OF SENATOR TIM JOHNSON )Tj
/F1 1 Tf
10 0 0 10 157 356.8001 Tm
0.218 Tw
(Senator J)Tj
8 0 0 7.6194 203.8193 356.8001 Tm
0 Tw
(OHNSON)Tj
10 0 0 10 241.0107 356.8001 Tm
0.218 Tw
(. Mr. Chairman, thank you for calling todays )Tj
-9.4011 -1.04 TD
0.074 Tw
(hearing to examine the condition of the domestic auto industry and )Tj
T*
0.26 Tw
(the effects of interest rate turmoil on job creation and economic )Tj
T*
0.108 Tw
(growth. As you know, I did not support the $700 billion bailout, in )Tj
T*
0.228 Tw
(part because I did not believe that the conditions set for bailout )Tj
T*
0.178 Tw
(monies for Wall Street firms were strong enough. I expect that if )Tj
T*
0.208 Tw
(help is extended to the auto industry, these companies and their )Tj
T*
0.072 Tw
(executives will be held to very high standards of accountability and )Tj
T*
0.052 Tw
(that the taxpayer protection remains a top priority. )Tj
1 -1.04 TD
0.19 Tw
(Going forward, Congress must focus on how to secure the hun-)Tj
-1 -1.04 TD
0.126 Tw
(dreds of thousands of jobs connected to the auto industry and also )Tj
T*
0.218 Tw
(ensure that this industry makes dramatic improvements to inno-)Tj
T*
0.176 Tw
(vate and reflect consumers changing tastes for fuel-efficient vehi-)Tj
T*
0.138 Tw
(cles, including flex-fuel vehicles and alternative-fuel vehicles, cars, )Tj
T*
0.086 Tw
(and trucks. The U.S. has the ability to lead the world powering ve-)Tj
T*
0.194 Tw
(hicles on renewable fuels. What is lacking has been the domestic )Tj
T*
0.114 Tw
(auto industrys embrace of policies and misallocations of resources, )Tj
T*
0.052 Tw
(resulting too often in an inferior product. )Tj
1 -1.04 TD
0.184 Tw
(I am keenly interested in learning from todays witnesses as to )Tj
-1 -1.04 TD
0.426 Tw
(how additional investment of taxpayer dollars to this interest )Tj
T*
0.052 Tw
(would not repeat these missteps. )Tj
1 -1.04 TD
(Thank you, Chairman Dodd. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 128 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 128 Tm
0.052 Tw
(. Thanks very much. )Tj
-7.6791 -1.04 TD
(Senator Enzi. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00009)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
36 0 obj
<>/ExtGState<>>>
endobj
37 0 obj
<>
endobj
38 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(6 )Tj
/F7 1 Tf
9 0 0 9 195.4 642 Tm
0.0422 Tw
(STATEMENT OF SENATOR MICHAEL B. ENZI )Tj
/F1 1 Tf
10 0 0 10 157 628.1 Tm
0.094 Tw
(Senator E)Tj
8 0 0 7.6194 204.2393 628.1 Tm
0 Tw
(NZI)Tj
10 0 0 10 218.903 628.1 Tm
0.094 Tw
(. Thank you, Mr. Chairman. I am disappointed that )Tj
-7.1903 -0.99 TD
0.278 Tw
(we are here today to consider another financial rescue package. )Tj
T*
0.148 Tw
(While I agree that this topic deserves the deliberate consideration )Tj
T*
0.204 Tw
(of the Senate Banking Committee, I have to note that this Com-)Tj
T*
0.172 Tw
(mittee will not actually be approving any legislative proposals re-)Tj
T*
0.494 Tw
(lated to the auto rescue package through the regular order, )Tj
T*
0.1 Tw
(through deliberation, which is the only way that we get good legis-)Tj
T*
0 Tw
(lation. )Tj
1 -0.99 TD
0.058 Tw
(The Committee process is the method by which we consider legis-)Tj
-1 -0.99 TD
0.502 Tw
(lative proposals, weigh alternative ideas, and build coalitions )Tj
T*
0.056 Tw
(through the process of deliberation. Unfortunately, that process has )Tj
T*
0.052 Tw
(not been relied upon during the debate on the Emergency Economic )Tj
T*
0.18 Tw
(Stimulus Act, and it is not the process we are using right now. I )Tj
T*
0.236 Tw
(opposed passage of the Emergency Economic Stabilization Act in )Tj
T*
0.214 Tw
(October because, in Congress rush to pass an expensive solution )Tj
T*
0.052 Tw
(to our financial crisis, we did not carefully consider the impact such )Tj
T*
(a proposal would have on our markets and honestly weigh all avail-)Tj
T*
0.058 Tw
(able alternatives. As evidenced by the financial markets since Octo-)Tj
T*
0.148 Tw
(ber 3rd, the EESA has made little progress in bringing prosperity )Tj
T*
0.068 Tw
(and consumer confidence back into the markets. Even though there )Tj
T*
0.2 Tw
(is a lot more flexibility there than I think any of us dreamed of, )Tj
T*
0.296 Tw
(I have serious doubts that this rescue package will be any dif-)Tj
T*
0.236 Tw
(ferent. The auto manufacturing industry is telling us today they )Tj
T*
0.106 Tw
(need a $25 billion rescue package as a result of the financial crisis )Tj
T*
0.052 Tw
(and the publics inability to find credit to buy their products. )Tj
1 -0.99 TD
0.114 Tw
(This is not the only reason why the domestic auto industry is in )Tj
-1 -0.99 TD
0.054 Tw
(trouble. Labor costs, enormous legacy liabilities, and inefficient pro-)Tj
T*
0.174 Tw
(duction have also contributed to the current crisis in the auto in-)Tj
T*
0.186 Tw
(dustry. Isnt it prudent for us to consider how the taxpayers $25 )Tj
T*
0.212 Tw
(billion will go to addressing these issues before we authorize the )Tj
0 -1 TD
0.108 Tw
(spending? For example, General Motors direct labor cost is report-)Tj
T*
0.248 Tw
(edly $71 an hour while Toyota pays only $47 per hour. Indirect )Tj
T*
0.186 Tw
(costs resulting from union labor agreements only add to this cost )Tj
T*
0.162 Tw
(differential. Ford and GM both spend much more time to produce )Tj
T*
0.082 Tw
(a vehicle than either Toyota or Honda, and fixed costs keep domes-)Tj
T*
0.114 Tw
(tic manufacturers from competing with more nimble overseas com-)Tj
T*
0 Tw
(petitors. )Tj
1 -1 TD
0.144 Tw
(Unfortunately, the auto package being considered by the Senate )Tj
-1 -1 TD
0.248 Tw
(this week is completely silent on these issues. When the Senate )Tj
T*
0.114 Tw
(votes on the bailout on Wednesday, the $25 billion bailout will not )Tj
T*
0.108 Tw
(be attached to any larger proposal to reform contractually imposed )Tj
T*
0.086 Tw
(costs incurred each year by domestic auto makers. The bill will not )Tj
T*
0.174 Tw
(include reforms to address the industrys crippling legacy costs or )Tj
T*
0.37 Tw
(enormous and costly infrastructure. Instead, it will be another )Tj
T*
0.166 Tw
(check issued by the taxpayer to solve a long-term problem with a )Tj
T*
0.22 Tw
(short-term solution. I am pretty sure whatever the bill is, if you )Tj
T*
0.188 Tw
(took it to your banker and asked for $25,000, he would send you )Tj
T*
0.052 Tw
(back for more work. )Tj
1 -1 TD
0.144 Tw
(Under the terms of the proposal, I would not be surprised if we )Tj
-1 -1 TD
0.056 Tw
(find ourselves and the domestic auto industry in the same situation )Tj
T*
0.224 Tw
(6 months or a year from now. There is nothing in the proposals )Tj
T*
0.126 Tw
(that I have heard to prevent the same problems from returning to )Tj
T*
0.052 Tw
(the industry in the future. We have little evidence that this $25 bil-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00010)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
39 0 obj
<>/ExtGState<>>>
endobj
40 0 obj
<>
endobj
41 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(7 )Tj
-15.622 -2 TD
0.054 Tw
(lion will do anything to promote the long-term success and competi-)Tj
0 -0.99 TD
0.326 Tw
(tiveness of domestic auto manufacturers. However, this body is )Tj
T*
0.124 Tw
(under enormous pressure from that industry to provide the money )Tj
0 -1 TD
0.052 Tw
(with no strings attached. )Tj
1 -1 TD
(Instead, I ask my colleagues to resist the illusions of pending eco-)Tj
-1 -1 TD
0.076 Tw
(nomic disaster and carefully consider the proposal. This Committee )Tj
T*
0.164 Tw
(should also examine ways to modify existing proposals to make it )Tj
T*
0.134 Tw
(more taxpayer friendly. We could secure this $25 billion loan with )Tj
T*
0.054 Tw
(unencumbered assets of the participating auto companies. We could )Tj
T*
0.13 Tw
(boost private sector investment through a matching program simi-)Tj
T*
0.096 Tw
(lar to the one proposed by Secretary Paulson. These ideas are wor-)Tj
T*
0.192 Tw
(thy of consideration and deliberation and should be a part of the )Tj
T*
0 Tw
(debate. )Tj
1 -1 TD
0.052 Tw
(I thank the Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 501.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 501.2 Tm
0.052 Tw
(. Thank you. )Tj
-7.6791 -1 TD
(Senator Schumer. )Tj
/F7 1 Tf
9 0 0 9 181.74 474.9999 Tm
0.0422 Tw
(STATEMENT OF SENATOR CHARLES E. SCHUMER )Tj
/F1 1 Tf
10 0 0 10 157 460.9999 Tm
0.198 Tw
(Senator S)Tj
8 0 0 7.6194 204.3593 460.9999 Tm
0 Tw
(CHUMER)Tj
10 0 0 10 242.4227 460.9999 Tm
0.198 Tw
(. Thank you, Mr. Chairman. I thank you and )Tj
-9.5423 -1 TD
0.212 Tw
(Senator Shelby for holding this obviously very timely and impor-)Tj
T*
0.052 Tw
(tant hearing. )Tj
1 -1 TD
0.058 Tw
(Survival of the auto companies is imperative for Americas ability )Tj
-1 -1 TD
0.068 Tw
(to remain the global economic leader in innovation. At a time when )Tj
T*
0.24 Tw
(there are tremendous horizons of opportunity in the auto sector, )Tj
T*
0.318 Tw
(helping the industry meet its challenges is very important. We )Tj
T*
0.236 Tw
(should not drop out of the race before we have had a chance to )Tj
T*
0.072 Tw
(compete. And given the fragility of our economy today, ignoring the )Tj
T*
0.384 Tw
(plight of the auto industry would only accelerate an economic )Tj
T*
0.226 Tw
(downturn and make it more difficult for our Nation to return to )Tj
T*
0.312 Tw
(prosperity. Bankruptcy of one or more major companies at this )Tj
T*
0.21 Tw
(point in time in our economy would have far more severe effects )Tj
T*
0.052 Tw
(than during a time of relative prosperity or stability. )Tj
1 -1 TD
0.098 Tw
(The auto industry is a bedrock of our economy. Almost 4 percent )Tj
-1 -1 TD
0.194 Tw
(of the Nations GDP comes from autos. That is 10 percent of our )Tj
T*
0.052 Tw
(industrial production by value. What is more, the industry supports )Tj
T*
0.154 Tw
(3 million ancillary jobsjobs we must preserve when employment )Tj
T*
0.104 Tw
(is decreasing by over 200,000 jobs a month, and more massive lay-)Tj
T*
0.148 Tw
(offs are expected as a result of the credit crisis. And thousands of )Tj
T*
0.096 Tw
(these jobs, Mr. Chairman, are in my State of New York, where the )Tj
T*
0.13 Tw
(auto industry has been an important part of the local economy for )Tj
T*
0.084 Tw
(decades. Large portions of the economies in western New York, the )Tj
T*
0.136 Tw
(Rochester area, Syracuse, and other places depend on the auto in-)Tj
T*
0 Tw
(dustry. )Tj
1 -1 TD
0.154 Tw
(So, while I believe that the auto industry is too vital to let fail, )Tj
-1 -1 TD
0.084 Tw
(I do share many of my colleagues concerns that what we are being )Tj
T*
0.124 Tw
(asked to do is not the end but the beginning, and that you will be )Tj
T*
0.228 Tw
(back before us in a matter of months. We must be assured that )Tj
T*
0.072 Tw
(whatever aid we give you is accompanied by a real plan that shows )Tj
T*
0.2 Tw
(you recognize the direction that this industry must take in order )Tj
T*
0.082 Tw
(to not to survive but to thrive. I believe we must take action in the )Tj
T*
0.186 Tw
(short term to save the industry, but we also need to hear a plan )Tj
T*
0.098 Tw
(from the auto executives sitting here today. We need them to reas-)Tj
T*
0.23 Tw
(sure us they will not come back again in 6 months in the same )Tj
T*
0.052 Tw
(sinking boat asking for another $50 billion to plug more holes. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00011)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
42 0 obj
<>/ExtGState<>>>
endobj
43 0 obj
<>
endobj
44 0 obj
<>
endobj
45 0 obj
<>
endobj
46 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(8 )Tj
-14.622 -2 TD
0.18 Tw
(A business model based on a gas-guzzling past is unacceptable. )Tj
-1 -0.99 TD
0.14 Tw
(We need a business model based on cars of the future, and we al-)Tj
T*
0.094 Tw
(ready know what that future is: the plug-in hybrid electric car. We )Tj
0 -1 TD
0.13 Tw
(need to know that you will be committed to building the cars that )Tj
T*
0.098 Tw
(will make America a leader in automotive innovation and are com-)Tj
T*
0.084 Tw
(mitting the appropriate resources to get this done, even if it means )Tj
T*
0.202 Tw
(sacrificing some short-term income for your long-term investment )Tj
T*
0.052 Tw
(in the future. )Tj
1 -1 TD
0.222 Tw
(I am hopeful that our Republican colleagues will recognize the )Tj
-1 -1 TD
0.154 Tw
(urgency of this situation and join us in this critical investment in )Tj
T*
0.052 Tw
(our future. )Tj
1 -1 TD
(Thank you, Mr. Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 521.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 521.2 Tm
0.052 Tw
(. Thank you, Senator. )Tj
-7.6791 -1 TD
(Senator Hagel, any comments? )Tj
T*
(Senator H)Tj
8 0 0 7.6194 204.9293 501.2 Tm
0 Tw
(AGEL)Tj
10 0 0 10 228.0409 501.2 Tm
0.052 Tw
(. No, Mr. Chairman. )Tj
-7.1041 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 491.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 491.2 Tm
0.052 Tw
(. Senator Bunning. )Tj
/F7 1 Tf
9 0 0 9 204.14 474.9999 Tm
0.0422 Tw
(STATEMENT OF SENATOR JIM BUNNING )Tj
/F1 1 Tf
10 0 0 10 157 460.9999 Tm
0.052 Tw
(Senator B)Tj
8 0 0 7.6194 203.8193 460.9999 Tm
0 Tw
(UNNING)Tj
10 0 0 10 239.3787 460.9999 Tm
0.052 Tw
(. Thank you, Mr. Chairman. )Tj
-8.2379 -1 TD
0.062 Tw
(Before talking about any legislation, I want to say that I am very )Tj
-1 -1 TD
0.402 Tw
(concerned about the state of the auto industry in the United )Tj
T*
0.116 Tw
(States. I am not concerned out of a sense of American pride or be-)Tj
T*
0.058 Tw
(cause of the great history of the American auto industry. What con-)Tj
T*
0.152 Tw
(cerns me are the workers, the men and women who assemble our )Tj
T*
0.2 Tw
(cars and trucks, who sell and service the vehicles at dealerships, )Tj
T*
0.15 Tw
(and those who work for suppliers that keep the industry running. )Tj
1 -1 TD
0.246 Tw
(Auto manufacturing is the largest manufacturing sector in my )Tj
-1 -1 TD
0.216 Tw
(State. I know Detroits pain is felt in towns and cities all across )Tj
T*
0.208 Tw
(Kentucky. In many counties, jobs making seat belts and radiator )Tj
T*
0.142 Tw
(hoses are some of the best-paying jobs around. And those jobs are )Tj
T*
0.052 Tw
(in danger. )Tj
1 -1 TD
0.128 Tw
(Just last week at least 600 steelworkers were laid off at a plant )Tj
-1 -1 TD
0.18 Tw
(in Ashland, Kentucky, that supplies steel for exhaust pipes. I am )Tj
T*
0.052 Tw
(concerned for those workers and their families. )Tj
1 -1 TD
0.22 Tw
(The question facing Congress is what, if anything, to do about )Tj
-1 -1 TD
0.27 Tw
(the industrys current problems. The proposal coming before the )Tj
T*
0.1 Tw
(Senate tomorrow is not a serious one. Much like the other bailouts )Tj
T*
0.12 Tw
(we have passed, it is virtually a blank check that does not require )Tj
T*
0.17 Tw
(serious considerations or concessions. It also does not address the )Tj
T*
0.118 Tw
(current problem facing the industry, which is a lack of funding for )Tj
T*
0.104 Tw
(auto loans. More importantly, it does not address the long-term vi-)Tj
T*
0.052 Tw
(ability of the domestic manufacturing industry. )Tj
1 -1 TD
0.254 Tw
(Everything I read says that these three companies before this )Tj
-1 -1 TD
0.214 Tw
(Committee cannot survive at the current size and cost structure, )Tj
T*
0.222 Tw
(even when the current economic climate passes. I also hear that )Tj
T*
0.128 Tw
($25 billion is not enough to last past February at the current rate )Tj
T*
0.262 Tw
(of spending. To me, that says that major changes are needed if )Tj
T*
0.06 Tw
(Federal dollars are to be made available. The bill coming before the )Tj
T*
0.15 Tw
(Senate requires no such changes. What I hear from our witnesses )Tj
T*
0.124 Tw
(today is whether or not they are serious about making the painful )Tj
T*
0.254 Tw
(changes that are necessary for these three companies to survive )Tj
T*
0.052 Tw
(the long term. )Tj
1 -1 TD
0.116 Tw
(One idea I read in the )Tj
/F6 1 Tf
11.1048 0 TD
(New York Times )Tj
/F1 1 Tf
8.1989 0 TD
(this morning is that the )Tj
-20.3037 -1 TD
0.098 Tw
(companies could go in a prearranged Chapter 11 restructuring and )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00012)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
47 0 obj
<>/ExtGState<>>>
endobj
48 0 obj
<>
endobj
49 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 303.22 661 Tm
0 g
0 Tc
0 Tw
(9 )Tj
-15.622 -2 TD
0.126 Tw
(the Government would provide financing for these companies com-)Tj
0 -0.99 TD
0.158 Tw
(ing out of bankruptcy. That is a more serious proposal than what )Tj
T*
0.12 Tw
(is before the Senate, so I want to know if the people sitting at the )Tj
0 -1 TD
0.152 Tw
(witness tablenot my fellow colleagueare willing to make those )Tj
T*
0.146 Tw
(tough choices. Are the companies ready to close down brands, fac-)Tj
T*
0.26 Tw
(tories, and shrink their overall sizes? Is the union willing to go )Tj
T*
0.216 Tw
(along with cost and size reduction as the companies restructure? )Tj
T*
0.07 Tw
(Are executives willing to give up their jobs as a condition of getting )Tj
T*
0.13 Tw
(these funds? These are just a few of the questions that need to be )Tj
T*
0 Tw
(answered. )Tj
1 -1 TD
0.342 Tw
(Finally, Mr. Chairman, I want to repeat my concern for the )Tj
-1 -1 TD
0.156 Tw
(workers up and down the auto supply chain and dealer networks. )Tj
T*
0.254 Tw
(Many of those families and communities are living in fear right )Tj
T*
0.244 Tw
(now. No matter what we do, some of those jobs are going to go )Tj
T*
0.06 Tw
(away, at least for the short term. We owe it to them to discuss seri-)Tj
T*
0.198 Tw
(ous proposals that will lead to long-term stability in the auto in-)Tj
T*
0 Tw
(dustry. )Tj
1 -1 TD
0.052 Tw
(Thank you. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 461.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 461.2 Tm
0.052 Tw
(. Thank you, Senator. )Tj
-7.6791 -1 TD
(Senator Carper. )Tj
/F7 1 Tf
9 0 0 9 188.48 435 Tm
0.0422 Tw
(STATEMENT OF SENATOR THOMAS R. CARPER )Tj
/F1 1 Tf
10 0 0 10 157 420.9999 Tm
0.286 Tw
(Senator C)Tj
8 0 0 7.6194 206.1593 420.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 234.5988 420.9999 Tm
0.286 Tw
(. Thanks, Mr. Chairman. Welcome to our wit-)Tj
-8.7599 -1 TD
0.08 Tw
(nesses today. Thank you for joining us. It is an important occasion. )Tj
1 -1 TD
0.128 Tw
(Not surprisingly, there is a healthy skepticism when it comes to )Tj
-1 -1 TD
0.086 Tw
(an auto industry bailout. Many are quick to point out the mistakes )Tj
T*
0.22 Tw
(the auto industry has made in past decades. I have been among )Tj
T*
0.138 Tw
(those. Some prominent economists have gone so far as to say that )Tj
T*
0.214 Tw
(the bankruptcy court could actually force a beneficial reorganiza-)Tj
T*
0.068 Tw
(tion. If our economy were doing well and if the credit markets were )Tj
T*
0.116 Tw
(not frozen, you know, it might just be possible that they are right. )Tj
T*
0.162 Tw
(But as things stand today, I do not believe that bankruptcy court )Tj
T*
0.052 Tw
(is the answer. )Tj
1 -1 TD
0.24 Tw
(General Motors does not have the money to reorganize, nor is )Tj
-1 -1 TD
0.342 Tw
(there credit available. That means we are not talking about a )Tj
T*
0.198 Tw
(Chapter 11 process but a Chapter 7in other words, liquidation. )Tj
T*
0.238 Tw
(That means the loss of more than perhaps a million jobs at the )Tj
T*
0.21 Tw
(worst possible moment. Our economy is too vulnerable. It simply )Tj
T*
0.056 Tw
(cannot stand the kind of anti-stimulus that a GM liquidation would )Tj
T*
0 Tw
(bring. )Tj
1 -1 TD
0.316 Tw
(The Big Three auto makers are taking steps we would want )Tj
-1 -1 TD
0.21 Tw
(them to take already. They have reached an agreement with the )Tj
T*
0.172 Tw
(UAW to bring labor costs down and to reduce the legacy costs by )Tj
T*
0.392 Tw
(moving health care benefits to private trusts managed by the )Tj
T*
0.064 Tw
(union. Further, as painful as it is, the Big Three have closed plants )Tj
T*
0.156 Tw
(to bring their production more in line with U.S. demand. In addi-)Tj
T*
0.162 Tw
(tion, they are developing new, exciting vehicles like the Chevrolet )Tj
T*
0.052 Tw
(Volt, which will go 40 miles without using one drop of gasoline. )Tj
1 -1 TD
0.06 Tw
(But in the midst of all these positive steps, the auto makers were )Tj
-1 -1 TD
0.178 Tw
(hit by high gas prices, along with the rest of us, followed quickly )Tj
T*
0.16 Tw
(by the complete paralysis of credit and a recession. The challenge )Tj
T*
0.26 Tw
(now is to get our domestic auto industry through the next year )Tj
T*
0.112 Tw
(while they finish the reorganization and modernization that every-)Tj
T*
0.136 Tw
(one has agreed is good for them and for the country, and, I might )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00013)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
50 0 obj
<>/ExtGState<>>>
endobj
51 0 obj
<>
endobj
52 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(10 )Tj
-15.344 -2 TD
0.212 Tw
(add, while they bring through the pipeline the vehicles, the very )Tj
0 -0.99 TD
0.052 Tw
(promising vehicles that are on the drawing board. )Tj
1 -0.99 TD
0.19 Tw
(As policymakers, it is our goal to design an assistance package )Tj
-1 -1 TD
0.174 Tw
(that will lead to a successful outcome for the auto industry while )Tj
T*
0.22 Tw
(protecting taxpayers investment. To do so, such a package could )Tj
T*
(include curbs on excessive executive compensation and the inclu-)Tj
T*
0.166 Tw
(sion of preferred stock and warrants in each of the companies re-)Tj
T*
0.068 Tw
(ceiving bridge loans, not unlike what we did in 1979 with Chrysler, )Tj
T*
0.19 Tw
(a process which led to the Federal Government actually realizing )Tj
T*
0.052 Tw
(a return on investment of $310 million. )Tj
1 -1 TD
0.174 Tw
(Although saving the auto companies is important to the overall )Tj
-1 -1 TD
0.124 Tw
(health of our economy, in Delaware auto workers, much like those )Tj
T*
0.252 Tw
(around the country, are losing their jobs right now. In fact, our )Tj
T*
0.124 Tw
(Chrysler assembly plant in Newark, some 50, almost 60 years old, )Tj
T*
0.056 Tw
(will close at the end of this year. So while we talk of another indus-)Tj
T*
0.09 Tw
(try bailout, I just hope we can take some time to ensure assistance )Tj
T*
0.282 Tw
(to those who will be left behind whether or not the companies, )Tj
T*
0.052 Tw
(their companies, are saved. )Tj
1 -1 TD
0.192 Tw
(Of course, people who are losing their jobs today need to know )Tj
-1 -1 TD
0.236 Tw
(that they will have unemployment benefits tomorrow, as well as )Tj
T*
0.228 Tw
(job retraining, job placement help, and possible relocation assist-)Tj
T*
0.238 Tw
(ance. We also cannot forget the communities who are facing the )Tj
T*
0.214 Tw
(challenge of redeveloping closed auto plants at a time when new )Tj
T*
0.242 Tw
(investment is scarce. We must provide assistance to ensure that )Tj
T*
0.098 Tw
(auto sites do not become blighted, but instead offer new opportuni-)Tj
T*
0.052 Tw
(ties and create new jobs. )Tj
1 -1 TD
0.056 Tw
(I am pleased that our Chairman called this hearing, but I am not )Tj
-1 -1 TD
(pleased that it was necessary, nor do I suspect any of our witnesses )Tj
T*
0.164 Tw
(are. However, I am interested in hearing what you have to say. I )Tj
T*
0.182 Tw
(stand ready to work with my colleagues, certainly Senator Stabe-)Tj
T*
0.096 Tw
(now and Senator Levin, to quickly determine the best course of ac-)Tj
T*
0.214 Tw
(tion for auto makers, for their employees, for our taxpayers, and )Tj
T*
0.052 Tw
(for our economy. )Tj
1 -1 TD
(Thanks, Mr. Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 301.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 301.2 Tm
0.052 Tw
(. Thank you. Thank you, Senator. )Tj
-7.6791 -1 TD
0.096 Tw
(I want to note the presence of Sandy Levin, our fellow Congress-)Tj
-1 -1 TD
0.132 Tw
(man from Michigan, who is in the room. We thank you, Congress-)Tj
T*
0.052 Tw
(man, for coming over to join us. )Tj
1 -1 TD
(Senator Dole. )Tj
/F7 1 Tf
9 0 0 9 194.38 245 Tm
0.0422 Tw
(STATEMENT OF SENATOR ELIZABETH DOLE )Tj
/F1 1 Tf
10 0 0 10 157 231 Tm
0.052 Tw
(Senator D)Tj
8 0 0 7.6194 204.3793 231 Tm
0 Tw
(OLE)Tj
10 0 0 10 221.715 231 Tm
0.052 Tw
(. Thank you, Mr. Chairman. )Tj
-6.4715 -1 TD
0.228 Tw
(As I have indicated before, I have very serious concerns about )Tj
-1 -1 TD
0.132 Tw
(the $700 billion rescue package that this legislation unfairly holds )Tj
T*
0.26 Tw
(taxpayers responsible for the costly and reckless decisions of in-)Tj
T*
0.1 Tw
(vestment bankers on Wall Street and policymakers in Washington. )Tj
T*
0.176 Tw
(Like so many North Carolinians I have heard from, I continue to )Tj
T*
0.15 Tw
(be very skeptical that this newly enacted law is turning out to be )Tj
T*
0.052 Tw
(the blank check that so many of us feared. )Tj
1 -1 TD
0.162 Tw
(Incredibly, only last week Treasury Secretary Paulson said that )Tj
-1 -1 TD
0.11 Tw
(the Troubled Asset Relief Program would now not include the pur-)Tj
T*
0.124 Tw
(chase of illiquid mortgage securities. This proposal was principally )Tj
T*
0.146 Tw
(sold to Congress as the way to return our financial institutions to )Tj
T*
0.142 Tw
(health. In fact, this Committee and its staff spent countless hours )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00014)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
53 0 obj
<>/ExtGState<>>>
endobj
54 0 obj
<>
endobj
55 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(11 )Tj
-15.344 -2 TD
0.056 Tw
(quizzing Treasury and Federal Reserve officials about how this pro-)Tj
0 -0.99 TD
(posal would work in practice. I know I was hardly the only Member )Tj
T*
0.188 Tw
(who found their responses either inconclusive or unsubstantiated. )Tj
1 -1 TD
0.248 Tw
(Well, as someone who opposed this legislation from the begin-)Tj
-1 -1 TD
0.076 Tw
(ning, I am pleased that Secretary Paulson now recognizes this type )Tj
T*
0.23 Tw
(of mortgage purchase mechanism looks destined to failure. I can )Tj
T*
0.092 Tw
(only imagine the number of Members of Congress who have had to )Tj
T*
0.106 Tw
(come to grips with the fact that the TARP plan was an ill-advised, )Tj
T*
0.086 Tw
(hurried attempt to stymie fundamental underlying problems in our )Tj
T*
0.09 Tw
(housing and credit markets. And now we are talking about extend-)Tj
T*
0.124 Tw
(ing this same legislation to the automotive companies? This would )Tj
T*
0.224 Tw
(ignore the original intent of the law, which was to clear out the )Tj
T*
0.176 Tw
(credit markets so banks would lend money to one another and to )Tj
T*
0.272 Tw
(businesses, thereby spurring economic activity. Additionally, this )Tj
T*
0.13 Tw
(would distract from what I believe to be the root cause of our eco-)Tj
T*
0.052 Tw
(nomic problem: the collapse of our housing market. )Tj
1 -1 TD
0.11 Tw
(So much of what is now happening with regard to the credit cri-)Tj
-1 -1 TD
0.078 Tw
(sis, the housing slump, and the bankruptcy and dissolving of major )Tj
T*
0.456 Tw
(financial institutions can be linked to the mismanagement of )Tj
T*
0.194 Tw
(Fannie Mae and Freddie Mac, which was made possible by weak )Tj
T*
0.052 Tw
(oversight and very little accountability. If anything, this Committee )Tj
T*
0.148 Tw
(should now be spending its precious time asking regulators: What )Tj
T*
0.314 Tw
(is going to happen with those GSEs in a post-Government-con-)Tj
T*
0.35 Tw
(servatorship world? After the conservatorship, what next? As I )Tj
T*
0.1 Tw
(have previously stated, we need to end the existing structure of an )Tj
T*
0.09 Tw
(implied Government guarantee. We need to end the practice of pri-)Tj
T*
0.052 Tw
(vate rewards at public risk. )Tj
1 -1 TD
0.116 Tw
(Another topic that would be more pertinent for this Committees )Tj
-1 -1 TD
0.21 Tw
(attention right now, it seems to me, would be the results of this )Tj
T*
0.218 Tw
(past weekends G-20 summit. One bright note from those discus-)Tj
T*
0.174 Tw
(sions was the recognition among the participants for the need for )Tj
T*
0.108 Tw
(stronger regulation of derivatives, including credit default swaps. I )Tj
T*
0.192 Tw
(have called for more transparency in this area of the credit mar-)Tj
T*
0.232 Tw
(ketscalled for it for some monthswhich have grown exponen-)Tj
T*
0.112 Tw
(tially from $1 trillion in 2000 to $55 trillion today in market expo-)Tj
T*
0 Tw
(sure. )Tj
1 -1 TD
0.212 Tw
(Finally, without fundamental changes in the automotive indus-)Tj
-1 -1 TD
0.096 Tw
(try, we would just be throwing taxpayers dollars at firms that will )Tj
T*
0.152 Tw
(inevitably go under. For instance, the enormous costs in union-re-)Tj
T*
0.444 Tw
(quired benefits is unsustainable. Renegotiating these contracts )Tj
T*
0.07 Tw
(would be essential if there were to be hope of keeping these compa-)Tj
T*
0.052 Tw
(nies afloat. )Tj
1 -1 TD
(Thank you, Mr. Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 211.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 211.2 Tm
0.052 Tw
(. Thank you very much, Senator. )Tj
-7.6791 -1 TD
(Senator Menendez. )Tj
/F7 1 Tf
9 0 0 9 187.56 185 Tm
0.0422 Tw
(STATEMENT OF SENATOR ROBERT MENENDEZ )Tj
/F1 1 Tf
10 0 0 10 157 171 Tm
0.052 Tw
(Senator M)Tj
8 0 0 7.6194 206.0392 171 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 171 Tm
0.052 Tw
(. Well, thank you, Mr. Chairman. )Tj
-9.0519 -1 TD
0.148 Tw
(First, let me say that if I was a Michigander or this industry, I )Tj
-1 -1 TD
0.07 Tw
(would not have any greater advocates than Senator Levin and Sen-)Tj
T*
0.274 Tw
(ator Stabenow. They are both passionate and eloquent, and if I )Tj
T*
0.052 Tw
(lived in Michigan, I would want them to be my Senators. )Tj
1 -1 TD
0.134 Tw
(You know, Mr. Chairman, a former chairman of General Motors )Tj
-1 -1 TD
0.164 Tw
(once quipped very famously that what is good for General Motors )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00015)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
56 0 obj
<>/ExtGState<>>>
endobj
57 0 obj
<>
endobj
58 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(12 )Tj
-15.344 -2 TD
0.124 Tw
(is good for America. And we would like to believe that is still true )Tj
0 -1.02 TD
0.148 Tw
(today, but many of us believe, unfortunately, that General Motors )Tj
T*
0.184 Tw
(has lost sight of what is good for General Motors or for America. )Tj
1 -1.02 TD
0.112 Tw
(I read through the testimony of our witnesses, and what we will )Tj
-1 -1.02 TD
0.206 Tw
(not hear is that any of the industrys problems are at the hands )Tj
T*
0.16 Tw
(of any of the witnesses who will come before us. They will tell us )Tj
T*
0.148 Tw
(that it is totally some other set of circumstances that they are af-)Tj
T*
0.19 Tw
(fected by, very similar to what mortgage lenders and brokers did )Tj
T*
0.204 Tw
(here a year ago in this very room. But I do hope that when you )Tj
0 -1.01 TD
0.224 Tw
(have an opportunity to answer questions, you will take some re-)Tj
T*
0.052 Tw
(sponsibility and work with us to find a constructive solution. )Tj
1 -1.01 TD
0.146 Tw
(Our Nation is in the midst of an energy security crisis, and our )Tj
-1 -1.01 TD
0.18 Tw
(planet is in the midst of a climate crisis. And the fact that these )Tj
T*
0.4 Tw
(twin crises would have an enormous impact on your industry )Tj
T*
0.07 Tw
(should not come as a surprise. For decades, leaders here on Capitol )Tj
T*
0.224 Tw
(Hill have asked our domestic auto manufacturers to look beyond )Tj
T*
0.16 Tw
(the next quarter and take into account the looming threats of en-)Tj
T*
0.21 Tw
(ergy and climate security. But all we have seen in response is a )Tj
T*
0.114 Tw
(concerted effort to block progress. I think we are all, frankly, look-)Tj
T*
0.104 Tw
(ing for some assurances that we will not continue to be here again )Tj
T*
0.17 Tw
(year after year lamenting the fact that our domestic auto makers )Tj
T*
0.104 Tw
(have chosen to lobby against changed regulation rather than to in-)Tj
T*
0.21 Tw
(novate and meet new circumstances. We have to make sure that )Tj
T*
0.052 Tw
(we are making a wise investment with taxpayer money. )Tj
1 -1.01 TD
0.06 Tw
(Quite simply, Mr. Chairman, I think there needs to be strings at-)Tj
-1 -1.01 TD
0.164 Tw
(tached. We need to see some type of guarantee that fuel economy )Tj
T*
0.174 Tw
(standards will continue to rise beyond the year 2020. We need to )Tj
T*
0.096 Tw
(ensure that the California waiver can be granted without spending )Tj
T*
0.172 Tw
(money by the industry in opposition to that effort. What we need )Tj
T*
0.1 Tw
(is for the Big Three to become part of the solution for energy secu-)Tj
T*
0.31 Tw
(rity and fighting global warming rather than being part of the )Tj
T*
0 Tw
(problem. )Tj
1 -1.01 TD
0.126 Tw
(That having been said, Mr. Chairman, I do worryI do worry )Tj
-1 -1.01 TD
0.104 Tw
(about protecting the workers, not those in the executive offices but )Tj
T*
0.052 Tw
(those on the manufacturing line, the suppliers, the dealers, the sev-)Tj
T*
0.104 Tw
(eral million people whose fates are intricatelyfellow Americans )Tj
T*
0.078 Tw
(who are intricately tied with this industry, and how we try to meet )Tj
T*
0.092 Tw
(this challenge of giving the assistance necessary to keep the indus-)Tj
T*
0.256 Tw
(try alive, but with the assurances that must comenot a blank )Tj
T*
0.328 Tw
(check. It must come with some assurances along the way that )Tj
T*
0.066 Tw
(hopefully can not only save the industry but move it into a new era )Tj
T*
0.052 Tw
(for both America, for those workers, and for our future. )Tj
1 -1.01 TD
0.214 Tw
(With that, Mr. Chairman, I ask that the rest of my statement )Tj
-1 -1.01 TD
0.052 Tw
(be included in the record. )Tj
1 -1.01 TD
0.268 Tw
(Chairman D)Tj
8 0 0 7.6194 217.2791 195.8 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.9508 195.8 Tm
0.268 Tw
(. I will do that. And, by the way, all the full )Tj
-8.8951 -1.01 TD
0.092 Tw
(statements of our colleagues and the witnesses and any supporting )Tj
T*
0.052 Tw
(material will be included in the record. )Tj
1 -1.01 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 165.5 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 165.5 Tm
0.052 Tw
(. Senator Corker. )Tj
/F7 1 Tf
9 0 0 9 205.28 145.3 Tm
0.0422 Tw
(STATEMENT OF SENATOR BOB CORKER )Tj
/F1 1 Tf
10 0 0 10 157 131.2 Tm
0.052 Tw
(Senator C)Tj
8 0 0 7.6194 203.8193 131.2 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 131.2 Tm
0.052 Tw
(. Thank you, Mr. Chairman, and I thank our wit-)Tj
-8.6595 -1.01 TD
0.15 Tw
(nesses for being here today and certainly the Senator from Michi-)Tj
T*
0 Tw
(gan. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00016)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
59 0 obj
<>/ExtGState<>>>
endobj
60 0 obj
<>
endobj
61 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(13 )Tj
-14.344 -2 TD
0.104 Tw
(In listening to the opening statements by many and just reading )Tj
-1 -0.99 TD
0.152 Tw
(the tea leaves, my sense is that probably nothing is going to hap-)Tj
T*
0.076 Tw
(pen this week and that this is sort of the beginning of a loan appli-)Tj
0 -1 TD
0.164 Tw
(cation, if you will, or an application for equity injection. This is a )Tj
T*
0.052 Tw
(beginning, and, in fact, probably in January you will be back. )Tj
1 -1 TD
0.072 Tw
(I know most of us have read the data on the companies and real-)Tj
-1 -1 TD
0.12 Tw
(ize, by the way, that these companies are not homogeneous. These )Tj
T*
0.1 Tw
(are three very different companies that have very different criteria )Tj
T*
0.192 Tw
(that they are dealing with. And I hope that today you will begin )Tj
T*
0.14 Tw
(giving us a glimpse as to what each of the companies individually )Tj
T*
0.188 Tw
(are doing. I realize that Ford may be in better shape to do some )Tj
T*
0.16 Tw
(things they have done a few years ago. But I hope you will begin )Tj
T*
0.052 Tw
(doing that. )Tj
1 -1 TD
0.202 Tw
(I would ask the witnesses, since in essence you are asking the )Tj
-1 -1 TD
0.16 Tw
(American public for a loan or equity or whatever it might end up )Tj
T*
0.194 Tw
(being, I would ask you to be realistic with us. I know that there )Tj
T*
0.13 Tw
(has been continual talk about how Chapter 11 just does not work. )Tj
T*
0.108 Tw
(We realize there are lots of legacy issues that handicap these com-)Tj
T*
0.052 Tw
(panies, and we understand that. )Tj
1 -1 TD
0.226 Tw
(I would like for each of you during your testimony to walk us )Tj
-1 -1 TD
0.11 Tw
(through why that does not work and why you would not be asking )Tj
T*
0.112 Tw
(for money from the Federal Government for a prepackaged reorga-)Tj
T*
0.096 Tw
(nization. I actually wonder, somewhat facetiously, if in your board-)Tj
T*
0.138 Tw
(rooms you are not hoping that we will turn down this so that you )Tj
T*
0.176 Tw
(have that as an option that you might emerge more strongly and )Tj
T*
0.052 Tw
(focus on those things that you do well. )Tj
1 -1 TD
0.184 Tw
(So I hope you will talk about all those things. I realize that in )Tj
-1 -1 TD
0.156 Tw
(all likelihood this is the beginning. I think each of you know that )Tj
T*
0.062 Tw
(I am fairly skeptical in looking at this, but I do thank you for being )Tj
T*
0.142 Tw
(here, and I actually hopeI feel for you in the fact that hopefully )Tj
T*
0.176 Tw
(you are carrying the burden of responsibility of all the employees )Tj
T*
0.156 Tw
(and the many distributors across the country that are involved in )Tj
T*
0.052 Tw
(marketing your products. )Tj
1 -1 TD
(Thank you for being here. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 301.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 301.2 Tm
0.052 Tw
(. Thank you very much, Senator. )Tj
-7.6791 -1 TD
(Senator Brown. )Tj
/F7 1 Tf
9 0 0 9 193.46 275 Tm
0.0422 Tw
(STATEMENT OF SENATOR SHERROD BROWN )Tj
/F1 1 Tf
10 0 0 10 157 261 Tm
0.166 Tw
(Senator B)Tj
8 0 0 7.6194 204.9593 261 Tm
0 Tw
(ROWN)Tj
10 0 0 10 231.3269 261 Tm
0.166 Tw
(. Thank you, Mr. Chairman, and thanks to Sen-)Tj
-8.4327 -1 TD
0.158 Tw
(ator Stabenow and Senator and Congressman Levin both for your )Tj
T*
0.052 Tw
(advocacy every day here. )Tj
1 -1 TD
0.23 Tw
(The American auto industry needs our help and needs it now. )Tj
-1 -1 TD
0.2 Tw
(The surest way to turn todays recession into a depression would )Tj
T*
0.08 Tw
(be to let this industry founder. Like the banking industry, the auto )Tj
T*
0.074 Tw
(companies have made some poor decisions, but they have had plen-)Tj
T*
0.052 Tw
(ty of help. )Tj
1 -1 TD
0.072 Tw
(In 2005, for example, the House and Senate decided against rais-)Tj
-1 -1 TD
0.258 Tw
(ing fuel efficiency standards. Most of the Members of this Com-)Tj
T*
0.244 Tw
(mittee took the position that CAFE standards were fine as they )Tj
T*
0.148 Tw
(stood. I wish the Federal Government had acted sooner on CAFE, )Tj
T*
0.192 Tw
(but we didnt and so we are on shaky ground if we now shake a )Tj
T*
0.052 Tw
(finger at Detroit for being ill-prepared for $4 gasoline. )Tj
1 -1 TD
0.162 Tw
(I wish the government in Washington had acted a lot sooner to )Tj
-1 -1 TD
0.12 Tw
(address the housing crisis, too. It was only a little over a year ago )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00017)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
62 0 obj
<>/ExtGState<>>>
endobj
63 0 obj
<>
endobj
64 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(14 )Tj
-15.344 -2 TD
0.26 Tw
(that the Bush administration began to realize we had a serious )Tj
0 -1 TD
0.08 Tw
(problem on our hands. But before that, through all of 2007, the ad-)Tj
T*
0.088 Tw
(ministration and boosters in the housing industry told us the prob-)Tj
T*
0.224 Tw
(lem was largely contained. It was contained in their view to the )Tj
T*
0.124 Tw
(subprime mortgage market and to States like Ohio, Michigan, and )Tj
T*
0.068 Tw
(Indiana. If you set aside those three States, according to one econo-)Tj
T*
0.052 Tw
(mist, the market was doing just fine. )Tj
1 -1 TD
0.23 Tw
(We have seen the success of that approach. Before long, every )Tj
-1 -1 TD
0.072 Tw
(State in the Nation felt the impact and every sector of the economy )Tj
T*
0.094 Tw
(was dragged down by the troubles in housing. It spread from Main )Tj
T*
0.052 Tw
(Street to Wall Street. )Tj
1 -1 TD
0.318 Tw
(But that mistaken approach is exactly what some of my col-)Tj
-1 -1 TD
0.294 Tw
(leagues are suggesting we take in response to the crisis in the )Tj
T*
0.126 Tw
(American automotive industry. Sure, the biggest and the most im-)Tj
T*
0.316 Tw
(mediate impact will be in places like Ohio, places like Senator )Tj
T*
0.098 Tw
(Stabenows Michigan, places like Senator Bayhs Indiana. But auto )Tj
T*
0.246 Tw
(suppliers and dealers and related industry, from Chuck Eddy in )Tj
T*
0.176 Tw
(Austintown, Ohio, to suppliers in every corner of our Nation, will )Tj
T*
0.168 Tw
(soon feel the impact. The industry is woven into the fabric of our )Tj
T*
0.218 Tw
(economy every bit as much as Lehman Brothers and AIG or the )Tj
T*
0.2 Tw
(three banks that testified before us in this Committee last week. )Tj
1 -1 TD
0.192 Tw
(Each one of these three banks that testified last week received )Tj
-1 -1 TD
0.182 Tw
($25 billion under the Emergency Economic Stabilization Act. If it )Tj
T*
0.164 Tw
(makes sense to give one bank $25 billion, we can certainly invest )Tj
T*
0.134 Tw
(the same amount to save the entire domestic automobile industry. )Tj
1 -1 TD
0.312 Tw
(As we heard last week, the banks may or may not lend the )Tj
-1 -1 TD
0.27 Tw
(money anytime soon. They may or may not use it to buy other )Tj
T*
0.172 Tw
(banks. They may or may not use it for executive bonuses or divi-)Tj
T*
0.09 Tw
(dends. I dont know what those companies are going to do with the )Tj
T*
0.114 Tw
(funds they receive from taxpayers and we dont know what impact )Tj
T*
0.166 Tw
(it will have, but I do know what the American auto industry will )Tj
T*
0.052 Tw
(do with the loans it seeks. )Tj
1 -1 TD
0.156 Tw
(It will build cars using parts from every State in the Nation. It )Tj
-1 -1 TD
0.304 Tw
(will provide good jobs to hundreds of thousands of middle-class )Tj
T*
0.124 Tw
(families in places like Lordstown and Toledo and Sharonville. And )Tj
T*
0.166 Tw
(it will support a decent retirement for a million senior citizens in )Tj
T*
0.052 Tw
(every corner of this Nation. )Tj
1 -1 TD
0.292 Tw
(Nobody wants to write this industry or any industry a blank )Tj
-1 -1 TD
0.266 Tw
(check, and if Detroit were indifferent to the challenges it faced, )Tj
T*
0.156 Tw
(then I dont think it would have a very good case to make. But if )Tj
T*
0.286 Tw
(you need evidence that Detroit gets it, look at last years labor )Tj
T*
0.226 Tw
(agreement. Labor and management made unprecedented changes )Tj
T*
0.088 Tw
(to bring their costs in line with the competition. They didnt antici-)Tj
T*
0.294 Tw
(pate the current economic environment any more than did Sec-)Tj
T*
0.052 Tw
(retary Paulson or Alan Greenspan. )Tj
1 -1 TD
0.134 Tw
(But if failing to see the future foreclosed access to Federal help, )Tj
-1 -1 TD
0.192 Tw
(the line of applicants would be very, very short. If that were our )Tj
T*
0.094 Tw
(standard, the government wouldnt aid the victims of flood or fires. )Tj
T*
0.256 Tw
(But we dont turn a blind eye to people who live near the Gulf )Tj
T*
0.052 Tw
(Coast or in the California hills. We help them. )Tj
1 -1 TD
0.112 Tw
(Economically and politically, we are the United States, not some )Tj
-1 -1 TD
0.264 Tw
(confederation of islands, and we must be united in rebuilding a )Tj
T*
0.22 Tw
(strong and vibrant manufacturing sector, a sector that has with-)Tj
T*
0.076 Tw
(ered over the past decade as we tried to build one Potemkin village )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00018)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
65 0 obj
<>/ExtGState<>>>
endobj
66 0 obj
<>
endobj
67 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(15 )Tj
-15.344 -2 TD
0.252 Tw
(after another. Our economy cant make it on mouse clicks alone )Tj
0 -0.99 TD
0.058 Tw
(and we cannot live by just lending to one another. We need to build )Tj
T*
0.098 Tw
(real things, and that is what Detroit does. Helping bankers is fine, )Tj
T*
0.144 Tw
(but we have it exactly backwards if we help those who dont need )Tj
T*
0.052 Tw
(it and we ignore those who do. )Tj
1 -1 TD
(Thank you, Mr. Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 581.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 581.4 Tm
0.052 Tw
(. Thank you, Senator Brown. )Tj
-7.6791 -1 TD
(Senator Allard. )Tj
/F7 1 Tf
9 0 0 9 198.72 555.2 Tm
0.0422 Tw
(STATEMENT OF SENATOR WAYNE ALLARD )Tj
/F1 1 Tf
10 0 0 10 157 541.2 Tm
0.088 Tw
(Senator A)Tj
8 0 0 7.6194 204.1793 541.2 Tm
0 Tw
(LLARD)Tj
10 0 0 10 232.6269 541.2 Tm
0.088 Tw
(. Mr. Chairman, thank you for holding this hear-)Tj
-8.5627 -1 TD
0.158 Tw
(ing. I am just sitting here and thinking, as a businessman, some-)Tj
T*
0.078 Tw
(body has handed me the payroll. I have had to compete against my )Tj
T*
0.152 Tw
(own tax dollars. And I sit here thinking, we dont have the entire )Tj
T*
0.19 Tw
(automobile industry here before us. I mean, we have a section of )Tj
T*
0.214 Tw
(the automobile industry and workers who are able to survive, at )Tj
T*
0.2 Tw
(least show a better balance than what we are seeing here before )Tj
T*
0 Tw
(us. )Tj
1 -1 TD
0.346 Tw
(I think I know how they must feel if they have to compete )Tj
-1 -1 TD
0.146 Tw
(against their own taxpayer dollars if we give them a subsidy, and )Tj
T*
0.08 Tw
(my question is, are we really serving the consumers of this country )Tj
T*
0.19 Tw
(a real service if we take one sector and give them a subsidy and )Tj
T*
0.24 Tw
(another sector of the automobile industry and dont give them a )Tj
T*
0.112 Tw
(subsidy and we put those workers, we put those companies at risk )Tj
T*
0.34 Tw
(because they have to compete against companies that are sub-)Tj
T*
0.052 Tw
(sidized by the tax dollar. )Tj
1 -1 TD
0.156 Tw
(So I am glad we are holding the hearing and hope that we will )Tj
-1 -1 TD
0.172 Tw
(have a genuinely open and deliberative legislative process on this )Tj
T*
0.222 Tw
(matter. To do otherwise often produces some of Congresss worst )Tj
T*
0.052 Tw
(legislation and generally fails to address the root causes. )Tj
1 -1 TD
0.1 Tw
(Based on the testimony submitted by the witnesses, it is unclear )Tj
-1 -1 TD
0.124 Tw
(that we have even identified the single root cause. Thus, I am un-)Tj
T*
0.128 Tw
(sure how we can be confident that the proposed solution will have )Tj
T*
0.148 Tw
(any effect. While we will hear about the dire consequences should )Tj
T*
0.168 Tw
(the domestic auto industry fail, it should be even worse if the in-)Tj
T*
0.116 Tw
(dustry fails and our Nation faces those consequences after pouring )Tj
T*
0.052 Tw
(tens of billions of dollars of taxpayer money into the industry. )Tj
1 -1 TD
0.162 Tw
(So I thank the witnesses for being here today and look forward )Tj
-1 -1 TD
0.342 Tw
(to their testimony and thank you, Mr. Chairman and Ranking )Tj
T*
0.052 Tw
(Member Shelby, for holding this hearing. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 241.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 241.2 Tm
0.052 Tw
(. Thank you very much, Senator. )Tj
-7.6791 -1 TD
(Senator Bob Casey. )Tj
/F7 1 Tf
9 0 0 9 193.74 215 Tm
0.0422 Tw
(STATEMENT OF SENATOR ROBERT P. CASEY )Tj
/F1 1 Tf
10 0 0 10 157 201 Tm
0.16 Tw
(Senator C)Tj
8 0 0 7.6194 204.8993 201 Tm
0 Tw
(ASEY)Tj
10 0 0 10 227.1229 201 Tm
0.16 Tw
(. Mr. Chairman, thank you very much for calling )Tj
-8.0123 -1 TD
0.068 Tw
(this hearing, especially at this time in our history when we are fac-)Tj
T*
0.06 Tw
(ing so many economic challenges. We want to thank Senator Stabe-)Tj
T*
0.084 Tw
(now for being with us today and for listening to our statements be-)Tj
T*
0.394 Tw
(fore she gives her testimony, Senator Levin and Congressman )Tj
T*
0.052 Tw
(Levin, and the witnesses. )Tj
1 -1 TD
0.194 Tw
(One of the questions I think we have to ask today, in addition )Tj
-1 -1 TD
0.23 Tw
(to the important questions we will pose to the witnesses, one or )Tj
T*
0.184 Tw
(two questions, at least, threshold questions. One is, what are the )Tj
T*
0.096 Tw
(consequences of doing nothing today, or this week, I should say, as )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00019)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
68 0 obj
<>/ExtGState<>>>
endobj
69 0 obj
<>
endobj
70 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(16 )Tj
-15.344 -2 TD
0.142 Tw
(opposed to doing something down the road? That is a question we )Tj
0 -1.02 TD
0.206 Tw
(have to ponder. And what are the consequences of doing nothing )Tj
T*
0.122 Tw
(at all? If the Congress takes a position that these companies must )Tj
T*
0.052 Tw
(survive or not on their own, what are the consequences of that? )Tj
1 -1.02 TD
0.312 Tw
(We have seen the evidence in the public record already, and )Tj
-1 -1.02 TD
0.122 Tw
(these are not exaggerated numbers. We know that potentially mil-)Tj
T*
0.204 Tw
(lions of jobs are at risk across America. I know in Pennsylvania, )Tj
T*
0.062 Tw
(for example, even though the job loss number might be in the thou-)Tj
T*
0.106 Tw
(sands, maybe not like in some other States where it would be tens )Tj
T*
0.096 Tw
(of thousands or more, even in Pennsylvania, we cant afford to lose )Tj
T*
0.184 Tw
(thousands of jobs. When you look at September 2007 versus Sep-)Tj
T*
0.164 Tw
(tember 2008 in our State, the unemployment number is up above )Tj
T*
0.248 Tw
(90,000 jobs. We cannot afford thousands of jobs lost in Pennsyl-)Tj
T*
0 Tw
(vania. )Tj
1 -1.02 TD
0.06 Tw
(I have to think of the history of my own State. The steel industry )Tj
-1 -1.02 TD
0.104 Tw
(faced an enormous challenge a generation ago and the government )Tj
T*
0.064 Tw
(did not help. It did not help in a substantial way. It helped in some )Tj
T*
0.166 Tw
(ways, but not in the way that we are contemplating today. And I )Tj
T*
0.118 Tw
(wonder, and I leave it to the economic historians, what if the Fed-)Tj
T*
0.194 Tw
(eral Government acted in a prudent way at that time, improving )Tj
T*
0.268 Tw
(technology, improving the operations of those companies? Maybe )Tj
T*
0.198 Tw
(Western Pennsylvania would not have had their job numbers cut )Tj
T*
0.18 Tw
(in halfin halfin one region of one State. I wonder about that, )Tj
T*
0.202 Tw
(and I dont think we should make the same mistake again when )Tj
T*
0.052 Tw
(it comes to our auto industry. )Tj
1 -1.02 TD
0.146 Tw
(We know that some economists believe that what is now, in my )Tj
-1 -1.02 TD
0.09 Tw
(judgment, definitively a recession could become a depression. Some )Tj
T*
0.13 Tw
(would dispute that, but I think that the evidence is pretty clear it )Tj
T*
0.082 Tw
(could head in that direction if these companies fail in the next cou-)Tj
T*
0.124 Tw
(ple of months. Even our national security could be at risk in some )Tj
T*
0.06 Tw
(way or another because of the part suppliers that supply both auto-)Tj
T*
0.052 Tw
(mobiles and weapons and defense materiel. )Tj
1 -1.02 TD
0.24 Tw
(So I think the country now is at a crossroads and I think we )Tj
-1 -1.02 TD
0.212 Tw
(have to take a couple of steps. First of all, I believe that now is )Tj
T*
0.15 Tw
(the time to finally transform our economy into a greener one that )Tj
T*
0.314 Tw
(is more energy efficient. Now is also the time to invest in the )Tj
T*
0.186 Tw
(American worker and in our children so we can continue to have )Tj
T*
0.142 Tw
(the most productive workforce in the world. And third, now is the )Tj
T*
0.084 Tw
(time to modernize our financial regulations so the Nation of spend-)Tj
T*
0.052 Tw
(ers can become a Nation of savers. )Tj
1 -1.02 TD
0.316 Tw
(Manufacturers and those who are representing manufacturers )Tj
-1 -1.02 TD
0.074 Tw
(here today know this, and I think it is important in your testimony )Tj
T*
0.162 Tw
(you demonstrate that you understand and know this and put evi-)Tj
T*
0.16 Tw
(dence on the table that you understand this. You have to change. )Tj
T*
0.094 Tw
(Some have. Some have changed more than others. But you have to )Tj
T*
0.078 Tw
(change and you have to become focused enough on change that you )Tj
T*
0.284 Tw
(are helping our economy, the United States economy, transform )Tj
T*
0.178 Tw
(itself to a green economy. That means efficiency. That means im-)Tj
T*
0.052 Tw
(provements in technology. )Tj
1 -1.01 TD
0.316 Tw
(You have to demonstrate that to us if the Congress and the )Tj
-1 -1.01 TD
0.144 Tw
(American people are going to give you the support you are asking )Tj
T*
0.254 Tw
(for. You have to improve your operations and you have to dem-)Tj
T*
0.278 Tw
(onstrate that. I would argue you should have to demonstrate it )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00020)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
71 0 obj
<>/ExtGState<>>>
endobj
72 0 obj
<>
endobj
73 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(17 )Tj
-15.344 -2 TD
0.168 Tw
(every single month before money goes out the door from the Fed-)Tj
0 -0.99 TD
0.052 Tw
(eral Government. )Tj
1 -0.99 TD
0.094 Tw
(I think that workers have led the way on this in terms of under-)Tj
-1 -1 TD
0.074 Tw
(standing what is at stake for the industry. Workers have made tre-)Tj
T*
0.408 Tw
(mendous concessions, coming together with management to do )Tj
T*
0 Tw
(that. )Tj
1 -1 TD
0.25 Tw
(But I really believe that one way to hold these companies ac-)Tj
-1 -1 TD
0.362 Tw
(countable, one way to have taxpayers have a sense that their )Tj
T*
0.114 Tw
(money is being spent prudently and judiciously is to have monthly )Tj
T*
0.162 Tw
(reporting so that the release of any taxpayer dollars would be ac-)Tj
T*
0.224 Tw
(companied by not just a broad justification, and the bill that we )Tj
T*
0.27 Tw
(have before us has some planning features, but I think the fol-)Tj
T*
0.052 Tw
(lowing should be part of what we need. )Tj
1 -1 TD
0.174 Tw
(First of all, information to the relevant committees in Congress )Tj
-1 -1 TD
0.132 Tw
(for, number one, cash and other sources of funding for current op-)Tj
T*
0 Tw
(erations. )Tj
1 -1 TD
0.052 Tw
(Number two, expected monthly expenditures by category. )Tj
T*
0.098 Tw
(Number three, plans to reduce cash needs and improve revenues )Tj
-1 -1 TD
0.052 Tw
(in the immediate future. )Tj
1 -1 TD
0.496 Tw
(And Number four, in subsequent months, a report on the )Tj
-1 -1 TD
0.096 Tw
(progress made toward meeting previously established cost and rev-)Tj
T*
0.052 Tw
(enue goals. )Tj
1 -1 TD
0.124 Tw
(That kind of accountability would go a long way to ensuring the )Tj
-1 -1 TD
0.196 Tw
(American people that the money that they are spending, $25 bil-)Tj
T*
0.154 Tw
(lion, if that is the number that is arrived at to help these compa-)Tj
T*
0.198 Tw
(nies by way of a bridge loan, to get from here to there would be )Tj
T*
0.052 Tw
(spent in an appropriate way. )Tj
1 -1 TD
0.18 Tw
(I have to say that even though $25 billion is a lot of money, it )Tj
-1 -1 TD
0.056 Tw
(still only represents 4 percent of the $700 billion that this Congress )Tj
T*
0.162 Tw
(approved to help the financial institutions, and when this govern-)Tj
T*
0.212 Tw
(ment can come up with $150 billion for AIG, not to mention the )Tj
T*
0.15 Tw
(other help that it has provided, I think we can help the backbone )Tj
T*
0.342 Tw
(of our manufacturing economy represented by these companies. )Tj
T*
0.058 Tw
(But the companies have to demonstrate here today and on an ongo-)Tj
T*
0.138 Tw
(ing basis that they get it, that they understand the stakes for our )Tj
T*
0.446 Tw
(economy, but they also understand the sacrifice of taxpayers. )Tj
T*
0.052 Tw
(Thank you. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 271.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 271.2 Tm
0.052 Tw
(. Thank you, Senator, very much. )Tj
-7.6791 -1 TD
(Senator Bennett. )Tj
/F7 1 Tf
9 0 0 9 186.16 245 Tm
0.0422 Tw
(STATEMENT OF SENATOR ROBERT F. BENNETT )Tj
/F1 1 Tf
10 0 0 10 157 231 Tm
0.118 Tw
(Senator B)Tj
8 0 0 7.6194 204.4793 231 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.7428 231 Tm
0.118 Tw
(. Thank you, Mr. Chairman. As I have listened )Tj
-9.2743 -1 TD
0.154 Tw
(to the executives of the companies that have come to see me, and )Tj
T*
0.2 Tw
(I assume they have come to see a number of the other Members )Tj
T*
0.282 Tw
(of the Committee, I am fully satisfied that they are very much )Tj
T*
0.184 Tw
(aware of all that they have to do in order to survive and I wont )Tj
T*
0.08 Tw
(give them a lecture on that score. I think they understand it better )Tj
T*
0.052 Tw
(than I do. )Tj
1 -1 TD
0.146 Tw
(The primary problem as I see it is overcapacity in the industry. )Tj
-1 -1 TD
0.118 Tw
(They have the ability to produce, what, 17 million cars a year and )Tj
T*
0.286 Tw
(they are only selling ten. They have to do something to reduce )Tj
T*
0.112 Tw
(their capacity, and they are doing that as rapidly as they can. But )Tj
T*
0.084 Tw
(in the process, they are burning through cash in a way that imper-)Tj
T*
0.052 Tw
(ils their survival. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00021)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
74 0 obj
<>/ExtGState<>>>
endobj
75 0 obj
<>
endobj
76 0 obj
<>
endobj
77 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(18 )Tj
-14.344 -2 TD
0.214 Tw
(So I am in favor of trying to find a way to provide them with )Tj
-1 -0.99 TD
0.17 Tw
(the cash that will allow them to continue. I agree absolutely that )Tj
T*
0.2 Tw
(we need some kind of accountability to make sure they continue, )Tj
0 -1 TD
0.148 Tw
(that they dont take the cash to say, oh, well, we can stop our at-)Tj
T*
0.21 Tw
(tempts to reduce capacity. I am not quite sure about bankruptcy )Tj
T*
0.14 Tw
(as the way to accomplish this. I am unburdened with a legal edu-)Tj
T*
0.184 Tw
(cation, as you know, so I dont understand all of the implications )Tj
T*
0.052 Tw
(of that. )Tj
1 -1 TD
0.108 Tw
(But I believe we have to do something to see to it that they sur-)Tj
-1 -1 TD
0.134 Tw
(vive while they are on this terribly difficult challenge of turning a )Tj
T*
0.24 Tw
(multi-billion-dollar industry into a smaller multi-billion-dollar in-)Tj
T*
0.244 Tw
(dustry in a very short period of time. Everybody is going to get )Tj
T*
0.12 Tw
(hurt in the process. Executives are going to lose their jobs. Middle )Tj
T*
0.254 Tw
(management is going to lose their jobs. And hourly workers are )Tj
T*
0.194 Tw
(going to have to have their contracts renegotiated downward and )Tj
T*
0.052 Tw
(some of them are going to lose their jobs. )Tj
1 -1 TD
0.12 Tw
(And any thought that we in the Congress can prevent that from )Tj
-1 -1 TD
0.192 Tw
(happening is wishful thinking. All we can do is provide as soft a )Tj
T*
0.14 Tw
(landing as possible, and I hope we can find a way to craft the de-)Tj
T*
0.11 Tw
(tails of that landing in the timeframe that we have. I fear that we )Tj
T*
0.116 Tw
(may not, but I hope that we understand the importance of what it )Tj
T*
0.052 Tw
(is we are trying to do. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 421.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 421.2 Tm
0.052 Tw
(. Thank you, Senator, very much. )Tj
-7.6791 -1 TD
(Senator Tester. )Tj
/F7 1 Tf
9 0 0 9 207.3 395 Tm
0.0422 Tw
(STATEMENT OF SENATOR JON TESTER )Tj
/F1 1 Tf
10 0 0 10 157 381 Tm
0.302 Tw
(Senator T)Tj
8 0 0 7.6194 205.7693 381 Tm
0 Tw
(ESTER)Tj
10 0 0 10 233.4729 381 Tm
0.302 Tw
(. Thank you, Mr. Chairman, Ranking Member )Tj
-8.6473 -1 TD
0.13 Tw
(Shelby, and thank you for the folks who are about to testify. Over )Tj
T*
0.186 Tw
(the next many months, we will be dealing with a lot of economic )Tj
T*
0.142 Tw
(problems that this country has and I dont think there is anybody )Tj
T*
0.102 Tw
(that has a silver bullet on how to get us out of this situation other )Tj
T*
0.2 Tw
(than the fact that we need to invest in infrastructure, roads and )Tj
T*
0.154 Tw
(highways and water and sewer systems and education and health )Tj
T*
0.052 Tw
(care and energy. )Tj
1 -1 TD
0.128 Tw
(About 7 weeks ago, Secretary Paulson came in and handed us a )Tj
-1 -1 TD
0.102 Tw
(bill and said, if you dont pass this in 3 days, we are going to have )Tj
T*
0.13 Tw
(an economic meltdown. I dont like to be behind the gun and I ex-)Tj
T*
0.052 Tw
(pressed that to him at that point in time. )Tj
1 -1 TD
0.17 Tw
(At this point in time, we have the auto industry in here, and I )Tj
-1 -1 TD
0.082 Tw
(might add while I am saying this, I get contacts from a lot of folks. )Tj
T*
0.134 Tw
(The timber industry is upside down right now. A mining company )Tj
T*
0.274 Tw
(just called me from Montana. They are laying off 21 percent of )Tj
T*
0.216 Tw
(their employees in that company in Montana because of the eco-)Tj
T*
0.052 Tw
(nomic turndown. Everybody is in trouble. )Tj
1 -1 TD
0.19 Tw
(But we have the auto industry here today, and I talked to one )Tj
-1 -1 TD
0.138 Tw
(of your agents on the ground who sells cars and said that I didnt )Tj
T*
0.058 Tw
(know if this was going to pass at this point in time. He said, I dont )Tj
T*
0.09 Tw
(know if they are going to make it until January. So once again, we )Tj
T*
0.052 Tw
(are up against the gun. )Tj
1 -1 TD
0.15 Tw
(And as I said before, I think everybody wants to try to find the )Tj
-1 -1 TD
0.194 Tw
(magic key that pulls us out of this, but we have to look at some )Tj
T*
(of the past performance. And I will tell you that one of my vices )Tj
T*
0.206 Tw
(in this world is that I like iron. I like iron a lot. In fact, 5 days )Tj
T*
0.114 Tw
(ago, I bought one of your pieces of iron. I traded off my 2004 pick- )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00022)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
78 0 obj
<>/ExtGState<>>>
endobj
79 0 obj
<>
endobj
80 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(19 )Tj
-15.344 -2 TD
0.184 Tw
(up, and to be honest with you, I had a hard time finding a pick- )Tj
0 -0.99 TD
(up that had a number one leading off the VIN number, an outfit )Tj
T*
0.106 Tw
(that was built in the United States. There were a lot built in Can-)Tj
0 -1 TD
0.094 Tw
(ada, a lot built in Mexico, but very few could I find that were built )Tj
T*
0.098 Tw
(here. That distresses me, because we need to encourage our manu-)Tj
T*
0.052 Tw
(facturing base. )Tj
1 -1 TD
0.132 Tw
(But what even more distresses me, and I heard folks talk about )Tj
-1 -1 TD
0.188 Tw
(aware of what we need to do, the outfit I traded out was a 2004 )Tj
T*
0.192 Tw
(for a new one. I took a loss and mileage of three to four miles a )Tj
T*
0.188 Tw
(gallon by making that trade. That is ridiculous. And we ask our-)Tj
T*
0.096 Tw
(selves, why, why, why is the industry going down? Folks, you need )Tj
T*
0.052 Tw
(to look at yourselves and make those business decisions. )Tj
1 -1 TD
0.268 Tw
(Now we are here with a $25 billion bailout, and compared to )Tj
-1 -1 TD
0.21 Tw
($700 billion, it is somewhat of a pittance, but $25 billion, to put )Tj
T*
0.178 Tw
(it in perspective, is about 8 years of Montanas budget. So it is a )Tj
T*
0.182 Tw
(fair amount of dough. And we need to know, if we are coming in )Tj
T*
0.082 Tw
(to bail you out, are things going to change? Are we going to get de-)Tj
T*
0.052 Tw
(cent mileage out of these vehicles? )Tj
1 -1 TD
0.184 Tw
(You have a dependable vehicle. I am not one of those that will )Tj
-1 -1 TD
0.076 Tw
(say that any one of you make a vehicle that is not dependable. You )Tj
T*
0.218 Tw
(do. But is your business plan for the future going to offer some-)Tj
T*
0.276 Tw
(thing that the American people can afford to buy and that will )Tj
T*
0.052 Tw
(have limited operation and maintenance budgets applied to it? )Tj
1 -1 TD
0.07 Tw
(The other thing I would have to ask is, where is the money going )Tj
-1 -1 TD
0.164 Tw
(to be spent? Who is it going to be spent on? And what country is )Tj
T*
0.09 Tw
(it going to be spent in? Those are all critically important. If we are )Tj
T*
0.2 Tw
(using taxpayer dollars, from my perspective, it ought to be spent )Tj
T*
0.068 Tw
(here. If Canada wants a dollar spent up there, go see the Canadian )Tj
T*
0.138 Tw
(taxpayers. But if we are putting American taxpayer money on the )Tj
T*
0.052 Tw
(line, it ought to be spent here. )Tj
1 -1 TD
0.11 Tw
(I look forward to your testimony. I look forward to hearing what )Tj
-1 -1 TD
0.06 Tw
(you have to say as far as the future goes. I can tell you that I think )Tj
T*
0.198 Tw
(the auto industry is critically important to this Nations economy )Tj
T*
0.312 Tw
(for all the reasons that have been listed above before me here )Tj
T*
0.218 Tw
(today. But the truth is that no matter how much money we put )Tj
T*
0.056 Tw
(forth, if the business model isnt changed, you are going to fail. And )Tj
T*
0.052 Tw
(so tell us how you are going to change the business model. )Tj
1 -1 TD
(Thank you very much. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 261.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 261.2 Tm
0.052 Tw
(. Very good, Senator. )Tj
-7.6791 -1 TD
(Senator Martinez. )Tj
/F7 1 Tf
9 0 0 9 199.72 235 Tm
0.0422 Tw
(STATEMENT OF SENATOR MEL MARTINEZ )Tj
/F1 1 Tf
10 0 0 10 157 221 Tm
0.178 Tw
(Senator M)Tj
8 0 0 7.6194 207.2993 221 Tm
0 Tw
(ARTINEZ)Tj
10 0 0 10 244.6267 221 Tm
0.178 Tw
(. Chairman, thank you very much, and I will )Tj
-9.7627 -1 TD
0.216 Tw
(be very brief because I believe I am all that stands between the )Tj
T*
0.052 Tw
(panel and the )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 191 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 191 Tm
0.052 Tw
(. No, no, there are a couple more. )Tj
-7.6791 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 181 Tm
0 Tw
(ARTINEZ)Tj
10 0 0 10 243.3667 181 Tm
0.052 Tw
(. Oh, is that right? OK. I will still be brief. )Tj
-8.6367 -1 TD
0.078 Tw
(I have heard, Mr. Chairman, a lot of consensus around the table. )Tj
-1 -1 TD
0.258 Tw
(We have talked an awful lot about the understanding that is, I )Tj
T*
0.288 Tw
(think, acknowledged by us all that the business model of these )Tj
T*
0.184 Tw
(companies is a failed model and that currently they are not on a )Tj
T*
0.088 Tw
(sustainable path and that the cash-flow situation is such that even )Tj
T*
0.16 Tw
(with $25 billion, it may be February before there is a cataclysmic )Tj
T*
0.052 Tw
(failure again. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00023)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
81 0 obj
<>/ExtGState<>>>
endobj
82 0 obj
<>
endobj
83 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(20 )Tj
-14.344 -2 TD
0.08 Tw
(So at the end of the day, I would love to see us, and I agree with )Tj
-1 -1.02 TD
0.054 Tw
(my colleague, Senator Corker, that it looks to me like we are poised )Tj
T*
0.064 Tw
(to stand clear on our positions but get nothing done, and the Amer-)Tj
T*
0.232 Tw
(ican people are tired of this. They want to see the Congress get )Tj
T*
0.224 Tw
(things done, things that are important. No one wants to see the )Tj
T*
0.238 Tw
(American automobile industry fail. But equally, no one wants to )Tj
T*
0.058 Tw
(see the taxpayer dollars put at risk in an investment that is at best )Tj
T*
0.052 Tw
(risky and perhaps destined to fail. )Tj
1 -1.02 TD
0.184 Tw
(So what assurances will you give us that you are putting forth )Tj
-1 -1.01 TD
0.164 Tw
(a business model that can be sustained and that, in fact, $25 bil-)Tj
T*
0.078 Tw
(lion is going to make a difference, that it is going to be a difference )Tj
T*
0.1 Tw
(maker? I personally believe that the TARP money is meant for the )Tj
T*
0.116 Tw
(financial institutions. That was the problem we were addressing it )Tj
T*
0.104 Tw
(to. And the incoming administration, there will be not more oppor-)Tj
T*
0.182 Tw
(tunities to talk about what the Bush administration did or didnt )Tj
T*
0.11 Tw
(do. There will be a new administration and it will be their respon-)Tj
T*
0.138 Tw
(sibility to try to keep the financial institutions afloat. That money )Tj
T*
0.052 Tw
(is going to be needed for that. )Tj
1 -1.01 TD
0.242 Tw
(We already have given $25 billion to the auto industry in the )Tj
-1 -1.01 TD
0.206 Tw
(Section 136 program under the energy bill that we did. Why not )Tj
T*
0.166 Tw
(take that money and utilize it for this purpose? It is as if the re-)Tj
T*
0.212 Tw
(modeling of the home for decorative purposes can wait while the )Tj
T*
0.052 Tw
(structural problems with the roof are taken care of. )Tj
1 -1.01 TD
0.208 Tw
(This is an emergency we are looking at today, it seems to me. )Tj
-1 -1.01 TD
0.164 Tw
(There are ways in which we can help these companies to be on a )Tj
T*
0.2 Tw
(sustainable model if you can give us those assurances, and there )Tj
T*
0.18 Tw
(is a way to get some help. I am not against helping the industry )Tj
T*
0.186 Tw
(stay afloat. I am not against seeing these workers continue to be )Tj
T*
0.12 Tw
(employed. We are at a very perilous economic time. The last thing )Tj
T*
0.444 Tw
(we need is additional unemployment. But I am also realistic )Tj
T*
0.11 Tw
(enough to know that the TARP money is going to be needed for fi-)Tj
T*
0.476 Tw
(nancial institutions and that we do have a vehicle available )Tj
T*
0.052 Tw
(through the Section 136 where there could be broad consensus. )Tj
1 -1.01 TD
0.206 Tw
(So do we want to get to a solution? Do we want to insist that )Tj
-1 -1.01 TD
0.172 Tw
(these companies give us some assurance that they will be able to )Tj
T*
0.148 Tw
(make something happen with $25 billion that will be sustainable? )Tj
T*
0.09 Tw
(Or is this a downpayment on even yet more money down the road? )Tj
T*
0.206 Tw
(And why not utilize what is already available, what already was )Tj
T*
0.174 Tw
(passed by the Congress, where there can be great bipartisan con-)Tj
T*
0.052 Tw
(sensus to get something done, not just to posture. )Tj
1 -1.01 TD
(Thank you, Mr. Chairman. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 226.1 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 226.1 Tm
0.052 Tw
(. Thank you very much. )Tj
-7.6791 -1.01 TD
(Senator Bayh. )Tj
/F7 1 Tf
9 0 0 9 209.62 195.8 Tm
0.0422 Tw
(STATEMENT OF SENATOR EVAN BAYH )Tj
/F1 1 Tf
10 0 0 10 157 181.7 Tm
0.052 Tw
(Senator B)Tj
8 0 0 7.6194 203.8193 181.7 Tm
0 Tw
(AYH)Tj
10 0 0 10 221.891 181.7 Tm
0.052 Tw
(. Thank you for your leadership, Mr. Chairman. )Tj
-6.4891 -1.01 TD
0.262 Tw
(Senator Stabenow, it is good working with you again. That is )Tj
-1 -1.01 TD
0.28 Tw
(what friends and neighbors are for. But, of course, where I am )Tj
T*
0.15 Tw
(from, we kind of consider Michigan to be part of Greater Indiana, )Tj
T*
0.052 Tw
(so however we define it, it is good to be working with you. )Tj
1 -1.01 TD
0.174 Tw
(And to our witnesses, it is good to see you here today. At least )Tj
-1 -1.01 TD
0.102 Tw
(one of the witnesses, Mr. Chairman, was born in the State of Indi-)Tj
T*
0.052 Tw
(ana. Ron, it is good to see you again. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00024)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
84 0 obj
<>/ExtGState<>>>
endobj
85 0 obj
<>
endobj
86 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(21 )Tj
-14.344 -2 TD
0.084 Tw
(These are historic times. We face what the Chairman of the Fed-)Tj
-1 -1 TD
(eral Reserve has described as the greatest financial panic since the )Tj
T*
0.232 Tw
(1930s. That has contributed at least in part to the greatest real )Tj
T*
0.206 Tw
(downturn in the economy since at least the early 1980s, possibly )Tj
T*
0.15 Tw
(before then, and this is really the first significant economic down-)Tj
T*
0.256 Tw
(turn since the advent of globalization, which means rather than )Tj
T*
0.194 Tw
(having some parts of the world growing more rapidly to serve as )Tj
T*
0.162 Tw
(a countervailing force to weakness here, instead, weakness in one )Tj
T*
0.136 Tw
(part of the world begets further weakness and it runs the risks of )Tj
T*
0.052 Tw
(an accelerating downside to economic growth around the world. )Tj
1 -1 TD
0.154 Tw
(So these are unprecedented times. This has led our government )Tj
-1 -1 TD
0.278 Tw
(to take a variety of unprecedented steps, none of which will be )Tj
T*
0.148 Tw
(found in your Economics 101 textbook. We have intervened in the )Tj
T*
0.422 Tw
(banking sector, taking significant equity stakes in the largest )Tj
T*
0.138 Tw
(banks of our country. We have intervened in the insurance sector, )Tj
T*
0.218 Tw
(virtually taking over one of the largest insurance companies, not )Tj
T*
0.23 Tw
(only here but anywhere in the world. We have essentially taken )Tj
T*
0.184 Tw
(over Fannie Mae and Freddie Mac, the GSEs. We have moved to )Tj
T*
0.224 Tw
(stabilize the money market system. We are looking at the credit )Tj
T*
0.058 Tw
(card situation and student loans. We are even now debating wheth-)Tj
T*
0.2 Tw
(er entire States and municipalities may need financial assistance )Tj
T*
0.702 Tw
(from our government to weather these unprecedented and )Tj
T*
0.052 Tw
(unpredicted times. )Tj
1 -1 TD
0.122 Tw
(All of this has led to a great deal of instability, fragility, and an )Tj
-1 -1 TD
0.126 Tw
(unpredicted situation, and so my own view, Mr. Chairman, is that )Tj
T*
0.2 Tw
(there is so much that we dont know, but this is not the time to )Tj
T*
0.066 Tw
(add greater instability to this situation, more unknown to this situ-)Tj
T*
0 Tw
(ation. )Tj
1 -1 TD
0.204 Tw
(I am reminded of decisions that were made earlier in the year )Tj
-1 -1 TD
0.218 Tw
(when the decision was made to rescue Bear Stearns because the )Tj
T*
0.21 Tw
(thought was that the systemic risk was too great. Subsequent to )Tj
T*
0.14 Tw
(that, the decision was made to not intervene on behalf of Lehman )Tj
T*
0.108 Tw
(Brothers because the systemic risk was perhapswas at that time )Tj
T*
0.214 Tw
(thought to be not so great. Well, with the benefit of hindsight, I )Tj
T*
0.182 Tw
(think if we had to do it over again, perhaps that situation would )Tj
T*
0.168 Tw
(be addressed a little bit differently and the taxpayers, the overall )Tj
T*
0.142 Tw
(economy, and the financial system would have been better served. )Tj
1 -1 TD
0.064 Tw
(My point simply is, if we allow tens of thousands of ordinary peo-)Tj
-1 -1 TD
0.332 Tw
(ple to lose their jobs, thousands of small businesses, suppliers, )Tj
T*
0.242 Tw
(dealerships, and others to be imperiled, three of the largest cor-)Tj
T*
0.056 Tw
(porations in the company to run the risk of going down, it will have )Tj
T*
0.13 Tw
(unintended consequences, none of them positive and some of them )Tj
T*
0.09 Tw
(quite possibly severe. This is probably not the right moment in our )Tj
T*
0.052 Tw
(economic situation to allow such a state of affairs to take place. )Tj
1 -1 TD
0.356 Tw
(Now, having said that, as my colleagues have outlined, that )Tj
-1 -1 TD
0.348 Tw
(doesnt mean we should just do anything. I am delighted, Mr. )Tj
T*
0.234 Tw
(Chairman, that we have the major stakeholders here. All of you )Tj
T*
0.056 Tw
(need to step up and make contributions to setting this right. Other-)Tj
T*
0.136 Tw
(wise, we are not going to be able to get the job done and the help )Tj
T*
0.052 Tw
(might not be forthcoming. )Tj
1 -1 TD
0.156 Tw
(Fortunately, and the final thing I will say is that we do have a )Tj
-1 -1 TD
0.116 Tw
(model to build off of, and one of my colleagues had mentioned this )Tj
T*
0.082 Tw
(previously, and that was in 1979 with the Chrysler Corporation. In )Tj
T*
0.088 Tw
(that particular case, all the stakeholders did step up. The right de-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00025)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
87 0 obj
<>/ExtGState<>>>
endobj
88 0 obj
<>
endobj
89 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(22 )Tj
-15.344 -2 TD
0.178 Tw
(cisions were made. And the net result was that the taxpayers, or )Tj
0 -0.99 TD
0.142 Tw
(the jobs were saved. The company was saved. The taxpayers were )Tj
T*
0.2 Tw
(repaid ahead of time, and I think, Tom, you mentioned that tax-)Tj
0 -1 TD
0.17 Tw
(payers actually generated a profit. That is not why we are in the )Tj
T*
0.054 Tw
(business, but it does go to show that if we do this correctly, Senator )Tj
T*
0.052 Tw
(Stabenow, it can be a win-win-win situation. )Tj
1 -1 TD
0.234 Tw
(Mr. Chairman, I am grateful for your leadership in helping to )Tj
-1 -1 TD
0.052 Tw
(bring that outcome about. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 561.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 561.2 Tm
0.052 Tw
(. Thank you, Senator Bayh, very much. )Tj
-7.6791 -1 TD
(Our last colleague, Senator Crapo. )Tj
/F7 1 Tf
9 0 0 9 206.46 534.9999 Tm
0.0422 Tw
(STATEMENT OF SENATOR MIKE CRAPO )Tj
/F1 1 Tf
10 0 0 10 157 520.9999 Tm
0.102 Tw
(Senator C)Tj
8 0 0 7.6194 204.3193 520.9999 Tm
0 Tw
(RAPO)Tj
10 0 0 10 227.4309 520.9999 Tm
0.102 Tw
(. Thank you very much, Mr. Chairman, and I will )Tj
-8.0431 -1 TD
0.092 Tw
(be brief since I am the last thing standing between us and hearing )Tj
T*
0.052 Tw
(from our witnesses. )Tj
1 -1 TD
0.088 Tw
(I just want to reiterate a couple of points that have already been )Tj
-1 -1 TD
0.216 Tw
(made. The first is, I am very concerned about process. While we )Tj
T*
0.128 Tw
(are holding this hearing, and I appreciate very much the fact that )Tj
T*
0.146 Tw
(we are holding the hearing, the reality is that the legislation that )Tj
T*
0.058 Tw
(we are going to vote on has been drafted already and is on the floor )Tj
T*
0.06 Tw
(of the Senate. Now, as one of my colleagues has already mentioned, )Tj
T*
0.124 Tw
(it may be that this is just the first step and that tomorrows votes )Tj
T*
0.18 Tw
(are simply one of the steps in the process before we really get to )Tj
T*
0.052 Tw
(the legislation that will be more seriously considered by the Senate. )Tj
1 -1 TD
0.116 Tw
(But my hope is that in some way, we can utilize this hearing as )Tj
-1 -1 TD
0.07 Tw
(a part of the real process where we develop legislation in this Com-)Tj
T*
0.234 Tw
(mittee as we are supposed to do and have the process work the )Tj
T*
0.184 Tw
(way it was intended to work. I am very concerned about the fact )Tj
T*
0.108 Tw
(that not only with this legislation, but increasingly, we tend to see )Tj
T*
0.416 Tw
(the process, the committee process and the legislative process )Tj
T*
0.212 Tw
(which works so well here in the Senate bypassed and I am very )Tj
T*
0.052 Tw
(concerned about that. )Tj
1 -1 TD
0.282 Tw
(Also, with regard to the substance that we are going to hear )Tj
-1 -1 TD
0.068 Tw
(today from the witnesses and with regard to the substance of many )Tj
T*
0.098 Tw
(of the comments of my colleagues here on the committee, it is very )Tj
T*
0.232 Tw
(clear to me that we have very different points of view being ex-)Tj
T*
0.112 Tw
(pressed about what the problem is, why we have the problem, and )Tj
T*
0.208 Tw
(what the solutions should be. Some are saying we just need this )Tj
T*
0.088 Tw
(bridge loan and we can get past everything and we cant allow this )Tj
T*
0.178 Tw
(problem to get worse and this loan is going to solve the problem. )Tj
1 -1 TD
0.112 Tw
(Others say that we need to restructure this industry and the re-)Tj
-1 -1 TD
0.194 Tw
(structuring needs to take place, so it is not a question of if, it is )Tj
T*
0.156 Tw
(a question of when we get into a reorganization and some type of )Tj
T*
0.33 Tw
(a bankruptcy proceeding. Others say, well, you know, we dont )Tj
T*
0.114 Tw
(know exactly what is going to happen, but we are pretty sure that )Tj
T*
0.208 Tw
(even if Congress passes this legislation, we are going to be right )Tj
T*
0.052 Tw
(back here in February looking at another tranche. )Tj
1 -1 TD
0.09 Tw
(I would like to see some answers to some of these questions, and )Tj
-1 -1 TD
0.17 Tw
(one of the things that the witnesses who are here today can help )Tj
T*
0.296 Tw
(with significantly, I think, is to evaluate that question. Are we )Tj
T*
0.084 Tw
(headed inevitably to a restructuring or a reorganization in the con-)Tj
T*
0.212 Tw
(text of some type of a Chapter 11 proceeding, and if so, is there )Tj
T*
0.208 Tw
(a reason why that should not happen now as opposed to in Feb-)Tj
T*
0.312 Tw
(ruary or in June or at some other date, after we have burned )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00026)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
90 0 obj
<>/ExtGState<>>>
endobj
91 0 obj
<>
endobj
92 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(23 )Tj
-15.344 -2 TD
0.09 Tw
(through another $25 billion or who knows how many more dollars? )Tj
0 -1 TD
0.102 Tw
(What is the real analysis that has gone on in the boardrooms with )Tj
T*
0.178 Tw
(regard to what the options are and what the best thing for these )Tj
T*
0.052 Tw
(companies can be? )Tj
1 -1 TD
0.248 Tw
(I think about other companies that did not get these kinds of )Tj
-1 -1 TD
0.306 Tw
(bridge loans from the taxpayers necessarily but who have gone )Tj
T*
0.19 Tw
(through the difficult process of reorganization, such as Delta Air-)Tj
T*
0.146 Tw
(lines, which has had to go through a similar type of restructuring )Tj
T*
0.27 Tw
(and a reorganization, and we now see some significant progress )Tj
T*
0 Tw
(there. )Tj
1 -1 TD
0.184 Tw
(So I guess the thing that I would like to hear most from these )Tj
-1 -1 TD
0.256 Tw
(witnesses and also from hopefully the future proceedings of this )Tj
T*
0.09 Tw
(Committee is what exactly is the nature of this problem? What are )Tj
T*
0.114 Tw
(we looking to in the future? And if we are looking at an inevitable )Tj
T*
0.14 Tw
(reorganization and some type of a legal proceeding or, heaven for-)Tj
T*
0.064 Tw
(bid, some kind of a Congressionally designed proceedingand I say )Tj
T*
0.09 Tw
(that only because I think if Congress gets involved in doing the re-)Tj
T*
0.106 Tw
(organization it will probably be worse for everybodybut if we are )Tj
T*
0.094 Tw
(headed for that, why should we not deal with it now? Or what will )Tj
T*
0.052 Tw
(the benefits of bridging to some future time be? )Tj
1 -1 TD
0.176 Tw
(All of these questions, as well as the others that my colleagues )Tj
-1 -1 TD
0.164 Tw
(here have raised, are the kinds of things that I believe this Com-)Tj
T*
0.198 Tw
(mittee should have the time to deal with before we are forced to )Tj
T*
0.254 Tw
(vote on legislation that has been crafted and put on the Senate )Tj
T*
0.052 Tw
(floor before we even have our first hearing. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 391 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 391 Tm
0.052 Tw
(. I thank the Senator. )Tj
-7.6791 -1 TD
0.192 Tw
(Let me just thank all of my colleagues for their comments. We )Tj
-1 -1 TD
0.052 Tw
(will get to Senator Stabenow, our witness. )Tj
1 -1 TD
0.276 Tw
(Obviously, we are operating here in the lame duck period, as )Tj
-1 -1 TD
0.168 Tw
(they say, and I thought it would be worthwhile for my colleagues )Tj
T*
0.138 Tw
(to have the opportunity to hear from the major stakeholders here. )Tj
T*
0.12 Tw
(We are going to be gone in a matter of hours, probably, until mid- )Tj
T*
0.082 Tw
(January. We could come back. We may come back. But it is always )Tj
T*
0.052 Tw
(difficult to reconvene committees. )Tj
1 -1 TD
0.188 Tw
(As my colleagues know, over the last 2 years my intention has )Tj
-1 -1 TD
0.28 Tw
(always been, wherever possible, to have the Committee act, not )Tj
T*
0.142 Tw
(only in hearings but also to move forward legislatively. Obviously, )Tj
T*
0.154 Tw
(events can overtake us from time to time, and that has happened )Tj
T*
0.366 Tw
(in the past. It happened in September. My intention certainly )Tj
T*
0.072 Tw
(would be that we have a normal process where the Committee goes )Tj
T*
0.106 Tw
(through it and does the kind of work that my colleagues have sug-)Tj
T*
0.142 Tw
(gested. And that still may be the case, depending upon what hap-)Tj
T*
0.166 Tw
(pens over the coming couple of days. And so it is my intention to )Tj
T*
0.136 Tw
(proceed along those grounds, as has been my manner of operating )Tj
T*
0.126 Tw
(here over the last 2 years, and I intend to continue in that frame-)Tj
T*
0 Tw
(work. )Tj
1 -1 TD
0.258 Tw
(There are times when that is not possible, and all of us here )Tj
-1 -1 TD
0.192 Tw
(know those moments do arrive from time to time. But we do not )Tj
T*
0.26 Tw
(have the luxury of time to act. And I am encouraged as I hear )Tj
T*
0.206 Tw
(thisand obviously there are some who, I think, would never be )Tj
T*
0.222 Tw
(supportive of any particular effort. But I hear generally that my )Tj
T*
0.132 Tw
(colleagues here would like to do something, recognizing this is not )Tj
T*
0.144 Tw
(just any industry. It has critical implications for our country. And )Tj
T*
0.126 Tw
(so a moment may well arrive here when we need to act. But I am )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00027)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
93 0 obj
<>/ExtGState<>>>
endobj
94 0 obj
<>
endobj
95 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(24 )Tj
-15.344 -2 TD
0.108 Tw
(encouraged as well by the comments I hear suggesting that we ex-)Tj
0 -1 TD
0.082 Tw
(pect to hear more from the industry itself of what needs to be done )Tj
T*
0.124 Tw
(in order to put us on the right track. And so todays hearing gives )Tj
T*
0.102 Tw
(us an opportunity for the first time to do that, and I welcome your )Tj
T*
0 Tw
(comments. )Tj
1 -1 TD
0.104 Tw
(I hope it has been worthwhile for the witnesses. Normally we do )Tj
-1 -1 TD
0.12 Tw
(not take a lot of time with people making opening statements, but )Tj
T*
0.094 Tw
(I thought it was as important for the witnesses to hear from Mem-)Tj
T*
0.246 Tw
(bers of this Committee as it is for us to hear from you what is )Tj
T*
0.094 Tw
(going so you get a flavor of what is being said up here. Not always )Tj
T*
0.234 Tw
(do you hear from everyone, but you have heard, I think, a good )Tj
T*
0.132 Tw
(smattering. While we disagree on routes to take, there has been a )Tj
T*
0.136 Tw
(lot of commonality about what needs to be done, at least from the )Tj
T*
0.052 Tw
(industry perspective. So I hope that has been worthwhile. )Tj
1 -1 TD
0.202 Tw
(With that, Senator Stabenow, we will hear your testimony and )Tj
-1 -1 TD
0.052 Tw
(then get right to our other witnesses. )Tj
/F7 1 Tf
9 0 0 9 215.36 474.8 Tm
0.0422 Tw
(STATEMENT OF DEBBIE STABENOW )Tj
-3.5911 -1.0889 TD
(A U.S. SENATOR FROM THE STATE OF MICHIGAN )Tj
/F1 1 Tf
10 0 0 10 157 450.9999 Tm
0.108 Tw
(Senator S)Tj
8 0 0 7.6194 203.4593 450.9999 Tm
0 Tw
(TABENOW)Tj
10 0 0 10 246.7146 450.9999 Tm
0.108 Tw
(. Well, thank you, Mr. Chairman, particularly )Tj
-9.9715 -1 TD
0.122 Tw
(to you, thank you on behalf of Senator Levin and myself for work-)Tj
T*
0.194 Tw
(ing with us as we deal with what is a very serious crisis related )Tj
T*
0.056 Tw
(to the global financial crisis that has occurred. And I want to thank )Tj
T*
0.068 Tw
(all my colleagues for thoughtful comments and important questions )Tj
T*
0.184 Tw
(that need to be answered. I know that those who will come after )Tj
T*
0.052 Tw
(me will be able to answer those questions. )Tj
1 -1 TD
0.184 Tw
(Let me just say I am not going to spend a lot of time on what )Tj
-1 -1 TD
0.21 Tw
(is happening in terms of quality in the industry, nor am I going )Tj
T*
0.058 Tw
(to spend time talking about decisions of the past. But I will tell you )Tj
T*
0.118 Tw
(that I would put an American-made, a domestic-made car or truck )Tj
T*
0.2 Tw
(up against any other vehicle being made on this planet. And the )Tj
T*
0.094 Tw
(reality is that we havethe industry spent last year $12 billion on )Tj
T*
0.052 Tw
(innovation to focus on fuel efficiency for the future. )Tj
1 -1 TD
0.086 Tw
(My family owns automobiles made by all of these companies, but )Tj
-1 -1 TD
0.19 Tw
(I would invite you to come out and see Motor Trends Car of the )Tj
T*
0.092 Tw
(Year, the 2008 CTS, which is sitting right outside this building. So )Tj
T*
0.206 Tw
(I would be happy to have anyone take a look and compare what )Tj
T*
(is being made by American people every single day with what is )Tj
T*
0.052 Tw
(coming overseas. )Tj
1 -1 TD
0.128 Tw
(We passed, as you all know, the increase in CAFE standards on )Tj
-1 -1 TD
0.144 Tw
(fuel efficiency, and part of that was Section 136 that has been re-)Tj
T*
0.214 Tw
(ferred to here that relates to support for the industry to be able )Tj
T*
0.15 Tw
(to get to the new vehicles. And I was very pleased that before we )Tj
T*
0.096 Tw
(left in October that we funded that provision to be able to focus on )Tj
T*
0.142 Tw
(the future for the industry and support those vehicles being made )Tj
T*
0.198 Tw
(here, retooling plants so they will be made here in America. The )Tj
T*
0.176 Tw
(Department of Energy has come forward with what I believe is a )Tj
T*
0.132 Tw
(complicated set of rules that relates to a cumbersome process that )Tj
T*
0.052 Tw
(we need to address to activate those. )Tj
1 -1 TD
0.07 Tw
(But we thought we were on our way. We thought we were on our )Tj
-1 -1 TD
0.108 Tw
(way. And then the global financial crisis hit, and we all know that )Tj
T*
0.196 Tw
(it hit everyone, and everyone on this Committee has debated the )Tj
T*
0.058 Tw
(ramifications of that. But the credit squeeze has made it impossible )Tj
T*
0.06 Tw
(for auto makers to raise capital in order to invest in advanced tech-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00028)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
96 0 obj
<>/ExtGState<>>>
endobj
97 0 obj
<>
endobj
98 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(25 )Tj
-15.344 -2 TD
0.238 Tw
(nology or to even meet daily operational costs. Dealers and sup-)Tj
0 -1 TD
0.104 Tw
(pliers are not able to get credit. Motor vehicle financing companies )Tj
T*
0.096 Tw
(and the plummeting consumer demand due to the unavailability of )Tj
T*
0.244 Tw
(auto loans and the economic realities facing families have really )Tj
T*
0.052 Tw
(created the perfect storm. And that is why we are here. )Tj
1 -1 TD
0.154 Tw
(I would rather not be here. The people behind me would rather )Tj
-1 -1 TD
0.126 Tw
(not be here. They want to be out making those new advanced fuel )Tj
T*
0.14 Tw
(vehicles that we all want them to make and be focused on the fu-)Tj
T*
0.202 Tw
(ture. We can debate previous decisions, but I think we would all )Tj
T*
0.142 Tw
(agree that the global financial crisis was not caused by the Amer-)Tj
T*
0.052 Tw
(ican auto industry. And that is why we are here. )Tj
1 -1 TD
0.138 Tw
(In October, we had the worst auto sales month in the entire in-)Tj
-1 -1 TD
0.234 Tw
(dustry that we have seen in 25 years. Across the industry, both )Tj
T*
0.182 Tw
(American and foreign auto makers saw huge declines, Mr. Chair-)Tj
T*
0.066 Tw
(man. GM sales dropped 45 percent; Chryslers, 35 percent; Ford, 30 )Tj
T*
0.144 Tw
(percent; Toyota sales dropped 23 percent; Honda sales dropped 25 )Tj
T*
0.344 Tw
(percent. We are in a severe global recession that has, in fact, )Tj
T*
0.162 Tw
(caused a group of auto makers, including Toyota, to approach the )Tj
T*
0.542 Tw
(British Government requesting $56 billion to help them get )Tj
T*
0.052 Tw
(through the credit crisis that we have today. )Tj
1 -1 TD
0.11 Tw
(The question I would ask, Mr. Chairman, I think it is important )Tj
-1 -1 TD
0.212 Tw
(for us to decide, is: Does it matter if we have an American auto )Tj
T*
0.102 Tw
(industry? If we can buy a car, does it matter where it is made? Do )Tj
T*
0.132 Tw
(we care about 3 million people who have helped create the middle )Tj
T*
0.128 Tw
(class of this country by making things for us in this country? Is it )Tj
T*
0.136 Tw
(important to have cars in this country? Because we are at a point )Tj
T*
0.144 Tw
(right now where that is a basic decision that I believe we have to )Tj
T*
0 Tw
(answer. )Tj
1 -1 TD
0.126 Tw
(The domestic auto industry represents 4 percent of our GDP, 10 )Tj
-1 -1 TD
0.122 Tw
(percent of our U.S. industrial production value, and one out of ten )Tj
T*
0.072 Tw
(jobs in America is auto related, with 5 million jobs across the coun-)Tj
T*
0.182 Tw
(try that you are going to see represented by the three CEOs and )Tj
T*
0.052 Tw
(the UAW today. )Tj
1 -1 TD
0.128 Tw
(They provide health care and pension benefits for over a million )Tj
-1 -1 TD
0.118 Tw
(retirees and their familiespeople that have been able to share in )Tj
T*
0.144 Tw
(the American dream and be a part of the middle class as a result )Tj
T*
0.052 Tw
(of being a part of the auto industry and auto manufacturing. )Tj
1 -1 TD
0.066 Tw
(Motor vehicle parts suppliers provide over 780,000 direct employ-)Tj
-1 -1 TD
0.08 Tw
(ment jobs, and they are leading the U.S. manufacturing employers, )Tj
T*
0.3 Tw
(contributing 4.5 million private industry jobs, 5.5 percent of all )Tj
T*
0.228 Tw
(manufacturing jobs. The numbers are huge. And the fact is that )Tj
T*
0.19 Tw
(you have more computer chips in your automobile than you have )Tj
T*
0.256 Tw
(in anything else you own. This is an industry that is connected )Tj
T*
0.124 Tw
(with every other industry in the United States, and certainly with )Tj
T*
0.146 Tw
(defense. The U.S. military relies on the Chrysler Companys B se-)Tj
T*
0.158 Tw
(ries engine, commonly found in a Dodge Ram, for both propulsion )Tj
T*
0.198 Tw
(and electric generation of power. We need to keep that line open )Tj
T*
0.052 Tw
(for the national security interests of our country. )Tj
1 -1 TD
0.32 Tw
(ArvinMeritor, a major supplier to all three auto makers, has )Tj
-1 -1 TD
0.096 Tw
(been a major supplier of axles for the U.S. Army for over 50 years. )Tj
T*
0.11 Tw
(Goodyear, GMs second largest tire supplier, has supplied the mili-)Tj
T*
0.052 Tw
(tary for over 100 years. We could go on and on and on. )Tj
1 -1 TD
0.23 Tw
(The reality is the failure of the auto industry moves over into )Tj
-1 -1 TD
0.24 Tw
(suppliers who do not get paid, who are not able to survive, and )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00029)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
99 0 obj
<>/ExtGState<>>>
endobj
100 0 obj
<>
endobj
101 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(26 )Tj
-15.344 -2 TD
0.122 Tw
(then it moves over into defense and aerospace and, I would argue, )Tj
0 -1 TD
0.058 Tw
(certainly in manufacturing and in technology, every industry in our )Tj
T*
0 Tw
(country. )Tj
1 -1 TD
0.238 Tw
(General James Cartwright, the U.S. Marine Corps Vice Chair-)Tj
-1 -1 TD
0.122 Tw
(man of the Joint Chiefs of Staff, has said that an auto maker fail-)Tj
T*
0.102 Tw
(ure certainly has the potential to diminish our capability. And so )Tj
T*
0.052 Tw
(we are watching this situation very closely. )Tj
1 -1 TD
0.344 Tw
(Other countries understand the importance of manufacturing. )Tj
-1 -1 TD
0.188 Tw
(While we continue not to focus on partnering with our industries )Tj
T*
0.114 Tw
(here at home, Germany has announced the great Battery Alliance, )Tj
T*
0.124 Tw
(which is investing $650 million in advanced battery technology re-)Tj
T*
0.104 Tw
(search. By 2010, South Korea will spend $700 million on advanced )Tj
T*
0.1 Tw
(batteries and developing hybrids. China offers multi-billions of dol-)Tj
T*
0.108 Tw
(lars in direct funding and incentives for R&D and so on. India has )Tj
T*
0.134 Tw
(developed an Automotive Mission Plan. And that is just related to )Tj
T*
0 Tw
(R&D. )Tj
1 -1 TD
0.352 Tw
(But the reality is we have our companies competing against )Tj
-1 -1 TD
0.23 Tw
(countriescountries who pay for research, countries who pay for )Tj
T*
0.148 Tw
(health care, countries that fight for their industry on trade agree-)Tj
T*
0.16 Tw
(ments. And I would just give one example. U.S. auto makers sold )Tj
T*
0.066 Tw
(just 6,200 vehicles into South Korea last year while Korea exported )Tj
T*
0.188 Tw
(to us nearly 750,000 vehicles. Yet, with the Korean Trade Agree-)Tj
T*
0.052 Tw
(ment in front of us, nothing is done to fix that, Mr. Chairman. )Tj
1 -1 TD
0.238 Tw
(I say that only to say if we want an automotive industry and )Tj
-1 -1 TD
0.116 Tw
(American jobs in manufacturing, we need a 21st century manufac-)Tj
T*
0.154 Tw
(turing strategy that relates to all of these things, not just leaving )Tj
T*
0.052 Tw
(our companies to compete with countries. )Tj
1 -1 TD
0.094 Tw
(Despite the challenges of all of this, we have managed to see the )Tj
-1 -1 TD
0.072 Tw
(American auto makers remain competitive until this point with the )Tj
T*
0.052 Tw
(severe global downturn. )Tj
1 -1 TD
0.11 Tw
(Now, Mr. Chairman, let me just say that I do not believe failure )Tj
-1 -1 TD
0.104 Tw
(is an option, nor is bankruptcy. The Center for American Research )Tj
T*
0.214 Tw
(found that if one or more of the top three automotive companies )Tj
T*
0.244 Tw
(file for bankruptcy, we can expect 2.5 million lost jobs. That in-)Tj
T*
0.226 Tw
(cludes direct job losses and losses from other kinds of industries )Tj
T*
0.24 Tw
(that I have talked about. Now, think of our economy right now. )Tj
T*
0.1 Tw
(What happens if we add another 2.5 million jobs to that? And that )Tj
T*
0.238 Tw
(does not count suppliers and services and dealers and all of the )Tj
T*
0.196 Tw
(others that are affected. Also, bankruptcy would put a disastrous )Tj
T*
0.356 Tw
(burden on the American taxpayer through the Pension Benefit )Tj
T*
0.22 Tw
(Guaranty Corporation, which already has massive shortfalls, and )Tj
T*
0.18 Tw
(current estimates are it will be tens of billions of dollars that we )Tj
T*
(would be back here trying to figure out how to find to be able to )Tj
T*
0.084 Tw
(deal with the pensions that we would assume. This is on top of the )Tj
T*
0.1 Tw
(check that taxpayers would pick up for health care, unemployment )Tj
T*
0.346 Tw
(benefits, additions for Medicare and Medicaid, and other social )Tj
T*
0.052 Tw
(services estimated to total about $50 billion. )Tj
1 -1 TD
0.062 Tw
(Governments, local governments facing crises, loss of tax base, as )Tj
-1 -1 TD
0.154 Tw
(well, tax revenue, would be impacted. Bankruptcy would result in )Tj
T*
0.1 Tw
(a reduction of personal income of $276 billion, which would lead to )Tj
T*
0.258 Tw
(a total Government tax loss of $108 billion over 3 years, not to )Tj
T*
0.052 Tw
(mention the increased borrowing costs for many States. )Tj
1 -1 TD
0.168 Tw
(The reality is that at a time when we need people to have jobs )Tj
-1 -1 TD
0.202 Tw
(and have money in their pockets so they can pay their mortgage )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00030)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
102 0 obj
<>/ExtGState<>>>
endobj
103 0 obj
<>
endobj
104 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(27 )Tj
-15.344 -2 TD
0.076 Tw
(and stay in their home and have a demand side of an economy, not )Tj
0 -1.02 TD
0.052 Tw
(just supply, this would be a disaster for us. )Tj
1 -1.02 TD
0.204 Tw
(Now, Mr. Chairman, in closing, let me just say that opponents )Tj
-1 -1.02 TD
0.078 Tw
(who say that we should restructuremaybe bankruptcy is all right )Tj
T*
0.316 Tw
(because it would involve restructuring. Mr. Chairman, we have )Tj
T*
0.086 Tw
(been restructuring in Michigan now for a decade, 400,000 jobs lost, )Tj
T*
0.194 Tw
(most of those related to the auto industry. We do not need to be )Tj
T*
0.18 Tw
(told that there needs to be restructuring or downsizing or closing )Tj
T*
0.122 Tw
(of plants. I can take you on a tour of plants that have been closed )Tj
T*
0.052 Tw
(in order to address excess capacity and downsizing. )Tj
1 -1.02 TD
0.15 Tw
(Also, we do not have to say to the workers that they should re-)Tj
-1 -1.02 TD
0.492 Tw
(structure in terms of pay cuts and changes inflexibility and )Tj
T*
0.212 Tw
(changes in benefits. The new contracts with the UAW cut wages )Tj
T*
0.172 Tw
(for new workers by 50 percent. I do not know any other industry )Tj
T*
0.206 Tw
(anywhere who has been willing to make changes on the order of )Tj
T*
0.052 Tw
(a 50 percent cut in wages. )Tj
1 -1.02 TD
0.072 Tw
(By the end of the current 2005 and 2007 contracts, the labor cost )Tj
-1 -1.02 TD
0.12 Tw
(gap between domestic auto makers and foreign transplants will be )Tj
T*
0.184 Tw
(largely eliminated. Some estimates indicate that GMs labor costs )Tj
T*
0.244 Tw
(will be even lower than Toyotas costs. They have eliminated 50 )Tj
T*
0.066 Tw
(percent of the companys liabilities for retiree health benefits, nego-)Tj
T*
0.29 Tw
(tiating an unprecedentedan unprecedentedagreement to take )Tj
T*
0.258 Tw
(over retiree health care by the UAW taking the costs off of the )Tj
T*
0.052 Tw
(companies, the voluntary agreements. )Tj
1 -1.02 TD
0.128 Tw
(So, Mr. Chairman, in conclusion, I would say I understand frus-)Tj
-1 -1.02 TD
0.11 Tw
(trations about where we are on a number of fronts, but the reality )Tj
T*
0.218 Tw
(is this is an industry, long before we told them they need to re-)Tj
T*
0.108 Tw
(structure, that has been restructuring, has been downsizing, work-)Tj
T*
0.232 Tw
(ers who have been doing their part. We need this industry as a )Tj
T*
0.28 Tw
(basic part of the fabric of our economy. Somebody has to make )Tj
T*
0.194 Tw
(something in America. Credit default swaps alone, moving paper, )Tj
T*
0.052 Tw
(are not going to do it. )Tj
1 -1.02 TD
0.23 Tw
(And so, Mr. Chairman, we need a 21st century manufacturing )Tj
-1 -1.02 TD
0.054 Tw
(strategy. I am proud that there are those now looking and speaking )Tj
T*
0.156 Tw
(with us about how to do that. But we need to make sure that we )Tj
T*
0.18 Tw
(are not moving from foreign dependence on oil to foreign depend-)Tj
T*
0.088 Tw
(ence on technology, to foreign dependence on manufacturing, to de-)Tj
T*
0.17 Tw
(pending on others to make our tanks and our equipment and our )Tj
T*
0.3 Tw
(planes and our automobiles. And that is what is at stake here )Tj
T*
0.156 Tw
(today: whether or not we are going to make a commitment to the )Tj
T*
0.158 Tw
(future of an industry that has been an integral part of creating a )Tj
T*
0.112 Tw
(strong economy and a middle class of America over the years. And )Tj
T*
0.208 Tw
(I hope you will join with us to support what is on the floor now )Tj
T*
0.248 Tw
(and that you will join us in making a commitment to American )Tj
T*
0.052 Tw
(manufacturing for the future. )Tj
1 -1.02 TD
0.202 Tw
(Chairman D)Tj
8 0 0 7.6194 216.6191 182 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.2908 182 Tm
0.202 Tw
(. Senator, thank you very, very much, and you )Tj
-8.8291 -1.02 TD
0.112 Tw
(are always welcome in this Committee, and we thank you for your )Tj
T*
0.052 Tw
(patience as well. )Tj
1 -1.02 TD
0.184 Tw
(Let me now invite, if I can, our witnesses, first of all, Mr. Ron )Tj
-1 -1.01 TD
0.22 Tw
(Gettelfinger, President of the UAW. Prior to becoming the Presi-)Tj
T*
0.326 Tw
(dent of the UAW, Mr. Gettelfinger in 2002 served as the Vice )Tj
T*
0.294 Tw
(President of the UAW. We welcome you to the Committee, Mr. )Tj
T*
0 Tw
(President. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00031)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
105 0 obj
<>/ExtGState<>>>
endobj
106 0 obj
<>
endobj
107 0 obj
<>
endobj
108 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(28 )Tj
-14.344 -2 TD
0.302 Tw
(Our next witness is Alan Mulally, President and CEO of the )Tj
-1 -1 TD
0.15 Tw
(Ford Motor Company, a member of the companys Board of Direc-)Tj
T*
0.092 Tw
(tors. Prior to joining Ford in 2006, Mr. Mulally was Executive Vice )Tj
T*
0.15 Tw
(President of the Boeing Company and President and Chief Execu-)Tj
T*
0.104 Tw
(tive Officer of Boeing Commercial Airlines. And we thank you, Mr. )Tj
T*
0.052 Tw
(Mulally, for joining us. )Tj
1 -1 TD
0.378 Tw
(Our next witness is Robert Nardelli, Chairman and CEO of )Tj
-1 -1 TD
0.434 Tw
(Chrysler LLC and a member of the Board of Managers. Mr. )Tj
T*
0.148 Tw
(Nardelli spent nearly three decades at General Electric in a num-)Tj
T*
0.052 Tw
(ber of leadership positions. Mr. Nardelli served as Chairman, Presi-)Tj
T*
0.204 Tw
(dent, and CEO of The Home Depot prior to joining Chrysler last )Tj
T*
0 Tw
(year. )Tj
1 -1 TD
0.112 Tw
(Next we will hear from Mr. Richard Wagoner, Jr., who has been )Tj
-1 -1 TD
0.088 Tw
(Chairman and CEO of General Motors Corporation since 2000. Mr. )Tj
T*
0.274 Tw
(Wagoner also serves on GMs Board of Directors. Previously, he )Tj
T*
0.144 Tw
(served as President, Chief Operations Officer, and Chief Financial )Tj
T*
0.052 Tw
(Officer of GM. )Tj
1 -1 TD
0.224 Tw
(And our final witness is Dr. Peter Morici. Dr. Morici is a pro-)Tj
-1 -1 TD
0.202 Tw
(fessor at the University of Marylands Robert H. Smith School of )Tj
T*
0.056 Tw
(Business, a well-recognized expert on international economic policy, )Tj
T*
0.364 Tw
(World Trade Organization, and international commercial agree-)Tj
T*
0.124 Tw
(ments. Prior to joining the university, he served as the Director of )Tj
T*
0.208 Tw
(the Office of Economics at the U.S. International Trade Commis-)Tj
T*
0 Tw
(sion. )Tj
1 -1 TD
0.08 Tw
(You have all been very patient, but I hope what I said a moment )Tj
-1 -1 TD
0.136 Tw
(ago was received in the spirit in which it was offered, that it may )Tj
T*
0.268 Tw
(have been worthwhile for you to hear from our colleagues here, )Tj
T*
0.084 Tw
(both Democrats and Republicans, coming across the spectrum ideo-)Tj
T*
0.144 Tw
(logically as well as geographically. I think that can be worthwhile )Tj
T*
0.102 Tw
(at a moment like this to give you a flavor of how they feel and the )Tj
T*
0.34 Tw
(reflection of how their constituents feel about these issues. So, )Tj
T*
0.052 Tw
(again, we are very grateful to you for being here this afternoon. )Tj
1 -1 TD
0.248 Tw
(I am going to take all of your statements and any supporting )Tj
-1 -1 TD
0.162 Tw
(documentation you think would be worthwhile for this Committee )Tj
T*
0.088 Tw
(to have. But it has been suggested by Senator Corkerand I think )Tj
T*
0.322 Tw
(it has some value here. Normally, we put clocks on. You have )Tj
T*
0.202 Tw
(heard a lot of the questions, and I have read all your testimony. )Tj
T*
0.096 Tw
(But I would like you, if you could, maybe on a more informal basis )Tj
T*
0.164 Tw
(hereyour testimony is going to be part of the record, and if you )Tj
T*
0.202 Tw
(want to just read the testimony, you can do that. But you heard )Tj
T*
0.182 Tw
(some of these very direct questions about what needs to be done, )Tj
T*
0.244 Tw
(and I would like you to take a little bit of time and respond to )Tj
T*
0.138 Tw
(those, if you will, in your testimony, and then we will get right to )Tj
T*
0.052 Tw
(the questions. )Tj
1 -1 TD
0.12 Tw
(So I am not going to put the clock on you as we normally do for )Tj
-1 -1 TD
0.188 Tw
(5 minutes here. We will give you a bit more freedom in terms of )Tj
T*
0.178 Tw
(expressing your thoughts on these mattersnot unlimited time, I )Tj
T*
0.188 Tw
(would say as well, but a chance to have a far more responsive, I )Tj
T*
0.232 Tw
(think, conversation. We know you prepared the testimony in ad-)Tj
T*
0.196 Tw
(vance, but you did not have the benefit of hearing my colleagues )Tj
T*
0.092 Tw
(in advance. And I think in light of that, it might be worthwhile for )Tj
T*
0.206 Tw
(you to respond. Several of our colleagues here on the Republican )Tj
T*
0.122 Tw
(side of the dais up here have strong reservations about doing any-)Tj
T*
0.108 Tw
(thing at all. Others I think are willing to consider some ideas. But )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00032)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
109 0 obj
<>/ExtGState<>>>
endobj
110 0 obj
<>
endobj
111 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(29 )Tj
-15.344 -2 TD
0.136 Tw
(they want to know what needs to be done to retool. Some want to )Tj
0 -1 TD
0.126 Tw
(know whether or not you are willing to acknowledge any mistakes )Tj
T*
0.134 Tw
(by the industry at all in the last number of years that brought us )Tj
T*
0.198 Tw
(to this point. And I agree with those who said the testimony did )Tj
T*
0.052 Tw
(not really reflect that at all. )Tj
1 -1 TD
0.152 Tw
(So you have heard some of these points that I did not find nec-)Tj
-1 -1 TD
0.186 Tw
(essarily in your testimony, but we would like you to comment on )Tj
T*
0.052 Tw
(them if you would, anyway. )Tj
1 -1 TD
0.1 Tw
(With that, let me begin with you, President Gettelfinger, and we )Tj
-1 -1 TD
0.126 Tw
(thank you for coming before the Committee. You have to pull that )Tj
T*
0.052 Tw
(microphone right up to you as well. )Tj
/F7 1 Tf
9 0 0 9 147 524.8 Tm
0.5933 Tw
(STATEMENT OF RON GETTELFINGER, PRESIDENT, INTER-)Tj
1 -1.1 TD
0.1978 Tw
(NATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND )Tj
T*
0.0422 Tw
(AGRICULTURAL IMPLEMENT WORKERS OF AMERICA )Tj
/F1 1 Tf
10 0 0 10 157 490.9999 Tm
0.278 Tw
(Mr. G)Tj
8 0 0 7.6194 186.9996 490.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 247.4467 490.9999 Tm
0.278 Tw
(. Thank you, Mr. Chairman. Thank you for )Tj
-10.0447 -1 TD
0.186 Tw
(the opportunity to testify today on the state of the domestic auto )Tj
T*
0 Tw
(industry. )Tj
1 -1 TD
0.18 Tw
(First of all, I just want to say that UAW strongly supports the )Tj
-1 -1 TD
0.06 Tw
(legislation to amend EESA to clarify that the Treasury Department )Tj
T*
0.09 Tw
(should use the existing financial rescue program to quickly provide )Tj
T*
0.168 Tw
(a $25 billion emergency bridge loan to General Motors, Ford, and )Tj
T*
0.052 Tw
(Chrysler to enable these companies to continue operations. )Tj
1 -1 TD
0.08 Tw
(I believe and the UAW believesand we have brought in outside )Tj
-1 -1 TD
0.132 Tw
(expertsStephen Girsky, who was a top auto analyst for 17 years )Tj
T*
0.066 Tw
(in a row, knows the industry extremely wellbrought him in to as-)Tj
T*
0.258 Tw
(sist our union to analyze the situation. Without question in our )Tj
T*
0.052 Tw
(mind, it is dire, it is critical, it is a crisis. )Tj
1 -1 TD
0.13 Tw
(As has been mentioned, as we all know, the sales plummeted to )Tj
-1 -1 TD
0.11 Tw
(the lowest level in 25 years, 10.8 million for the month of October. )Tj
1 -1 TD
0.088 Tw
(I am going to step away from my prepared remarks here and try )Tj
-1 -1 TD
0.134 Tw
(to address some of the things that I have heard. But I do want to )Tj
T*
0.054 Tw
(mention this: In regards to the retirees from the Detroit-based com-)Tj
T*
0.254 Tw
(panies, their spouses, and their dependentsand we are talking )Tj
T*
0.14 Tw
(about a million people herethey could suffer sharp reductions in )Tj
T*
0.21 Tw
(their pension benefits and the loss of their health insurance cov-)Tj
T*
0.16 Tw
(erage, an especially devastating blow to the roughly 40 percent of )Tj
T*
0.178 Tw
(these who are younger than 65 and are not yet eligible for Medi-)Tj
T*
0.328 Tw
(care. So if the auto makers pension plans are terminated, the )Tj
T*
0.248 Tw
(PBGC, as Senator Stabenow pointed out, would be saddled with )Tj
T*
0.286 Tw
(unprecedented liabilities, and the Federal Government would be )Tj
T*
0.186 Tw
(liable for a 65 percent tax credit for the health care costs of pre- )Tj
T*
0.236 Tw
(Medicare auto retirees. And there is no questionit has already )Tj
T*
0.052 Tw
(been stated about the impact on the economy as a whole. )Tj
1 -1 TD
0.098 Tw
(But I do want to address point blankand I think the American )Tj
-1 -1 TD
0.2 Tw
(people and the Senate of the United States as well as the entire )Tj
T*
0.096 Tw
(Congress has a right to knowwhat the UAW has done. And I am )Tj
T*
0.17 Tw
(not going to go back beyond 2005. But a mid-contract year for us )Tj
T*
0.102 Tw
(as a union, a commitment, a vow made to retirees that they would )Tj
T*
0.06 Tw
(not have to contribute to their health care. But in mid-contract, our )Tj
T*
0.38 Tw
(union negotiated a Voluntary Employee Beneficiary Association )Tj
T*
0.174 Tw
(with these companies. That was a difficult decision for us. It was )Tj
T*
0.308 Tw
(the hardest decision that I have ever made as a leader in our )Tj
T*
0.188 Tw
(union. But we did that because, again, we brought in outside ex-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00033)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
112 0 obj
<>/ExtGState<>>>
endobj
113 0 obj
<>
endobj
114 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(30 )Tj
-15.344 -2 TD
0.256 Tw
(perts to help us analyze the situation and say as a union what )Tj
0 -1.04 TD
0.052 Tw
(should we do to help these companies be more competitive. )Tj
1 -1.04 TD
0.08 Tw
(We asked our workers at that timeagain, mid-contractto give )Tj
-1 -1.04 TD
0.162 Tw
(up a 3 percent wage increase. We put in current operating agree-)Tj
T*
0.226 Tw
(ments to address the work rule issue that was brought up here, )Tj
T*
0.206 Tw
(and Ford alone, a year from those current operating agreements, )Tj
T*
0.106 Tw
(is a billion dollars in savings. But we have done business a lot dif-)Tj
T*
0.164 Tw
(ferently. As a union and with the company, we have continued to )Tj
T*
0.12 Tw
(build a strong relationship to be as competitive as we possibly can )Tj
T*
0.052 Tw
(in this environment. )Tj
1 -1.04 TD
0.074 Tw
(When we went into the 2007 negotiations, we had a lot of discus-)Tj
-1 -1.04 TD
0.11 Tw
(sion about taking the entire VEBA off of that companys books. By )Tj
T*
0.15 Tw
(so doing that, we have reduced, effective January the 1st of 2010, )Tj
T*
0.144 Tw
(we have eliminated their OPAB obligation, or other post-employee )Tj
T*
0.3 Tw
(benefit obligation, by 50 percent. That is major to them. For 4 )Tj
T*
0.086 Tw
(years, workers at General Motors, Ford, and Chrysler have a nego-)Tj
T*
0.07 Tw
(tiated agreement that they will not receive an annual improvement )Tj
T*
0.096 Tw
(factor, a wage increase. We settled for bonuses. We diverted COLA )Tj
T*
0.064 Tw
(to help pay for health care, both for retirees and for active workers. )Tj
T*
0.306 Tw
(Again, both unprecedented in the terms of our agreements and )Tj
T*
0.168 Tw
(what we as a union have been willing to do to help these compa-)Tj
T*
0 Tw
(nies. )Tj
1 -1.04 TD
0.224 Tw
(Furthermore, I would just want to mention to you as well, we )Tj
-1 -1.04 TD
0.176 Tw
(work hard on productivity every day, and the men and women of )Tj
T*
0.124 Tw
(the UAW are proud to go to work and receive a fair days wage in )Tj
T*
0.204 Tw
(exchange for a fair days work. And that is what they do. Safety )Tj
T*
0.186 Tw
(records at our facilities, second to none. We work extremely hard )Tj
T*
0.122 Tw
(because that is a major savings to the corporation if we reduce in-)Tj
T*
0.16 Tw
(juries in the workplace. And the quality, we are proud of the rat-)Tj
T*
0.068 Tw
(ings that we got from J.D. Power, and we have made continued im-)Tj
T*
0.052 Tw
(provements in all of these areas. )Tj
1 -1.04 TD
0.202 Tw
(I may have even gone a little bit over my 5 minutes here, but )Tj
-1 -1.04 TD
0.1 Tw
(I am willing to come back in the questions and take more because, )Tj
T*
0.052 Tw
(point blank, there are a lot of misconceptions about our union. )Tj
1 -1.04 TD
0.086 Tw
(The last one I want to close on is about the articles that we read )Tj
-1 -1.04 TD
0.14 Tw
(and hear about in regards to jobs banks. Since September of 2005 )Tj
T*
0.19 Tw
(through September of 2008, we have lost 47,000 workers at Gen-)Tj
T*
0.25 Tw
(eral Motors. By the same token, during that period of time and )Tj
T*
0.12 Tw
(with that loss, we have all but virtually eliminated our jobs banks )Tj
T*
0.078 Tw
(at all three companies. We recognize that in order for these compa-)Tj
T*
0.126 Tw
(nies to be competitive, we had to make the tough calls. We had to )Tj
T*
0.174 Tw
(take the political heat for these kinds of decisions, and we did it. )Tj
T*
0.116 Tw
(And we are proud as a unionworkers, men and women, and I as )Tj
T*
0.19 Tw
(a union representative, as well as all of our boardto work with )Tj
T*
0.106 Tw
(these companies to make sure that the consumers get the absolute )Tj
T*
0.052 Tw
(best quality product that we can give them. )Tj
1 -1.04 TD
(Thank you very much. )Tj
T*
0.19 Tw
(Chairman D)Tj
8 0 0 7.6194 216.4991 152.2001 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.1708 152.2001 Tm
0.19 Tw
(. Thank you very much, President Gettelfinger. )Tj
-8.8171 -1.04 TD
0.052 Tw
(We appreciate it very, very much. )Tj
1 -1.04 TD
(I mispronounced your name earlier and I apologize. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00034)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
115 0 obj
<>/ExtGState<>>>
endobj
116 0 obj
<>
endobj
117 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(31 )Tj
/F7 1 Tf
9 0 0 9 156.32 642 Tm
0.0422 Tw
(STATEMENT OF ALAN R. MULALLY, PRESIDENT AND CHIEF )Tj
3.5067 -1.2 TD
(EXECUTIVE OFFICER, FORD MOTOR COMPANY )Tj
/F1 1 Tf
10 0 0 10 157 617 Tm
0.26 Tw
(Mr. M)Tj
8 0 0 7.6194 188.4796 617 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.415 617 Tm
0.26 Tw
(. Thank you. Thank you, Mr. Chairman, Senator )Tj
-7.5415 -1.02 TD
0.272 Tw
(Shelby, and Members of the Committee. I appreciate the oppor-)Tj
T*
0.052 Tw
(tunity to be here today representing the Ford Motor Company. )Tj
1 -1.02 TD
0.114 Tw
(As you know, the auto industry has been heavily affected by the )Tj
-1 -1.02 TD
0.182 Tw
(turmoil in the financial markets. Much of the recent commentary )Tj
T*
0.238 Tw
(has suggested that our companies need a new business model. I )Tj
T*
0.104 Tw
(completely agree. In fact, we at Ford are well on our way to trans-)Tj
T*
0.186 Tw
(forming our company and building a new Ford that I believe has )Tj
T*
0.052 Tw
(a very bright future. )Tj
1 -1.02 TD
0.072 Tw
(There are two fundamental questions that I think we are dealing )Tj
-1 -1.02 TD
0.116 Tw
(with today. First, is there a competitive and sustainable future for )Tj
0 -1.01 TD
0.222 Tw
(our domestic automobile industry? And, second, is a Government )Tj
T*
0.248 Tw
(bridge loan through these difficult economic times better for our )Tj
T*
0.108 Tw
(country than inaction? I believe the answer to both of these is yes. )Tj
1 -1.01 TD
0.056 Tw
(As a relative newcomer to this industry, I have the benefit of see-)Tj
-1 -1.01 TD
0.21 Tw
(ing the auto industry and its transformation in a much different )Tj
T*
0.174 Tw
(light. I see parallels to what I witnessed at Boeing after the 9/11 )Tj
T*
0.262 Tw
(tragedy and the steps we took to transform the commercial air-)Tj
T*
0.226 Tw
(plane business. I can tell you that the transformation of Ford is )Tj
T*
0.304 Tw
(even more aggressive, and the progress we are making is even )Tj
T*
0.052 Tw
(more remarkable. )Tj
1 -1.01 TD
0.168 Tw
(Our plan for the past 2 years has been consistent: Aggressively )Tj
-1 -1.01 TD
0.146 Tw
(restructure to operate profitably at the current lower demand and )Tj
T*
0.168 Tw
(the changing model mix. Accelerate the development of safe, fuel- )Tj
T*
0.214 Tw
(efficient, high-quality new products that our customers want and )Tj
T*
0.154 Tw
(truly value. Finance our plan and improve our balance sheet, and )Tj
T*
0.118 Tw
(work together as one team leveraging our global assets worldwide. )Tj
T*
0.056 Tw
(Our goal is to create a viable Ford Motor Company and a lean glob-)Tj
T*
0.052 Tw
(al enterprise delivering profitable growth for everyone involved. )Tj
1 -1.01 TD
0.292 Tw
(Few companies have restructured more aggressively. We have )Tj
-1 -1.01 TD
0.09 Tw
(taken out that excess capacity that we talked about earlier, closing )Tj
T*
0.1 Tw
(17 plants and reducing our workforce by 51,000 employees. We ne-)Tj
T*
0.104 Tw
(gotiated a new contract with the UAW to improve our competitive-)Tj
T*
0.288 Tw
(ness, many of the features of which Ron delineated earlier. We )Tj
T*
0.126 Tw
(shifted to a balanced product line-up offering high-quality, proven- )Tj
T*
0.09 Tw
(safe, and good-value cars, utilities, and trucks, small, medium, and )Tj
T*
0.172 Tw
(large. We are delivering the best or among the best fuel economy )Tj
T*
0.052 Tw
(with every new vehicle we are launching today. )Tj
1 -1.01 TD
0.208 Tw
(The speed and the breadth of our transformation is evident by )Tj
-1 -1.01 TD
0.26 Tw
(the actions in just 1 week alone. Tomorrow, at the Los Angeles )Tj
T*
0.2 Tw
(Auto Show, we will introduce two new all new hybrids. Our new )Tj
T*
0.204 Tw
(Ford Fusion hybrid beats the Toyota Camry hybrid by at least 6 )Tj
T*
0.056 Tw
(miles per gallon. Today we are submitting our application for direct )Tj
T*
0.158 Tw
(loans authorized by Congress last year to help us speed advanced )Tj
T*
0.18 Tw
(technologies and vehicles to the market. On Friday, we end large )Tj
T*
0.242 Tw
(SUV production at our Michigan truck plant, and we begin con-)Tj
T*
0.052 Tw
(verting to fuel-efficient, small-car production at that plant. )Tj
1 -1.01 TD
0.084 Tw
(To fund our new products and restructuring, we went to the cap-)Tj
-1 -1.01 TD
0.198 Tw
(ital markets early, and we divested all of our non-core assets. In )Tj
T*
0.166 Tw
(addition, our Ford credit business has consolidated abroad to pre-)Tj
T*
0.052 Tw
(served capital in support of our U.S. customers and dealers. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00035)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
118 0 obj
<>/ExtGState<>>>
endobj
119 0 obj
<>
endobj
120 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(32 )Tj
-14.344 -2 TD
0.228 Tw
(We appreciate the recently introduced asset-backed commercial )Tj
-1 -1 TD
0.362 Tw
(paper funding facility and anxiously await the administrations )Tj
T*
0.052 Tw
(term securitization facility being considered. )Tj
1 -1 TD
0.204 Tw
(In the same way, FDICs approval of Ford Credits pending in-)Tj
-1 -1 TD
0.134 Tw
(dustrial loan bank application will enable us to meet the financial )Tj
T*
0.052 Tw
(needs of our dealers and our retail customers. )Tj
1 -1 TD
0.114 Tw
(As a result of all of these actions, we were profitable in the first )Tj
-1 -1 TD
0.058 Tw
(quarter of this year and well on our way to sustainable profitability )Tj
T*
0.202 Tw
(before the economic and the credit crisis hit. And we have taken )Tj
T*
0.158 Tw
(now decisive action to deal with this new crisis. We have reduced )Tj
T*
0.166 Tw
(production. We have further reduced employment. We have elimi-)Tj
T*
0.062 Tw
(nated all raises and all bonuses through 2009. We took these meas-)Tj
T*
0.192 Tw
(ures while protecting the heart of our company, the new vehicles )Tj
T*
0.052 Tw
(that will secure our future. )Tj
1 -1 TD
0.066 Tw
(Now, we believe we must join our competitors today in asking for )Tj
-1 -1 TD
0.152 Tw
(your support to gain access to an industry bridge loan that would )Tj
T*
0.134 Tw
(help us navigate through this difficult economic crisis. We suggest )Tj
T*
0.076 Tw
(that the loans be structured in a revolving format so that the expo-)Tj
T*
0.324 Tw
(sure to the taxpayer would be limitedand, if used, we would )Tj
T*
0.274 Tw
(repay, of course, with interest. We at Ford are hopeful that we )Tj
T*
0.152 Tw
(have enough liquidity, but we also must prepare ourselves for the )Tj
T*
0.052 Tw
(prospect of further deteriorating economic conditions in 2009. )Tj
1 -1 TD
0.152 Tw
(In addition, the collapse of one of our competitors would have a )Tj
-1 -1 TD
0.072 Tw
(severe impact on Ford and our transformation plan because the do-)Tj
T*
0.178 Tw
(mestic auto industry is highly interdependent. It would also have )Tj
T*
0.052 Tw
(devastating ripple effects across the entire U.S. economy. )Tj
1 -1 TD
0.202 Tw
(I am more convinced than ever that we have the right plan to )Tj
-1 -1 TD
0.108 Tw
(transform Ford. With your help, we will create a safeguard to deal )Tj
T*
0.198 Tw
(with the growing economic uncertainty. We at Ford will continue )Tj
T*
0.234 Tw
(to deliver on our plan to create a thriving auto business for the )Tj
T*
0.09 Tw
(benefit of all of us. This is really an important industry. It is a pil-)Tj
T*
0.1 Tw
(lar of our economy, and we look forward to working with you to be )Tj
T*
0.174 Tw
(part of a solution on the road to economic recovery in the United )Tj
T*
0 Tw
(States. )Tj
1 -1 TD
0.052 Tw
(Thank you very much. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 290.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 290.9999 Tm
0.052 Tw
(. Thank you very much, Mr. Mulally. )Tj
-7.6791 -1 TD
0.162 Tw
(Let me turn to you, Mr. Nardelli. Thank you for being with us. )Tj
/F7 1 Tf
9 0 0 9 154.94 264.7999 Tm
0.0422 Tw
(STATEMENT OF ROBERT NARDELLI, CHAIRMAN AND CHIEF )Tj
6.1667 -1.0889 TD
(EXECUTIVE OFFICER, CHRYSLER LLC )Tj
/F1 1 Tf
10 0 0 10 157 240.9999 Tm
0.074 Tw
(Mr. N)Tj
8 0 0 7.6194 185.3296 240.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.809 240.9999 Tm
0.074 Tw
(. Thank you, Mr. Chairman, Mr. Shelby, and Mem-)Tj
-7.5809 -1 TD
0.226 Tw
(bers of the Committee. I really appreciate this opportunity to be )Tj
T*
0.112 Tw
(here today and we are asking for assistance for one reason: To ad-)Tj
T*
0.13 Tw
(dress the devastating automotive industry recession caused by our )Tj
T*
0.052 Tw
(Nations financial meltdown. )Tj
1 -1 TD
0.218 Tw
(With the credit markets frozen, the average working American )Tj
-1 -1 TD
0.18 Tw
(just cant get competitive financial to purchase or lease a vehicle. )Tj
T*
0.296 Tw
(Our dealers dont have access to market competitive funding to )Tj
T*
0.08 Tw
(place wholesale orders for new vehicles, which result in severe con-)Tj
T*
0.052 Tw
(striction of cash inflow to the auto manufacturers. )Tj
1 -1 TD
0.208 Tw
(At the same time, Chrysler has billions of dollars in cash pay-)Tj
-1 -1 TD
0.24 Tw
(ment obligation to pay wages, pay suppliers, to pay health care, )Tj
T*
0.094 Tw
(pensions, all in the range of about $4 to $5 billion a month. There-)Tj
T*
0.134 Tw
(fore, without an immediate bridge financing support, Chryslers li-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00036)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
121 0 obj
<>/ExtGState<>>>
endobj
122 0 obj
<>
endobj
123 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(33 )Tj
-15.344 -2 TD
0.198 Tw
(quidity could fall below the level necessary to sustain operations. )Tj
0 -1 TD
0.1 Tw
(Independent research firms have quantified the fallout of a domes-)Tj
T*
0.074 Tw
(tic auto maker in bankruptcy to overhaul the economy, and the im-)Tj
T*
0.052 Tw
(pact, as Senator Stabenow said, would be devastating. )Tj
1 -1 TD
0.208 Tw
(Now, you asked the question on why bankruptcy is not a good )Tj
-1 -1 TD
0.072 Tw
(idea. It is not a good option for Chrysler, and more importantly, for )Tj
T*
0.184 Tw
(the auto industry or the broader economy for some following rea-)Tj
T*
0 Tw
(sons. )Tj
1 -1 TD
0.148 Tw
(One, we believe that retail sales will plummet dramatically. We )Tj
-1 -1 TD
0.118 Tw
(saw this happen, sir, when all options were put on the table when )Tj
T*
0.082 Tw
(our previous owners announced they were going to divest Chrysler. )Tj
T*
0.066 Tw
(Sales fell 37 percent. Consumers were leery of buying vehicles from )Tj
T*
0.204 Tw
(manufacturers whom they didnt think were going to be in exist-)Tj
T*
0.22 Tw
(ence. Our existing inventory, some over 400,000 units out in the )Tj
T*
0.272 Tw
(field, would require heavy, heavy discounting to convince a cus-)Tj
T*
0.052 Tw
(tomer to buy them. )Tj
1 -1 TD
0.34 Tw
(Given our common supplier base, the bankruptcy of any one )Tj
-1 -1 TD
0.176 Tw
(automotive manufacturer, we believe threatens the viability of all )Tj
T*
0.052 Tw
(auto makers. )Tj
1 -1 TD
0.118 Tw
(Our factories would likely be idle for a significant period of time )Tj
-1 -1 TD
0.198 Tw
(while we negotiate contracts with literally thousands of suppliers )Tj
T*
0.084 Tw
(and our primary lenders. This would put severe pressure in having )Tj
T*
0.192 Tw
(to pay COD or cash up front and would turn the whole financial )Tj
T*
0.232 Tw
(equation upside down, where we would have to pay for material )Tj
T*
0.214 Tw
(prior to assembly, wait through the assembly process, collect our )Tj
T*
0.198 Tw
(funds. So we think it would be a more costly solution than what )Tj
T*
0.052 Tw
(we are asking for today. )Tj
1 -1 TD
0.162 Tw
(The overall amount of costs of financing and restructuring, as I )Tj
-1 -1 TD
0.228 Tw
(said, would be significantly higher in a Chapter 11 process than )Tj
T*
0.19 Tw
(the working capital bridge that we are asking for and presenting )Tj
T*
0.052 Tw
(to this committee. )Tj
1 -1 TD
0.06 Tw
(And finally, we just cant be confident that we will be able to suc-)Tj
-1 -1 TD
0.052 Tw
(cessfully emerge from bankruptcy. )Tj
1 -1 TD
0.192 Tw
(That is why as an industry, collectively, we are requesting $25 )Tj
-1 -1 TD
0.262 Tw
(billion of working capital to survive this liquidity crisis. We are )Tj
T*
0.102 Tw
(willing to provide full financial transparency. We welcome the gov-)Tj
T*
0.162 Tw
(ernment as a stakeholder, including an equity holder, and we are )Tj
T*
0.066 Tw
(fully prepared at Chrysler to comply with all the current conditions )Tj
T*
0.166 Tw
(and policies under the recently enacted Emergency Economic Sta-)Tj
T*
0.052 Tw
(bilization Act. )Tj
1 -1 TD
0.114 Tw
(Furthermore, Mr. Chairman, our private equity owner, Cerberus )Tj
-1 -1 TD
0.158 Tw
(Capital Management LLP, has made it clear that they will forego )Tj
T*
0.076 Tw
(any benefit from the upside that would in part be created from any )Tj
T*
0.052 Tw
(government assistance that Chrysler LLC may obtain. )Tj
1 -1 TD
0.196 Tw
(Being new myself to the auto industry, I recognize the need to )Tj
-1 -1 TD
0.604 Tw
(challenge the )Tj
/F6 1 Tf
7.6529 0 TD
(status quo )Tj
/F1 1 Tf
6.2079 0 TD
(and seek significant improvements )Tj
-13.8608 -1 TD
0.184 Tw
(throughout the business. For example, you asked some questions. )Tj
1 -1 TD
0.25 Tw
(Since August of 2007, when we emerged as the first privately )Tj
-1 -1 TD
0.224 Tw
(held auto manufacturer in 50 years, we have reduced and taken )Tj
T*
0.058 Tw
(out 1.2 million units of capacity, or 30 percent of our installed base. )Tj
T*
0.066 Tw
(We have identified over $1 billion in non-earning assets to sell, and )Tj
T*
0.126 Tw
(we are more than 75 percent along the way toward achieving that )Tj
T*
0.138 Tw
(goal. This year alone, we have reduced our fixed costs by $2.2 bil-)Tj
T*
0.166 Tw
(lion. And unfortunately, by the end of the year, we will have fur-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00037)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
124 0 obj
<>/ExtGState<>>>
endobj
125 0 obj
<>
endobj
126 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(34 )Tj
-15.344 -2 TD
0.16 Tw
(loughed over 32,000 employees. Twelve thousand of those employ-)Tj
0 -1 TD
0.052 Tw
(ees are salaried employees. )Tj
1 -1 TD
0.178 Tw
(Mr. Chairman, through the first half, we were meeting and ex-)Tj
-1 -1 TD
0.168 Tw
(ceeding all of our performance targets. We had generated over $1 )Tj
T*
0.142 Tw
(billion in VEBA, and we closed the first half with over $11 billion )Tj
T*
0.052 Tw
(in cash, both restricted and unrestricted. )Tj
1 -1 TD
0.238 Tw
(So it is equally important that the lack of liquidity to provide )Tj
-1 -1 TD
0.07 Tw
(loans and leases to customers and financing to dealers is addressed )Tj
T*
0.094 Tw
(immediately. We talked about our financial companies. It is imper-)Tj
T*
0.202 Tw
(ative that our affiliate financial companies receive access to com-)Tj
T*
0.094 Tw
(petitive liquidity and financing capacity. At Chrysler, 75 percent of )Tj
T*
(our dealers rely on Chrysler Finance to finance their business, and )Tj
T*
0.336 Tw
(50 percent of all customers finance their vehicles through pur-)Tj
T*
0.116 Tw
(chases at Chrysler Finance. Now, normally, these loans and leases )Tj
T*
0.118 Tw
(are securitized and sold in the secondary market to generate fresh )Tj
T*
0.222 Tw
(liquidity and financing capacity. Today, there is virtually no sec-)Tj
T*
0.052 Tw
(ondary market, and therefore no way to raise capital. )Tj
1 -1 TD
0.314 Tw
(With immediate financial assistance, the lifeblood of the U.S. )Tj
-1 -1 TD
0.08 Tw
(economy will continue to flow and Chrysler will be able to continue )Tj
T*
0.172 Tw
(to pay its current levels of obligation, $6 billion in annual wages, )Tj
T*
0.226 Tw
($2 billion in annual pensions, $20 billion in health care commit-)Tj
T*
0.094 Tw
(ments, $35 billion annually to suppliers, and $3 billion annually in )Tj
T*
0.252 Tw
(capital reinvestment back into our company for new energy effi-)Tj
T*
0.052 Tw
(cient and environmentally friendly products. )Tj
1 -1 TD
0.108 Tw
(Clearly, Chryslers plan to emerge from the current downturn as )Tj
-1 -1 TD
0.162 Tw
(a lean, agile company, and we are and will continue to be what I )Tj
T*
0.268 Tw
(will call the quintessential American car company. Why is that, )Tj
T*
0.164 Tw
(Mr. Chairman? Seventy-three percent of our sales are in the U.S. )Tj
T*
0.094 Tw
(Sixty-one percent of our vehicles are produced in the U.S. Seventy- )Tj
T*
0.152 Tw
(four percent of our employees work in the U.S. Seventy-eight per-)Tj
T*
0.08 Tw
(cent of our material is purchased in the U.S. And 62 percent of our )Tj
T*
0.052 Tw
(dealers are based in the U.S. )Tj
1 -1 TD
0.28 Tw
(Now, Chrysler has a strong pipeline with product renaissance )Tj
-1 -1 TD
0.184 Tw
(scheduled for 2010, and in September, we revealed three electric- )Tj
T*
0.174 Tw
(driven vehicles, one for each brand, and they will be launched by )Tj
T*
0.074 Tw
(2010. I recognize that this is not an insignificant amount of money. )Tj
T*
0.156 Tw
(However, I believe that this request is the least costly alternative )Tj
T*
0.29 Tw
(considering the options that we have faced with less impact on )Tj
T*
0.142 Tw
(human capital and one that would provide stimulus as opposed to )Tj
T*
0.052 Tw
(further depression in the economy. )Tj
1 -1 TD
(Thank you for your attention. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 230.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 230.9999 Tm
0.052 Tw
(. Thank you very much, Mr. Nardelli. )Tj
-7.6791 -1 TD
(Mr. Wagoner, welcome to the Committee. )Tj
/F7 1 Tf
9 0 0 9 153.14 204.7999 Tm
0.0422 Tw
(STATEMENT OF G. RICHARD WAGONER, JR., CHAIRMAN AND )Tj
3.4356 -1.0889 TD
(CHIEF EXECUTIVE OFFICER, GENERAL MOTORS )Tj
/F1 1 Tf
10 0 0 10 157 180.9999 Tm
0.11 Tw
(Mr. W)Tj
8 0 0 7.6194 187.3495 180.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.645 180.9999 Tm
0.11 Tw
(. Thank you very much. I really appreciate the op-)Tj
-7.6645 -1 TD
0.16 Tw
(portunity to appear in front of you, Mr. Chairman, and the Mem-)Tj
T*
0.052 Tw
(bers of the Committee, as well, and appreciated your comments. )Tj
1 -1 TD
0.118 Tw
(I would just like to comment briefly about the state of affairs as )Tj
-1 -1 TD
0.208 Tw
(we see them for the domestic auto industry and General Motors. )Tj
T*
0.228 Tw
(I would like to start by acknowledging for the Committee that I )Tj
T*
0.232 Tw
(represent and am privileged to represent a number of important )Tj
T*
0.196 Tw
(constituents today. We directly employ approximately 96,000 peo-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00038)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
127 0 obj
<>/ExtGState<>>>
endobj
128 0 obj
<>
endobj
129 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(35 )Tj
-15.344 -2 TD
0.206 Tw
(ple in the United States. We have 6,500 dealers who employ an-)Tj
0 -1.02 TD
0.196 Tw
(other 340,000 people. We have more than 2,000 suppliers located )Tj
T*
0.152 Tw
(in 46 States. We purchased $30 billion of goods and services from )Tj
T*
0.4 Tw
(them last year. Our pension plan covers 475,000 retirees and )Tj
T*
0.392 Tw
(spouses. Our health care benefits extend to about one million )Tj
T*
0.052 Tw
(Americans. We have about a million registered stockholders. )Tj
1 -1.02 TD
0.13 Tw
(And 70 million of our vehicles are registered to U.S. citizens, 22 )Tj
-1 -1.02 TD
0.24 Tw
(million of them purchased in the last 5 years. To the comments )Tj
T*
0.184 Tw
(made by one of the Members of the Committee, I can assure you )Tj
T*
0.052 Tw
(that I feel very personally responsible for every one of them. )Tj
1 -1.02 TD
0.15 Tw
(As recent news coverage has made abundantly clear, many peo-)Tj
-1 -1.02 TD
0.184 Tw
(ple have a picture of GM that has not kept pace with our efforts )Tj
T*
0.174 Tw
(and with our progress. In fact, GM has made a lot of progress in )Tj
T*
0.134 Tw
(transforming our business in recent years, progress which is abso-)Tj
T*
0.052 Tw
(lutely necessary for our survival. )Tj
1 -1.02 TD
0.158 Tw
(Since 2005, we have reduced our annual structural cost base or )Tj
-1 -1.02 TD
0.174 Tw
(fixed cost base in North America by 23 percent, or $9 billion. We )Tj
T*
0.152 Tw
(expect to reduce them by 35 percent, or $14 to $15 billion, by the )Tj
T*
0.13 Tw
(year 2011. Within that, a little bit of a different number. Between )Tj
T*
0.296 Tw
(the years 2003 and 2010, we will reduce our U.S. hourly labor )Tj
T*
0.076 Tw
(costs, expense off our income statements, from $18 billion to $6 bil-)Tj
T*
0.668 Tw
(lion, and I think this does really indicate that President )Tj
T*
0.184 Tw
(Gettelfinger has made some very tough calls and worked with us )Tj
T*
0.21 Tw
(in order to make sure that we can have a competitive labor cost )Tj
T*
0.15 Tw
(situation. We, as he mentioned, negotiated a landmark agreement )Tj
T*
0.21 Tw
(last year which will enable us to virtually erase the competitive-)Tj
T*
0.124 Tw
(ness and cost gap. We have addressed pension and health care re-)Tj
T*
0.08 Tw
(tiree costs in the U.S. We have spent over $103 billion on those ex-)Tj
T*
0.208 Tw
(penses over the last 15 years. As a result of these and other ac-)Tj
T*
0.078 Tw
(tions, we are now matching or beating foreign competitors in terms )Tj
T*
0.262 Tw
(of productivity, quality, and fuel economy, and by 2010, we will )Tj
T*
0.052 Tw
(match them on labor costs, as well. )Tj
1 -1.02 TD
0.286 Tw
(On the product side, we are building vehicles that consumers )Tj
-1 -1.02 TD
0.072 Tw
(really want to buy. Senator Stabenow referred to her Cadillac CTS, )Tj
T*
0.054 Tw
(the Motor Trend 2008 Car of the Year. The Chevy Malibu, the 2008 )Tj
T*
0.214 Tw
(North American Car of the Year. And while we have been doing )Tj
T*
0.118 Tw
(that, we have made huge progress developing advanced propulsion )Tj
T*
0.052 Tw
(technologies, which I know you were so interested in. )Tj
1 -1.02 TD
0.214 Tw
(In 2009, GM will offer 20 models in the U.S. that get at least )Tj
-1 -1.02 TD
0.118 Tw
(30 miles per gallon highway. That is twice our nearest competitor. )Tj
T*
0.056 Tw
(We will have nine hybrids next year. We have more than three mil-)Tj
T*
0.136 Tw
(lion flex-fuel vehicles on the road in the U.S. We have established )Tj
T*
0.084 Tw
(the worlds largest hydrogen fuel test fleet right here in the United )Tj
T*
0.204 Tw
(States, and we are running all out with all of our capabilities to )Tj
T*
0.258 Tw
(get the Chevy Volt extended range electric vehicle to market as )Tj
T*
0.052 Tw
(soon as possible. )Tj
1 -1.02 TD
0.128 Tw
(In short, we have addressed what we think were definitely com-)Tj
-1 -1.02 TD
0.262 Tw
(petitive shortcomings and we have moved as aggressively as we )Tj
T*
0.166 Tw
(could to position GM for long-term success and felt that we were, )Tj
0 -1.01 TD
0.232 Tw
(as my colleagues mentioned, well on our road to turning around )Tj
T*
0.054 Tw
(the North American business. Just last October, following the nego-)Tj
T*
0.066 Tw
(tiation of the new labor agreement that Mr. Gettelfinger mentioned )Tj
T*
0.068 Tw
(with the UAW, our stock price climbed to almost $43 a share based )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00039)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
130 0 obj
<>/ExtGState<>>>
endobj
131 0 obj
<>
endobj
132 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(36 )Tj
-15.344 -2 TD
0.172 Tw
(on analysts views that we had finally overcome the cost competi-)Tj
0 -1 TD
0.052 Tw
(tiveness gap with foreign manufacturers. )Tj
1 -1 TD
0.066 Tw
(Since then, the industry and the economy, of course, has been hit )Tj
-1 -1 TD
0.086 Tw
(hard by global financial markets and the crisis therein, and the re-)Tj
T*
0.116 Tw
(cent plunge in vehicle sales threatens not only GMs ongoing turn-)Tj
T*
0.052 Tw
(around, but, in fact, our real survival. )Tj
1 -1 TD
0.248 Tw
(In response, we moved quickly to keep our company on track. )Tj
-1 -1 TD
0.054 Tw
(Since June, we have taken steps tofurther steps to further reduce )Tj
T*
0.162 Tw
(our North American manufacturing capacity, further shift produc-)Tj
T*
0.12 Tw
(tion to cars and cross-overs, sell off parts of the company, suspend )Tj
T*
0.346 Tw
(dividend payments, reduce head count, eliminate raises, discre-)Tj
T*
0.24 Tw
(tionary bonuses, and 401\(k\) matches for salaried employees, and )Tj
T*
0.276 Tw
(eliminate health care coverage for salaried employees after they )Tj
T*
0.306 Tw
(reach age 65. These and other actions are designed to improve )Tj
T*
0.062 Tw
(GMs liquidity by $20 billion by the end of 2009, and they obviously )Tj
T*
0.318 Tw
(affect every employee, retiree, dealer, supplier, and investor in-)Tj
T*
0.052 Tw
(volved in our company. )Tj
1 -1 TD
0.252 Tw
(Mr. Chairman, I do not agree with those who say we are not )Tj
-1 -1 TD
0.156 Tw
(doing enough to position GM for success. What exposes us to fail-)Tj
T*
0.134 Tw
(ure now is not our product lineup, is not our business plan, is not )Tj
T*
0.262 Tw
(our employees and their willingness to work hard. It is not our )Tj
T*
0.1 Tw
(long-term strategy. What exposes us to failure now is the global fi-)Tj
T*
0.14 Tw
(nancial crisis, which has severely restricted credit availability and )Tj
T*
0.212 Tw
(reduced industry sales to the lowest per capita level since World )Tj
T*
0.052 Tw
(War II. )Tj
1 -1 TD
0.302 Tw
(Our industry, which represents Americas real economy, Main )Tj
-1 -1 TD
0.094 Tw
(Street, needs a bridge to span the financial chasm that has opened )Tj
T*
0.124 Tw
(before us. We will use this bridge, and we will use it effectively to )Tj
T*
0.168 Tw
(pay for essential operations, new vehicles and power trains, parts )Tj
T*
0.224 Tw
(from our suppliers, wages and benefits for our workers and sup-)Tj
T*
0.122 Tw
(pliers, and taxes for State and local governments that help deliver )Tj
T*
0.13 Tw
(essential services to millions of Americans. And in the process, we )Tj
T*
0.23 Tw
(will continue to reinvent the automobile and to improve the Na-)Tj
T*
0.498 Tw
(tions energy security through development of advanced tech-)Tj
T*
0.052 Tw
(nologies like those in the Chevy Volt. )Tj
1 -1 TD
0.262 Tw
(What would it mean if the domestic industry were allowed to )Tj
-1 -1 TD
0.14 Tw
(fail? You heard Senator Stabenow, so I wont repeat other than to )Tj
T*
0.092 Tw
(say the cost would be catastrophic in jobs lost, income lost, govern-)Tj
T*
0.132 Tw
(ment tax revenue lost, and a huge blow to consumer and business )Tj
T*
0.156 Tw
(confidence. I believe it is fair to say that such a level of economic )Tj
T*
(devastation would far exceed the government support that our in-)Tj
T*
0.052 Tw
(dustry needs to weather this current crisis. )Tj
1 -1 TD
0.174 Tw
(That is why this is all about a lot more than just Detroit. It is )Tj
-1 -1 TD
0.312 Tw
(about saving the U.S. economy from a catastrophic collapse. In )Tj
T*
0.142 Tw
(short, helping the auto industry bridge the current financial crisis )Tj
T*
0.34 Tw
(will not only prevent massive economic dislocation now, it will )Tj
T*
0.174 Tw
(produce enormous benefits for our country later. We want to con-)Tj
T*
0.082 Tw
(tinue to play the vital role we have played for America for the past )Tj
T*
0.182 Tw
(100 years, but right now, in todays circumstances, we cant do it )Tj
T*
0 Tw
(alone. )Tj
1 -1 TD
0.112 Tw
(You can help us through this crisis. In return, we will repay the )Tj
-1 -1 TD
0.236 Tw
(taxpayers faith and support many times over for many years to )Tj
T*
0 Tw
(come. )Tj
1 -1 TD
0.052 Tw
(Thank you very much, and I look forward to your questions. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00040)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
133 0 obj
<>/ExtGState<>>>
endobj
134 0 obj
<>
endobj
135 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(37 )Tj
-14.344 -2 TD
0.066 Tw
(Chairman D)Tj
8 0 0 7.6194 215.2591 641 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.9308 641 Tm
0.066 Tw
(. Thank you very much, Mr. Wagoner. We appre-)Tj
-8.6931 -1 TD
0.052 Tw
(ciate it. )Tj
1 -1 TD
(Mr. Morici, we welcome you to the Committee. )Tj
/F7 1 Tf
9 0 0 9 162.68 604.8 Tm
0.0422 Tw
(STATEMENT OF PETER MORICI, PROFESSOR, ROBERT H. )Tj
-0.48 -1.0889 TD
(SMITH SCHOOL OF BUSINESS, UNIVERSITY OF MARYLAND )Tj
/F1 1 Tf
10 0 0 10 157 581 Tm
0.104 Tw
(Mr. M)Tj
8 0 0 7.6194 186.9195 581 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.2072 581 Tm
0.104 Tw
(. Thank you, Senator. My name is Peter Morici. I am )Tj
-6.4207 -1 TD
0.058 Tw
(an economist and professor at the University of Maryland. I am the )Tj
T*
0.096 Tw
(sole panelist here to speak against the bailout. I guess three CEOs )Tj
T*
0.054 Tw
(and a president of a labor union, one Terrapin, I think it is a pretty )Tj
T*
0.216 Tw
(fair match-up, actually. I feel sort of like the mouse that stowed )Tj
T*
0.052 Tw
(away on the Titanic. )Tj
1 -1 TD
0.146 Tw
(The automobile industry has two major components, the Detroit )Tj
-1 -1 TD
0.096 Tw
(Three and the Japanese, Asian, and European transplants that as-)Tj
T*
0.158 Tw
(semble vehicles here. Both contribute vitally to our national econ-)Tj
T*
0.058 Tw
(omy and ensuring that these companies have the means to compete )Tj
T*
0.052 Tw
(is of the most important national interest. )Tj
1 -1 TD
0.22 Tw
(The gradual erosion of the market shares of the Detroit Three )Tj
-1 -1 TD
0.092 Tw
(over the last several decades stems from higher labor costs, having )Tj
T*
0.12 Tw
(origins in wages, benefits, work rules, poor management decisions, )Tj
T*
0.236 Tw
(and less than fully supportive government policies. Although the )Tj
T*
0.066 Tw
(government has been sympathetic to the needs of this industry, the )Tj
T*
0.392 Tw
(industry has fallen victim to currency manipulation and other )Tj
T*
0.302 Tw
(forms of protectionism, predominately in Asia, in Japan, Korea, )Tj
T*
0.052 Tw
(China, India, and elsewhere. )Tj
1 -1 TD
0.088 Tw
(The Detroit Three are rapidly running out of cash and face filing )Tj
-1 -1 TD
0.214 Tw
(for Chapter 11 reorganization. It is my position that it would be )Tj
T*
0.124 Tw
(better to let them go through that process and reemerge with new )Tj
T*
0.34 Tw
(labor agreements, reduced debt, strengthened management that )Tj
T*
0.124 Tw
(would permit these companies to produce cars at costs comparable )Tj
T*
0.214 Tw
(to those enjoyed by their Japanese and other foreign competitors )Tj
T*
0.052 Tw
(assembling vehicles in the United States. )Tj
1 -1 TD
0.352 Tw
(Circumstances today are dramatically different than in 1979, )Tj
-1 -1 TD
0.212 Tw
(when Chrysler received assistance from the Federal Government. )Tj
T*
0.19 Tw
(In those days, the challenge for Chrysler was to become competi-)Tj
T*
0.222 Tw
(tive with Ford and General Motors, and Lee Iacocca had a clear )Tj
T*
0.42 Tw
(plan to achieve that objective. Today, the Detroit Three have )Tj
T*
0.228 Tw
(achieved remarkable progress in improving productivity and low-)Tj
T*
0.206 Tw
(ering labor costs thanks to a new agreement with the UAW, but )Tj
T*
0.064 Tw
(they still dont have costs quite as low as the Japanese transplants. )Tj
1 -1 TD
0.216 Tw
(This is an industry with very thin margins. I have heard over )Tj
-1 -1 TD
0.172 Tw
(and over again, for example, when Ford decided to locate a small )Tj
T*
0.22 Tw
(car factory in Mexico, that the UAW had tried to persuade Ford )Tj
T*
0.138 Tw
(that it could be competitive enough in the United States. There is )Tj
T*
0.23 Tw
(no such thing as competitive enough in the automobile industry. )Tj
T*
0.1 Tw
(Either you hit the mark that Honda hits in Indiana or you are not )Tj
T*
0.068 Tw
(competitive. The margins are too thin. There is too much excess ca-)Tj
T*
0.16 Tw
(pacity. Either the costs are the same or they are not. There is no )Tj
T*
0.052 Tw
(such thing as almost as competitive. )Tj
1 -1 TD
0.15 Tw
(By assisting the Detroit Three, Congress can delay one or all of )Tj
-1 -1 TD
0.12 Tw
(them from going through Chapter 11 reorganization, but sooner or )Tj
T*
0.18 Tw
(later, one of them will march down that path. Twenty-five billion )Tj
T*
0.186 Tw
(dollars to tide over firms would create another AIG. I ask you to )Tj
T*
0.108 Tw
(consider the promises that were made to you when that happened. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00041)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
136 0 obj
<>/ExtGState<>>>
endobj
137 0 obj
<>
endobj
138 0 obj
<>
endobj
139 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(38 )Tj
-15.344 -2 TD
0.338 Tw
(I realize that was really the Federal Reserve that did that. If )Tj
0 -1 TD
0.064 Tw
(things are so dire that they have to come here and submit to a gov-)Tj
T*
0.39 Tw
(ernment oversight board, government ownership, is $25 billion )Tj
T*
0.126 Tw
(really enough in the grand scale of things? I would suggest that if )Tj
T*
0.052 Tw
(you give them $25 billion this month, they will be back. )Tj
1 -1 TD
0.182 Tw
(Without a new labor agreement that brings wages and benefits )Tj
-1 -1 TD
0.264 Tw
(absolutely in line with those at the most competitive transplant )Tj
T*
0.308 Tw
(factories, without reduced debt and other liabilities, the Detroit )Tj
T*
0.174 Tw
(Three will continue to lag in innovation and build too few attrac-)Tj
T*
0.176 Tw
(tive vehicles because their higher costs, debt, and other liabilities )Tj
T*
0.128 Tw
(require them to spend less on new product development than they )Tj
T*
0 Tw
(should. )Tj
1 -1 TD
0.206 Tw
(General Motors makes about the same number of cars globally )Tj
-1 -1 TD
0.104 Tw
(as Toyota. It simply has a smaller product development budget be-)Tj
T*
0.076 Tw
(cause of the costs it bears. They have very fine engineers. They are )Tj
T*
0.168 Tw
(capable of producing very good cars. The same applies at Ford. If )Tj
T*
0.092 Tw
(you have less money to develop product, you put fewer products on )Tj
T*
0.2 Tw
(the street. They have a longer life. For example, the Impala was )Tj
T*
0.114 Tw
(a great car, but it was left sitting out there for 7 years. Camry re-)Tj
T*
0.052 Tw
(cycles every four. )Tj
1 -1 TD
0.076 Tw
(If Chapter 11 is put off, the industry will continue to shrink, and )Tj
-1 -1 TD
0.182 Tw
(inevitably when it happens and we go through the process, fewer )Tj
T*
0.264 Tw
(jobs will be saved because fewer jobs will be there to be saved. )Tj
T*
0.132 Tw
(Sooner or later, this industry has to go through the ultimate reor-)Tj
T*
0.134 Tw
(ganization that brings its cost structure absolutely in line with its )Tj
T*
0.088 Tw
(competition. It may not be fair. It may not be what we would want )Tj
T*
0.052 Tw
(to see. But it is inevitable. )Tj
1 -1 TD
0.102 Tw
(In my mind, Chapter 11 is viable. The assets of these companies )Tj
-1 -1 TD
0.086 Tw
(are needed by the domestic automobile market. They make over 40 )Tj
T*
0.16 Tw
(percent, near 50 percent depending on which estimate you use, of )Tj
T*
0.294 Tw
(the cars driven in America. They cant go out of business com-)Tj
T*
0.082 Tw
(pletely. The factories cant shut down completely and then there be )Tj
T*
0.17 Tw
(adequate cars to be sold. Someone is going to run these factories. )Tj
1 -1 TD
0.204 Tw
(They have creditors. To the creditors, the companies are worth )Tj
-1 -1 TD
0.178 Tw
(more operating than they are shuttered because the assets of the )Tj
T*
0.1 Tw
(companies will be worth more if the companies continue to operate )Tj
T*
0.208 Tw
(than if they are permitted to fall merely into Chapter 7. That is )Tj
T*
0.346 Tw
(where the debtor and possession financing lies, in the existing )Tj
T*
0.132 Tw
(creditors. Not enough attention has been given to that option sim-)Tj
T*
0.204 Tw
(ply because, unfortunately, we have created in America what my )Tj
T*
0.146 Tw
(profession calls moral hazard. Now that AIG has been able to put )Tj
T*
0.202 Tw
(a pistol to the head of the country and say, If you dont bail us )Tj
T*
0.268 Tw
(out, the credit markets will collapse, we face the same kind of )Tj
T*
0.052 Tw
(issue with the Detroit Three. )Tj
1 -1 TD
0.164 Tw
(When Americans buy automobiles from the Detroit Three, more )Tj
-1 -1 TD
0.064 Tw
(is contributed to the vitality of the U.S. economy than when Ameri-)Tj
T*
0.238 Tw
(cans buy cars that were assembled here by transplants or when )Tj
T*
0.14 Tw
(they buy imports. These vehicles have more U.S. content in terms )Tj
T*
0.28 Tw
(of job, engineering, and profits and so forth, and the vitality of )Tj
T*
0.114 Tw
(manufacturing to a strong American economy cannot be underesti-)Tj
T*
0.206 Tw
(mated and it has too long been neglected by the people who live )Tj
T*
0.052 Tw
(and work in this city. )Tj
1 -1 TD
0.208 Tw
(The Congress could take steps to improve the attractiveness of )Tj
-1 -1 TD
0.11 Tw
(making cars and parts in the United States by improving the pub-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00042)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
140 0 obj
<>/ExtGState<>>>
endobj
141 0 obj
<>
endobj
142 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(39 )Tj
-15.344 -2 TD
0.272 Tw
(lic policy environment. This would include finally addressing di-)Tj
0 -1.02 TD
0.202 Tw
(rectly and forthrightly undervalued currencies in Asia, currencies )Tj
T*
0.404 Tw
(kept cheap by massive government intervention in foreign ex-)Tj
T*
0.052 Tw
(change markets. )Tj
1 -1.02 TD
0.256 Tw
(In addition, assertive efforts could be made to address foreign )Tj
-1 -1.02 TD
0.146 Tw
(protectionism. It is very difficult to sell a car in China that is not )Tj
T*
0.154 Tw
(made there. It is very difficult to make a car there with imported )Tj
T*
0.216 Tw
(parts from the United States. So General Motors is criticized for )Tj
T*
0.086 Tw
(encouraging its parts manufacturers to move there. It, frankly, has )Tj
T*
0.096 Tw
(no choice. It is high time that we take that trade policy imperative )Tj
T*
0.052 Tw
(quite seriously. )Tj
1 -1.02 TD
0.228 Tw
(Congress could provide substantial product development assist-)Tj
-1 -1.02 TD
0.114 Tw
(ance to U.S.-based auto makers and suppliers. I would say include )Tj
T*
0.172 Tw
(Toyota, Nissan, and Honda in that process in the interest of fair-)Tj
T*
0.062 Tw
(ness and our WTO obligations, battery makers and suppliers, to ac-)Tj
T*
0.084 Tw
(celerate the production of high-mileage cars. I would condition that )Tj
T*
0.278 Tw
(assistance, though, on all the participants sharing what patents )Tj
T*
0.266 Tw
(they develop with one another at fair patent fees, the Japanese )Tj
T*
0.052 Tw
(model that was employed in the 1970s and 1980s. )Tj
1 -1.02 TD
0.12 Tw
(In addition, we could have a clunker rebate program. Bring in a )Tj
-1 -1.02 TD
0.248 Tw
(Tahoe, trade it in for a Volt and we will give you a big rebate. )Tj
T*
0.118 Tw
(Bring in a small Chevette that is 30 years old, you get a small re-)Tj
T*
0.06 Tw
(bate. The newer the car, the more miles you save, but the only part )Tj
T*
0.178 Tw
(of the deal has to be it has got to go through the crusher. It has )Tj
T*
0.268 Tw
(got to go through. You cant recycle them and put them on the )Tj
T*
0 Tw
(street. )Tj
1 -1.02 TD
0.108 Tw
(There are things that we can do to provide incentives for Ameri-)Tj
-1 -1.02 TD
0.178 Tw
(cans to drive fuel efficient cars that we have not done, and there )Tj
T*
0.28 Tw
(are things that we could do to improve the environment in the )Tj
T*
0.128 Tw
(United States. But I dont think that giving these guys $25 billion )Tj
T*
0.052 Tw
(right now is a smart idea. )Tj
1 -1.02 TD
(Thank you for your time. )Tj
T*
(Chairman D)Tj
8 0 0 7.6194 215.1191 314.6 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 314.6 Tm
0.052 Tw
(. I would call you the mouse that roared here. )Tj
-7.6791 -1.02 TD
0 Tw
([Laughter.] )Tj
T*
0.122 Tw
(Chairman D)Tj
8 0 0 7.6194 215.8191 294.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.4908 294.2 Tm
0.122 Tw
(. You did pretty well, Mr. Morici, I will tell you. )Tj
-7.7491 -1.02 TD
0.052 Tw
(Thank you all very, very much )Tj
T*
(Senator S)Tj
8 0 0 7.6194 202.8993 273.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 273.8 Tm
0.052 Tw
(. Mr. Chairman, maybe a lion. )Tj
-7.5083 -1.02 TD
0.138 Tw
(Chairman D)Tj
8 0 0 7.6194 215.9791 263.6 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.6508 263.6 Tm
0.138 Tw
(. Yes. Well, let me open up a question here and )Tj
-8.7651 -1.02 TD
0.086 Tw
(then we will move right along pretty quickly. But one of the things )Tj
T*
0.254 Tw
(that struck me, and Mr. Wagoner, you began to address this in )Tj
T*
0.058 Tw
(your comments and I appreciate them, but in most of the testimony )Tj
T*
0.112 Tw
(I went through and read, we talk about the economic implications, )Tj
T*
0.164 Tw
(and I want to read for you, because Hank Paulson the other day, )Tj
T*
0.218 Tw
(in fact, he is quoted in, I think it is todays )Tj
/F6 1 Tf
22.2357 0 TD
(Wall Street Journal )Tj
/F1 1 Tf
-22.2357 -1.02 TD
0.052 Tw
(speaking why he is reluctant. )Tj
1 -1.02 TD
0.144 Tw
(Let me first of all say, as someone who was directly involved in )Tj
-1 -1.02 TD
0.164 Tw
(the writing of the Emergency Economic Stabilization Act, there is )Tj
T*
0.218 Tw
(no question in my mind whatsoever that within that Act, within )Tj
T*
0.124 Tw
(that authority we extended, the authority exists to respond to this )Tj
0 -1.01 TD
0.118 Tw
(issue. Now, it doesnt require it. It doesnt mandate it. But I think )Tj
T*
0.168 Tw
(even the Treasury has acknowledged that if they wish to respond )Tj
T*
0.108 Tw
(to this situation, they could do so, and so I want to at least as one )Tj
T*
0.092 Tw
(of the coauthors of that bill state clearly that that authority exists. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00043)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
143 0 obj
<>/ExtGState<>>>
endobj
144 0 obj
<>
endobj
145 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(40 )Tj
-14.344 -2 TD
0.172 Tw
(Now, he has taken the position, however, though, that the pur-)Tj
-1 -1 TD
0.192 Tw
(pose of this bill, and I quote him here, I dont see the purpose, )Tj
T*
0.298 Tw
(talking about the automobile situation, of the bailout program, )Tj
T*
0.33 Tw
(which is intended to stabilize jittery financial markets and get )Tj
T*
0.244 Tw
(lending flowing more freely, which eventually should help revive )Tj
T*
0.052 Tw
(the ailing economy. )Tj
1 -1 TD
0.118 Tw
(The point I want to make here is that I dont think we have ad-)Tj
-1 -1 TD
0.214 Tw
(dressed as effectively as we could and as you could the financial )Tj
T*
0.118 Tw
(implications, because that is the argument he is making. They are )Tj
T*
0.216 Tw
(not financial implications to the conditions facing the automotive )Tj
T*
0 Tw
(industry. )Tj
1 -1 TD
0.068 Tw
(I wonder if each of you would begin, and Mr. Wagoner, why dont )Tj
-1 -1 TD
0.284 Tw
(we begin with you, to talk about the financial implications. We )Tj
T*
0.124 Tw
(know about job losses. We know about all of these other elements. )Tj
T*
0.102 Tw
(But what are the financial implications if your company fails, your )Tj
T*
0.296 Tw
(company goes into bankruptcy, putting aside the questions that )Tj
T*
0.182 Tw
(Professor Morici has raised. And then, Mr. Nardelli, if you would )Tj
T*
0.076 Tw
(go down the line, and then Mr. Mulally, if you would also comment )Tj
T*
0.108 Tw
(on this, and Ron, if you would, too, what are the financial implica-)Tj
T*
0.052 Tw
(tions of a failure. )Tj
1 -1 TD
0.128 Tw
(Mr. W)Tj
8 0 0 7.6194 187.5295 441 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.825 441 Tm
0.128 Tw
(. I think they are numerous. I would start by say-)Tj
-7.6825 -1 TD
0.136 Tw
(ing, obviously, we all have captive finance companies. In our case, )Tj
T*
0.15 Tw
(it is 49 percent owned. I think it is fairly clear that difficulties in )Tj
T*
0.084 Tw
(one or another of the manufacturers would significantly impact the )Tj
T*
0.146 Tw
(finance company, which in every case are huge borrowers, and af-)Tj
T*
0.052 Tw
(fect the financial system. )Tj
1 -1 TD
0.076 Tw
(The inability of any one of us or all of us to meet our post-retiree )Tj
-1 -1 TD
0.102 Tw
(obligations, pensions and health care, I think would have a signifi-)Tj
T*
0.334 Tw
(cant effect on financial markets, and I suspect the inability to )Tj
T*
0.142 Tw
(make supplier payments and what I believe would be a domino of )Tj
T*
0.082 Tw
(bankruptcies through the supplier community, which as Al Mulally )Tj
T*
0.128 Tw
(said, is very integrated for all of us, would have a huge impact on )Tj
T*
0.052 Tw
(their ability to meet their financial obligations. )Tj
1 -1 TD
0.064 Tw
(And finally, I suspect it would affect State and local governments )Tj
-1 -1 TD
0.106 Tw
(and their ability, in fact, in some cases, to service their obligations )Tj
T*
0.052 Tw
(in communities that are heavily vested in the auto business. )Tj
1 -1 TD
0.066 Tw
(So I wouldmy own view is the potential impact on the financial )Tj
-1 -1 TD
0.052 Tw
(markets would be severe. )Tj
1 -1 TD
0.056 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1591 260.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.8308 260.9999 Tm
0.056 Tw
(. And may I ask you, Mr. Nardelli, this is talking )Tj
-8.6831 -1 TD
0.058 Tw
(about systemic risk. We were told here that we had to provide $150 )Tj
T*
0.164 Tw
(billion to AIG because of the systemic risk issues here. Tell me if )Tj
T*
0.186 Tw
(you agree by what has been said by Mr. Wagoner, the additional )Tj
T*
0.144 Tw
(points. Is there systemic risk? I realize there is financial risk, but )Tj
T*
0.388 Tw
(is there systemic risk with the failures we have been talking )Tj
T*
0 Tw
(about? )Tj
1 -1 TD
0.124 Tw
(Mr. N)Tj
8 0 0 7.6194 185.8296 190.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.309 190.9999 Tm
0.124 Tw
(. Mr. Chairman, I believe there is. In our case, for )Tj
-7.6309 -1 TD
0.116 Tw
(example, if we were to go into bankruptcy or fail, we have over $7 )Tj
T*
0.224 Tw
(to $8 billion of outstanding payables. Those suppliers, those con-)Tj
T*
0.21 Tw
(tractors, those equipment manufacturers basically would be help-)Tj
T*
0.052 Tw
(less in the recovery of those funds. )Tj
1 -1 TD
0.226 Tw
(We have about 3,600 entrepreneurs, small business owners we )Tj
-1 -1 TD
0.15 Tw
(call dealers. They have in excess of over $1 billion of inventory in )Tj
T*
0.096 Tw
(their lots today. They would basically be totally exposed relative to )Tj
T*
0.052 Tw
(the risk. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00044)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
146 0 obj
<>/ExtGState<>>>
endobj
147 0 obj
<>
endobj
148 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(41 )Tj
-14.344 -2 TD
0.108 Tw
(I think the systemic risk that we talk about here, of our top 100 )Tj
-1 -1.02 TD
0.134 Tw
(suppliers, 96 of them are common to my colleagues on either side. )Tj
T*
0.168 Tw
(And given the fragileness of that supplier base today, because we )Tj
T*
0.078 Tw
(basically have takenthe industry has basically contracted equiva-)Tj
T*
0.074 Tw
(lent to the U.S. production that both Alan and I ship in a full year. )Tj
T*
0.066 Tw
(That is the magnitude of contraction we have seen in this industry. )Tj
T*
0.204 Tw
(So I think the systemic risk would be dramatic across the entire )Tj
T*
0 Tw
(economy. )Tj
1 -1.02 TD
0.058 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1791 559.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.8508 559.4 Tm
0.058 Tw
(. I agree, and again, maybe I am not making my-)Tj
-8.6851 -1.02 TD
0.258 Tw
(self clear. I am talking about bonds, credit default swaps, these )Tj
T*
0.208 Tw
(other elements that are part of your business that really havent )Tj
T*
0.106 Tw
(been discussed here today. We have talked about exactly what you )Tj
T*
0.174 Tw
(have just mentioned, but I want to get at this other set of issues )Tj
T*
0.108 Tw
(that Hank Paulson is raising as an objection for them to deal with )Tj
T*
0.294 Tw
(this under the existing emergency stabilization bill, and that is )Tj
T*
0.054 Tw
(these other financial instruments which are deeply involved in your )Tj
T*
0.146 Tw
(business. Are they at risk? That is the financial risk I am talking )Tj
T*
0 Tw
(about. )Tj
1 -1.02 TD
0.156 Tw
(Mr. N)Tj
8 0 0 7.6194 186.1496 457.4 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.629 457.4 Tm
0.156 Tw
(. There is no question that the lenders, the finan-)Tj
-7.6629 -1.02 TD
0.116 Tw
(cial institutions, would be at total risk relative to being able to re-)Tj
T*
0.052 Tw
(cover their investments in this company. )Tj
1 -1.02 TD
0.13 Tw
(I would disagree with the gentleman on the left from the stand-)Tj
-1 -1.02 TD
0.21 Tw
(point that, again, if any one of us went into liquidation, I would )Tj
T*
0.124 Tw
(submit to you that there is very minimal recovery, and if you look )Tj
T*
0.086 Tw
(at the institutions today and how they have remarked their invest-)Tj
T*
0.152 Tw
(ments, the 20 to 30 cents on the bond, I believe there is absent )Tj
T*
0.144 Tw
(there is really no recovery and there would be tremendous impact )Tj
T*
0.052 Tw
(on the financial institutions. )Tj
1 -1.02 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 355.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 355.4 Tm
0.052 Tw
(. Mr. Mulally, do you want to )Tj
-7.6791 -1.02 TD
0.096 Tw
(Mr. M)Tj
8 0 0 7.6194 186.8395 345.2 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.775 345.2 Tm
0.096 Tw
(. Mr. Chairman, I think the only thing I would add )Tj
-7.3775 -1.02 TD
0.202 Tw
(is I think the most significant risk would be what would happen )Tj
T*
0.198 Tw
(to the economic development, to the GDP growth, especially with )Tj
T*
0.322 Tw
(the unemployment and with the debt, because clearly with the )Tj
T*
0.298 Tw
(interdependence that we have with the supply chain and all of )Tj
T*
0.084 Tw
(that, they are highly leveraged, also. I think the biggest single risk )Tj
T*
0.052 Tw
(would be further slowdown in the economic development. )Tj
1 -1.02 TD
0.054 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1391 273.8 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.8108 273.8 Tm
0.054 Tw
(. President Gettelfinger, do you want to comment )Tj
-8.6811 -1.02 TD
0.052 Tw
(on this? )Tj
1 -1.02 TD
0.096 Tw
(Mr. G)Tj
8 0 0 7.6194 185.1796 253.4 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.6267 253.4 Tm
0.096 Tw
(. Well, the one thing I think that is important )Tj
-9.8627 -1.02 TD
0.294 Tw
(from our perspective, if one of the big three goes into so-called )Tj
T*
0.098 Tw
(Chapter 11, the American public is not going to buy an automobile )Tj
T*
0.052 Tw
(from a company that is in bankruptcy. )Tj
1 -1.02 TD
0.13 Tw
(Chairman D)Tj
8 0 0 7.6194 215.8991 212.6 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.5708 212.6 Tm
0.13 Tw
(. Let me ask you something. Someone asked me )Tj
-8.7571 -1.02 TD
0.116 Tw
(today if it was a prepackaged bankruptcy with Federal guarantees )Tj
T*
0.052 Tw
(behind it. Is your answer still the same? )Tj
1 -1.02 TD
0.122 Tw
(Mr. G)Tj
8 0 0 7.6194 185.4396 182 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.8867 182 Tm
0.122 Tw
(. My answer would still be the same. I do not )Tj
-9.8887 -1.02 TD
0.286 Tw
(believe it would happen successfully, and more importantly, the )Tj
T*
0.084 Tw
(way that the supply base is interlaced with all of the big three and )Tj
T*
0.15 Tw
(even some of the foreign brands, if one of these companies was to )Tj
0 -1.01 TD
0.156 Tw
(go into bankruptcy, I would almost bet it would take two of them )Tj
T*
0.052 Tw
(or another one with it and possibly all three of them. )Tj
1 -1.01 TD
0.174 Tw
(But I did want to go back again and point out the risk here to )Tj
-1 -1.01 TD
0.052 Tw
(the PBGC with the pensions and then the 45 percent of the retirees )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00045)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
149 0 obj
<>/ExtGState<>>>
endobj
150 0 obj
<>
endobj
151 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(42 )Tj
-15.344 -2 TD
0.292 Tw
(who are not Medicare-eligible, so another major addition to our )Tj
0 -1 TD
0.052 Tw
(woes, if you will. )Tj
1 -1 TD
0.154 Tw
(Chairman D)Tj
8 0 0 7.6194 216.1391 621 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.8108 621 Tm
0.154 Tw
(. Yes. Let me ask you something one of my col-)Tj
-8.7811 -1 TD
0.19 Tw
(leagues raised, and I will raise it and they may want to raise it, )Tj
T*
0.224 Tw
(as well. Again, going back in the early 2003/2005, when interest )Tj
T*
0.162 Tw
(rates were the lowest they had been in 45 or 50 years, there was )Tj
T*
0.214 Tw
(a real pushing money out the door. That is when you get to the )Tj
T*
0.192 Tw
(17 million, I think, those numbers, which are high numbers, and )Tj
T*
0.052 Tw
(obviously the oversupply. )Tj
1 -1 TD
0.202 Tw
(The question was raised earlier, aside from talking about obvi-)Tj
-1 -1 TD
0.25 Tw
(ously the financial crisis we are in, looking back introspectively, )Tj
T*
0.146 Tw
(what mistakes did the industry make that contributed in addition )Tj
T*
0.108 Tw
(to this? Is it only the financial crisis, or were there other decisions )Tj
T*
0.144 Tw
(that were made by the industry that could have helped avoid this )Tj
T*
0.052 Tw
(or minimized the kind of problems we are looking at today? )Tj
1 -1 TD
0.242 Tw
(Mr. M)Tj
8 0 0 7.6194 188.2995 490.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.235 490.9999 Tm
0.242 Tw
(. I probablyBob and I are relatively new and I )Tj
-7.5235 -1 TD
0.178 Tw
(would never feel qualified to comment too thoroughly on the past )Tj
T*
0.126 Tw
(strategic decisions, but I think your issue about what the real run )Tj
T*
0.194 Tw
(rate is, what the real demand is, is a very serious question. And )Tj
T*
0.106 Tw
(I think in the conversations that we have all had, the direction we )Tj
T*
0.228 Tw
(are going with the companies, we are assuming thatwe should )Tj
T*
0.052 Tw
(assume that there is a lower run rate. What is the real )Tj
1 -1 TD
0.178 Tw
(Chairman D)Tj
8 0 0 7.6194 216.3791 421 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.0508 421 Tm
0.178 Tw
(. What do you think that might be? If it is not )Tj
-8.8051 -1 TD
0.052 Tw
(17, what should it be? )Tj
1 -1 TD
0.244 Tw
(Mr. M)Tj
8 0 0 7.6194 188.3195 401 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.255 401 Tm
0.244 Tw
(. Well, we clearly dont know, but separating out )Tj
-7.5255 -1 TD
0.112 Tw
(what has happened because of the current financial crisis and eco-)Tj
T*
0.22 Tw
(nomic slowdown has kind of masked that right now. But we are )Tj
T*
0.248 Tw
(going through vehicle by vehicle, each size, what is the real de-)Tj
T*
0.252 Tw
(mand? But I think there is a real possibility that over the long )Tj
T*
0.052 Tw
(term, it could be a lot less than that 17 million. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 341 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 341 Tm
0.052 Tw
(. Yes. )Tj
-7.6791 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 330.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 330.9999 Tm
0.052 Tw
(. And we are sizing our companies accordingly. )Tj
-6.3335 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 320.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 320.9999 Tm
0.052 Tw
(. Mr. Nardelli. )Tj
-7.6791 -1 TD
0.244 Tw
(Mr. N)Tj
8 0 0 7.6194 187.0296 311 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 224.509 311 Tm
0.244 Tw
(. So, Mr. Chairman, let me answer two or three )Tj
-7.7509 -1 TD
0.116 Tw
(points, please. First of all, having been there a year-and-a-half, let )Tj
T*
0.052 Tw
(me share with you what we did find and what we did do. We imme-)Tj
T*
0.136 Tw
(diately eliminated four vehicle nameplates because what we found )Tj
T*
0.068 Tw
(is they were designed for Europe and being sold in the U.S. We im-)Tj
T*
0.24 Tw
(mediately put in the first ever Chief Customer Officer. We have )Tj
T*
0.206 Tw
(identified over 400 line items to improve performance, reliability, )Tj
T*
0.31 Tw
(durability, and finish. So yes, we have made some mistakes in )Tj
T*
0.258 Tw
(Chrysler and what we are trying to do is move expeditiously to )Tj
T*
0.096 Tw
(remedy those. Our warranty costs as a result of that in the last 15 )Tj
T*
0.254 Tw
(months has gone down 29 percent by focusing on customer first )Tj
T*
0.052 Tw
(and quality, period. )Tj
1 -1 TD
0.158 Tw
(Your other point, and having spent a lot of time in the housing )Tj
-1 -1 TD
0.262 Tw
(industry, I can share with you that there was this unbelievable )Tj
T*
0.092 Tw
(bubble. As you know, people were extracting a tremendous amount )Tj
T*
0.208 Tw
(of equity, trillions of dollars, and reinvesting and rolling up. The )Tj
T*
0.128 Tw
(mistake the Chrysler probably made during that period is that we )Tj
T*
0.162 Tw
(were responding to the customer who wanted bigger, more expen-)Tj
T*
0.286 Tw
(sive, higher horsepower vehicles to go with their second homes, )Tj
T*
0.228 Tw
(their boats, their trailers, and we chased that consumer demand )Tj
T*
0.118 Tw
(up. Lesson learned for us, and we are moving as fast as we can to )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00046)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
152 0 obj
<>/ExtGState<>>>
endobj
153 0 obj
<>
endobj
154 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(43 )Tj
-15.344 -2 TD
0.222 Tw
(make sure our product portfolio is much more balanced, that we )Tj
0 -1 TD
0.142 Tw
(have smaller, more fuel efficient, more efficient cars to blend with )Tj
T*
0.224 Tw
(those things that we are doing, both like Alan and Rick, in pro-)Tj
T*
0.204 Tw
(ducing hybrids, producing electric vehicles, to make sure that we )Tj
T*
0.052 Tw
(have the appropriate blend as we go forward. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 591 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 591 Tm
0.052 Tw
(. Mr. Wagoner. )Tj
-7.6791 -1 TD
0.09 Tw
(Mr. W)Tj
8 0 0 7.6194 187.1495 581 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.445 581 Tm
0.09 Tw
(. I just wantyour comment about the 2003, 2004, )Tj
-7.6445 -1 TD
0.232 Tw
(2005 period, I think it was a period that in retrospect was defi-)Tj
T*
0.174 Tw
(nitely fueled by low-cost credit, ready availability of credit to just )Tj
T*
0.284 Tw
(about anybody who wanted it under, frankly, looser terms than )Tj
T*
0.268 Tw
(probably would have been appropriate in retrospect. I think the )Tj
T*
0.324 Tw
(wealth that was in the housing market, or perceived wealth, I )Tj
T*
0.09 Tw
(think a lot of that was taken out by people with home equity loans )Tj
T*
0.052 Tw
(and they would trade up and buy vehicles. )Tj
1 -1 TD
0.114 Tw
(And then I would have to say, within the industry, we had a bit )Tj
-1 -1 TD
0.204 Tw
(of a structural issue, which I know from GMs side we had a lot )Tj
T*
0.132 Tw
(of employees. We had huge cash obligations. I mentioned we owed )Tj
T*
0.168 Tw
($103 billion, or we paid over a certain period that in health care. )Tj
T*
0.166 Tw
(And so the pressure to keep revenues quite high, and I think the )Tj
T*
0.114 Tw
(learning from that period is we really have had to significantly re-)Tj
T*
0.138 Tw
(duce our structural costs so we dont have to force, if you will, try )Tj
T*
0.052 Tw
(to push a string when the market isnt really there. )Tj
1 -1 TD
0.154 Tw
(And second of all, we are all going to have to adapt to a period )Tj
-1 -1 TD
0.084 Tw
(of, I think, not only much more realistic credit terms, which means )Tj
T*
0.566 Tw
(much less leasing, needing customers to offer some sort of )Tj
T*
0.11 Tw
(downpayments, but we are also going to have to stick on this path )Tj
T*
0.21 Tw
(that while energy prices have plummeted here recently, we dont )Tj
T*
0.132 Tw
(for a second believe that that is a long-term situation. It is driven )Tj
T*
0.226 Tw
(by the current credit crisis, and eventually with the growing de-)Tj
T*
0.056 Tw
(mand for autos around the world, we have got to stick with the fuel )Tj
T*
0 Tw
(economy. )Tj
1 -1 TD
0.198 Tw
(So, I mean, it was a heady period to a certain extent, and for, )Tj
-1 -1 TD
0.068 Tw
(like, 5 or 6 years, the industry ran over 17 million. I think, as Alan )Tj
T*
0.184 Tw
(suggested, for me, a more likely trend volume, if we werent in a )Tj
T*
(massive credit crisis, and it is probably a million and a half, two )Tj
T*
0.35 Tw
(million less anyway, rather than if we were normal conditions )Tj
T*
0.134 Tw
(today we would probably be running more like, I would guess, 15- )Tj
T*
0.346 Tw
(and-a-half or 16 million units than 17-and-a-half or 18 million )Tj
T*
0 Tw
(units. )Tj
1 -1 TD
0.278 Tw
(And it could actually be lower, and the other lesson we have )Tj
-1 -1 TD
0.172 Tw
(learned is we are planning our business on a much lower volume )Tj
T*
0.118 Tw
(than that, and if we have to stretch on the up-side, that is a more )Tj
T*
0.052 Tw
(fun thing to do, anyway. )Tj
1 -1 TD
0.228 Tw
(Chairman D)Tj
8 0 0 7.6194 216.8791 210.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.5508 210.9999 Tm
0.228 Tw
(. Let me respectfully suggest, as well, here, in )Tj
-8.8551 -1 TD
0.148 Tw
(addition towe are talking about credit as if it were some sort of )Tj
T*
0.052 Tw
(outside source. I mean, you were providing the sources of credit. )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 180.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 180.9999 Tm
0.052 Tw
(. Right. )Tj
-6.6065 -1 TD
0.108 Tw
(Chairman D)Tj
8 0 0 7.6194 215.6791 171 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.3508 171 Tm
0.108 Tw
(. You were making these decisions involving )Tj
-7.7351 -1 TD
0.052 Tw
(Mr. W)Tj
8 0 0 7.6194 186.7695 160.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 160.9999 Tm
0.052 Tw
(. Sure. )Tj
-6.6065 -1 TD
0.396 Tw
(Chairman D)Tj
8 0 0 7.6194 218.5591 150.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 237.2308 150.9999 Tm
0.396 Tw
(. So some acknowledgement of the fact that )Tj
-9.0231 -1 TD
0.132 Tw
(while certainly that was going on in the housing sector, we all ac-)Tj
T*
0.336 Tw
(knowledge that, we had 75 hearings on the housing. But in a )Tj
T*
0.264 Tw
(sense, GMAC is providing that credit at those low rates and so )Tj
T*
0.052 Tw
(forth at the time. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00047)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
155 0 obj
<>/ExtGState<>>>
endobj
156 0 obj
<>
endobj
157 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(44 )Tj
-14.344 -2 TD
0.052 Tw
(Mr. W)Tj
8 0 0 7.6194 186.7695 641 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 641 Tm
0.052 Tw
(. Yes. It was )Tj
-6.6065 -1.02 TD
0.62 Tw
(Chairman D)Tj
8 0 0 7.6194 220.7991 630.8 Tm
0 Tw
(ODD)Tj
10 0 0 10 239.4708 630.8 Tm
0.62 Tw
(. Was there any acknowledgement at the )Tj
-9.2471 -1.02 TD
0 Tw
(time )Tj
1 -1.02 TD
0.052 Tw
(Mr. W)Tj
8 0 0 7.6194 186.7695 610.4 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 610.4 Tm
0.052 Tw
(. Sure. )Tj
-6.6065 -1.02 TD
0.2 Tw
(Chairman D)Tj
8 0 0 7.6194 216.5991 600.2 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.2708 600.2 Tm
0.2 Tw
(. that what you were doing here was actu-)Tj
-8.8271 -1.02 TD
0.148 Tw
(ally going to end up in a bubble kind of situation, that could only )Tj
T*
0.052 Tw
(end up in the situation we are now facing? )Tj
1 -1.02 TD
0.132 Tw
(Mr. W)Tj
8 0 0 7.6194 187.5695 569.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.865 569.6 Tm
0.132 Tw
(. Fair question. We had at GMAC and continue to )Tj
-7.6865 -1.02 TD
0.174 Tw
(track the performance on their loans of consumers. And while we )Tj
T*
0.052 Tw
(have had some increase in delinquency and stuff, we )Tj
1 -1.02 TD
0.134 Tw
(Chairman D)Tj
8 0 0 7.6194 215.9391 539 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.6108 539 Tm
0.134 Tw
(. Were you pushing them at all? Were we push-)Tj
-8.7611 -1.02 TD
0.052 Tw
(ing them out the door? Is there any acknowledgment of )Tj
1 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 518.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 518.6 Tm
0.052 Tw
(. Pushing loans? )Tj
-6.6065 -1.02 TD
0.126 Tw
(Chairman D)Tj
8 0 0 7.6194 215.8591 508.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.5308 508.4 Tm
0.126 Tw
(. Pushing the credit out the door, people coming )Tj
-8.7531 -1.02 TD
0.102 Tw
(in and wanting to buy that bigger, faster, heavier automobile. Was )Tj
T*
0.052 Tw
(anybody saying, wait a minute? )Tj
1 -1.02 TD
0.098 Tw
(Mr. W)Tj
8 0 0 7.6194 187.2295 477.8 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.525 477.8 Tm
0.098 Tw
(. Well, I think GMAC management was focused on )Tj
-7.6525 -1.02 TD
0.162 Tw
(the fact that they needed to be paid back because the marginto )Tj
T*
0.098 Tw
(be fair, I can give you the data later, get it, but the consumer pay-)Tj
T*
0.414 Tw
(ments on automobiles, the records are pretty good. We really )Tj
T*
0.354 Tw
(havent seen a huge spike up in losses there. I mean, I dont )Tj
T*
0.212 Tw
(thinkI am not sure I would put the responsibility on GMAC. I )Tj
T*
0.108 Tw
(think our industry was running to a revenue model to try to make )Tj
T*
0.206 Tw
(sure we could meet the financial obligations, and soand by the )Tj
T*
0.278 Tw
(way, the domestics did it, but the foreign-owned manufacturers, )Tj
T*
0.17 Tw
(very aggressive on leasing, as well. So it was kind of an industry )Tj
T*
0.076 Tw
(culture and I think we have had to address it rather painfully here )Tj
T*
0.052 Tw
(in the last 2 or 3 years. )Tj
1 -1.02 TD
0.324 Tw
(Chairman D)Tj
8 0 0 7.6194 217.8391 355.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 236.5108 355.4 Tm
0.324 Tw
(. May I ask the other two to respond to my )Tj
-8.9511 -1.02 TD
0.166 Tw
(point? And again, I realize you have only been here a short time, )Tj
T*
0.052 Tw
(but obviously you have followed the industry. )Tj
1 -1.02 TD
0.136 Tw
(Mr. N)Tj
8 0 0 7.6194 185.9496 324.8 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.429 324.8 Tm
0.136 Tw
(. Mr. Chairman, I would say, if I understand your )Tj
-7.6429 -1.02 TD
0.128 Tw
(question directly, I dont think our captive finance company at the )Tj
T*
0.146 Tw
(time, which was, of course, owned by Daimler, told customers, no, )Tj
T*
0.22 Tw
(you should not buy a bigger, more luxurious vehicle. I think the )Tj
T*
0.228 Tw
(customer came in, had extracted a tremendous amount of equity )Tj
T*
0.262 Tw
(out of their home, they were financially sound at the time, and )Tj
T*
0.152 Tw
(therefore the transaction took place. And as Rick indicated, if you )Tj
T*
0.168 Tw
(look at our delinquency and our repossessions, while they are up, )Tj
T*
0.106 Tw
(it is modest compared to what we are seeing in the housing indus-)Tj
T*
0.052 Tw
(try relative to foreclosure or bad loans. )Tj
1 -1.02 TD
0.282 Tw
(Chairman D)Tj
8 0 0 7.6194 217.4191 222.8 Tm
0 Tw
(ODD)Tj
10 0 0 10 236.0908 222.8 Tm
0.282 Tw
(. I am going to get back to you, Doctor, in a )Tj
-8.9091 -1.02 TD
0.052 Tw
(minute. Finish up here, Mr. Mulally. )Tj
1 -1.02 TD
0.096 Tw
(Mr. M)Tj
8 0 0 7.6194 186.8395 202.4 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.775 202.4 Tm
0.096 Tw
(. Yes, Mr. Chairman. I wouldI think it is a really )Tj
-7.3775 -1.02 TD
0.19 Tw
(good point. I would just add in our case, we were just looking at )Tj
T*
0.186 Tw
(the data, that I would say we didnt offer easy credit because we )Tj
T*
0.108 Tw
(always had relatively high FICO scores. But to your point, the rel-)Tj
T*
0.066 Tw
(ative interest rate was relatively low to the consumer. You combine )Tj
T*
0.136 Tw
(that with the low fuel prices and I think that, along with the life-)Tj
0 -1.01 TD
0.178 Tw
(style, that did incentivize a lot of borrowing. It kind of goes back )Tj
T*
0.194 Tw
(to the issue we all have of kind of living beyond our means, and )Tj
T*
0.176 Tw
(with a lower savings rate, it just continued to decline. But as far )Tj
T*
0.056 Tw
(as fueling that with low credit scores, we have not done that. It has )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00048)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
158 0 obj
<>/ExtGState<>>>
endobj
159 0 obj
<>
endobj
160 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(45 )Tj
-15.344 -2 TD
0.17 Tw
(been a good business for us, a good prudent business with our fi-)Tj
0 -1.02 TD
0.052 Tw
(nance company. )Tj
1 -1.02 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 620.6 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 620.6 Tm
0.052 Tw
(. Doctor, you wanted to make a comment. )Tj
-7.6791 -1.02 TD
0.162 Tw
(Mr. M)Tj
8 0 0 7.6194 187.4995 610.4 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.7872 610.4 Tm
0.162 Tw
(. Yes. I think it is important to recognize that these )Tj
-6.4787 -1.02 TD
0.198 Tw
(three companies in the context of the other major Japanese com-)Tj
T*
0.166 Tw
(petitors and Korean competitors, no one of them can decide to sit )Tj
T*
0.092 Tw
(on the sidelines when there is a credit hysteria and not participate )Tj
T*
0.082 Tw
(because of the loss of market share, then the consequent impact on )Tj
T*
0.19 Tw
(their product development budgets and so forth. It isnt like they )Tj
T*
0.222 Tw
(could get together and say, gee, we are making too much credit. )Tj
T*
0.106 Tw
(You become part of the economy. It is much like the homebuyer in )Tj
T*
0.082 Tw
(2005 saying, gee, there may be a bubble out there. I should sit this )Tj
T*
0.158 Tw
(out. And they sit it out 2 years and they find out the house costs )Tj
T*
0.052 Tw
($100,000 more than before. They have to participate. )Tj
1 -1.02 TD
0.142 Tw
(That said, America is over-car-ed just as it is over-housed. I am )Tj
-1 -1.02 TD
0.086 Tw
(a macroeconomist and I know something about this. We can expect )Tj
T*
0.158 Tw
(to sell fewer cars going forward for a variety of reasons. Credit is )Tj
T*
0.254 Tw
(going to be more expensive. People are going to be saving more )Tj
T*
0.2 Tw
(than they have in the past. The cars last longer. They are much )Tj
T*
0.104 Tw
(more durable. People have been buying cars because they get tired )Tj
T*
0.052 Tw
(of them, not because they wear out. I drive a Ford truck. )Tj
1 -1.02 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 426.8 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 426.8 Tm
0.052 Tw
(. Yes. )Tj
-6.3335 -1.02 TD
0 Tw
([Laughter.] )Tj
T*
0.12 Tw
(Chairman D)Tj
8 0 0 7.6194 215.7991 406.4 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.4708 406.4 Tm
0.12 Tw
(. Why dont you move your chair? Would you sit )Tj
-8.7471 -1.02 TD
0.052 Tw
(down over at this end here? )Tj
1 -1.02 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 386 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 386 Tm
0.052 Tw
(. Ask Mark Fields who sold it to him. )Tj
-6.3335 -1.02 TD
0.168 Tw
(Mr. M)Tj
8 0 0 7.6194 187.5595 375.8 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.8472 375.8 Tm
0.168 Tw
(. In any case, they are going to last a long time. As )Tj
-6.4847 -1.02 TD
0.096 Tw
(a consequence, and this is important, the industry each year needs )Tj
T*
0.182 Tw
(fewer people to make the same number of cars and it is going to )Tj
T*
0.158 Tw
(be making fewer cars. Therefore, those severance charges that we )Tj
T*
0.26 Tw
(see, those special charges, are going to continue for a very long )Tj
T*
0.212 Tw
(time. What is it, $105,000 per worker? We are going to continue )Tj
T*
0.182 Tw
(to see severance charges. It is going to be difficult for these guys )Tj
T*
0.086 Tw
(to balance the books with the cost structure they have in that kind )Tj
T*
0.052 Tw
(of environment. )Tj
1 -1.02 TD
0.208 Tw
(When you talk about things like if we let them do Chapter 11 )Tj
-1 -1.02 TD
0.25 Tw
(or not, you have to realize that probably at some point there is )Tj
T*
0.058 Tw
(going to be a crisis over that issue and that if you talk about things )Tj
T*
0.188 Tw
(like prepackaged Chapter 11 and so forth, it is probably not best )Tj
T*
0.198 Tw
(to prepackage so it is administered by this body or the executive )Tj
T*
0 Tw
(branch. )Tj
1 -1.02 TD
0.174 Tw
(You are very good at writing banking regulations, despite what )Tj
-1 -1.02 TD
0.06 Tw
(your critics say, but you are not good at reworking companies. That )Tj
T*
0.196 Tw
(is why we have bankruptcy courts. If we are going to have some )Tj
T*
0.182 Tw
(sort of prepackaged process, we want to access the expertise that )Tj
T*
0.082 Tw
(those people have, but we have to do it in a way that mitigates the )Tj
T*
0.098 Tw
(real issues that are raised. Warranty issues can be resolved. There )Tj
T*
0.068 Tw
(are such things as third-party warranties and assurances of contin-)Tj
T*
0.14 Tw
(ued operation. We need to accelerate the payments to suppliers to )Tj
0 -1.01 TD
0.052 Tw
(ensure that they get paid. )Tj
1 -1.01 TD
0.15 Tw
(This isnt an airline. They do raise a valid point. This is not an )Tj
-1 -1.01 TD
0.208 Tw
(airline going under. But it has to be carefully conceived in those )Tj
T*
0.202 Tw
(terms. This is not a matter of whether it happens now or not at )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00049)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
161 0 obj
<>/ExtGState<>>>
endobj
162 0 obj
<>
endobj
163 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(46 )Tj
-15.344 -2 TD
0.156 Tw
(all. Some kind of reorganization process has to happen because of )Tj
0 -1.02 TD
0.052 Tw
(the very issues you are raising. )Tj
1 -1.02 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 620.6 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 620.6 Tm
0.052 Tw
(. I took a lot of time and I apologize. )Tj
-7.6791 -1.02 TD
(Senator Shelby. )Tj
T*
0.202 Tw
(Senator S)Tj
8 0 0 7.6194 204.3993 600.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.5829 600.2 Tm
0.202 Tw
(. Thank you. All of you are here today because )Tj
-8.6583 -1.02 TD
0.284 Tw
(you realize, and I think a lot of us realize you are in dire cir-)Tj
T*
0.222 Tw
(cumstances. You wouldnt be here otherwise. But with both your )Tj
T*
0.066 Tw
(market share declining and the overall market for automobiles con-)Tj
T*
0.152 Tw
(tracting, why should we believe that your firms are capable of re-)Tj
T*
0.078 Tw
(structuring now when you were unable to do so under better condi-)Tj
T*
0.204 Tw
(tions, more benign conditions? A lot of people think you have al-)Tj
T*
0.184 Tw
(ready failed, that your model has failed, that you are here to get )Tj
T*
0.092 Tw
(life support. You have burned billions collectively, the three of you, )Tj
T*
0.106 Tw
(the companies have earned billions and billions and billions of dol-)Tj
T*
0.052 Tw
(lars in trying to turn around your industry. )Tj
1 -1.02 TD
0.246 Tw
(What would you do with the money if you were able to get a )Tj
-1 -1.02 TD
0.236 Tw
(tranche of $25 billion, and I am sure if you got $25 billion, you )Tj
T*
0.06 Tw
(would want 25 or 30 or 40 more. What would you do with it specifi-)Tj
T*
0.258 Tw
(cally, and how would you pay this money back to the taxpayer, )Tj
T*
0.052 Tw
(which is a very important question for me? )Tj
1 -1.02 TD
(Mr. Wagoner, we will start with you. You are GM. )Tj
T*
0.176 Tw
(Mr. W)Tj
8 0 0 7.6194 188.0096 426.8 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.305 426.8 Tm
0.176 Tw
(. Yes, sir. First of all, you said, what is different. )Tj
-7.7305 -1.02 TD
0.086 Tw
(I mean, the fact is that our capacity in 2005 was about five million )Tj
T*
0.098 Tw
(units in North America in total and now that isor U.S. and Can-)Tj
T*
0.132 Tw
(ada, and now that number, by the time we finish the adjustments )Tj
T*
0.1 Tw
(that we have announced, or around 2010, will be, as I recall, down )Tj
T*
0.148 Tw
(to about 3.3, 3.4 million units. So we have taken a huge chunk of )Tj
T*
0.208 Tw
(capacity out, and we have also, we have taken out 47 percent of )Tj
T*
0.052 Tw
(our workforce over about the last six )Tj
1 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 345.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 345.2 Tm
0.052 Tw
(. Well, why arent you making money? )Tj
-7.5083 -1.02 TD
0.092 Tw
(Mr. W)Tj
8 0 0 7.6194 187.1695 335 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.465 335 Tm
0.092 Tw
(. Becausewell, I think two reasons. Our financial )Tj
-7.6465 -1.02 TD
0.316 Tw
(results have reflected quite significant costs to restructure, and )Tj
T*
0.08 Tw
(that has cost cash for sure, but hopefully with the amount we have )Tj
T*
0.168 Tw
(going forward, we wont have to decrease our capacity another 30 )Tj
T*
0.206 Tw
(or 40 percent. And the other issue we are obviously facing today )Tj
T*
0.096 Tw
(is that the market has simply plunged, in part because people who )Tj
T*
0.126 Tw
(want to buy our cars cant get credit. But we try to run models as )Tj
T*
0.052 Tw
(accurately as we can. It has been a little tough getting )Tj
1 -1.02 TD
0.368 Tw
(Senator S)Tj
8 0 0 7.6194 206.0593 253.4 Tm
0 Tw
(HELBY)Tj
10 0 0 10 235.2429 253.4 Tm
0.368 Tw
(. Wait a minute. You werent making money )Tj
-8.8243 -1.02 TD
0.12 Tw
(when you had cheap money flowing everywhere a year or two ago. )Tj
1 -1.02 TD
0.33 Tw
(Mr. W)Tj
8 0 0 7.6194 189.5495 233 Tm
0 Tw
(AGONER)Tj
10 0 0 10 225.845 233 Tm
0.33 Tw
(. When you take away the charges for restruc-)Tj
-7.8845 -1.02 TD
0.052 Tw
(turing the company, from an operating perspective )Tj
1 -1.02 TD
0.336 Tw
(Senator S)Tj
8 0 0 7.6194 205.7393 212.6 Tm
0 Tw
(HELBY)Tj
10 0 0 10 234.9229 212.6 Tm
0.336 Tw
(. Well, I know, but you have to consider the )Tj
-8.7923 -1.02 TD
0 Tw
(whole. )Tj
1 -1.02 TD
0.094 Tw
(Mr. W)Tj
8 0 0 7.6194 187.1895 192.2 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.485 192.2 Tm
0.094 Tw
(. Sure. I mean, obviously, we have put $103 billion )Tj
-7.6485 -1.02 TD
0.052 Tw
(over the last 15 years in )Tj
1 -1.02 TD
0.06 Tw
(Senator S)Tj
8 0 0 7.6194 202.9793 171.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.1628 171.8 Tm
0.06 Tw
(. You have put over $100 billion in restructuring? )Tj
-7.5163 -1.02 TD
0.26 Tw
(Mr. W)Tj
8 0 0 7.6194 188.8495 161.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 225.145 161.6 Tm
0.26 Tw
(. No, this is just in post-retiree health care and )Tj
-7.8145 -1.02 TD
0 Tw
(pensions. )Tj
1 -1.01 TD
0.052 Tw
(Senator S)Tj
8 0 0 7.6194 202.8993 141.2999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 141.2999 Tm
0.052 Tw
(. OK. )Tj
-7.5083 -1.01 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 131.1999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 131.1999 Tm
0.052 Tw
(. So there is an amount )Tj
-6.6065 -1.01 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 121.0999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 121.0999 Tm
0.052 Tw
(. What have you spent on restructuring, sir? )Tj
-7.5083 -1.01 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 110.9998 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 110.9998 Tm
0.052 Tw
(. I am sorry? )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00050)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
164 0 obj
<>/ExtGState<>>>
endobj
165 0 obj
<>
endobj
166 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(47 )Tj
-14.344 -2 TD
0.124 Tw
(Senator S)Tj
8 0 0 7.6194 203.6193 641 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.8029 641 Tm
0.124 Tw
(. What have you spent in the last 5 years on re-)Tj
-8.5803 -1.02 TD
0.052 Tw
(structuring? You have spent billions of dollars. )Tj
1 -1.02 TD
0.212 Tw
(Mr. W)Tj
8 0 0 7.6194 188.3695 620.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.665 620.6 Tm
0.212 Tw
(. We have. We have spent a lot. I cant give you )Tj
-7.7665 -1.02 TD
0.052 Tw
(an exact number, but )Tj
1 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 600.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 600.2 Tm
0.052 Tw
(. You cant give it to me )Tj
-7.5083 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 590 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 590 Tm
0.052 Tw
(. I can )Tj
-6.6065 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 579.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 579.8 Tm
0.052 Tw
(. Will you furnish that for the record? )Tj
-7.5083 -1.02 TD
0.102 Tw
(Mr. W)Tj
8 0 0 7.6194 187.2695 569.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.565 569.6 Tm
0.102 Tw
(. Yes, sir, we can certainly do that. But as we look )Tj
-7.6565 -1.02 TD
0.116 Tw
(at the business model going forward, at what I would say conserv-)Tj
T*
0.178 Tw
(ative industry, so let us say 12 millionwe thought was conserv-)Tj
T*
0.102 Tw
(ative12 million units next year, which would be a very low num-)Tj
T*
0.252 Tw
(ber, maybe 13 the following year, and then trending up to, say, )Tj
T*
0.138 Tw
(level out at 14.5, 15, we believe in a business model that we have )Tj
T*
0.172 Tw
(got structured today we can be profitable, not as profitable as we )Tj
T*
0.136 Tw
(would like, so we have more work to do in all aspects of our busi-)Tj
T*
0.052 Tw
(ness. I guess that will never end. But we believe )Tj
1 -1.02 TD
0.3 Tw
(Senator S)Tj
8 0 0 7.6194 205.3793 477.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 234.5629 477.8 Tm
0.3 Tw
(. What would you say to people, though, that )Tj
-8.7563 -1.02 TD
0.08 Tw
(have said, we have heard that before? You are the CEO of GM. We )Tj
T*
0.14 Tw
(have heard that you are going to be profitable, that you are going )Tj
T*
0.052 Tw
(to make money off of this )Tj
1 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 437 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 437 Tm
0.052 Tw
(. Well )Tj
-6.6065 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 426.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 426.8 Tm
0.052 Tw
(. but you havent. )Tj
-7.5083 -1.02 TD
0.15 Tw
(Mr. W)Tj
8 0 0 7.6194 187.7495 416.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.045 416.6 Tm
0.15 Tw
(. I mean, I would say, Senator Shelby, if you look )Tj
-7.7045 -1.02 TD
0.114 Tw
(at the actions that we have taken, this is hard stuff and it has re-)Tj
T*
0.134 Tw
(quired a lot of good cooperation with our unions, but I would take )Tj
T*
0.122 Tw
(as evidence coming out of the labor agreement last year, obviously )Tj
T*
0.126 Tw
(the people who were frequently critical of us, the Wall Street ana-)Tj
T*
0.188 Tw
(lysts, said, hey, these guys have gotten their labor costs competi-)Tj
T*
0.122 Tw
(tive finally, layered on with the fact that they have got good prod-)Tj
T*
0.294 Tw
(ucts now. They are moving hard in technology, quality, produc-)Tj
T*
0 Tw
(tivity, )Tj
/F6 1 Tf
3.176 0 TD
0.138 Tw
(et cetera. )Tj
/F1 1 Tf
4.6079 0 TD
(And so our stock price went up a lot, to, like, $42 )Tj
-7.7839 -1.02 TD
0.07 Tw
(a share. I think that was evidence that people felt like if the indus-)Tj
T*
0.106 Tw
(try had continued even at 15, 16 million units, we would have had )Tj
T*
0.052 Tw
(a decent business. )Tj
1 -1.02 TD
0.136 Tw
(But this has come down pretty quickly. We reacted. We said we )Tj
-1 -1.02 TD
0.052 Tw
(will come up with additional steps to save $20 billion )Tj
1 -1.02 TD
0.22 Tw
(Senator S)Tj
8 0 0 7.6194 204.5793 273.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.7629 273.8 Tm
0.22 Tw
(. What are you going to do with that money if )Tj
-8.6763 -1.02 TD
0.052 Tw
(you were to get it? )Tj
1 -1.02 TD
0.208 Tw
(Mr. W)Tj
8 0 0 7.6194 188.3295 253.4 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.625 253.4 Tm
0.208 Tw
(. We are going to use it to continue product pro-)Tj
-7.7625 -1.02 TD
0.108 Tw
(grams, because we know over time, as Dr. Morici said, if you dont )Tj
T*
0.092 Tw
(have competitive products, you dont win. We are going to continue )Tj
T*
0.204 Tw
(programs like the Chevy Volt, because obviously it is a high pri-)Tj
T*
0.2 Tw
(ority to be able to meet the fuel economy standards. And we are )Tj
T*
0.098 Tw
(going to need some of that money to pay suppliers to keep the sys-)Tj
T*
0.052 Tw
(tem going. )Tj
1 -1.02 TD
0.102 Tw
(Senator S)Tj
8 0 0 7.6194 203.3993 182 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.5829 182 Tm
0.102 Tw
(. Ford? And how are you going to pay the money )Tj
-8.5583 -1.02 TD
0.052 Tw
(back? Neither one of you answered that. )Tj
1 -1.02 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 161.6 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 161.6 Tm
0.052 Tw
(. I welcome your question. )Tj
-6.3335 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 151.4 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 151.4 Tm
0.052 Tw
(. Yes. )Tj
-7.5083 -1.01 TD
0.096 Tw
(Mr. M)Tj
8 0 0 7.6194 186.8395 141.2999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.775 141.2999 Tm
0.096 Tw
(. We started on this plan. It was a very exciting vi-)Tj
-7.3775 -1.01 TD
0.1 Tw
(sion to create, and the most important thing that we had to decide )Tj
T*
0.094 Tw
(is are we going to create a sustainable automobile company, mean-)Tj
T*
0.126 Tw
(ing exactly that, that year over year, are you going to reverse this )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00051)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
167 0 obj
<>/ExtGState<>>>
endobj
168 0 obj
<>
endobj
169 0 obj
<>
endobj
170 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(48 )Tj
-15.344 -2 TD
0.092 Tw
(decline and start to grow again and can you grow profitably so you )Tj
0 -1 TD
0.052 Tw
(can continue to invest in the business. )Tj
1 -1 TD
0.328 Tw
(So what we decided, a couple of just really fundamentals. It )Tj
-1 -1 TD
0.166 Tw
(doesnt sound like rocket science, but the most important thing is )Tj
T*
0.216 Tw
(we had to make products that people really did want and value. )Tj
T*
0.19 Tw
(And the four things that we decided is they had to be absolutely )Tj
T*
0.14 Tw
(the best in quality, they had to be the best in fuel efficiency, they )Tj
T*
0.052 Tw
(had to be the most safe, and they had to be the best value. )Tj
1 -1 TD
0.086 Tw
(So the first thing we decided was to leverage all of our global as-)Tj
-1 -1 TD
0.28 Tw
(sets, because we make, as you know, dynamite smaller vehicles )Tj
T*
0.164 Tw
(around the world where fuel prices are higher and they are abso-)Tj
T*
0.232 Tw
(lutely best in class. So we complemented our best-in-class larger )Tj
T*
0.124 Tw
(vehicles in the United States by starting to bring in and bring on-)Tj
T*
0.052 Tw
(line smaller, more efficient vehicles. Number one thing. )Tj
1 -1 TD
0.156 Tw
(The second thing, on the quality, every year we continue to im-)Tj
-1 -1 TD
0.118 Tw
(prove the quality where we are now statistically equal to or better )Tj
T*
0.052 Tw
(than our Japanese competitor. )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 471 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 471 Tm
0.052 Tw
(. Are you making money yet? )Tj
-7.5083 -1 TD
0.066 Tw
(Mr. M)Tj
8 0 0 7.6194 186.5396 460.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.475 460.9999 Tm
0.066 Tw
(. And we made money in the first quarter before we )Tj
-7.3475 -1 TD
0.052 Tw
(had this economic decline. But let me finish on the strategy )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 441 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 441 Tm
0.052 Tw
(. OK. )Tj
-7.5083 -1 TD
0.18 Tw
(Mr. M)Tj
8 0 0 7.6194 187.6795 431 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.615 431 Tm
0.18 Tw
(. because it has got to start with the product. )Tj
-7.4615 -1 TD
0.198 Tw
(The second thing, on the fuel efficiency, we made a commitment, )Tj
T*
0.142 Tw
(and it was kind of a highlight for us last year to be asked to par-)Tj
T*
0.052 Tw
(ticipate by Congress in the 2007 Energy Independence and Security )Tj
T*
0.11 Tw
(Act, and we made a commitment that in every vehicle that we put )Tj
T*
0.192 Tw
(out going forward, we would be world class in fuel efficiency and )Tj
T*
0.128 Tw
(we would move right up that CAFE line. So fuel efficiency, we be-)Tj
T*
0.158 Tw
(lieve has moved right up to the top of the consumers decision, so )Tj
T*
0.052 Tw
(we have got to be best in class in that. )Tj
1 -1 TD
0.074 Tw
(And on safety, it is just a given, and right now, the Ford vehicles )Tj
-1 -1 TD
0.168 Tw
(have more five-star ratings than any other brand. So we are in a )Tj
T*
0.052 Tw
(good place right there. )Tj
1 -1 TD
0.07 Tw
(Now on the making money and the productivity, all those actions )Tj
-1 -1 TD
0.204 Tw
(we put in place, starting with the agreement that we made with )Tj
T*
0.092 Tw
(Ron on getting our costs in line and our work rules and everything )Tj
T*
0.238 Tw
(we could do on productivity, we ended up with all of that being )Tj
T*
0.226 Tw
(able to deliver profitability in the first quarter of this year. And )Tj
T*
0.104 Tw
(then we all know what happened to us after the first quarter. And )Tj
T*
0.242 Tw
(the only reason that we are here today is that with the market )Tj
T*
0.218 Tw
(coming down so fast and the credit getting so tight, that we are )Tj
T*
(just overwhelmed by the revenue falling off so much that our li-)Tj
T*
0.052 Tw
(quidity is threatened. )Tj
1 -1 TD
0.19 Tw
(But the key to us going forward is as we go through this, con-)Tj
-1 -1 TD
0.144 Tw
(tinue to invest in the new products, continue to invest in the new )Tj
T*
0.096 Tw
(productivity, and we will come out the other side and we are going )Tj
T*
0.074 Tw
(to be a turbo machine. This is a near-term problem that we are ad-)Tj
T*
0 Tw
(dressing. )Tj
1 -1 TD
0.052 Tw
(Senator S)Tj
8 0 0 7.6194 202.8993 160.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 160.9999 Tm
0.052 Tw
(. Mr. Nardelli. )Tj
-7.5083 -1 TD
0.178 Tw
(Mr. N)Tj
8 0 0 7.6194 186.3696 150.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.849 150.9999 Tm
0.178 Tw
(. Yes, sir, Senator. One of the questions that was )Tj
-7.6849 -1 TD
0.072 Tw
(asked and responded to is there is a third-party organization called )Tj
T*
0.162 Tw
(the Harbour Report and they basically track the number of hours )Tj
T*
0.052 Tw
(it takes to assemble a vehicle. )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 110.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 110.9999 Tm
0.052 Tw
(. I am familiar with that. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00052)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
171 0 obj
<>/ExtGState<>>>
endobj
172 0 obj
<>
endobj
173 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(49 )Tj
-14.344 -2 TD
0.23 Tw
(Mr. N)Tj
8 0 0 7.6194 186.8896 641 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 224.369 641 Tm
0.23 Tw
(. This year, Chrysler is spot-on Toyota. I noticed )Tj
-7.7369 -1 TD
0.102 Tw
(that the comment was made from the Committee, but we are spot- )Tj
T*
0.148 Tw
(on Toyota relative to number of hours. As Ron said, by 2010, Ron )Tj
T*
0.144 Tw
(Gettelfinger said, our hours, our pay per hour will be competitive. )Tj
T*
0.148 Tw
(So therefore, on a vehicle production standpoint, we think we will )Tj
T*
0.052 Tw
(be U.S. and globally competitive. )Tj
1 -1 TD
0.182 Tw
(We are working with our dealer network. We have about 3,500 )Tj
-1 -1 TD
0.252 Tw
(dealers. We have created a Genesis program where basically we )Tj
T*
0.058 Tw
(will consolidate dealers and put three brands under one roof to con-)Tj
T*
0.15 Tw
(tinue to minimize cost. We have taken our overall structure down )Tj
T*
0.09 Tw
(basically assuming a little more conservatively than what the little )Tj
T*
0.21 Tw
(two fellows said. We are assuming that our exit rate will be our )Tj
T*
0.27 Tw
(entrance rate next year, at about 11 million units. We are con-)Tj
T*
0.166 Tw
(tinuing to de-layer the organization and increase the span of con-)Tj
T*
0.172 Tw
(trol of our salaried personnel. We are continuing to try and drive )Tj
T*
0.052 Tw
(efficiency and inefficiency out. )Tj
1 -1 TD
0.164 Tw
(We are adding between $400 to $500 per vehicle on the fit, the )Tj
-1 -1 TD
0.11 Tw
(finish, and the interior to move us up in the J.D. Power ratings so )Tj
T*
0.196 Tw
(that we are more competitive with the transplants, so consumers )Tj
T*
0.148 Tw
(do have a higher reliability confidence level, and in fact, they will )Tj
T*
0.052 Tw
(see the value of the products that we are producing. )Tj
1 -1 TD
0.256 Tw
(We do all those things, sir, and we would assume to pay you )Tj
-1 -1 TD
0.052 Tw
(back just like we would the investors )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 411 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 411 Tm
0.052 Tw
(. Not me, the taxpayers. )Tj
-7.5083 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 401 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 401 Tm
0.052 Tw
(. the taxpayers )Tj
-6.5589 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 391 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 391 Tm
0.052 Tw
(. How would you pay the money back? )Tj
-7.5083 -1 TD
0.118 Tw
(Mr. N)Tj
8 0 0 7.6194 185.7696 381 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.249 381 Tm
0.118 Tw
(. Because we will generate profit and we will have )Tj
-7.6249 -1 TD
0.142 Tw
(to return that. Just as we will pay our debt down from our inves-)Tj
T*
0.052 Tw
(tors, we would pay it back to )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 350.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 350.9999 Tm
0.052 Tw
(. What if you dont, though? )Tj
-7.5083 -1 TD
0.234 Tw
(Mr. N)Tj
8 0 0 7.6194 186.9296 341 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 224.409 341 Tm
0.234 Tw
(. Well, sir, we wouldnt be here today asking for )Tj
-7.7409 -1 TD
0.068 Tw
(this if we didnt have a high confidence level that we could weather )Tj
T*
0.082 Tw
(this economic trough, continue to resize, make these gut-wrenching )Tj
T*
0.112 Tw
(decisions to come out the other side leaner, more agile, and for us, )Tj
T*
0.052 Tw
(a higher quality, higher reliable product. )Tj
1 -1 TD
0.146 Tw
(Senator S)Tj
8 0 0 7.6194 203.8393 290.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.0229 290.9999 Tm
0.146 Tw
(. Doctor, let me ask you this question, the same )Tj
-8.6023 -1 TD
0.17 Tw
(thing. Why should we believewe have got the three CEOs here. )Tj
T*
0.112 Tw
(Why should we believe that they are capable of restructuring, con-)Tj
T*
0.232 Tw
(sidering their past, their immediate past, that they have burned )Tj
T*
0.166 Tw
(through billions of dollars trying to restructure? What will be dif-)Tj
T*
0.066 Tw
(ferent, and has their model failed, and how are we going to get this )Tj
T*
0.052 Tw
(money back if we pay it? )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 220.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 220.9999 Tm
0.052 Tw
(. I am skeptical that you will get it back. )Tj
-5.3687 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 210.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 210.9999 Tm
0.052 Tw
(. I am, too. )Tj
-7.5083 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 200.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 200.9999 Tm
0.052 Tw
(. Let me explain why )Tj
-5.3687 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 190.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 190.9999 Tm
0.052 Tw
(. Yes, sir. )Tj
-7.5083 -1 TD
0.146 Tw
(Mr. M)Tj
8 0 0 7.6194 187.3395 180.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.6272 180.9999 Tm
0.146 Tw
(. and it is no disrespect to these fine gentlemen. )Tj
-6.4627 -1 TD
0.244 Tw
(They really know how to make automobiles. If you go to China, )Tj
T*
0.232 Tw
(where they have a clean slate, and they are competing with the )Tj
T*
0.178 Tw
(Japanese there, they do very well. Here, they dont. Even if their )Tj
T*
0.27 Tw
(labor costs are spot-on, which I dont believe that they are, but )Tj
T*
0.214 Tw
(even if they are, you are in a perpetual model of downsizing be-)Tj
T*
0.188 Tw
(cause you get more productivity every year, and we have a chart )Tj
T*
0.068 Tw
(here that shows that phenomenon from Harbour. Then you are lay-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00053)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
174 0 obj
<>/ExtGState<>>>
endobj
175 0 obj
<>
endobj
176 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(50 )Tj
-15.344 -2 TD
0.142 Tw
(ing people off and you have to pay them $105,000 apiece to leave. )Tj
0 -1.02 TD
0.178 Tw
(You are going to have special charges forever. That is a problem. )Tj
1 -1.02 TD
0.134 Tw
(In terms of productivity, Chrysler is on a par, according to Har-)Tj
-1 -1.02 TD
0.186 Tw
(bour, with Toyota. Ford is not by a fairly large margin, about 10 )Tj
T*
0.104 Tw
(percent, and General Motors is not by about two-thirds of that, ac-)Tj
T*
0.158 Tw
(cording to the data from Harbour as published by the )Tj
/F6 1 Tf
26.4896 0 TD
(Wall Street )Tj
-26.4896 -1.02 TD
0 Tw
(Journal)Tj
/F1 1 Tf
3.6839 0 TD
0.052 Tw
(. If they have better data, I am not aware of it. )Tj
-2.6839 -1.02 TD
0.15 Tw
(So I am somewhat skeptical. It is not that they are not capable )Tj
-1 -1.02 TD
0.11 Tw
(managers, but they are burdened by history and they need a labor )Tj
T*
0.124 Tw
(agreement that truly places them on a par with Honda in Indiana )Tj
T*
0.076 Tw
(and with work rules that are truly on a par with Honda in Indiana )Tj
T*
(or they cant get there from here because the margins in the indus-)Tj
T*
0.052 Tw
(try are simply too thin. )Tj
1 -1.02 TD
0.176 Tw
(Senator S)Tj
8 0 0 7.6194 204.1393 508.4 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.3228 508.4 Tm
0.176 Tw
(. If there is not drastic change, no matter what )Tj
-8.6323 -1.02 TD
0.052 Tw
(we spend on it, it is not going to work, is it? )Tj
1 -1.02 TD
0.156 Tw
(Mr. M)Tj
8 0 0 7.6194 187.4395 488 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.7272 488 Tm
0.156 Tw
(. More than that, it is possible to accomplish drastic )Tj
-6.4727 -1.02 TD
0.33 Tw
(change. Remember, Chapter 11 reorganization hasnt been seri-)Tj
T*
0.23 Tw
(ously considered. What has been seriously considered is the AIG )Tj
T*
0 Tw
(model. )Tj
1 -1.02 TD
0.052 Tw
(Senator S)Tj
8 0 0 7.6194 202.8993 447.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 447.2 Tm
0.052 Tw
(. Sure. )Tj
-7.5083 -1.02 TD
0.078 Tw
(Mr. M)Tj
8 0 0 7.6194 186.6595 437 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.9472 437 Tm
0.078 Tw
(. Show up here and say, look, if you dont give us this )Tj
-6.3947 -1.02 TD
0.064 Tw
(money, the world is going to come to an end. I mean, it has already )Tj
T*
0.28 Tw
(worked. We have seen it work. AIG has got $150 billion of my )Tj
T*
0.052 Tw
(money and your money, too. )Tj
1 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 396.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 396.2 Tm
0.052 Tw
(. That is what bothers me. )Tj
-7.5083 -1.02 TD
0.17 Tw
(Quickly, and I know my time has run over, I would like to ask )Tj
-1 -1.02 TD
0.21 Tw
(each one, and I will start with you, Mr. Wagoner, I am going to )Tj
T*
0.136 Tw
(ask three questions, but you can answer them quickly. How many )Tj
T*
0.052 Tw
(product lines do you currently have? )Tj
1 -1.02 TD
0.186 Tw
(Mr. W)Tj
8 0 0 7.6194 188.1095 345.2 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.405 345.2 Tm
0.186 Tw
(. We have aboutcurrently about 60 model offer-)Tj
-7.7405 -1.02 TD
0 Tw
(ings. )Tj
1 -1.02 TD
0.052 Tw
(Senator S)Tj
8 0 0 7.6194 202.8993 324.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 324.8 Tm
0.052 Tw
(. How many? )Tj
-7.5083 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 314.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 314.6 Tm
0.052 Tw
(. About 60. )Tj
-6.6065 -1.02 TD
0.24 Tw
(Senator S)Tj
8 0 0 7.6194 204.7793 304.4 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.9629 304.4 Tm
0.24 Tw
(. Sixty. How many of these lines are currently )Tj
-8.6963 -1.02 TD
0.052 Tw
(profitable and how many are losing money out of the 60? )Tj
1 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 284 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 284 Tm
0.052 Tw
(. Profitable at what level? )Tj
-6.6065 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 273.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 273.8 Tm
0.052 Tw
(. Well )Tj
-7.5083 -1.02 TD
0.064 Tw
(Mr. W)Tj
8 0 0 7.6194 186.8895 263.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.185 263.6 Tm
0.064 Tw
(. I mean, contribution margin, net incomeI would )Tj
-7.6185 -1.02 TD
0.052 Tw
(say about half at the low industry level. )Tj
1 -1.02 TD
0.232 Tw
(Senator S)Tj
8 0 0 7.6194 204.6993 243.2 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.8829 243.2 Tm
0.232 Tw
(. How long have these lines performed as they )Tj
-8.6883 -1.02 TD
0.19 Tw
(are currently performing? In other words, how long have they ei-)Tj
T*
0.052 Tw
(ther been making money or losing money? )Tj
1 -1.02 TD
0.06 Tw
(Mr. W)Tj
8 0 0 7.6194 186.8495 212.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.145 212.6 Tm
0.06 Tw
(. I would say, generally, because of the higher fixed )Tj
-7.6145 -1.02 TD
0.078 Tw
(costs for lower-priced vehicles, it is harder to make money, particu-)Tj
T*
0.232 Tw
(larly when fuel economy wasnt as highly valued because energy )Tj
T*
0.052 Tw
(was so cheap here, but I think that is changing over time. )Tj
1 -1.02 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 171.8 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 171.8 Tm
0.052 Tw
(. Mr. Mulally? )Tj
-7.5083 -1.02 TD
0.214 Tw
(Mr. M)Tj
8 0 0 7.6194 188.0195 161.6 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.955 161.6 Tm
0.214 Tw
(. Let us see, on the product lines, on brands, the )Tj
-7.4955 -1.02 TD
0.052 Tw
(ones that we )Tj
1 -1.01 TD
0.08 Tw
(Senator S)Tj
8 0 0 7.6194 203.1793 141.2999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.3629 141.2999 Tm
0.08 Tw
(. How many product lines do you currently have? )Tj
-7.5363 -1.01 TD
0.176 Tw
(Mr. M)Tj
8 0 0 7.6194 187.6395 131.1999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.575 131.1999 Tm
0.176 Tw
(. Right. We have Ford, Lincoln, and Mercury, and )Tj
-7.4575 -1.01 TD
0.052 Tw
(we also )Tj
1 -1.01 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 110.9998 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 110.9998 Tm
0.052 Tw
(. I know that, but how many others? )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00054)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
177 0 obj
<>/ExtGState<>>>
endobj
178 0 obj
<>
endobj
179 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(51 )Tj
-14.344 -2 TD
0.202 Tw
(Mr. M)Tj
8 0 0 7.6194 187.8995 641 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.835 641 Tm
0.202 Tw
(. We have divested all of the other brands, so we )Tj
-7.4835 -1 TD
0.292 Tw
(have divested Aston Martin and Jaguar and Land Rover so we )Tj
T*
0.052 Tw
(could absolutely laser focus on )Tj
1 -1 TD
0.216 Tw
(Senator S)Tj
8 0 0 7.6194 204.5393 611 Tm
0 Tw
(HELBY)Tj
10 0 0 10 233.7228 611 Tm
0.216 Tw
(. How many of these lines are currently profit-)Tj
-8.6723 -1 TD
0.052 Tw
(able and how many are losing money? )Tj
1 -1 TD
0.164 Tw
(Mr. M)Tj
8 0 0 7.6194 187.5195 591 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.455 591 Tm
0.164 Tw
(. Well, in January, at the end of the first quarter, )Tj
-7.4455 -1 TD
0.052 Tw
(and the first quarter would be )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 571 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 571 Tm
0.052 Tw
(. We are talking about, say, now. )Tj
-7.5083 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 561 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 561 Tm
0.052 Tw
(. Well, we are losing money now )Tj
-6.3335 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 551 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 551 Tm
0.052 Tw
(. Sure, you are. )Tj
-7.5083 -1 TD
0.212 Tw
(Mr. M)Tj
8 0 0 7.6194 187.9995 541 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.935 541 Tm
0.212 Tw
(. because the volume is way down. But when )Tj
-7.4935 -1 TD
0.092 Tw
(we completed the first quarter, the larger vehicles made a little bit )Tj
T*
0.12 Tw
(more money. The ones that were harder to make were the smaller )Tj
T*
0.118 Tw
(ones, but that is where the transformational agreement with labor )Tj
T*
0.198 Tw
(comes in that we will be able to make money on all the vehicles )Tj
T*
0.052 Tw
(on all the sizes. )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 480.9999 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 480.9999 Tm
0.052 Tw
(. Mr. Nardelli, quickly. )Tj
-7.5083 -1 TD
0.302 Tw
(Mr. N)Tj
8 0 0 7.6194 187.6096 471 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 225.089 471 Tm
0.302 Tw
(. Yes, sir. We have three brands, as you know, )Tj
-7.8089 -1 TD
0.134 Tw
(Chrysler, Dodge, and Jeep. Today, we have 22 brands, or lines, as )Tj
T*
0.08 Tw
(you are suggesting. One of the things I mentioned is we eliminated )Tj
T*
0.14 Tw
(several lines already because they were not profitable and werent )Tj
T*
0.228 Tw
(carrying the volume. If you look at the newest products that we )Tj
T*
0.316 Tw
(just rolled out, the new minivan, the new Challenger, the new )Tj
T*
0.096 Tw
(Journey, the new truck, the new Liberty, we are making money on )Tj
T*
0.256 Tw
(a variable cost basis and we are driving our fixed cost per unit )Tj
T*
0.052 Tw
(down so that we will be making money across the board. )Tj
1 -1 TD
(Senator S)Tj
8 0 0 7.6194 202.8993 381 Tm
0 Tw
(HELBY)Tj
10 0 0 10 232.0829 381 Tm
0.052 Tw
(. Thank you, Mr. Chairman. )Tj
-7.5083 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 371 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 371 Tm
0.052 Tw
(. Senator Carper. )Tj
-7.6791 -1 TD
0.26 Tw
(Senator C)Tj
8 0 0 7.6194 205.8993 360.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 234.3389 360.9999 Tm
0.26 Tw
(. I just observe that your fixed costs per unit, )Tj
-8.7339 -1 TD
0.302 Tw
(driving it down, you obviously have to sell more vehicles. Your )Tj
T*
0.204 Tw
(Newark, Delaware, assembly plant where you make the Durango )Tj
T*
0.266 Tw
(and the Aspen, is selling some of the most highly rated quality )Tj
T*
0.144 Tw
(products of any SUV, I think, by J.D. Power. In fact, I think they )Tj
T*
0.214 Tw
(won the award for the best quality vehicle earlier this year. But )Tj
T*
0.152 Tw
(it is a plant where you can actually assemble about 225,000 vehi-)Tj
T*
0.218 Tw
(cles a year. I think last month roughly 3,000 vehicles were sold. )Tj
T*
0.096 Tw
(And when you try to spread out the operating costs, you know, the )Tj
T*
0.184 Tw
(fixed cost across 3,000 or 4,000 vehicles as opposed to 200,000 or )Tj
T*
0.052 Tw
(225,000 vehicles, we know that it does not work. )Tj
1 -1 TD
0.064 Tw
(I tend to see most glasses as half-full, even when they are almost )Tj
-1 -1 TD
0.076 Tw
(bone dry. This one is not bone dry. And I want to just lay out what )Tj
T*
0.208 Tw
(I am hopeful may be a confluence of events and maybe by 2010, )Tj
T*
0.06 Tw
(and in 2010, Mr. Gettelfinger, correct me if I am wrong, but I think )Tj
T*
0.236 Tw
(some of the labor savings that you negotiated and gave up with )Tj
T*
0.204 Tw
(great reluctance to make this work, but some of those labor sav-)Tj
T*
0.138 Tw
(ingsin fact, quite a few of those labor savings will really kick in )Tj
T*
0.082 Tw
(in the year 2010. The product mix that sees the Big Three pivoting )Tj
T*
0.144 Tw
(from largely a light truck/SUV mix to something that includes far )Tj
T*
0.176 Tw
(more efficient vehicles and a lot more cars, vehicles propelled not )Tj
T*
0.188 Tw
(just by flexible fuels but also to include hybrids. Anyway, we are )Tj
T*
0.074 Tw
(going to see a product mix that looks a lot more like what the mar-)Tj
T*
0.052 Tw
(ketplace is asking for and is demanding. )Tj
1 -1 TD
0.156 Tw
(In 2010, my hope is we are going to see a rebound in the econ-)Tj
-1 -1 TD
0.15 Tw
(omy by then, and one of the things we know about recessions, we )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00055)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
180 0 obj
<>/ExtGState<>>>
endobj
181 0 obj
<>
endobj
182 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(52 )Tj
-15.344 -2 TD
0.21 Tw
(have them from time to time. We know they do not last forever, )Tj
0 -1 TD
0.206 Tw
(and history would suggest that when we have them, the sharper )Tj
T*
0.184 Tw
(it is on the way down, usually the sharper it is on the way back )Tj
T*
0.226 Tw
(up. So this one, as bad as it looks right now, is not going to be )Tj
T*
0.052 Tw
(around forever, and we will get through it. )Tj
1 -1 TD
0.13 Tw
(And the last thing that is out there is consumers. A good exam-)Tj
-1 -1 TD
0.132 Tw
(ple. I have the 2001 Chrysler Town and Country minivan, and we )Tj
T*
0.124 Tw
(have driven the wheels off of it. We have several other vehicles as )Tj
T*
0.176 Tw
(well. But the Town and Country minivan is in the shop today. It )Tj
T*
0.214 Tw
(is in for regular maintenance, and they told me that we need to )Tj
T*
0.19 Tw
(do something to keep the transmission fluid from leaking so that )Tj
T*
0.1 Tw
(it will go a bit farther. It has 210,000 miles on it. I have been say-)Tj
T*
0.142 Tw
(ing I wanted to keep it until we are able to buy one of those flex- )Tj
T*
0.13 Tw
(fuel plug-in hybrid Chevrolet Volts. I am not sure we will make it )Tj
T*
0.052 Tw
(that long unless you guys speed up even faster. )Tj
1 -1 TD
0.204 Tw
(But somewhere down the line, and certainly by 2010, all those )Tj
-1 -1 TD
0.208 Tw
(millions of people that are not buying cars, trucks, and vans are )Tj
T*
0.144 Tw
(going to finally decide they need one and they cannot keep taking )Tj
T*
0.058 Tw
(their Chrysler Town and Country minivans, however good they are, )Tj
T*
0.052 Tw
(back to have it serviced and to keep them on the road. )Tj
1 -1 TD
0.284 Tw
(Some would say that I am being maybe too optimistic, and I )Tj
-1 -1 TD
0.142 Tw
(think our third witness here, Dr. Morici, your job here, I think, is )Tj
T*
0.182 Tw
(to beI do not know if truth teller is the right word, but what )Tj
T*
0.052 Tw
(is unrealistic about what I just suggested? )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 401 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 401 Tm
0.052 Tw
(. Keep making these mistakes )Tj
-5.3687 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 391 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 391 Tm
0.052 Tw
(. Just leave your microphone on. )Tj
-7.5259 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 381 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 381 Tm
0.052 Tw
(. OK. Well, I do not want to say something in )Tj
-5.3687 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 371 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 371 Tm
0.052 Tw
(. That is OK. )Tj
-7.5259 -1 TD
0.056 Tw
(Mr. M)Tj
8 0 0 7.6194 186.4395 360.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.7272 360.9999 Tm
0.056 Tw
(. My feeling is it is unrealistic to expect that on a sus-)Tj
-6.3727 -1 TD
0.18 Tw
(tainable basis we will be selling 16 million vehicles a year again, )Tj
T*
0.186 Tw
(perhaps even 15 million vehicles, simply because the vehicles are )Tj
T*
0.208 Tw
(too good. They make them too well. They do not break anymore. )Tj
1 -1 TD
0.052 Tw
(Senator C)Tj
8 0 0 7.6194 203.8193 320.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 320.9999 Tm
0.052 Tw
(. Like my minivan. )Tj
-7.5259 -1 TD
0.15 Tw
(Mr. M)Tj
8 0 0 7.6194 187.3795 311 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.6672 311 Tm
0.15 Tw
(. Like my truck. As a consequence, they will be sell-)Tj
-6.4667 -1 TD
0.052 Tw
(ing fewer vehicles. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 290.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 290.9999 Tm
0.052 Tw
(. Except my son wants my minivan. )Tj
-7.5259 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 280.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 280.9999 Tm
0.052 Tw
(. I understand that. )Tj
-5.3687 -1 TD
0.172 Tw
(Senator C)Tj
8 0 0 7.6194 205.0193 270.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 233.4588 270.9999 Tm
0.172 Tw
(. He wants me to buy one of those Ford Fusion )Tj
-8.6459 -1 TD
0 Tw
(hybrids. )Tj
1 -1 TD
0.192 Tw
(Mr. M)Tj
8 0 0 7.6194 187.7995 250.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 212.0872 250.9999 Tm
0.192 Tw
(. I am a macroeconomist, and I do deal with things )Tj
-6.5087 -1 TD
0.108 Tw
(like population growth rates, GDP growth rates, and things of this )Tj
T*
0.148 Tw
(nature. And we have been buying cars at a very accelerated pace, )Tj
T*
0.164 Tw
(and it is reasonable to expect over the next several years, though )Tj
T*
0.244 Tw
(there might be one blip year, that by and by we will be buying )Tj
T*
0.128 Tw
(fewer cars than we did in the good days. That does not mean it is )Tj
T*
0.084 Tw
(terrible. It just meansit is like your refrigerators last a long time )Tj
T*
0.294 Tw
(these days. As a consequence, they will be requiring fewer and )Tj
T*
0.068 Tw
(fewer workers to do that job. And with the kind of buyouts the con-)Tj
T*
0.136 Tw
(tract requires, that is indeed a significant challenge for the indus-)Tj
T*
0.062 Tw
(try if it is going to make cars at the same labor costs as an expand-)Tj
T*
0.072 Tw
(ing group of Asian manufacturers in the Southeast who do not, you )Tj
T*
0.056 Tw
(know, pay $105,000 for people to leave. It is going to be challenging )Tj
T*
0.052 Tw
(with such thin margins. That is what is wrong with that. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 110.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 110.9999 Tm
0.052 Tw
(. All right. Thanks very much. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00056)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
183 0 obj
<>/ExtGState<>>>
endobj
184 0 obj
<>
endobj
185 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(53 )Tj
-14.344 -2 TD
0.142 Tw
(Anybody else want to comment at all in response to what I just )Tj
-1 -1.02 TD
0.052 Tw
(said? Yes, Mr. Gettelfinger, quickly please. )Tj
1 -1.02 TD
0.16 Tw
(Mr. G)Tj
8 0 0 7.6194 185.8196 620.6 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 246.2667 620.6 Tm
0.16 Tw
(. Please. Thank you. The one point I want to )Tj
-9.9267 -1.02 TD
0.214 Tw
(make is the labor cost savings are incremental coming in. As an )Tj
T*
0.094 Tw
(example, in the parts depots, we took a 5 percent pay cut. We took )Tj
T*
0.102 Tw
(people out of the defined pension benefit plan, and we put them in )Tj
T*
0.238 Tw
(a 401\(k\) health care, and that is for all employees that come in )Tj
T*
0.092 Tw
(there. Janitor work that used to be work that belonged to the com-)Tj
T*
0.134 Tw
(panies is now at a much lower rate of pay, and the work does not )Tj
T*
0.052 Tw
(even belong to the company. It is going to somebody else. )Tj
1 -1.02 TD
0.082 Tw
(So the changes that we have made are huge, and I think the one )Tj
-1 -1.02 TD
0.092 Tw
(thing the professor on the end there is missing is, just like in Gen-)Tj
T*
0.058 Tw
(eral Motors case, if we look at the value of COLA and wage conces-)Tj
T*
0.248 Tw
(sions from 2002 to 2008, that is $700 million. We take the pro-)Tj
T*
0.058 Tw
(jected value of COLA and wage concessions from 2003 to 2011, that )Tj
T*
0.096 Tw
(is $1.8 billion. And then when we look at the number of employees )Tj
T*
0.156 Tw
(that have been reduced, we look at the fact that there is going to )Tj
T*
0.072 Tw
(be no general wage increase, according to our research department, )Tj
T*
0.06 Tw
(the cost savings at General Motors from 2003 to 2011 is almost $49 )Tj
T*
0 Tw
(billion. )Tj
1 -1.02 TD
0.052 Tw
(Senator C)Tj
8 0 0 7.6194 203.8193 437 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 437 Tm
0.052 Tw
(. All right. Thank you, sir. )Tj
-7.5259 -1.02 TD
(I made a statement earlier. I went back to 1980 when at the time )Tj
-1 -1.02 TD
0.216 Tw
(I was State treasurer of Delaware, and I negotiated the State of )Tj
T*
0.32 Tw
(Delawares loan to Chrysler, interest-bearing loan, collateralized )Tj
T*
0.196 Tw
(loan. We made money off of it. We talked earlier about the 1979 )Tj
T*
0.078 Tw
(bailout of Chrysler where we agreed to make not a loan, but a loan )Tj
T*
0.08 Tw
(guarantee, and in return for taking on that risk, the American tax-)Tj
T*
0.262 Tw
(payers something in return. What we got were warrants to buy )Tj
T*
0.146 Tw
(Chrysler stock. At the time Chrysler stock was selling at 5 bucks. )Tj
T*
0.144 Tw
(We got warrants to buy it at $13. We exercised those warrants in )Tj
T*
0.068 Tw
(a couple years. And at the time when we bought the Chrysler stock )Tj
T*
0.252 Tw
(for $13, we turned around and sold it the next day or the next )Tj
T*
0.052 Tw
(week for $30 a share, and we made about $300 million. I think that )Tj
T*
0.18 Tw
(was a pretty good deal for the American taxpayer. I think it was )Tj
T*
0.052 Tw
(a pretty good deal, frankly, for Delawareans as well. )Tj
1 -1.02 TD
0.192 Tw
(My question of you is this: If we were to go forward with this, )Tj
-1 -1.02 TD
0.098 Tw
(with some bridge loan, how can we turn and honestly face the tax-)Tj
T*
0.188 Tw
(payersparticularly in States where they do not have these auto )Tj
T*
0.23 Tw
(assembly operations or parts operations, how do we turn around )Tj
T*
0.052 Tw
(and say this is a good deal for you, too? )Tj
1 -1.02 TD
0.208 Tw
(Mr. W)Tj
8 0 0 7.6194 188.3295 233 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.625 233 Tm
0.208 Tw
(. I think, Senator Carper, the first thing, you al-)Tj
-7.7625 -1.02 TD
0.158 Tw
(most cannot find a State where it is not relevant. We buy compo-)Tj
T*
0.22 Tw
(nents in 46 States. I assume between us we cover all 50 States. )Tj
T*
0.158 Tw
(And, second of all, we have dealers in every State who have even )Tj
T*
0.154 Tw
(more employees than we do. So I think the issue is one that does )Tj
T*
0.14 Tw
(affect every community in the United States, virtually, is the first )Tj
T*
0 Tw
(point. )Tj
1 -1.02 TD
0.31 Tw
(The second one, you know, we willgiven the opportunity to )Tj
-1 -1.02 TD
0.146 Tw
(bridge through this financial crisis, I think you can take our com-)Tj
0 -1.01 TD
0.168 Tw
(mitments that we will do everything we can to ensure the money )Tj
T*
0.068 Tw
(is paid back, paid back with interest, and certainly understood that )Tj
T*
0.106 Tw
(the expectations would be something additional, whether it is war-)Tj
T*
0.052 Tw
(rants or whatever. And we would fully agree to that. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00057)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
186 0 obj
<>/ExtGState<>>>
endobj
187 0 obj
<>
endobj
188 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(54 )Tj
-14.344 -2 TD
0.136 Tw
(So I tell you our interest would be 100 percent aligned with the )Tj
-1 -1 TD
0.074 Tw
(shareholders, with the taxpayers, with you all, in making sure that )Tj
T*
0.188 Tw
(your willingness to support us was rewarded, because that is the )Tj
T*
0.052 Tw
(way our company is going to survive and prosper in the future. )Tj
1 -1 TD
0.08 Tw
(Senator C)Tj
8 0 0 7.6194 204.0993 601 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.5388 601 Tm
0.08 Tw
(. All right. Well, the last question I want to raise )Tj
-8.5539 -1 TD
0.052 Tw
(deals with the hydrogen infrastructure. We are going to have a new )Tj
T*
0.196 Tw
(administration in about 63 days. I like to say 63 days, 14 hours, )Tj
T*
0.21 Tw
(7 minutes. But we are going to have a new administration soon, )Tj
T*
0.076 Tw
(and the new administration is going to come in, and they are going )Tj
T*
0.266 Tw
(to be calling for a major stimulus package. And I think part of )Tj
T*
0.128 Tw
(what they are going to focus on is infrastructure improvement, in-)Tj
T*
0.072 Tw
(frastructure development, and infrastructure. And one piece of that )Tj
T*
0.214 Tw
(could be to focus on a hydrogen infrastructure. It could be doing )Tj
T*
0.088 Tw
(something in the Northeast corridor here. It could be something on )Tj
T*
0.052 Tw
(the West Coast. )Tj
1 -1 TD
0.244 Tw
(Do you have any advice for us in this regard? Are we getting )Tj
-1 -1 TD
0.112 Tw
(ahead of ourselves? Is that something that should be in the mix of )Tj
T*
0.052 Tw
(things that we discuss? )Tj
1 -1 TD
0.176 Tw
(Mr. M)Tj
8 0 0 7.6194 187.6395 460.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.575 460.9999 Tm
0.176 Tw
(. Just one thing I would offer is that with respect )Tj
-7.4575 -1 TD
0.16 Tw
(to the use of hydrogen in automobiles, the two key enabling tech-)Tj
T*
0.184 Tw
(nologies are going to be the fuel cells and the batteries. So along )Tj
T*
0.142 Tw
(with a commitment on the infrastructure, I would make sure that )Tj
T*
0.098 Tw
(we have in place a comprehensive technology development plan for )Tj
T*
0.164 Tw
(those two key technologies, because they are needed absolutely in )Tj
T*
0.052 Tw
(addition to the infrastructure. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 391 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 391 Tm
0.052 Tw
(. Any other comments? Mr. Nardelli. )Tj
-7.5259 -1 TD
0.086 Tw
(Mr. N)Tj
8 0 0 7.6194 185.4496 381 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.929 381 Tm
0.086 Tw
(. Yes, Senator. The only thing I would say is for us )Tj
-7.5929 -1 TD
0.096 Tw
(at Chrysler, we did not have the financial strength to look at a va-)Tj
T*
0.118 Tw
(riety of different technologies to gain energy independence and en-)Tj
T*
0.244 Tw
(vironmental sustainability. So when we looked at the infrastruc-)Tj
T*
0.082 Tw
(ture, we felt what had the highest potential of success was electric, )Tj
T*
0.08 Tw
(like our new electric minivan that will be rolling out here soon. We )Tj
T*
0.116 Tw
(wanted to make sure with 6 million plugs out there, we wanted to )Tj
T*
0.064 Tw
(have technology that was common to the consumer, that did not re-)Tj
T*
0.23 Tw
(quire a significant amount of infrastructure cost before the tech-)Tj
T*
0.052 Tw
(nology would be able to be applied into the street. )Tj
1 -1 TD
0.134 Tw
(So I think the only thing I would suggest is to take a hard look )Tj
-1 -1 TD
0.234 Tw
(at the rate with which the infrastructure and the cost, the fully )Tj
T*
0.12 Tw
(loaded cost, cost of operation of that on the vehicle might be going )Tj
T*
0 Tw
(forward. )Tj
1 -1 TD
0.188 Tw
(Senator C)Tj
8 0 0 7.6194 205.1793 240.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 233.6189 240.9999 Tm
0.188 Tw
(. All right. Mr. Wagoner, do you have a closing )Tj
-8.6619 -1 TD
0 Tw
(comment? )Tj
1 -1 TD
0.052 Tw
(Mr. W)Tj
8 0 0 7.6194 186.7695 220.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 220.9999 Tm
0.052 Tw
(. I think Dr. Morici did. )Tj
-6.6065 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 210.9999 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 210.9999 Tm
0.052 Tw
(. Dr. Morici. )Tj
-7.5259 -1 TD
0.196 Tw
(Mr. M)Tj
8 0 0 7.6194 187.8395 200.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 212.1272 200.9999 Tm
0.196 Tw
(. Yes, if you want a quick bite on energy efficiency, )Tj
-6.5127 -1 TD
0.104 Tw
(it has got to be electric, not hydrogen. And that is going to require )Tj
T*
0.096 Tw
(enormous infrastructure investment because what I have been told )Tj
T*
0.17 Tw
(by General Motors officials is the grid is onlyand please correct )Tj
T*
0.178 Tw
(me if I do not remember this correctlybut the grid is only good )Tj
T*
0.154 Tw
(for about 1.5 million volts. So we are going to have to invest sub-)Tj
T*
0.052 Tw
(stantially in the grid. )Tj
1 -1 TD
0.114 Tw
(Now, if we are going to do that in the context of CO2 emissions, )Tj
-1 -1 TD
0.182 Tw
(it means that President Obama is going to have to sit the Amer-)Tj
T*
0.052 Tw
(ican people down and have a long chat about nuclear power. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00058)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
189 0 obj
<>/ExtGState<>>>
endobj
190 0 obj
<>
endobj
191 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(55 )Tj
-14.344 -2 TD
0.222 Tw
(Senator C)Tj
8 0 0 7.6194 205.5193 641 Tm
0 Tw
(ARPER)Tj
10 0 0 10 233.9589 641 Tm
0.222 Tw
(. Nuclear power and offshore wind, which New )Tj
-8.6959 -1 TD
0.052 Tw
(Jersey and Delaware and some others are bit time into. )Tj
1 -1 TD
0.314 Tw
(Mr. M)Tj
8 0 0 7.6194 189.0195 621 Tm
0 Tw
(ORICI)Tj
10 0 0 10 213.3072 621 Tm
0.314 Tw
(. God bless you, yes, but, unfortunately, the wind )Tj
-6.6307 -1 TD
0.052 Tw
(does not always blow when you want it to blow. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 601 Tm
0 Tw
(ARPER)Tj
10 0 0 10 232.2589 601 Tm
0.052 Tw
(. Well, we can use both. )Tj
-7.5259 -1 TD
0.23 Tw
(Let me just close with this, my colleagues. In the end, in this )Tj
-1 -1 TD
0.178 Tw
(country it is all well and goodand I am from a State where we )Tj
T*
0.146 Tw
(are big in financial services. We have science and so forth. But in )Tj
T*
0.126 Tw
(here we have got to make something. We have got to make things )Tj
T*
0.198 Tw
(that people in this country want to buy and that people in other )Tj
T*
0.142 Tw
(countries want to buy. And we cannot walk away from our manu-)Tj
T*
0.152 Tw
(facturing base. And the question here for me is: Can we do some-)Tj
T*
0.148 Tw
(thing that is realistic, that provides the resources that these folks )Tj
T*
0.216 Tw
(and the companies need going forward, to a point in time where )Tj
T*
0.17 Tw
(they can recover, the market comes back, consumers are ready to )Tj
T*
0.07 Tw
(buy, they have the technology, the products to offer, and we as rep-)Tj
T*
0.094 Tw
(resentatives of the taxpayers can make sure that whatever risk we )Tj
T*
0.212 Tw
(take on, there is going to be a reward for taking on that risk? I )Tj
T*
0.318 Tw
(am encouraged that we can find that and make itif not this )Tj
T*
0.052 Tw
(month, in 63 days perhaps we can. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 441 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 441 Tm
0.052 Tw
(. Thank you. )Tj
-7.6791 -1 TD
(Senator Bennett. )Tj
T*
0.31 Tw
(Senator B)Tj
8 0 0 7.6194 206.3993 421 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 241.6628 421 Tm
0.31 Tw
(. Thank you very much, Mr. Chairman, and )Tj
-9.4663 -1 TD
0.112 Tw
(thank you to the witnesses. This has been a very interesting expe-)Tj
T*
0.126 Tw
(rience to sit here and listen to you go back and forth. I appreciate )Tj
T*
0.09 Tw
(the fact that you have clashed a little bit and that the unions have )Tj
T*
0.24 Tw
(come to the defense of management on some circumstances, and )Tj
T*
0.052 Tw
(that is kind of historic in and of itself given the past history. )Tj
1 -1 TD
0.322 Tw
(If I can draw this parallel, Mr. Chairman, as we worked on )Tj
-1 -1 TD
0.14 Tw
(TARP, what we were basically doing was replacing private capital )Tj
T*
0.082 Tw
(with public capital in the conviction that, once the market was sta-)Tj
T*
0.15 Tw
(bilized by virtue of patient capitalthat is, the public capital was )Tj
T*
0.152 Tw
(impatient, would not do itor pardon me, the private capital was )Tj
T*
0.176 Tw
(impatient, would not invest anything, but public capital would be )Tj
T*
0.142 Tw
(patient. And we have put public capital in, and it could wait 2, 3, )Tj
T*
0.342 Tw
(5, 7 years, whatever it took, for the toxic mortgages to all be )Tj
T*
0.172 Tw
(flushed out and everything to be done. And in the end, we would )Tj
T*
0.052 Tw
(have done the right thing. )Tj
1 -1 TD
(I see the parallel here. What we are being asked to do is put pub-)Tj
-1 -1 TD
0.126 Tw
(lic capital into the investments of the automobile industry, specifi-)Tj
T*
0.156 Tw
(cally these companies, in the belief that, as patient capital, it can )Tj
T*
0.24 Tw
(be paid back with interest over time. And we have a contrarian )Tj
T*
0.052 Tw
(here who is saying that is not going to happen. )Tj
1 -1 TD
(Now, is that a fair summary of what we are hearing? )Tj
T*
0.194 Tw
(Mr. W)Tj
8 0 0 7.6194 188.1895 200.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.485 200.9999 Tm
0.194 Tw
(. I think it is, yes. As you know, the reason that )Tj
-7.7485 -1 TD
0.128 Tw
(we need the public capital at this time is that the private market, )Tj
T*
0.052 Tw
(which we have traditionally relied on, simply has gone away. )Tj
1 -1 TD
(Senator B)Tj
8 0 0 7.6194 203.8193 171 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.0827 171 Tm
0.052 Tw
(. OK. Now )Tj
-8.2083 -1 TD
0.244 Tw
(Mr. M)Tj
8 0 0 7.6194 188.3195 160.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 212.6072 160.9999 Tm
0.244 Tw
(. I guess I am skeptical about that hypothesis. My )Tj
-6.5607 -1 TD
0.162 Tw
(feeling is that the cost structure is not quite aligned. I heard Mr. )Tj
T*
0.052 Tw
(Mulally this morning, either on Fox or on CNBC )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 130.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 130.9999 Tm
0.052 Tw
(. CNBC. )Tj
-6.3335 -1 TD
0.188 Tw
(Mr. M)Tj
8 0 0 7.6194 187.7596 120.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 212.0472 120.9999 Tm
0.188 Tw
(. Right. I was working out, and you said that the )Tj
-6.5047 -1 TD
0.052 Tw
(well, I get information where I can. I do not have much staff. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00059)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
192 0 obj
<>/ExtGState<>>>
endobj
193 0 obj
<>
endobj
194 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(56 )Tj
-14.344 -2 TD
0.084 Tw
(Chairman D)Tj
8 0 0 7.6194 215.4391 641 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.1108 641 Tm
0.084 Tw
(. You were driven to the gym in that Ford truck. )Tj
-7.7111 -1 TD
0.052 Tw
(Mr. M)Tj
8 0 0 7.6194 186.3995 631 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 631 Tm
0.052 Tw
(. So do we all. )Tj
-6.3335 -1 TD
0.154 Tw
(Mr. M)Tj
8 0 0 7.6194 187.4196 621 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.7072 621 Tm
0.154 Tw
(. No, I heard with my own two ears, sir. But in any )Tj
-6.4707 -1 TD
0.252 Tw
(case, that he had narrowedthe labor agreement had permitted )Tj
T*
0.136 Tw
(him to narrow the labor cost differential. He did not use the word )Tj
T*
0.052 Tw
(eliminate. He used the word reduced or narrowed. )Tj
1 -1 TD
(Senator B)Tj
8 0 0 7.6194 203.8193 581 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.0827 581 Tm
0.052 Tw
(. Yes, you have made that point. )Tj
-8.2083 -1 TD
0.26 Tw
(Mr. M)Tj
8 0 0 7.6194 188.4796 571 Tm
0 Tw
(ORICI)Tj
10 0 0 10 212.7672 571 Tm
0.26 Tw
(. But I am saying, that is very important. That is )Tj
-6.5767 -1 TD
0.064 Tw
(very important, because if it was zeroif it was zero, then your hy-)Tj
T*
0.052 Tw
(pothesis would be correct. )Tj
1 -1 TD
0.166 Tw
(Senator B)Tj
8 0 0 7.6194 204.9593 541 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 240.2227 541 Tm
0.166 Tw
(. I recognize the difference between your anal-)Tj
-9.3223 -1 TD
0.052 Tw
(ysis, but )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 520.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 520.9999 Tm
0.052 Tw
(. At least potentially correct. )Tj
-5.3687 -1 TD
0.142 Tw
(Senator B)Tj
8 0 0 7.6194 204.7193 510.9999 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.9828 510.9999 Tm
0.142 Tw
(. OK. We are being asked to put public capital )Tj
-9.2983 -1 TD
0.136 Tw
(in. Now the question is: Are we going to be able to get it back? Is )Tj
T*
0.146 Tw
(it going to work? And the thing you have said, Doctor, that I find )Tj
T*
0.15 Tw
(interesting is that even if the wage is spot on and presumably all )Tj
T*
0.238 Tw
(of the other elements of the car are the same as youyou used )Tj
T*
0.192 Tw
(Honda of Indiana. My wife has a Honda that was made in Ohio, )Tj
T*
0.148 Tw
(so I do not know about Indiana, but Honda of Indiana. As the in-)Tj
T*
0.234 Tw
(dustry shrinks, by virtue of increased productivity and increased )Tj
T*
0.156 Tw
(length of timeand I contribute to that, too. I drive a 1996 Olds-)Tj
T*
0.1 Tw
(mobile, Mr. Wagoner, and I am sorry but it is holding up just fine. )Tj
T*
0.072 Tw
(That will continue. Uniquelythis is the thing I want to get, is the )Tj
T*
0.082 Tw
(difference. Uniquely, among these three, they will have to have the )Tj
T*
0.052 Tw
($105,000 buyout, and Honda of Indiana will not. )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 381 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 381 Tm
0.052 Tw
(. That is right. )Tj
-5.3687 -1 TD
(Senator B)Tj
8 0 0 7.6194 203.8193 371 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.0827 371 Tm
0.052 Tw
(. Is that the sum and substance of )Tj
-8.2083 -1 TD
0.128 Tw
(Mr. M)Tj
8 0 0 7.6194 187.1595 360.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.4472 360.9999 Tm
0.128 Tw
(. That is right, and they have to do other things like )Tj
-6.4447 -1 TD
0.286 Tw
(fund the VEBA and so forth. Theoretically, those things end at )Tj
T*
0.2 Tw
(some point. But the issue of having to perpetually pay severance )Tj
T*
0.114 Tw
(benefits is a real challenge, and also, they still do have work rules )Tj
T*
0 Tw
(in )Tj
1 -1 TD
0.052 Tw
(Senator B)Tj
8 0 0 7.6194 203.8193 311 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.0827 311 Tm
0.052 Tw
(. Yes, OK. But )Tj
-8.2083 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 300.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 300.9999 Tm
0.052 Tw
(. Well, that does make a difference in productivity. )Tj
-5.3687 -1 TD
(Senator B)Tj
8 0 0 7.6194 203.8193 290.9999 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.0827 290.9999 Tm
0.052 Tw
(. I understand that. )Tj
-8.2083 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 280.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.6872 280.9999 Tm
0.052 Tw
(. A couple of hours will really do you in. )Tj
-5.3687 -1 TD
0.19 Tw
(Senator B)Tj
8 0 0 7.6194 205.1993 270.9999 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 240.4627 270.9999 Tm
0.19 Tw
(. I understand that. Now, the UAW is saying, )Tj
-9.3463 -1 TD
0.244 Tw
(no, over time by virtue of the agreements that they have made, )Tj
T*
0.12 Tw
(there will be subsequent benefits that will flow over time. Are you )Tj
T*
0.26 Tw
(saying that they are sufficiently strong to overcome the buyout? )Tj
T*
0.172 Tw
(And will the time ever come when Honda of Indiana will have to )Tj
T*
0.086 Tw
(have a buyout and level the playing field that way? And if they do, )Tj
T*
0.052 Tw
(then Kia will come in and undercut Honda of Indiana. )Tj
1 -1 TD
0.074 Tw
(Mr. M)Tj
8 0 0 7.6194 186.6195 200.9999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.9072 200.9999 Tm
0.074 Tw
(. They are not required to pay their workers $105,000 )Tj
-6.3907 -1 TD
0 Tw
(apiece. )Tj
1 -1 TD
0.264 Tw
(Mr. G)Tj
8 0 0 7.6194 186.8596 180.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 247.3067 180.9999 Tm
0.264 Tw
(. Senator, first of all, as far as productivity )Tj
-10.0307 -1 TD
0.19 Tw
(goesand we ran some ads. I hope you saw one of them here in )Tj
T*
0.094 Tw
(the papers on the Hill. Our plants are more efficient than factories )Tj
T*
0.136 Tw
(run by our non-union counterparts, including nine of the ten most )Tj
T*
0.054 Tw
(efficient plants of North America. That is not the UAW saying that. )Tj
T*
0.052 Tw
(That is a Harvard report saying that. )Tj
1 -1 TD
0.118 Tw
(Senator B)Tj
8 0 0 7.6194 204.4793 120.9999 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.7428 120.9999 Tm
0.118 Tw
(. OK. But address the question of the $105,000 )Tj
-9.2743 -1 TD
0 Tw
(buyout. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00060)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
195 0 obj
<>/ExtGState<>>>
endobj
196 0 obj
<>
endobj
197 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(57 )Tj
-14.344 -2 TD
0.07 Tw
(Mr. G)Tj
8 0 0 7.6194 184.9196 641 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.3667 641 Tm
0.07 Tw
(. The $105,000you kind of got me on a curve )Tj
-9.8367 -1.02 TD
0.052 Tw
(there. I do not know where that number is coming from. )Tj
1 -1.02 TD
0.104 Tw
(Senator B)Tj
8 0 0 7.6194 204.3393 620.6 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.6028 620.6 Tm
0.104 Tw
(. I have been a CEO, and I know if I have that )Tj
-9.2603 -1.02 TD
0.052 Tw
(sitting on my back, I have got a real problem. )Tj
1 -1.02 TD
0.258 Tw
(Now, the three CEOs, what is your reaction to this argument )Tj
-1 -1.02 TD
0.154 Tw
(about the $105,000 buyout? Because if you take the numberswe )Tj
T*
0.226 Tw
(cannot repeal the laws of arithmetic, and if there is a shrinking )Tj
T*
0.274 Tw
(workforce coming as a result of your increased productivity and )Tj
T*
0.304 Tw
(your deal with the UAW that makes you more productive and, )Tj
T*
0.07 Tw
(therefore, more competitive, but that every time you get the advan-)Tj
T*
0.06 Tw
(tage of becoming more productive and more competitive in the form )Tj
T*
(of a worker who is laid off, instead of getting the advantage of that, )Tj
T*
0.236 Tw
(that you no longer have a problem, you have a cost of $105,000 )Tj
T*
0.052 Tw
(which Honda of Indiana does not have. )Tj
1 -1.02 TD
0.12 Tw
(Square this circle for me. Help me understand exactly where we )Tj
-1 -1.02 TD
0 Tw
(are. )Tj
1 -1.02 TD
0.078 Tw
(Mr. W)Tj
8 0 0 7.6194 187.0295 477.8 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.325 477.8 Tm
0.078 Tw
(. Well, there is one other factor. I think he is refer-)Tj
-7.6325 -1.02 TD
0.19 Tw
(ring to when we induce people to leave before regular retirement )Tj
T*
0.096 Tw
(age. So I think it is fair to say all of us, because of the competitive )Tj
T*
0.228 Tw
(situation, the need to downsize, have encouraged people to leave )Tj
T*
0.284 Tw
(quite before their normal retirement ages, and so these kind of )Tj
T*
0.2 Tw
(payments, a little different from company to company, have been )Tj
T*
0.052 Tw
(made to induce people to do that. )Tj
1 -1.02 TD
0.054 Tw
(But, you know, in our case we still have a relatively high average )Tj
-1 -1.02 TD
0.246 Tw
(age of our hourly workforce, and so for us over time, the model )Tj
T*
0.188 Tw
(would be, having shrunk the base of the workforce, you know, in )Tj
T*
0.182 Tw
(our case from 133,000 in 2002 to about 60,000 today, we will get )Tj
T*
0.084 Tw
(eventually some natural attrition because our workforceour aver-)Tj
T*
0.144 Tw
(age workforce age I think is about 47, 48, 49 right now, and a lot )Tj
T*
0.13 Tw
(of people retire about early 50s to mid-50s. So we are going to get )Tj
T*
0.142 Tw
(some natural attrition, and that should help us to be able to fund )Tj
T*
0.082 Tw
(some of this productivity growth that we do need, which Dr. Morici )Tj
T*
0.052 Tw
(is correct in saying to be competitive. )Tj
1 -1.02 TD
0.184 Tw
(So hopefully we do not have to rely in the future to the extent )Tj
-1 -1.02 TD
0.182 Tw
(we did in the past on these costly bailouts, or at least not to the )Tj
T*
0.052 Tw
(great extent we have had to pay the last 3 or 4 years. )Tj
1 -1.02 TD
0.054 Tw
(Mr. M)Tj
8 0 0 7.6194 186.4195 273.8 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.7072 273.8 Tm
0.054 Tw
(. Will you continue to have to pay them? Will you con-)Tj
-6.3707 -1.02 TD
0.052 Tw
(tinue, as you lay off workers, to have to pay people to leave? )Tj
1 -1.02 TD
0.064 Tw
(Senator B)Tj
8 0 0 7.6194 203.9393 253.4 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.2028 253.4 Tm
0.064 Tw
(. Yes, that is a key question. We will not go any )Tj
-9.2203 -1.02 TD
0.052 Tw
(deeper. My time isoh, you wanted to comment? )Tj
1 -1.02 TD
0.16 Tw
(Mr. M)Tj
8 0 0 7.6194 187.4796 233 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.415 233 Tm
0.16 Tw
(. I would just like to add one comment. Clearly, if )Tj
-7.4415 -1.02 TD
0.234 Tw
(you are in a declining business and you have a cost to separate )Tj
T*
0.144 Tw
(people, your overall costs are going to be more. To your point, the )Tj
T*
0.22 Tw
(absolute goal of the automobile industry is to arrest this market )Tj
T*
0.066 Tw
(share decline and start to grow again. That is why we have to have )Tj
T*
0.196 Tw
(a competitive set of products. We have to have products in every )Tj
T*
0.146 Tw
(segment that people really do want and value and we are produc-)Tj
T*
0.136 Tw
(tive making them. We turn that corner, and then we are growing, )Tj
T*
0.142 Tw
(and we do not have the costs that are being described by the pro-)Tj
0 -1.01 TD
0 Tw
(fessor. )Tj
1 -1.01 TD
0.054 Tw
(Mr. M)Tj
8 0 0 7.6194 186.4195 131.1999 Tm
0 Tw
(ORICI)Tj
10 0 0 10 210.7072 131.1999 Tm
0.054 Tw
(. You only accomplish that if you have a growing mar-)Tj
-6.3707 -1.01 TD
0.152 Tw
(ket share if the number of cars purchased every year is relatively )Tj
T*
0.052 Tw
(fixed, which has already been conceded here. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00061)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
198 0 obj
<>/ExtGState<>>>
endobj
199 0 obj
<>
endobj
200 0 obj
<>
endobj
201 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(58 )Tj
-14.344 -2 TD
0.12 Tw
(Senator B)Tj
8 0 0 7.6194 204.4993 641 Tm
0 Tw
(ENNETT)Tj
10 0 0 10 239.7628 641 Tm
0.12 Tw
(. All right. We could go on, but thank you very )Tj
-9.2763 -1 TD
0.214 Tw
(much. Our responsibility as stewards of the public money, which )Tj
T*
0.182 Tw
(would be the patient capital, is to decide whether or not wenot )Tj
T*
0.114 Tw
(just whether we are going to get our money back, but whether the )Tj
T*
0.168 Tw
(cost to the country would be greater if we did nothing than if we )Tj
T*
0.246 Tw
(used the patient capital to prevent a meltdown. And at the mo-)Tj
T*
0.112 Tw
(ment, everybody is guessing. I think everybody is guessing in good )Tj
T*
0.134 Tw
(faith, but I think everybody is guessing. And that is the challenge )Tj
T*
0.09 Tw
(that we have, and regardless of how we guess, we have to go home )Tj
T*
0.082 Tw
(to our constituents and explain why we were absolutely brilliant in )Tj
T*
0.052 Tw
(the decision that we made. )Tj
1 -1 TD
0.224 Tw
(Chairman D)Tj
8 0 0 7.6194 216.8391 530.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.5108 530.9999 Tm
0.224 Tw
(. Let me thank Senator Bennett. He always is )Tj
-8.8511 -1 TD
0.052 Tw
(tremendously helpful, and I think he done a lot. )Tj
1 -1 TD
0.206 Tw
(I will turn to Senator Menendez for questioning. I was looking )Tj
-1 -1 TD
0.264 Tw
(at the cash on a quarterly basis that the three companies have )Tj
T*
0.076 Tw
(gone through in the last quarter, the third quarter, a total of about )Tj
T*
0.084 Tw
($27 billion, the cash, if I total up the amounts. I have totaled here, )Tj
T*
0.136 Tw
(looking at GM, $6.9 billion in cash; Ford, $7.7 billion in cash; and )Tj
T*
0.146 Tw
(Chrysler, it is about $4 to $5 billion a month. I am going to come )Tj
T*
0.144 Tw
(back to this in a minute, but this cash burn idea and the $25 bil-)Tj
T*
0.136 Tw
(lion in terms of a 2010 restructuring, what would be helpful to us )Tj
T*
0.222 Tw
(as well is if we get a real total number. The 25 is bridge, but I )Tj
T*
0.064 Tw
(want to hear at some point what you think the total package is you )Tj
T*
0.158 Tw
(are going to be coming to the U.S. Congress for, not just now but )Tj
T*
0.052 Tw
(over the coming months. We need to know that. )Tj
1 -1 TD
0.174 Tw
(What bothers most of us a lot of times is we go home and say, )Tj
-1 -1 TD
0.338 Tw
(well, we did the 25, and then you come back again. We went )Tj
T*
0.224 Tw
(through this with Hank Paulson last summer on the GSE issue, )Tj
T*
0.172 Tw
(and you may recall what that was like. And then all of a sudden )Tj
T*
0.052 Tw
(it was something different. )Tj
1 -1 TD
0.212 Tw
(I am going to let my colleague go because I have been talking )Tj
-1 -1 TD
0.2 Tw
(a lot, but I want to come back to that point. Bob, why dont you )Tj
T*
0.052 Tw
(go ahead? )Tj
1 -1 TD
0.142 Tw
(Mr. N)Tj
8 0 0 7.6194 186.0096 311 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.489 311 Tm
0.142 Tw
(. Mr. Chairman, can II apologize. But when you )Tj
-7.6489 -1 TD
0.16 Tw
(said $4 to $5 billion, that is what we were paying out a month. I )Tj
T*
0.178 Tw
(want to make sure for the record that is not what our cash burn )Tj
T*
0.052 Tw
(is per month. I am sorry. )Tj
1 -1 TD
0.068 Tw
(Chairman D)Tj
8 0 0 7.6194 215.2791 270.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.9508 270.9999 Tm
0.068 Tw
(. Well, that is another question. That is all right. )Tj
-8.6951 -1 TD
0.052 Tw
(I had that number here, 4 to 5 )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 250.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 250.9999 Tm
0.052 Tw
(. I apologize. )Tj
-6.5589 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 240.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 240.9999 Tm
0.052 Tw
(. That is a wrong number? )Tj
-7.6791 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 230.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 230.9999 Tm
0.052 Tw
(. Yes, sir. )Tj
-6.5589 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 220.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 220.9999 Tm
0.052 Tw
(. OK. )Tj
-7.6791 -1 TD
0.35 Tw
(Mr. N)Tj
8 0 0 7.6194 188.0896 210.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 225.569 210.9999 Tm
0.35 Tw
(. The right number is in the third quarter we )Tj
-7.8569 -1 TD
0.13 Tw
(burned about $3 billion, so about $1 billion a month in cash burn. )Tj
1 -1 TD
0.052 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1191 190.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 190.9999 Tm
0.052 Tw
(. A month? )Tj
-7.6791 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 180.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 180.9999 Tm
0.052 Tw
(. A month. )Tj
-6.5589 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 171 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 171 Tm
0.052 Tw
(. So it is the quarter number? )Tj
-7.6791 -1 TD
0.084 Tw
(Mr. N)Tj
8 0 0 7.6194 185.4296 160.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.909 160.9999 Tm
0.084 Tw
(. We burned about threeif you relate to the num-)Tj
-7.5909 -1 TD
0.2 Tw
(bers you just cited for GM, Ford, our number would be about $3 )Tj
T*
0 Tw
(billion. )Tj
1 -1 TD
0.052 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1191 130.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 130.9999 Tm
0.052 Tw
(. OK. )Tj
-7.6791 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 120.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 120.9999 Tm
0.052 Tw
(. Thank you, sir. )Tj
-6.5589 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 110.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 110.9999 Tm
0.052 Tw
(. Go ahead. I am sorry, Bob. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00062)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
202 0 obj
<>/ExtGState<>>>
endobj
203 0 obj
<>
endobj
204 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(59 )Tj
-14.344 -2 TD
0.212 Tw
(Senator M)Tj
8 0 0 7.6194 207.6393 641 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 249.1186 641 Tm
0.212 Tw
(. Thank you, Mr. Chairman. You just asked )Tj
-10.2119 -1 TD
0.18 Tw
(the first question that I intended to ask, but I will ask it a little )Tj
T*
0.192 Tw
(differently because I still dont quite get the answer, and that is, )Tj
T*
0.214 Tw
(you know, we have gone in this Committee in different contexts, )Tj
T*
0.12 Tw
(just so you gentlemen understand, from being told that everything )Tj
T*
0.296 Tw
(in the economy, the fundamentals of the economy were fine, to )Tj
T*
0.15 Tw
(being told by the Treasury Secretary that he needed a bazooka in )Tj
T*
0.26 Tw
(order to not use it on behalf of the American taxpayers, a very )Tj
T*
0.242 Tw
(large check that was largely blank, which he ended up using in )Tj
T*
0.16 Tw
(Fannie Mae and Freddie Mac, and then to being told $700 billion )Tj
T*
0.136 Tw
(to purchase illiquid assets, which now have totally been jettisoned )Tj
T*
0.142 Tw
(out the window. So I hope you understand some of the skepticism )Tj
T*
0.15 Tw
(that exists here based upon the immediate history that has taken )Tj
T*
0 Tw
(place. )Tj
1 -1 TD
0.076 Tw
(And so that brings me to the question that I think the Chairman )Tj
-1 -1 TD
0.096 Tw
(was getting at. How did we get to $25 billion as the magic number )Tj
T*
0.204 Tw
(that is necessary to transition in this period of time or to bridge )Tj
T*
0.214 Tw
(this period of time? You know, I would like to hear the specifics )Tj
T*
0.166 Tw
(of it. You know, we did not take a dart and say what can we get )Tj
T*
0.102 Tw
(or look at the $700 billion and say how much is left and figure out )Tj
T*
0.064 Tw
(how much can we get. How is it that $25 billion is the number that )Tj
T*
0.052 Tw
(meets the challenge that you have all described here? )Tj
1 -1 TD
0.126 Tw
(Mr. N)Tj
8 0 0 7.6194 185.8496 421 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.329 421 Tm
0.126 Tw
(. Well, Senator, one way that we have looked at it )Tj
-7.6329 -1 TD
0.104 Tw
(is we look at the cash consumption we have done through the first )Tj
T*
0.052 Tw
(three quarters. We look at an industry basically that is not )Tj
1 -1 TD
0.074 Tw
(Senator M)Tj
8 0 0 7.6194 206.2592 391 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.7386 391 Tm
0.074 Tw
(. And what is that? What is that? What is the )Tj
-10.0739 -1 TD
0.052 Tw
(cash consumption of the first three quarters? )Tj
1 -1 TD
0.058 Tw
(Mr. N)Tj
8 0 0 7.6194 185.1696 371 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.649 371 Tm
0.058 Tw
(. If you look at our cash consumption, we ended the )Tj
-7.5649 -1 TD
0.256 Tw
(third quarter with about $6.1 billion in cash, about $6.1 billion. )Tj
T*
0.052 Tw
(And so we basically have gone )Tj
1 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 341 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 341 Tm
0.052 Tw
(. That is what you ended up with )Tj
-9.0519 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 330.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 330.9999 Tm
0.052 Tw
(. Left with or ended up )Tj
-7.6791 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 320.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 320.9999 Tm
0.052 Tw
(. Yes. So we basicallyour biggest )Tj
-6.5589 -1 TD
0.092 Tw
(Senator M)Tj
8 0 0 7.6194 206.4392 311 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.9186 311 Tm
0.092 Tw
(. Which is it? Is that what you ended up with )Tj
-10.0919 -1 TD
0.052 Tw
(or what you spent? )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 290.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 290.9999 Tm
0.052 Tw
(. That is what we ended up with. )Tj
-6.5589 -1 TD
0.182 Tw
(Senator M)Tj
8 0 0 7.6194 207.3392 280.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.8186 280.9999 Tm
0.182 Tw
(. What did you spend in the three quarters? )Tj
-9.1819 -1 TD
0.13 Tw
(Mr. N)Tj
8 0 0 7.6194 185.8896 270.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.369 270.9999 Tm
0.13 Tw
(. In the third quarter, we went through $3 billion, )Tj
-7.6369 -1 TD
0.222 Tw
(but as I said, in quarter 1 and 2, we were basically holding our )Tj
T*
0.162 Tw
(own. We ended the first half at about $9.4 billion, which includes )Tj
T*
0.224 Tw
(a $2 billion pull-down from our private equity owners, both Cer-)Tj
T*
0.052 Tw
(berus and Daimler at the time. And so )Tj
1 -1 TD
0.132 Tw
(Senator M)Tj
8 0 0 7.6194 206.8392 220.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.3186 220.9999 Tm
0.132 Tw
(. So what is the net amount that you burned )Tj
-10.1319 -1 TD
0.052 Tw
(through for the first three quarters? )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 200.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 200.9999 Tm
0.052 Tw
(. We burned through $5 billion. )Tj
-6.5589 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 190.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 190.9999 Tm
0.052 Tw
(. $5 billion. )Tj
-9.0519 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 180.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 180.9999 Tm
0.052 Tw
(. $5 billion. )Tj
-6.5589 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 171 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 171 Tm
0.052 Tw
(. OK. )Tj
-9.0519 -1 TD
0.1 Tw
(Mr. N)Tj
8 0 0 7.6194 185.5896 160.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.069 160.9999 Tm
0.1 Tw
(. So what we have looked at is what is the produc-)Tj
-7.6069 -1 TD
0.26 Tw
(tion level for the fourth quarter, because we only generate cash )Tj
T*
0.214 Tw
(through production. We have used that number against what we )Tj
T*
0.132 Tw
(are getting from our field relative to sales and wholesale reorders. )Tj
T*
0.126 Tw
(We then extend that through 2009, and as I said, we become dan-)Tj
T*
0.112 Tw
(gerously close to a minimum liquidity level by the end of the year. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00063)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
205 0 obj
<>/ExtGState<>>>
endobj
206 0 obj
<>
endobj
207 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(60 )Tj
-15.344 -2 TD
0.11 Tw
(And that is why we are asking for the immediacy of cash infusion. )Tj
0 -1 TD
0.192 Tw
(We believe that cash infusion, given a very conservative industry )Tj
T*
0.134 Tw
(number and retaining our share, which we have been able to hold )Tj
T*
0.15 Tw
(share over the past several years, comes to a number that is part )Tj
T*
0.052 Tw
(of the $25 billion that we are asking for. )Tj
1 -1 TD
0.136 Tw
(Senator M)Tj
8 0 0 7.6194 206.8792 591 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.3586 591 Tm
0.136 Tw
(. The other gentlemen from the other compa-)Tj
-10.1359 -1 TD
0.052 Tw
(nies, how do you all come here and say $25 billion? )Tj
1 -1 TD
0.2 Tw
(Mr. W)Tj
8 0 0 7.6194 188.2495 571 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.545 571 Tm
0.2 Tw
(. Basically, this is obviouslythe key assumption )Tj
-7.7545 -1 TD
0.22 Tw
(is to estimate what you think the industry is going to run at in )Tj
T*
0.076 Tw
(2009, and so as I said, we have used $11.7 million light or $12 mil-)Tj
T*
0.178 Tw
(lion total industry, and on that basis have tried to be, you know, )Tj
T*
0.158 Tw
(as conservative as we can in figuring out what might be the cash )Tj
T*
0.152 Tw
(outflow next year. I believe each of us supplied that to the people )Tj
T*
0.094 Tw
(writing the legislation, and they added it up and came up with the )Tj
T*
0 Tw
(25. )Tj
1 -1 TD
0.124 Tw
(Senator M)Tj
8 0 0 7.6194 206.7592 490.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.2386 490.9999 Tm
0.124 Tw
(. So what was your figure? Mr. Nardelli gave )Tj
-10.1239 -1 TD
0.052 Tw
(me a figure. What was yours? )Tj
1 -1 TD
0.132 Tw
(Mr. W)Tj
8 0 0 7.6194 187.5695 471 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.865 471 Tm
0.132 Tw
(. Our cash burn for the first 9 months, we burned )Tj
-7.6865 -1 TD
0.206 Tw
(about $3 billion each of the first and second quarter. As Senator )Tj
T*
0.072 Tw
(Dodd mentioned, $6.9 billion in the third quarter, and we indicated )Tj
T*
0.172 Tw
(we expect the fourth quarter to be more like the first and second )Tj
T*
0 Tw
(quarters. )Tj
1 -1 TD
0.214 Tw
(Senator M)Tj
8 0 0 7.6194 207.6592 421 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 249.1386 421 Tm
0.214 Tw
(. So the total number you are projecting is? )Tj
-9.2139 -1 TD
(Mr. W)Tj
8 0 0 7.6194 188.3895 411 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.685 411 Tm
0.214 Tw
(. For the year it will be in the range ofsorry I )Tj
-7.7685 -1 TD
0.168 Tw
(did not do that math, but around betweenlets say in the range )Tj
T*
0.052 Tw
(of $15 billion. )Tj
1 -1 TD
0.238 Tw
(Senator M)Tj
8 0 0 7.6194 207.8992 381 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 249.3786 381 Tm
0.238 Tw
(. So 15 and 5 is 20. That only leaves 5 for )Tj
-10.2379 -1 TD
0.052 Tw
(Ford. Is that the case? )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 360.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 360.9999 Tm
0.052 Tw
(. Sorry. That was 2008. )Tj
-6.6065 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 350.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 350.9999 Tm
0.052 Tw
(. Well, but you are looking forward, right? )Tj
-9.0519 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 341 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 341 Tm
0.052 Tw
(. We have obviously taken )Tj
-6.6065 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 330.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 330.9999 Tm
0.052 Tw
(. Do you expect your burn to be less? )Tj
-9.0519 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 320.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 320.9999 Tm
0.052 Tw
(. We do, yes, sir, because we )Tj
-6.6065 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 311 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 311 Tm
0.052 Tw
(. How much dramatically less? )Tj
-9.0519 -1 TD
0.232 Tw
(Mr. W)Tj
8 0 0 7.6194 188.5695 300.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.865 300.9999 Tm
0.232 Tw
(. Well, we have taken significant cost-cutting ac-)Tj
-7.7865 -1 TD
0.052 Tw
(tions, and we have reduced capital spending. )Tj
1 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 280.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 280.9999 Tm
0.052 Tw
(. You must have a figure. You are a CEO. )Tj
-9.0519 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 270.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 270.9999 Tm
0.052 Tw
(. Yes. )Tj
-6.6065 -1 TD
0.09 Tw
(Senator M)Tj
8 0 0 7.6194 206.4193 260.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.8986 260.9999 Tm
0.09 Tw
(. And I am a fiduciary to the taxpayers in my )Tj
-10.0899 -1 TD
0.052 Tw
(State and the country. )Tj
1 -1 TD
0.26 Tw
(Mr. W)Tj
8 0 0 7.6194 188.8495 240.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 225.145 240.9999 Tm
0.26 Tw
(. We would expect to be able to reduce it by at )Tj
-7.8145 -1 TD
0.052 Tw
(least $5 billion. )Tj
1 -1 TD
0.156 Tw
(Senator M)Tj
8 0 0 7.6194 207.0793 220.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.5586 220.9999 Tm
0.156 Tw
(. By at least $5 billion, so that is $10 billion )Tj
-10.1559 -1 TD
0.052 Tw
(that you would still burn. )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 200.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 200.9999 Tm
0.052 Tw
(. Right. )Tj
-6.6065 -1 TD
0.144 Tw
(Senator M)Tj
8 0 0 7.6194 206.9592 190.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.4386 190.9999 Tm
0.144 Tw
(. And your $5 billion is still intact, what you )Tj
-10.1439 -1 TD
0.052 Tw
(are looking at next year as well? )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 171 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 171 Tm
0.052 Tw
(. Between 5 to 7. )Tj
-6.5589 -1 TD
0.19 Tw
(Senator M)Tj
8 0 0 7.6194 207.4193 160.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.8986 160.9999 Tm
0.19 Tw
(. All right. So now we have between 15 and )Tj
-10.1899 -1 TD
0 Tw
(17. )Tj
1 -1 TD
0.228 Tw
(Mr. M)Tj
8 0 0 7.6194 188.1595 140.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.095 140.9999 Tm
0.228 Tw
(. I think we went about it maybe a little bit dif-)Tj
-7.5095 -1 TD
0.142 Tw
(ferent way, but when we announced our third quarter results and )Tj
T*
0.122 Tw
(provided our forward guidance, we said that our plan was that we )Tj
T*
0.244 Tw
(are going to enhance our cash position by actions that we could )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00064)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
208 0 obj
<>/ExtGState<>>>
endobj
209 0 obj
<>
endobj
210 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(61 )Tj
-15.344 -2 TD
0.114 Tw
(take between $14 and $17 billion, so that we could slow down this )Tj
0 -1 TD
0.052 Tw
(cash burn rate to be able to make it through this. )Tj
1 -1 TD
0.054 Tw
(Senator M)Tj
8 0 0 7.6194 206.0592 621 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5386 621 Tm
0.054 Tw
(. So what is it that you expect to have to draw )Tj
-10.0539 -1 TD
0.052 Tw
(upon if you get the $25 billion? )Tj
1 -1 TD
0.106 Tw
(Mr. M)Tj
8 0 0 7.6194 186.9395 601 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.875 601 Tm
0.106 Tw
(. Well, yes, that depends on the assumption for the )Tj
-7.3875 -1 TD
0.116 Tw
(industry and whether it ishow much it slows down. Sol what we )Tj
T*
0.17 Tw
(did, our best assessment is that the industry was not going to be )Tj
T*
0.188 Tw
(any better in 2009 than it is in 2008, and weour best estimate )Tj
T*
0.14 Tw
(is that we would finish the year at a run rate of around 13.7 mil-)Tj
T*
0.08 Tw
(lion vehicles. And so our assumption is, it is not going to get better )Tj
T*
0.052 Tw
(in 2009. And then whether it is )Tj
1 -1 TD
0.188 Tw
(Senator M)Tj
8 0 0 7.6194 207.3992 530.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.8786 530.9999 Tm
0.188 Tw
(. What does that all equate to at the end of )Tj
-10.1879 -1 TD
0.162 Tw
(the day in terms of money that you are going to be seeking, your )Tj
T*
0.052 Tw
(best projection? )Tj
1 -1 TD
0.304 Tw
(Mr. M)Tj
8 0 0 7.6194 188.9196 500.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.855 500.9999 Tm
0.304 Tw
(. Well, we cant give forward guidance in public )Tj
-7.5855 -1 TD
0.052 Tw
(more than what we already have. )Tj
1 -1 TD
0.178 Tw
(Senator M)Tj
8 0 0 7.6194 207.2993 480.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.7786 480.9999 Tm
0.178 Tw
(. Well, here is the problem. You asked us to )Tj
-10.1779 -1 TD
0.216 Tw
(give you $25 billion of the taxpayers money. We have to have a )Tj
T*
0.102 Tw
(sense of how that, in fact, takes you to a time period that gets you )Tj
T*
0.156 Tw
(past what you all described as your major challenge, which is the )Tj
T*
0.098 Tw
(credit freeze and the economy. I dont think there is any economist )Tj
T*
0.18 Tw
(in this country who suggests that we will be out of the doldrums )Tj
T*
0.15 Tw
(that we are in, to put it mildly, for a year, year-and-a-half, which )Tj
T*
0.164 Tw
(means that I dont hear this figure taking you to where you need )Tj
T*
0.16 Tw
(to be in order to achieve your goal, which is where the Chairman )Tj
T*
0.052 Tw
(is at, saying are you going to comeback? )Tj
1 -1 TD
0.072 Tw
(And let me just say that I know that several of you said that you )Tj
-1 -1 TD
0.222 Tw
(were new to the industry, and I appreciate that, but part of the )Tj
T*
0.228 Tw
(problem, Mr. Chairman, we have here is a credibility issue with )Tj
T*
0.126 Tw
(the industry. In the 1970s, all of the domestic manufacturing auto )Tj
T*
0.16 Tw
(makers argued that enacting fuel efficiency standards would force )Tj
T*
0.208 Tw
(them to make nothing but subcompact cars. Well, we know that, )Tj
T*
0.128 Tw
(in fact, we did it anyway and we had the fuel efficiency standards )Tj
T*
0.052 Tw
(raised and we were flooded with sport utility vehicles. )Tj
1 -1 TD
0.106 Tw
(In the 1990s, the big three made a deal with the Clinton admin-)Tj
-1 -1 TD
0.358 Tw
(istration for over $1 billion to help commercialize hybrid tech-)Tj
T*
0.134 Tw
(nology. In exchange, the Clinton administration reportedly did not )Tj
T*
0.084 Tw
(push for higher fuel efficiency standards. But when President Clin-)Tj
T*
0.134 Tw
(ton left office, that deal was broken and you stopped pursuing the )Tj
T*
0.08 Tw
(technology. Now Japanese auto makers have at least a 7-year head )Tj
T*
0.052 Tw
(start developing hybrids. )Tj
1 -1 TD
0.264 Tw
(And these are not isolated instances. You know, I was one of )Tj
-1 -1 TD
0.072 Tw
(those who voted for the $25 billion to help you restructure and pro-)Tj
T*
0.196 Tw
(vide for the new higher fuel efficiency cars, but when I hear you )Tj
T*
0.242 Tw
(not being able to give us how this $25 billion takes you to that )Tj
T*
0.156 Tw
(place in time in which you will be able to not only repay the tax-)Tj
T*
0.25 Tw
(payers of the country, but at the same time have met the chal-)Tj
T*
0.07 Tw
(lenges that you have described, it is a difficult proposition. I am in-)Tj
T*
0.196 Tw
(clined to be helpful, but I have got to hear a better fundamental )Tj
T*
0.076 Tw
(of how it is that this gets youwhy this number wasnt just picked )Tj
T*
0.104 Tw
(out of the sky and said, this is a good number to try to go for, and )Tj
T*
0.052 Tw
(how it gets you to where you need to get. )Tj
1 -1 TD
0.172 Tw
(So that is what I was trying to add up here, to give a sense of )Tj
-1 -1 TD
0.122 Tw
(time. Now, you cant tell me how much, but there is not much left )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00065)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
211 0 obj
<>/ExtGState<>>>
endobj
212 0 obj
<>
endobj
213 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(62 )Tj
-15.344 -2 TD
0.102 Tw
(in that package after your two colleagues here projected what they )Tj
0 -1 TD
0.136 Tw
(need. So I just dont see how the $25 billion is finite and gets you )Tj
T*
0.156 Tw
(there. I hope we get better accounting, Mr. Chairman, in order to )Tj
T*
0.052 Tw
(be able to decide )Tj
1 -1 TD
0.128 Tw
(Chairman D)Tj
8 0 0 7.6194 215.8791 601 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.5508 601 Tm
0.128 Tw
(. Well, the point is, and this is the point we are )Tj
-8.7551 -1 TD
0.108 Tw
(trying to get at, because you are looking at 2010, I think, in terms )Tj
T*
0.318 Tw
(of Senator Menendez makes the point that our economy is not )Tj
T*
0.09 Tw
(going to recover quickly here, and so we are going to have a period )Tj
T*
0.162 Tw
(of at least a year or longer of recovery. And we are talking about )Tj
T*
0.216 Tw
(the restructuring efforts really beginning to take hold by 2010, I )Tj
T*
0.08 Tw
(think is what we are now talking about. So we have got all of 2009 )Tj
T*
0.096 Tw
(to go through, and these numbers look like, if you take the totality )Tj
T*
0.232 Tw
(of the three companies, they look like basically good for about a )Tj
T*
0.052 Tw
(quarter, is my concern. )Tj
1 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 500.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 500.9999 Tm
0.052 Tw
(. Mr. Chairman? )Tj
-9.0519 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 490.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 490.9999 Tm
0.052 Tw
(. Yes? )Tj
-7.6791 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 480.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 480.9999 Tm
0.052 Tw
(. One last point, if I may. )Tj
-9.0519 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 471 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 471 Tm
0.052 Tw
(. Yes. )Tj
-7.6791 -1 TD
0.106 Tw
(Senator M)Tj
8 0 0 7.6194 206.5793 460.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 248.0586 460.9999 Tm
0.106 Tw
(. The energy bill that we passed that had the )Tj
-10.1059 -1 TD
0.196 Tw
($25 billion that is now in the regulations of the Section 136 pro-)Tj
T*
0.26 Tw
(gram, I understand that Ford announced that it applied for the )Tj
T*
0.052 Tw
(loans today, which I applaud. What about Chrysler and GM? )Tj
1 -1 TD
0.178 Tw
(Mr. N)Tj
8 0 0 7.6194 186.3696 421 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.849 421 Tm
0.178 Tw
(. Sir, we applied the first day it was available by )Tj
-7.6849 -1 TD
0.052 Tw
(five oclock. )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 401 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 401 Tm
0.052 Tw
(. We applied Monday morning at 8:43 a.m. )Tj
-6.6065 -1 TD
(Senator M)Tj
8 0 0 7.6194 206.0392 391 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 247.5186 391 Tm
0.052 Tw
(. OK. I am glad to hear it. )Tj
-9.0519 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 381 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 381 Tm
0.052 Tw
(. You knew that number. )Tj
-7.6791 -1 TD
0 Tw
([Laughter.] )Tj
T*
0.284 Tw
(Senator M)Tj
8 0 0 7.6194 208.3593 360.9999 Tm
0 Tw
(ENENDEZ)Tj
10 0 0 10 249.8386 360.9999 Tm
0.284 Tw
(. I am glad to hear those answers because )Tj
-10.2839 -1 TD
0.17 Tw
(that certainly appears to be a viable program that is necessary. I )Tj
T*
0.078 Tw
(do hope that the history of the industry as it relates to fighting the )Tj
T*
0.354 Tw
(Congress about fuel efficiency is an issue of the past, not the )Tj
T*
0.208 Tw
(present. I hope that we are going to hear from you that you are )Tj
T*
0.09 Tw
(not going to fight, for example, Californias waiver the other States )Tj
T*
0.202 Tw
(are looking for, as well, and use the resources that we may very )Tj
T*
0.116 Tw
(well give you here in the Congress to fight against such proposals. )Tj
T*
0.078 Tw
(I hope that we will be partners at the end of the day in this regard )Tj
T*
0.052 Tw
(and not be adversaries. )Tj
1 -1 TD
0.268 Tw
(Chairman D)Tj
8 0 0 7.6194 217.2791 260.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 235.9508 260.9999 Tm
0.268 Tw
(. Senator Corker? You sure you dont want to )Tj
-8.8951 -1 TD
0.052 Tw
(move up a little bit? You are so far away. )Tj
1 -1 TD
0.224 Tw
(Senator C)Tj
8 0 0 7.6194 205.5393 240.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.3148 240.9999 Tm
0.224 Tw
(. I couldnt abandon my friend the cameraman )Tj
-8.8315 -1 TD
0 Tw
(here. )Tj
1 -1 TD
([Laughter.] )Tj
T*
0.19 Tw
(Senator C)Tj
8 0 0 7.6194 205.1993 210.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.9748 210.9999 Tm
0.19 Tw
(. Mr. Chairman, thank you for this great hear-)Tj
-8.7975 -1 TD
0.114 Tw
(ing. I appreciate all of you being here and understand the tremen-)Tj
T*
0.124 Tw
(dous problems this is creating in all of our States. We have one of )Tj
T*
0.276 Tw
(our most respected business people here tonight. That is one of )Tj
T*
0.118 Tw
(your dealers who has 300 employees, and we understand about all )Tj
T*
0.076 Tw
(the many workers and much employment. So I do have some tough )Tj
T*
0.062 Tw
(questions, but I want you to know I do understand the turmoil that )Tj
T*
0.052 Tw
(this is creating throughout our country. )Tj
1 -1 TD
0.234 Tw
(We have talked a lot about the TARP program and we talked )Tj
-1 -1 TD
0.06 Tw
(about the fact that we were willing to, quote, bailout the financial )Tj
T*
0.202 Tw
(institutions. But one of the things that is occurring in the TARP )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00066)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
214 0 obj
<>/ExtGState<>>>
endobj
215 0 obj
<>
endobj
216 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(63 )Tj
-15.344 -2 TD
0.084 Tw
(program that is not happening here is that the OCC that regulates )Tj
0 -1 TD
0.066 Tw
(these banks, or the FDIC if that is the case, has to certify to Treas-)Tj
T*
0.144 Tw
(ury that these are strong institutions and they actually make rec-)Tj
T*
0.156 Tw
(ommendations to Treasury as to which institutions are the strong )Tj
T*
0.052 Tw
(banks, the good banks, and should succeed. )Tj
1 -1 TD
0.288 Tw
(I find it really interesting that we, quote, have the big three )Tj
-1 -1 TD
0.194 Tw
(here, if you will, because I know that all three of you are in dif-)Tj
T*
0.16 Tw
(ferent circumstances, and my sense is if the OCC was performing )Tj
T*
0.152 Tw
(the same ordeal, if you will, on you all, some of you would not be )Tj
T*
0.052 Tw
(recommended to get credit. )Tj
1 -1 TD
0.142 Tw
(My sense is that Ford has done a better job and is in a slightly )Tj
-1 -1 TD
0.082 Tw
(stronger position, that GM has made some changes but is spiraling )Tj
T*
0.14 Tw
(downward and in serious trouble, and my sense is, and I could be )Tj
T*
0.102 Tw
(wrong, I know it is a private company and results arent available, )Tj
T*
0.112 Tw
(but that Chrysler just barely has a heartbeat. So I do wonder why )Tj
T*
0.056 Tw
(we are talking to three companies in very different situations about )Tj
T*
0.156 Tw
(all being treated the same way. It seems to me that that premise )Tj
T*
0.052 Tw
(to begin with is very flawed. )Tj
1 -1 TD
0.17 Tw
(Now, obviously you all have created a pact. You wouldnt share )Tj
-1 -1 TD
0.11 Tw
(with Senator Menendez how much each of you have asked. I know )Tj
T*
0.106 Tw
(that one of you shared with us that you have given those numbers )Tj
T*
0.196 Tw
(to Levin. But I would like to know exactly what each of you has )Tj
T*
0.08 Tw
(asked for, and I think that is only fair, and I think dancing around )Tj
T*
0.052 Tw
(that is incorrect. )Tj
1 -1 TD
0.058 Tw
(And then I would like Mr. Gettelfinger, if he would, since he says )Tj
-1 -1 TD
0.082 Tw
(he went in and looked at these companies, to tell us which of these )Tj
T*
0.094 Tw
(three should survive and which shouldnt. But I would like to have )Tj
T*
0.052 Tw
(the numbers first. )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 360.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 360.9999 Tm
0.052 Tw
(. I would be happy again to say )Tj
-6.5589 -1 TD
0.078 Tw
(Senator C)Tj
8 0 0 7.6194 204.0793 350.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.8548 350.9999 Tm
0.078 Tw
(. I just want the numbers. Just give us the num-)Tj
-8.6855 -1 TD
0.052 Tw
(bers that you gave to Mr. Levin to create the legislation. )Tj
1 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 330.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 330.9999 Tm
0.052 Tw
(. Seven billion. )Tj
-6.5589 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 320.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 320.9999 Tm
0.052 Tw
(. Seven billion. What is the number from GM? )Tj
-7.6595 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 311 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 311 Tm
0.052 Tw
(. Seven billion. )Tj
-6.5589 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 300.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 300.9999 Tm
0.052 Tw
(. And the number from GM? )Tj
-7.6595 -1 TD
0.122 Tw
(Mr. W)Tj
8 0 0 7.6194 187.4695 290.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.765 290.9999 Tm
0.122 Tw
(. Senator, sir, I think you have to be fair and look )Tj
-7.6765 -1 TD
0.052 Tw
(at it )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 270.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 270.9999 Tm
0.052 Tw
(. I just want )Tj
-7.6595 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 260.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 260.9999 Tm
0.052 Tw
(. what industry )Tj
-6.6065 -1 TD
0.09 Tw
(Senator C)Tj
8 0 0 7.6194 204.1993 250.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.9748 250.9999 Tm
0.09 Tw
(. Of the $25 billion that you have asked for, how )Tj
-8.6975 -1 TD
0.052 Tw
(much of it have you guys decided at GM )Tj
1 -1 TD
0.192 Tw
(Mr. W)Tj
8 0 0 7.6194 188.1695 230.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.465 230.9999 Tm
0.192 Tw
(. We felt that if we get our proportionate market )Tj
-7.7465 -1 TD
0.052 Tw
(share of that )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 210.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 210.9999 Tm
0.052 Tw
(. Just give me the number. )Tj
-7.6595 -1 TD
0.072 Tw
(Mr. W)Tj
8 0 0 7.6194 186.9695 200.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.265 200.9999 Tm
0.072 Tw
(. which would be in the $10 to $12 billion, that )Tj
-7.6265 -1 TD
0.052 Tw
(we would have a very )Tj
1 -1 TD
0.234 Tw
(Senator C)Tj
8 0 0 7.6194 205.6393 180.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.4148 180.9999 Tm
0.234 Tw
(. And how much is Ford getting in this three- )Tj
-8.8415 -1 TD
0.052 Tw
(way pact? )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 160.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 160.9999 Tm
0.052 Tw
(. Seven to $8 billion. )Tj
-6.3335 -1 TD
0.286 Tw
(Senator C)Tj
8 0 0 7.6194 206.1593 150.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.9348 150.9999 Tm
0.286 Tw
(. Seven to $8 billion. So it is seven, seven to )Tj
-8.8935 -1 TD
0.052 Tw
(eight, and ten to 12. Those are the numbers. )Tj
1 -1 TD
0.318 Tw
(Mr. Gettelfinger, you have been in to these three companies. )Tj
-1 -1 TD
0.076 Tw
(They are all three in different positions. Some of them are stronger )Tj
T*
0.052 Tw
(than others for lots of reasons. Rank them, one, two, three. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00067)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
217 0 obj
<>/ExtGState<>>>
endobj
218 0 obj
<>
endobj
219 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(64 )Tj
-14.344 -2 TD
0.052 Tw
(Mr. G)Tj
8 0 0 7.6194 184.7396 641 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.1867 641 Tm
0.052 Tw
(. In being in the best shape to the worst? )Tj
-8.8187 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 631 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 631 Tm
0.052 Tw
(. Yes. )Tj
-7.6595 -1 TD
0.112 Tw
(Mr. G)Tj
8 0 0 7.6194 185.3396 621 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.7867 621 Tm
0.112 Tw
(. I would rank them Ford, Chrysler, and Gen-)Tj
-9.8787 -1 TD
0.052 Tw
(eral Motors. )Tj
1 -1 TD
0.066 Tw
(Senator C)Tj
8 0 0 7.6194 203.9593 601 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.7348 601 Tm
0.066 Tw
(. OK. I have to say that we have gone to ten mil-)Tj
-8.6735 -1 TD
0.18 Tw
(lion sales a year in our country and there may not be a need for )Tj
T*
0.12 Tw
(three auto makers. I just want to say that we are going down this )Tj
T*
(road in a really odd way in that when we went through the finan-)Tj
T*
0.214 Tw
(cial mechanisms, we actually had the OCC go in and make sure )Tj
T*
0.11 Tw
(these were going entities. I just want to say, if we are going to try )Tj
T*
0.1 Tw
(to do something this week, we are bypassing something that to me )Tj
T*
0.058 Tw
(is an incredibly important thing for us to do as it relates to the tax-)Tj
T*
0 Tw
(payers. )Tj
1 -1 TD
0.128 Tw
(We have mentioned Section 136 and some people have said that )Tj
-1 -1 TD
0.1 Tw
(maybe that is the vehicle we ought to use to fund the auto makers )Tj
T*
0.09 Tw
(if we do it. There are two provisions there. One says that you have )Tj
T*
0.248 Tw
(to be making alternative types of vehicles or alternative energy- )Tj
T*
0.152 Tw
(type vehicles. The other is you have to show that you are a going )Tj
T*
0.052 Tw
(concern and that you are going to survive. )Tj
1 -1 TD
0.212 Tw
(I assume that when you applied at 8:43 and the others of you )Tj
-1 -1 TD
0.21 Tw
(the same day, that you put in placethere was a plan that was )Tj
T*
0.068 Tw
(submitted that showed you to be going concerns, is that correct, be-)Tj
T*
0.052 Tw
(cause that is one of the stipulations of 136. )Tj
1 -1 TD
0.154 Tw
(Mr. W)Tj
8 0 0 7.6194 187.7895 411 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.085 411 Tm
0.154 Tw
(. It is part of the process, yes. I am not sure that )Tj
-7.7085 -1 TD
0.068 Tw
(all has to be submitted up front, but yes, we are all aware of it and )Tj
T*
0.052 Tw
(we are all doing that analysis. )Tj
1 -1 TD
0.062 Tw
(Senator C)Tj
8 0 0 7.6194 203.9193 381 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.6948 381 Tm
0.062 Tw
(. I would just say to the Committee that it seems )Tj
-8.6695 -1 TD
0.138 Tw
(to me that we would like to at least look at those prior to putting )Tj
T*
0.052 Tw
(money into these firms. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 350.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 350.9999 Tm
0.052 Tw
(. Look at what Bobwhat do you want? )Tj
-7.6791 -1 TD
0.088 Tw
(Senator C)Tj
8 0 0 7.6194 204.1793 341 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.9548 341 Tm
0.088 Tw
(. Well, they are going to have to submit for their )Tj
-8.6955 -1 TD
0.052 Tw
(136 applications )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 320.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 320.9999 Tm
0.052 Tw
(. Right. )Tj
-7.6791 -1 TD
0.248 Tw
(Senator C)Tj
8 0 0 7.6194 205.7793 311 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.5548 311 Tm
0.248 Tw
(. they have to submit something that lays )Tj
-8.8555 -1 TD
0.108 Tw
(out a business plan that shows that they are a going concern, that )Tj
T*
0.052 Tw
(they can be successful, that they can pay this money back. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 280.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 280.9999 Tm
0.052 Tw
(. Very good point. )Tj
-7.6791 -1 TD
0.102 Tw
(Senator C)Tj
8 0 0 7.6194 204.3193 270.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.0948 270.9999 Tm
0.102 Tw
(. And it seems like that before we would rush to )Tj
-8.7095 -1 TD
0.248 Tw
(take action this week, we could at least see those, because it is )Tj
T*
0.118 Tw
(pretty evident, I think, to all of us in this Committee that $25 bil-)Tj
T*
0.112 Tw
(lion was sort of thrown up on the wall and it stuck. There has not )Tj
T*
0.214 Tw
(been any real thinking behind that number. It is what might be )Tj
T*
0.17 Tw
(attained today. I think we all know if that occurs, they are going )Tj
T*
0.156 Tw
(to be back. I dont think there is anybody on this Committee that )Tj
T*
0.052 Tw
(believes otherwise. )Tj
1 -1 TD
0.06 Tw
(So it seems to me that we would be so much better off to actually )Tj
-1 -1 TD
0.206 Tw
(see these submittals that you are going to have to submit to get )Tj
T*
0.194 Tw
(the 136 money you are already after. We should judge those and )Tj
T*
0.052 Tw
(we should see if you are actually going concerns. )Tj
1 -1 TD
0.23 Tw
(Now, I was just in Russia last week and noticed that General )Tj
-1 -1 TD
0.09 Tw
(Motors was opening a plant there, I guess the next day after I was )Tj
T*
0.16 Tw
(there. And I understand that you make money in Russia and you )Tj
T*
0.26 Tw
(make money in other places, but you dont make money here. I )Tj
T*
0.112 Tw
(would just like to ask a very blunt question, if it has something to )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00068)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
220 0 obj
<>/ExtGState<>>>
endobj
221 0 obj
<>
endobj
222 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(65 )Tj
-15.344 -2 TD
0.314 Tw
(do with your relationship with Mr. Gettelfinger or the UAW. I )Tj
0 -1.02 TD
0.118 Tw
(mean, what is it that allows you to make money in all these other )Tj
T*
0.052 Tw
(countries but not make money here? )Tj
1 -1.02 TD
0.268 Tw
(Mr. W)Tj
8 0 0 7.6194 188.9295 610.4 Tm
0 Tw
(AGONER)Tj
10 0 0 10 225.225 610.4 Tm
0.268 Tw
(. Well, each market, to be fair, has its own cir-)Tj
-7.8225 -1.02 TD
0.14 Tw
(cumstances, but in general, we have done quite well in most mar-)Tj
T*
0.174 Tw
(kets outside the U.S. recently. Part of the reason is a little bit of )Tj
T*
0.262 Tw
(the issue we discussed earlier, very rapid growth. Frankly, it is )Tj
T*
0.28 Tw
(easier to make money when things are growing than when you )Tj
T*
0.142 Tw
(have to shrink, and it is fair to say that if you look back over the )Tj
T*
0.058 Tw
(last 10 or 15 years, as I mentioned, we have had a fairly significant )Tj
T*
0.192 Tw
(cost to restructure our business in the U.S. And so that is a fair )Tj
T*
0.064 Tw
(point. I think the point we were trying to make today in our earlier )Tj
T*
0.052 Tw
(comments is that a lot of that is behind us. )Tj
1 -1.02 TD
0.11 Tw
(Senator C)Tj
8 0 0 7.6194 204.3993 508.4 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.1748 508.4 Tm
0.11 Tw
(. It is a pretty big point, but let me just say you )Tj
-8.7175 -1.02 TD
0.134 Tw
(all have been very careful, and I appreciate this. Mr. Gettelfinger, )Tj
T*
0.08 Tw
(I want you to know I have been a card-carrying union member and )Tj
T*
0.066 Tw
(been a trustee and I dont have a major issue. I do with card check, )Tj
T*
0.14 Tw
(of course, but they keep saying that by 2010, they are going to be )Tj
T*
0.088 Tw
(competitive and it makes me think that what we are doing is loan-)Tj
T*
0.12 Tw
(ing these guys possibly money so that at some point in the future, )Tj
T*
0.184 Tw
(they are going to be competitive because of agreements that they )Tj
T*
0.238 Tw
(have with you. And I would ask, why not 2009? Why not 2008? )Tj
T*
0.15 Tw
(Why dont you go ahead and make the changes you need to make )Tj
T*
0.052 Tw
(to make them competitive now? )Tj
1 -1.02 TD
0.292 Tw
(Mr. G)Tj
8 0 0 7.6194 187.1396 396.2 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 247.5867 396.2 Tm
0.292 Tw
(. Well, just one example, Senator. The Vol-)Tj
-10.0587 -1.02 TD
0.174 Tw
(untary Employee Beneficiary Association, we had to go through a )Tj
T*
0.282 Tw
(court process after the negotiations. That is a Federal court-ap-)Tj
T*
0.306 Tw
(proved settlement. Just transferring that over to the union, we )Tj
T*
0.188 Tw
(have had two trustees meetings to this point in time. But this is )Tj
T*
0.15 Tw
(major. Because of the time that it is going to take for everybodys )Tj
T*
0.06 Tw
(eligibility, we have to set up a complete structure, because what we )Tj
T*
0.212 Tw
(are doing is we are creating the Voluntary Employee Beneficiary )Tj
T*
0.358 Tw
(Association, which has more independent trustees than it does )Tj
T*
0.172 Tw
(UAW trustees, and we are going to be responsible for everything. )Tj
T*
0.15 Tw
(So just the magnitude. We are on a push now to get this through )Tj
T*
0.052 Tw
(to 2010. )Tj
1 -1.02 TD
0.194 Tw
(Senator C)Tj
8 0 0 7.6194 205.2393 273.8 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.0148 273.8 Tm
0.194 Tw
(. Yes. Mr. Nardelli had a representative in our )Tj
-8.8015 -1.02 TD
0.162 Tw
(office earlier today that was sharing that even when they are not )Tj
T*
0.122 Tw
(making cars, when there is not a demand for cars, in their plants, )Tj
T*
0.112 Tw
(they have to operate at 80 percent regardless, and I would like for )Tj
T*
0.17 Tw
(you to acknowledge whether that is true or not and then I would )Tj
T*
0.052 Tw
(like to ask you, Mr. Gettelfinger, why that would be the case. )Tj
1 -1.02 TD
0.142 Tw
(Mr. N)Tj
8 0 0 7.6194 186.0096 212.6 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.489 212.6 Tm
0.142 Tw
(. Senator, I am not sure, when you say operate at )Tj
-7.6489 -1.02 TD
0.052 Tw
(80 percent, if you are suggesting that we )Tj
1 -1.02 TD
0.298 Tw
(Senator C)Tj
8 0 0 7.6194 206.2793 192.2 Tm
0 Tw
(ORKER)Tj
10 0 0 10 236.0548 192.2 Tm
0.298 Tw
(. I understand you have agreements in place. )Tj
-8.9055 -1.02 TD
0.22 Tw
(Mr. Jim Press was in our office earlier today explaining that, in )Tj
T*
0.152 Tw
(fact, even when your plants are not needed, they have to operate. )Tj
T*
0.07 Tw
(There have to be some issues that still cause you to lose money un-)Tj
T*
0 Tw
(necessarily. )Tj
1 -1.01 TD
0.124 Tw
(Mr. N)Tj
8 0 0 7.6194 185.8296 141.2999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.309 141.2999 Tm
0.124 Tw
(. Maybe what he was referring to, Senator, is that )Tj
-7.6309 -1.01 TD
0.122 Tw
(there is a contractual obligation that when we have to idle a facil-)Tj
T*
0.114 Tw
(ity, that we do have to continue to pay wages at about 95 percent. )Tj
T*
0.052 Tw
(I think Ron can be more specific than that )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00069)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
223 0 obj
<>/ExtGState<>>>
endobj
224 0 obj
<>
endobj
225 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(66 )Tj
-14.344 -2 TD
0.116 Tw
(Senator C)Tj
8 0 0 7.6194 204.4593 641 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.2348 641 Tm
0.116 Tw
(. That seems kind of problematic to me, I mean, )Tj
-8.7235 -1 TD
0.132 Tw
(just on the surface, and it seems to me that you are asking us for )Tj
T*
0.238 Tw
($25 billion to support a clause that in no other business in this )Tj
T*
0.568 Tw
(country would be tolerated. I understand the good job Mr. )Tj
T*
0.102 Tw
(Gettelfinger is doing on behalf of the employees that are not work-)Tj
T*
0.156 Tw
(ing but still being paid, but I find it very difficult that you would )Tj
T*
0.116 Tw
(be in here asking us for $25 billion, which we know is just the be-)Tj
T*
0.382 Tw
(ginning, when you have an agreement in place like that that )Tj
T*
0.174 Tw
(causes you to have to pay 95 percent of the workers that are not )Tj
T*
0.278 Tw
(working. Could you elaborate, or Mr. Gettelfinger, could you all )Tj
T*
0.052 Tw
(change that tomorrow before you make another application? )Tj
1 -1 TD
0.268 Tw
(Mr. G)Tj
8 0 0 7.6194 186.8996 530.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 247.3466 530.9999 Tm
0.268 Tw
(. Senator, first of all, I gave some numbers )Tj
-10.0347 -1 TD
0.052 Tw
(here earlier on. General Motors, 9/30/05, had 110,000 )Tj
1 -1 TD
0.074 Tw
(Senator C)Tj
8 0 0 7.6194 204.0393 510.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.8148 510.9999 Tm
0.074 Tw
(. I know what you have done. I am talking about )Tj
-8.6815 -1 TD
0 Tw
(this )Tj
1 -1 TD
0.196 Tw
(Mr. G)Tj
8 0 0 7.6194 186.1796 490.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 246.6267 490.9999 Tm
0.196 Tw
(. But they are not getting paid, is the point. )Tj
-9.9627 -1 TD
0.052 Tw
(We were able to reduce that )Tj
1 -1 TD
0.172 Tw
(Senator C)Tj
8 0 0 7.6194 205.0193 471 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.7948 471 Tm
0.172 Tw
(. I know what you are talking about, about the )Tj
-8.7795 -1 TD
0.052 Tw
(bank, but this is a different issue. This is a different issue. )Tj
1 -1 TD
(Mr. G)Tj
8 0 0 7.6194 184.7396 450.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.1867 450.9999 Tm
0.052 Tw
(. You are talking about the sub-pay. )Tj
-8.8187 -1 TD
0.072 Tw
(Senator C)Tj
8 0 0 7.6194 204.0193 441 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.7948 441 Tm
0.072 Tw
(. Mr. Nardelli, do you want to explain to him the )Tj
-8.6795 -1 TD
0 Tw
(issue? )Tj
1 -1 TD
0.126 Tw
(Mr. N)Tj
8 0 0 7.6194 185.8496 421 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.329 421 Tm
0.126 Tw
(. I think what he may have been alluding to, Ron, )Tj
-7.6329 -1 TD
0.168 Tw
(is, for example, if we have to idle a facility that we have ongoing )Tj
T*
0.052 Tw
(labor contractual obligations to pay those employees. )Tj
1 -1 TD
(Mr. G)Tj
8 0 0 7.6194 184.7396 391 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.1867 391 Tm
0.052 Tw
(. That is their unemployment plus )Tj
-8.8187 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 381 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 381 Tm
0.052 Tw
(. For how long? )Tj
-7.6595 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 371 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 371 Tm
0.052 Tw
(. Ron? )Tj
-6.5589 -1 TD
(Mr. G)Tj
8 0 0 7.6194 184.7396 360.9999 Tm
0 Tw
(ETTELFINGER)Tj
10 0 0 10 245.1867 360.9999 Tm
0.052 Tw
(. I would have to look at the contract. )Tj
-8.8187 -1 TD
0.124 Tw
(Senator C)Tj
8 0 0 7.6194 204.5393 350.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.3148 350.9999 Tm
0.124 Tw
(. You have got to be kidding me. I would like to )Tj
-8.7315 -1 TD
0.062 Tw
(know, and I would like to know at what expense that is to the com-)Tj
T*
0.174 Tw
(panies. But it seems like things like thatlet me go back to pre-)Tj
T*
0.262 Tw
(packaged bankruptcy. I have to tell you, I dont understand the )Tj
T*
0.168 Tw
(stigma that would come with prepackaged bankruptcy, where you )Tj
T*
0.058 Tw
(knew that there was money coming if certain things happened. You )Tj
T*
0.146 Tw
(lay out a plan, either in 136 or some other way that laid out how )Tj
T*
0.11 Tw
(all that would happen. And these changes that are so necessary to )Tj
T*
0.24 Tw
(cause these companies to be competitive were put in place over-)Tj
T*
0.052 Tw
(night, not in 2010 or 2011. )Tj
1 -1 TD
0.154 Tw
(And again, I have got to believe that there is a piece of each of )Tj
-1 -1 TD
0.166 Tw
(you as CEOs, which I respect, I really do, and I respect the chal-)Tj
T*
0.212 Tw
(lenges you are going through, that would almost like to see that )Tj
T*
0.136 Tw
(happen, but you cant say it. I dont know how that could possibly )Tj
T*
0.052 Tw
(be detrimental. )Tj
1 -1 TD
0.158 Tw
(You have 7,000 dealers across this country. People that sell the )Tj
-1 -1 TD
0.132 Tw
(same amounts of cars have, like, 1,200 dealers across the country. )Tj
T*
0.102 Tw
(It seems to me that that is highly problematic and that State laws )Tj
T*
(keep you from doing things that you feel like you really would like )Tj
T*
0.072 Tw
(to do but you cant. It seems like those things are very, very impor-)Tj
T*
0.314 Tw
(tant and very tangible and things that we ought to be talking )Tj
T*
0.052 Tw
(about today and I would love a response. )Tj
1 -1 TD
0.094 Tw
(Mr. W)Tj
8 0 0 7.6194 187.1895 130.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.485 130.9999 Tm
0.094 Tw
(. Well, if I could start, Senator, I am not an expert )Tj
-7.6485 -1 TD
0.178 Tw
(in bankruptcy, but I have seen research by an independent party )Tj
T*
0.316 Tw
(as recently as this summer which said that 80 percent of con-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00070)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
226 0 obj
<>/ExtGState<>>>
endobj
227 0 obj
<>
endobj
228 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(67 )Tj
-15.344 -2 TD
0.198 Tw
(sumers, and it was broken out by brand, so maybe it was 60 for )Tj
0 -1 TD
0.072 Tw
(Honda and I think it was 90-plus for one of the brands here, it was )Tj
T*
0.136 Tw
(about 80 percent for us, would not considerwould not consider )Tj
T*
0.138 Tw
(buying a car from a company that was in bankruptcy. Eighty per-)Tj
T*
0.1 Tw
(cent. If any of us had an 80 percent reduction in volume, then this )Tj
T*
0.052 Tw
(idea of a prepackaged bankruptcy is pure fantasy. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 581 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 581 Tm
0.052 Tw
(. Would the industry be )Tj
-7.6595 -1 TD
0.156 Tw
(Mr. W)Tj
8 0 0 7.6194 187.8095 571 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.105 571 Tm
0.156 Tw
(. You would be talkingexcuse me. You would be )Tj
-7.7105 -1 TD
0.052 Tw
(talking about a Chapter 7 liquidation )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 551 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 551 Tm
0.052 Tw
(. No, no, no )Tj
-7.6595 -1 TD
0.074 Tw
(Mr. W)Tj
8 0 0 7.6194 186.9895 541 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.285 541 Tm
0.074 Tw
(. which would affect the supply base, affect the )Tj
-7.6285 -1 TD
0.174 Tw
(other two, and ripple across this economy like a tsunami that we )Tj
T*
0.246 Tw
(havent seen, and it seems like to me a huge roll of the dice to )Tj
T*
0.202 Tw
(weigh that, the risks of that, which I personally believe are very )Tj
T*
0.052 Tw
(high, against the request we are making here today. So I )Tj
1 -1 TD
0.096 Tw
(Senator C)Tj
8 0 0 7.6194 204.2593 490.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.0348 490.9999 Tm
0.096 Tw
(. Well, today, but you are going to come back for )Tj
-8.7035 -1 TD
0.062 Tw
(more, and I think you alllet me ask you this. Would you all make )Tj
T*
0.19 Tw
(the pledge that if you get the $25 billion, you will never be back )Tj
T*
0.052 Tw
(to see us again? )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 450.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 450.9999 Tm
0.052 Tw
(. Well, I think )Tj
-6.6065 -1 TD
0.178 Tw
(Senator C)Tj
8 0 0 7.6194 205.0793 441 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.8548 441 Tm
0.178 Tw
(. I dont think you are under oath, but I would )Tj
-8.7855 -1 TD
0.052 Tw
(love it if )Tj
1 -1 TD
0.17 Tw
(Mr. W)Tj
8 0 0 7.6194 187.9495 421 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.245 421 Tm
0.17 Tw
(. Sir, if you could make the pledge to us that the )Tj
-7.7245 -1 TD
0.178 Tw
(U.S. economy will turn around on a certain point in time, then )Tj
T*
0.146 Tw
(and the financial markets will rejuvenate, then we would be glad, )Tj
T*
0.052 Tw
(based on that data, to come back to you and give you )Tj
1 -1 TD
0.16 Tw
(Senator C)Tj
8 0 0 7.6194 204.8993 381 Tm
0 Tw
(ORKER)Tj
10 0 0 10 234.6748 381 Tm
0.16 Tw
(. You are going to be back, arent you? You )Tj
-7.7675 -1 TD
0.152 Tw
(Mr. W)Tj
8 0 0 7.6194 187.7695 371 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.065 371 Tm
0.152 Tw
(. our exact best estimate of how much financ-)Tj
-7.7065 -1 TD
0.052 Tw
(ing we think we need, sir. We will be very glad to do that. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 350.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 350.9999 Tm
0.052 Tw
(. I thank you all. )Tj
-7.6595 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 341 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 341 Tm
0.052 Tw
(. Senator, may I answer your question? )Tj
-6.5589 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 330.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 233.5948 330.9999 Tm
0.052 Tw
(. Yes. )Tj
-7.6595 -1 TD
0.19 Tw
(Mr. N)Tj
8 0 0 7.6194 186.4896 320.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.969 320.9999 Tm
0.19 Tw
(. We did look attwo parts to your question, if I )Tj
-7.6969 -1 TD
0.126 Tw
(may, sir. We did look at prepackaged. We looked at prenegotiated. )Tj
T*
0.204 Tw
(We have looked at almost every alternative within Chrysler as a )Tj
T*
0.092 Tw
(privately held company before we came here and asked for support )Tj
T*
0.142 Tw
(to provide a bridge, if you will, through this economic trough, and )Tj
T*
0.136 Tw
(to a certain degree, all of these take an extensive amount of time, )Tj
T*
0.152 Tw
(certainly in a prenegotiated. We have to get all of the players, all )Tj
T*
0.226 Tw
(of the suppliers, all of the lenders, all of the labor, and you can )Tj
T*
0.23 Tw
(imagine, sir, that would take an extensive amount of time to be )Tj
T*
0.136 Tw
(able to renegotiate that, and in fact, we are in a very fragile posi-)Tj
T*
0.052 Tw
(tion, Chrysler is, point one. )Tj
1 -1 TD
0.124 Tw
(Point two, I think I would be remiss as being the newest guy in )Tj
-1 -1 TD
0.214 Tw
(the auto industry if I didnt respond favorably to your challenge. )Tj
T*
0.124 Tw
(Chrysler, again, has been looking for partnerships. We are looking )Tj
T*
0.096 Tw
(for alliances. We are looking for opportunities to make the auto in-)Tj
T*
0.154 Tw
(dustry, either within the United States or globally, more efficient. )Tj
T*
0.12 Tw
(I dont think there is any question that there are opportunities for )Tj
T*
0.116 Tw
(more synergies. There are opportunities for more sharing, whether )Tj
T*
0.062 Tw
(it be in technology in 136, for example, to create a National Science )Tj
T*
0.088 Tw
(Center where rather than paying each of us a dollar to develop the )Tj
T*
0.186 Tw
(same technology we would pay one dollar. That technology would )Tj
T*
0.104 Tw
(then be transferred over to the auto companies. It would make the )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00071)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
229 0 obj
<>/ExtGState<>>>
endobj
230 0 obj
<>
endobj
231 0 obj
<>
endobj
232 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(68 )Tj
-15.344 -2 TD
0.12 Tw
($25 billion go further. It would be more cost effective. If it became )Tj
0 -1 TD
0.172 Tw
(a wholly owned affiliate, you could get private equity to invest in )Tj
T*
0.052 Tw
(it and then market that. )Tj
1 -1 TD
0.116 Tw
(So there are many creative ideas, I think to your point, that the )Tj
-1 -1 TD
0.102 Tw
(auto industry could look at, but the immediacy of why we are here )Tj
T*
0.21 Tw
(today is to give us a chance to get through this period and then )Tj
T*
0.128 Tw
(to look at those on how the U.S. auto industry can be more formi-)Tj
T*
0.056 Tw
(dable, can be more competitive, not only to be profitable here in the )Tj
T*
0.052 Tw
(U.S., but on a global basis. )Tj
1 -1 TD
0.232 Tw
(Senator C)Tj
8 0 0 7.6194 205.6193 551 Tm
0 Tw
(ORKER)Tj
10 0 0 10 235.3948 551 Tm
0.232 Tw
(. I know you are alluding to the fact that you )Tj
-8.8395 -1 TD
0.262 Tw
(would like to see a merger between GM and yourselves. I dont )Tj
T*
0.072 Tw
(know that, again, Mr. Chairman, that things like that we shouldnt )Tj
T*
0.086 Tw
(force to happen if they are going to get this money. But I will stop. )Tj
T*
0.052 Tw
(I know I have taken my time. I thank you. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 500.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 500.9999 Tm
0.052 Tw
(. No, I thank you. )Tj
-7.6791 -1 TD
0.348 Tw
(Senator C)Tj
8 0 0 7.6194 206.7793 490.9999 Tm
0 Tw
(ORKER)Tj
10 0 0 10 236.5548 490.9999 Tm
0.348 Tw
(. And I asked tough questions. I respect the )Tj
-8.9555 -1 TD
0.108 Tw
(problems you are going through and I thank you for coming today. )Tj
1 -1 TD
0.052 Tw
(Chairman D)Tj
8 0 0 7.6194 215.1191 471 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 471 Tm
0.052 Tw
(. We thank you, Senator. )Tj
-7.6791 -1 TD
0.088 Tw
(Let me just turn to Senator Casey, but I cant resist commenting )Tj
-1 -1 TD
0.248 Tw
(on this idea of providing some compensation to employees in an )Tj
T*
0.084 Tw
(idle plant. I dont think that is outrageous at all. I mean, these are )Tj
T*
0.124 Tw
(people we hope will be back at work in a facility that is not work-)Tj
T*
0.058 Tw
(ing, and the idea that we take care of people, the assumption some-)Tj
T*
0.086 Tw
(how we just get rid of them without taking into consideration their )Tj
T*
0.18 Tw
(needs, I am not going toI dont know all the details of the con-)Tj
T*
0.194 Tw
(tract, either, Mr. Gettelfinger, or in the case of Mr. Nardelli, but )Tj
T*
0.192 Tw
(I just, for my part, I dont find that offensive at all. I think that )Tj
T*
0.098 Tw
(is taking good care of people who work damn hard for our country, )Tj
T*
0.204 Tw
(and the fact that you are able to provide some benefits for them )Tj
T*
0.142 Tw
(during a downtime in their lives is not something that I think we )Tj
T*
0.052 Tw
(ought to deplore. I commend you for it. )Tj
1 -1 TD
(Senator Casey. )Tj
T*
0.114 Tw
(Senator C)Tj
8 0 0 7.6194 204.4393 320.9999 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.663 320.9999 Tm
0.114 Tw
(. Mr. Chairman, thank you very much, and thank )Tj
-7.9663 -1 TD
0.07 Tw
(you for calling this hearing. We have had a number of hearings the )Tj
T*
0.092 Tw
(last couple of months that tried to shed some light on the financial )Tj
T*
0.11 Tw
(crisis that grips the country. It is affecting each of your companies )Tj
T*
0.256 Tw
(as well as the broader economy, but I want to thank Chairman )Tj
T*
0.052 Tw
(Dodd for making these opportunities available. )Tj
1 -1 TD
0.082 Tw
(I really have two fundamental questions, two broad questions for )Tj
-1 -1 TD
0.12 Tw
(the three CEOs, Mr. Mulally, Mr. Nardelli, and Mr. Wagoner. The )Tj
T*
0.092 Tw
(first pertains to the dollars if the Congress were to pass legislation )Tj
T*
0.19 Tw
(which would provide $25 billion. A broad question, which I think )Tj
T*
0.316 Tw
(you could probably amplify for the record later, as to how you )Tj
T*
0.332 Tw
(would spend the money and what are your most urgent needs )Tj
T*
0.052 Tw
(maybe by way of a list, an itemization. )Tj
1 -1 TD
0.13 Tw
(And second, on the question of the environmental questions, the )Tj
-1 -1 TD
0.054 Tw
(question of environmental technology, fuel efficiency, that whole set )Tj
T*
0.202 Tw
(of questions, how far advanced are you? Where are you? Give us )Tj
T*
0.052 Tw
(kind of a status report. )Tj
1 -1 TD
0.134 Tw
(But first of all, with regard to how you would spend the money, )Tj
-1 -1 TD
(because as you know from my opening, I propose that if this were )Tj
T*
0.162 Tw
(to go forward, that there would be a monthly accounting on cash, )Tj
T*
0.064 Tw
(on expenditures by category, a whole host of monthly reporting and )Tj
T*
0.098 Tw
(justifications for the further expenditure in the next month of pub-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00072)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
233 0 obj
<>/ExtGState<>>>
endobj
234 0 obj
<>
endobj
235 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(69 )Tj
-15.344 -2 TD
0.124 Tw
(lic dollars. But maybe we will just kind of go left to right on what )Tj
0 -1 TD
0.052 Tw
(you need the money for and the environmental progress. )Tj
1 -1 TD
0.12 Tw
(Mr. M)Tj
8 0 0 7.6194 187.0795 621 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.015 621 Tm
0.12 Tw
(. Sure. One, just, question for clarification, because )Tj
-7.4015 -1 TD
0.188 Tw
(clearly, each of our businesses are in different States. But in our )Tj
T*
0.276 Tw
(case in Ford, we believe we have sufficient liquidity to make it )Tj
T*
0.136 Tw
(through this slow-down in the economy, and we took action pretty )Tj
T*
0.214 Tw
(aggressively over a year-and-a-half ago to go to the markets and )Tj
T*
0.054 Tw
(raise money. But clearly, none of us know what the market is going )Tj
T*
0.17 Tw
(to look like going forward, and you could argue pretty easily that )Tj
T*
0.124 Tw
(it looks like things could deteriorate further. There is more risk of )Tj
T*
0.052 Tw
(that than it getting better. )Tj
1 -1 TD
0.208 Tw
(Senator C)Tj
8 0 0 7.6194 205.3793 530.9999 Tm
0 Tw
(ASEY)Tj
10 0 0 10 227.6029 530.9999 Tm
0.208 Tw
(. I dont want to interrupt your answer, but can )Tj
-8.0603 -1 TD
0.052 Tw
(you put a timeframe on that? )Tj
1 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 510.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 510.9999 Tm
0.052 Tw
(. Yes )Tj
-6.3335 -1 TD
0.128 Tw
(Senator C)Tj
8 0 0 7.6194 204.5793 500.9999 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.8029 500.9999 Tm
0.128 Tw
(. In terms of what you think, what period of time )Tj
-7.9803 -1 TD
0.052 Tw
(you can get through. )Tj
1 -1 TD
0.4 Tw
(Mr. M)Tj
8 0 0 7.6194 189.8795 480.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 223.815 480.9999 Tm
0.4 Tw
(. Yes. Our assumption was that if the market )Tj
-7.6815 -1 TD
0.312 Tw
(doesnt deteriorate significantly more than how we came out of )Tj
T*
0.134 Tw
(2008, that we could get through 2009, assuming that the economy )Tj
T*
0.062 Tw
(started to come back in 2010. But clearly, there is a significant risk )Tj
T*
0.186 Tw
(that the economy is going to continue to slow down. I mean, like )Tj
T*
0.128 Tw
(you have pointed out, we are all a little disappointed that some of )Tj
T*
0.068 Tw
(the actions we have put in place have notwe havent seen the im-)Tj
T*
0.052 Tw
(mediate benefit of that. )Tj
1 -1 TD
0.094 Tw
(So the reason we are here together is that this is a really impor-)Tj
-1 -1 TD
0.15 Tw
(tant industry, and if any one of us gets to the place where our fi-)Tj
T*
0.212 Tw
(nancial viability is at risk, we are putting the entire industry at )Tj
T*
0.248 Tw
(risk. So we believe together, absolutely together, that we should )Tj
T*
0.17 Tw
(put in place this bridge loan capability and then draw on that as )Tj
T*
0.052 Tw
(we need it. )Tj
1 -1 TD
0.204 Tw
(Now, each of us will be in a different situation. How much we )Tj
-1 -1 TD
0.266 Tw
(would actually draw would be dependent on the situation, what )Tj
T*
0.124 Tw
(happens in the economy. But we are not asking for a lot of money )Tj
T*
0.052 Tw
(right now. We are asking for the money as we need it. )Tj
1 -1 TD
(So against that backdrop, I would like to answer your other ques-)Tj
-1 -1 TD
0.08 Tw
(tion on the enabling technology. Just to kind of back up a little bit, )Tj
T*
0.19 Tw
(we are really pleased for the work that we did together with the )Tj
T*
0.122 Tw
(Congress last year on the 2007 Energy Independence and Security )Tj
T*
0.204 Tw
(Act, and we know there is a lot of history about standing up for )Tj
T*
0.178 Tw
(things but not standing up for what you really stand for, and we )Tj
T*
0.244 Tw
(took a stand together that we absolutely believe in energy inde-)Tj
T*
0.3 Tw
(pendence, energy security, sustainability, fuel efficiency, and we )Tj
T*
0.052 Tw
(wanted to be part of the answer. )Tj
1 -1 TD
0.07 Tw
(And we were very gratified with the debate that went on and the )Tj
-1 -1 TD
0.208 Tw
(recognition to accelerate that advanced technology and those fuel )Tj
T*
0.266 Tw
(efficient vehicles. That was a substantial investment. So we are )Tj
T*
0.144 Tw
(also very pleased with what was put in the 136 to allow us to ac-)Tj
T*
0.09 Tw
(cess that money to accelerate the fuel efficient vehicles, and as you )Tj
T*
0.052 Tw
(heard, we are all aggressively applying for that. )Tj
1 -1 TD
0.21 Tw
(Now, each of us is in a little bit different place, but generally, )Tj
-1 -1 TD
0.15 Tw
(this is led by technology. This is high tech and we all understand )Tj
T*
0.066 Tw
(it, and so the fundamental building blocks are if we continue to im-)Tj
T*
0.078 Tw
(prove the internal combustion engine, and there is lots that we can )Tj
T*
0.148 Tw
(do on that, on turbocharging, direct fuel injection, you know, a 20 )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00073)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
236 0 obj
<>/ExtGState<>>>
endobj
237 0 obj
<>
endobj
238 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(70 )Tj
-15.344 -2 TD
0.216 Tw
(percent improvement in fuel efficiency, a 15 percent reduction in )Tj
0 -1 TD
0.192 Tw
(CO2 right off the top of that technology which we can get across )Tj
T*
0.052 Tw
(all of our vehicles, across all of the engines. )Tj
1 -1 TD
0.182 Tw
(Then we go to alternate fuels, and we all believe, and we have )Tj
-1 -1 TD
0.332 Tw
(been taking action to make our vehicles compatible with alter-)Tj
T*
0.174 Tw
(native fuels like ethanol. Then you move to electrification. We all )Tj
T*
0.054 Tw
(believe that moving to hybrids was a natural first step, but the real )Tj
T*
0.12 Tw
(goal is to get rid of two power trains and move to all-electric vehi-)Tj
T*
0.052 Tw
(cles, and each of us are working that really hard. )Tj
1 -1 TD
0.116 Tw
(Then as the Senator mentioned about hydrogen, clearly, there is )Tj
-1 -1 TD
0.15 Tw
(another technology later on with hydrogen and really capable fuel )Tj
T*
0.074 Tw
(cells and new batteries that you could have a hydrogen alternative, )Tj
T*
0 Tw
(also. )Tj
1 -1 TD
0.154 Tw
(So none of us know which one is going to be the dominant one, )Tj
-1 -1 TD
0.09 Tw
(and each of us have our plan to deal with that. But we are dealing )Tj
T*
0.254 Tw
(with all those technologies. But in Fords case, we are trying to )Tj
T*
0.09 Tw
(make the biggest impact we can on fuel efficiency by making a sig-)Tj
T*
0.284 Tw
(nificant improvement in the internal combustion engine as it is )Tj
T*
0.108 Tw
(today, followed by working on the research to make the other ones )Tj
T*
0.052 Tw
(come true, too. )Tj
1 -1 TD
0.09 Tw
(Senator C)Tj
8 0 0 7.6194 204.1993 441 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.4229 441 Tm
0.09 Tw
(. I have some follow-ups, but I will resist them for )Tj
-7.9423 -1 TD
0 Tw
(now. )Tj
1 -1 TD
0.052 Tw
(Mr. M)Tj
8 0 0 7.6194 186.3995 421 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 421 Tm
0.052 Tw
(. OK. )Tj
-6.3335 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 411 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.0429 411 Tm
0.052 Tw
(. Mr. Nardelli. )Tj
-6.9043 -1 TD
0.056 Tw
(Mr. N)Tj
8 0 0 7.6194 185.1496 401 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.629 401 Tm
0.056 Tw
(. Senator, if we are granted the opportunity for this )Tj
-7.5629 -1 TD
0.058 Tw
(cash infusion, fundamentally, we will use it for operating cash-flow. )Tj
T*
0.132 Tw
(One of the things you talk about is a monthly or quarterly report. )Tj
T*
0.142 Tw
(We do it every week. We have a cash call review. We look atwe )Tj
T*
0.094 Tw
(have gone back to the old days where the owner-operator signs the )Tj
T*
0.156 Tw
(check so they basically know where the funds are going. We have )Tj
T*
0.098 Tw
(gotten down to that level of granularity, and our CFO, who is here )Tj
T*
0.272 Tw
(with me today, basically runs a cash committee meeting once a )Tj
T*
0.246 Tw
(week. We bring in all the requests. We prioritize those requests )Tj
T*
0.136 Tw
(and then we make those distributions. And we are looking at how )Tj
T*
0.052 Tw
(we can conserve cash in every opportunity. )Tj
1 -1 TD
0.22 Tw
(So those funds fundamentally would go for ongoing operations. )Tj
-1 -1 TD
0.126 Tw
(They would go for, as my colleague said, Alan, we will continue to )Tj
T*
0.116 Tw
(drive for a new product portfolio. We have to make sure that after )Tj
T*
0.154 Tw
(the separation from Daimler, that we make a major cash infusion )Tj
T*
0.274 Tw
(in new product portfolio, new product cadence, product perform-)Tj
T*
0.052 Tw
(ance, product quality, reliability, and durability. )Tj
1 -1 TD
0.198 Tw
(So simply said, that is where the majority of the funds will go )Tj
-1 -1 TD
0.052 Tw
(if we are granted the opportunity from this Committee. )Tj
1 -1 TD
0.08 Tw
(Mr. W)Tj
8 0 0 7.6194 187.0495 210.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.345 210.9999 Tm
0.08 Tw
(. Senator, I wont repeat. I would just add on the )Tj
-7.6345 -1 TD
0.204 Tw
(because I think all of us have similar kinds of buckets, pay sup-)Tj
T*
0.338 Tw
(pliers, pay employees, keep product programs on schedule, and )Tj
T*
0.146 Tw
(bring forward these new technologies. I would say the other thing )Tj
T*
0.148 Tw
(that we are doing a lot of work in, we have done a lot of work as )Tj
T*
0.156 Tw
(part of the Energy Security Act, is gone back and relooked at our )Tj
T*
0.19 Tw
(whole product portfolio. So even in this time of cutbacks, and we )Tj
T*
0.174 Tw
(have had to cut back quite a bit to get where we need to be, but )Tj
T*
0.196 Tw
(we have continued our pull forward most of the smaller vehicles. )Tj
T*
0.092 Tw
(Chevy Cruise would be a good example. So if we have had to delay )Tj
T*
0.156 Tw
(vehicles, we have basically put some of the, frankly, less fuel effi-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00074)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
239 0 obj
<>/ExtGState<>>>
endobj
240 0 obj
<>
endobj
241 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(71 )Tj
-15.344 -2 TD
0.258 Tw
(cient vehicles on the back burner for now, and frankly, some of )Tj
0 -1 TD
0.052 Tw
(those may not continue in the market over time. )Tj
1 -1 TD
0.058 Tw
(Senator C)Tj
8 0 0 7.6194 203.8793 621 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.1029 621 Tm
0.058 Tw
(. Thank you. What I will do for the record is follow )Tj
-7.9103 -1 TD
0.214 Tw
(up with some questions aboutmaybe you can provide kind of a )Tj
T*
0.076 Tw
(progress report in writing as to where things are. And I know I am )Tj
T*
0.052 Tw
(out of time and Senator Tester has been very patient waiting. )Tj
1 -1 TD
0.168 Tw
(Just one last point, and it is not by way of a question, but Mr. )Tj
-1 -1 TD
0.156 Tw
(Gettelfinger, I want to make sure that I highlighted some of your )Tj
T*
0.214 Tw
(testimony which I think is important to highlight with regard to )Tj
T*
0.126 Tw
(retirees. We have talked a lot about bottom lines and budgets and )Tj
T*
0.168 Tw
(all the important matters we have discussed today, but I think it )Tj
T*
0.1 Tw
(is important to point out some of the points that you made in your )Tj
T*
0.152 Tw
(testimony on a whole host of fronts, but in particular with regard )Tj
T*
0.052 Tw
(to retirees. )Tj
1 -1 TD
0.132 Tw
(I am reading from page four. Taken together, the changes made )Tj
-1 -1 TD
0.33 Tw
(by the 2005 and 2007 contracts reduced the companies retiree )Tj
T*
0.13 Tw
(health care liabilities by 50 percent. And then you made the point )Tj
T*
0.18 Tw
(earlier on page three with regard to the potential adverse impact )Tj
T*
0.336 Tw
(to retirees that a loss of retiree health benefits would be dev-)Tj
T*
0.204 Tw
(astating to the roughly 40 percent who are younger than 65 and )Tj
T*
0.052 Tw
(thus not eligible for Medicare. )Tj
1 -1 TD
0.13 Tw
(I want to commend all of you for the work you have done to try )Tj
-1 -1 TD
0.08 Tw
(to reduce those costs, but also to remember the human impact that )Tj
T*
0.166 Tw
(these decisions have on people. If we had more time, I would ask )Tj
T*
0.08 Tw
(you to amplify on that, as well, but thank you very much for point-)Tj
T*
0.052 Tw
(ing that out in the testimony. )Tj
1 -1 TD
(Senator C)Tj
8 0 0 7.6194 203.8193 381 Tm
0 Tw
(ASEY)Tj
10 0 0 10 226.0429 381 Tm
0.052 Tw
(. Thank you. )Tj
-6.9043 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 371 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 371 Tm
0.052 Tw
(. Senator Tester. )Tj
-7.6791 -1 TD
0.182 Tw
(Senator T)Tj
8 0 0 7.6194 204.5693 360.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.2729 360.9999 Tm
0.182 Tw
(. Thank you, Mr. Chairman. I have a few ques-)Tj
-8.5273 -1 TD
0.142 Tw
(tions. I hope you can make your answers short because I am sure )Tj
T*
0.052 Tw
(your bladder feels about like mine does right now. )Tj
1 -1 TD
0 Tw
([Laughter.] )Tj
T*
0.268 Tw
(Senator T)Tj
8 0 0 7.6194 205.4293 320.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 233.1329 320.9999 Tm
0.268 Tw
(. First of all, I appreciate you guys time here )Tj
-8.6133 -1 TD
0.162 Tw
(today. This has beenwe are going on 4 hours here pretty quick. )Tj
T*
0.19 Tw
(I guess the first question is, for each one of you, will this money )Tj
T*
0.104 Tw
(be spent here in the U.S.? This was part of my opening statement. )Tj
1 -1 TD
0.052 Tw
(Mr. W)Tj
8 0 0 7.6194 186.7695 280.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 280.9999 Tm
0.052 Tw
(. Yes. )Tj
-6.6065 -1 TD
0.116 Tw
(Mr. N)Tj
8 0 0 7.6194 185.7496 270.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.229 270.9999 Tm
0.116 Tw
(. Yes, sir. We are primarily a U.S.-based company. )Tj
-6.6229 -1 TD
0.052 Tw
(Mr. M)Tj
8 0 0 7.6194 186.3995 260.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 260.9999 Tm
0.052 Tw
(. Yes. )Tj
-6.3335 -1 TD
0.136 Tw
(Senator T)Tj
8 0 0 7.6194 204.1093 250.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.8129 250.9999 Tm
0.136 Tw
(. OK. There was a question earlier asked by one )Tj
-8.4813 -1 TD
0.144 Tw
(of my fellow Senators here that said that, I think it was GM, you )Tj
T*
0.206 Tw
(are making some dough in Russia. Why not take the money and )Tj
T*
0.052 Tw
(invest it in Russia if that is where you are making the money? )Tj
1 -1 TD
0.244 Tw
(Mr. W)Tj
8 0 0 7.6194 188.6895 210.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.985 210.9999 Tm
0.244 Tw
(. Well, we make money in other markets. China )Tj
-7.7985 -1 TD
0.17 Tw
(might even be a bigger example where we did initially years ago, )Tj
T*
0.148 Tw
(10 or 12 years ago, invest a significant amount, but that business )Tj
T*
0.062 Tw
(is profitable, so with the profits, they are able to continue to invest, )Tj
T*
0.174 Tw
(to expand the business there and actually send dividends back to )Tj
T*
0.118 Tw
(the U.S. So most of the business models we have outside the U.S., )Tj
T*
0.052 Tw
(they have been able to get to be self-sufficient. )Tj
1 -1 TD
0.082 Tw
(Senator T)Tj
8 0 0 7.6194 203.5693 140.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.2729 140.9999 Tm
0.082 Tw
(. OK, and I will go to Ford here in a second since )Tj
-8.4273 -1 TD
0.154 Tw
(Chrysler is mainly here in this country, but how would we know? )Tj
T*
0.242 Tw
(I mean, you are a big company. How do we know that you just )Tj
T*
0.218 Tw
(dont take it from one pocket to the other and put it somewhere )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00075)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
242 0 obj
<>/ExtGState<>>>
endobj
243 0 obj
<>
endobj
244 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(72 )Tj
-15.344 -2 TD
0.16 Tw
(else? I am reallyI want to see you guys succeed. I have the im-)Tj
0 -1 TD
0.234 Tw
(pression from each one of you that you are happy with the way )Tj
T*
0.21 Tw
(each one of your companies are going. You would like to see the )Tj
T*
0.092 Tw
(market and liquidity and the credit. But how do we know? I mean, )Tj
T*
0.156 Tw
(I am a farmer. If I am making more money somewhere, I usually )Tj
T*
0.052 Tw
(go there and make it. )Tj
1 -1 TD
0.144 Tw
(Mr. W)Tj
8 0 0 7.6194 187.6895 581 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.985 581 Tm
0.144 Tw
(. So the question is how do you know that we are )Tj
-7.6985 -1 TD
0.052 Tw
(going to spend the money here? )Tj
1 -1 TD
0.178 Tw
(Senator T)Tj
8 0 0 7.6194 204.5293 561 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.2329 561 Tm
0.178 Tw
(. How do I know that you are going to spend it )Tj
-8.5233 -1 TD
0.104 Tw
(here and not just shuffle it around and go somewhere else with it? )Tj
1 -1 TD
0.144 Tw
(Mr. W)Tj
8 0 0 7.6194 187.6895 541 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.985 541 Tm
0.144 Tw
(. We would be glad to work on source and uses of )Tj
-7.6985 -1 TD
0 Tw
(funds )Tj
1 -1 TD
0.052 Tw
(Senator T)Tj
8 0 0 7.6194 203.2693 520.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 520.9999 Tm
0.052 Tw
(. On accountability, and Ford )Tj
-7.3973 -1 TD
0.204 Tw
(Mr. W)Tj
8 0 0 7.6194 188.2895 510.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.585 510.9999 Tm
0.204 Tw
(. and find a way to ensure that for you, yes, )Tj
-7.7585 -1 TD
0 Tw
(sir. )Tj
1 -1 TD
0.216 Tw
(Mr. M)Tj
8 0 0 7.6194 188.0396 490.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.975 490.9999 Tm
0.216 Tw
(. Plus, I would add that the fact that we operate )Tj
-7.4975 -1 TD
0.172 Tw
(globally, that we get the scale of that globally, which even brings )Tj
T*
0.052 Tw
(us more competitiveness to the United States. )Tj
1 -1 TD
0.194 Tw
(Senator T)Tj
8 0 0 7.6194 204.6893 460.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.3929 460.9999 Tm
0.194 Tw
(. OK, so let us take it the other direction. Why )Tj
-8.5393 -1 TD
0.188 Tw
(not bring some of those funds from those profitable markets over )Tj
T*
0 Tw
(here? )Tj
1 -1 TD
0.212 Tw
(Mr. M)Tj
8 0 0 7.6194 187.9995 431 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.935 431 Tm
0.212 Tw
(. We do. We operate globally and the profits that )Tj
-7.4935 -1 TD
0.052 Tw
(we make, we use together to further invest in the future )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 411 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 411 Tm
0.052 Tw
(. OK )Tj
-7.3973 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 401 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 401 Tm
0.052 Tw
(. in all of those markets. )Tj
-6.3335 -1 TD
0.256 Tw
(Senator T)Tj
8 0 0 7.6194 205.3093 391 Tm
0 Tw
(ESTER)Tj
10 0 0 10 233.0129 391 Tm
0.256 Tw
(. So do you really need the money? If you are )Tj
-8.6013 -1 TD
0.302 Tw
(global and you are able to take money from other areas, other )Tj
T*
0.234 Tw
(countries, and bring it back here, cant you do that in the short )Tj
T*
0.134 Tw
(term to get through this, hopefully, out of this gully economically? )Tj
1 -1 TD
0.148 Tw
(Mr. M)Tj
8 0 0 7.6194 187.3595 350.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.295 350.9999 Tm
0.148 Tw
(. I understand your question. I think that the rea-)Tj
-7.4295 -1 TD
0.198 Tw
(son we are here is from a total enterprise point of view. Clearly, )Tj
T*
0.088 Tw
(with all of the markets slowing down worldwide, we are giving you )Tj
T*
0.052 Tw
(a status of the companies. )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 311 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 311 Tm
0.052 Tw
(. OK, but )Tj
-7.3973 -1 TD
0.228 Tw
(Mr. W)Tj
8 0 0 7.6194 188.5295 300.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.825 300.9999 Tm
0.228 Tw
(. Senator, maybe if I could just take it from our )Tj
-7.7825 -1 TD
0 Tw
(side )Tj
1 -1 TD
0.052 Tw
(Senator T)Tj
8 0 0 7.6194 203.2693 280.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 280.9999 Tm
0.052 Tw
(. Yes, go ahead. )Tj
-7.3973 -1 TD
0.13 Tw
(Mr. W)Tj
8 0 0 7.6194 187.5495 270.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.845 270.9999 Tm
0.13 Tw
(. we have tried to, to the extent we can, repa-)Tj
-7.6845 -1 TD
0.18 Tw
(triate money from other businesses, but I would like to reempha-)Tj
T*
0.178 Tw
(size what Mr. Mulally said. Basically, we see kind of with 2 or 3 )Tj
T*
0.132 Tw
(months time lag what has happened in the U.S., where the cutoff )Tj
T*
0.226 Tw
(of credit led to really additional plummeting of the U.S. market. )Tj
T*
0.162 Tw
(That played out over the last 60, 90 days in Western Europe and )Tj
T*
0.212 Tw
(literally as we speak today is playing out in Brazil. So while we )Tj
T*
0.07 Tw
(have been able to be, for example, very profitable in Brazil up until )Tj
T*
0.09 Tw
(now this year and be able to remit some money to the U.S., we see )Tj
T*
0.198 Tw
(this, unfortunately, this crisis as we did in the financial markets )Tj
T*
0.118 Tw
(roll around the world. We are seeing the availability now affecting )Tj
T*
0.052 Tw
(auto sales around the world, as well. )Tj
1 -1 TD
0.302 Tw
(Senator T)Tj
8 0 0 7.6194 205.7693 150.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 233.4729 150.9999 Tm
0.302 Tw
(. So you anticipate the profit margin in those )Tj
-8.6473 -1 TD
0.052 Tw
(countries where you are profitable is also going toOK. )Tj
1 -1 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 130.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 130.9999 Tm
0.052 Tw
(. Yes. )Tj
-6.6065 -1 TD
0.244 Tw
(Senator T)Tj
8 0 0 7.6194 205.1893 120.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.8929 120.9999 Tm
0.244 Tw
(. Do you think there should be any strings at-)Tj
-8.5893 -1 TD
0.458 Tw
(tached? The President-elect has talked about increased CAFE )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00076)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
245 0 obj
<>/ExtGState<>>>
endobj
246 0 obj
<>
endobj
247 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(73 )Tj
-15.344 -2 TD
0.052 Tw
(standards with any sort of bail-out. Would you have a problem with )Tj
0 -1.02 TD
(that? And all three of you can answer that. )Tj
1 -1.02 TD
0.222 Tw
(Mr. M)Tj
8 0 0 7.6194 188.0995 620.6 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.035 620.6 Tm
0.222 Tw
(. Well, I think on the CAFE, on the fuel mileage )Tj
-7.5035 -1.02 TD
0.118 Tw
(itself, I think the work we did last year was very, very good work. )Tj
T*
0.078 Tw
(We completely stretched the enabling technology to be able to meet )Tj
T*
0.294 Tw
(the fuel efficiency improvement requirements that we have out-)Tj
T*
0.118 Tw
(lined. I dont think we know of any more technology that we could )Tj
T*
0.052 Tw
(bring to bear that would accelerate that. )Tj
1 -1.02 TD
(With respect to other strings )Tj
T*
0.192 Tw
(Senator T)Tj
8 0 0 7.6194 204.6693 549.2 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.3729 549.2 Tm
0.192 Tw
(. So how far are you going to exceed the CAFE )Tj
-8.5373 -1.02 TD
0.052 Tw
(standards that we passed a year ago? )Tj
1 -1.02 TD
0.114 Tw
(Mr. M)Tj
8 0 0 7.6194 187.0195 528.8 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.955 528.8 Tm
0.114 Tw
(. We are absolutely committed to meeting those re-)Tj
-7.3955 -1.02 TD
0 Tw
(quirements. )Tj
1 -1.02 TD
0.052 Tw
(Senator T)Tj
8 0 0 7.6194 203.2693 508.4 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 508.4 Tm
0.052 Tw
(. ThoseOK. Go ahead. Keep going. )Tj
-7.3973 -1.02 TD
0.26 Tw
(Mr. M)Tj
8 0 0 7.6194 188.4796 498.2 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.415 498.2 Tm
0.26 Tw
(. And they are, as you know, when we all nego-)Tj
-7.5415 -1.02 TD
0.21 Tw
(tiated together that those are tremendous stretches using all the )Tj
T*
0.052 Tw
(enabling technology that we have. )Tj
1 -1.02 TD
0.286 Tw
(Senator T)Tj
8 0 0 7.6194 205.6093 467.6 Tm
0 Tw
(ESTER)Tj
10 0 0 10 233.3129 467.6 Tm
0.286 Tw
(. And those are fleet-wide averages, and I am )Tj
-8.6313 -1.02 TD
0.124 Tw
(here to tell you from personal experience, in 30 years, the mileage )Tj
T*
0.18 Tw
(increase in light trucks is very, very minimal. That is my experi-)Tj
T*
0 Tw
(ence. )Tj
1 -1.02 TD
0.17 Tw
(Mr. M)Tj
8 0 0 7.6194 187.5795 426.8 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.515 426.8 Tm
0.17 Tw
(. I personally would be glad to sit down with you. )Tj
-7.4515 -1.02 TD
0.184 Tw
(We think the data, the improvement we have made over the last )Tj
T*
0.09 Tw
(35 years in trucks, because we have improved the fuel mileage tre-)Tj
T*
0.11 Tw
(mendously in trucks, also. Now, you are absolutely right in the re-)Tj
T*
0.156 Tw
(cent experience. In our case, we let the fuel mileage of our recent )Tj
T*
0.052 Tw
(trucks not improve as fast as what we should have )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 365.6 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 365.6 Tm
0.052 Tw
(. I am talking half-tons. )Tj
-7.3973 -1.02 TD
0.226 Tw
(Mr. M)Tj
8 0 0 7.6194 188.1396 355.4 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 222.075 355.4 Tm
0.226 Tw
(. Oh, OK. Well, that would be something good to )Tj
-7.5075 -1.02 TD
0.052 Tw
(compare notes on. )Tj
1 -1.02 TD
0.12 Tw
(Senator T)Tj
8 0 0 7.6194 203.9493 335 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.6529 335 Tm
0.12 Tw
(. I mean, it is one of the things I think is a very )Tj
-8.4653 -1.02 TD
0.176 Tw
(good marketing tool for domestically made vehicles that you need )Tj
T*
0.114 Tw
(to pound on, and if you get those up, your CAFE for your fleet av-)Tj
T*
0.08 Tw
(erage would go up significantly because I know each one of you are )Tj
T*
0.052 Tw
(making fuel efficient cars. )Tj
1 -1.02 TD
0.138 Tw
(Mr. M)Tj
8 0 0 7.6194 187.2596 284 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.195 284 Tm
0.138 Tw
(. I agree. We are makingjust like the last trucks )Tj
-7.4195 -1.02 TD
0.422 Tw
(that we are introducing, we are making tremendous improve-)Tj
T*
0 Tw
(ment )Tj
1 -1.02 TD
0.078 Tw
(Senator T)Tj
8 0 0 7.6194 203.5293 253.4 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.2329 253.4 Tm
0.078 Tw
(. Getting back to the question, though, you would )Tj
-8.4233 -1.02 TD
0.33 Tw
(be opposed to any sort of strings attached for increased CAFE )Tj
T*
0.152 Tw
(standards with any kind of bail-out, is that correct? Is that a cor-)Tj
T*
0.052 Tw
(rect assumption? )Tj
1 -1.02 TD
0.258 Tw
(Mr. W)Tj
8 0 0 7.6194 188.8295 212.6 Tm
0 Tw
(AGONER)Tj
10 0 0 10 225.125 212.6 Tm
0.258 Tw
(. I think it wouldfrom our perspective, we are )Tj
-7.8125 -1.02 TD
0.102 Tw
(stretching to meet the requirements as they are, so we understand )Tj
T*
0.052 Tw
(there will be strings and expectations )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 182 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 182 Tm
0.052 Tw
(. OK )Tj
-7.3973 -1.02 TD
0.196 Tw
(Mr. W)Tj
8 0 0 7.6194 188.2095 171.8 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.505 171.8 Tm
0.196 Tw
(. but from our perspective, it would be tough )Tj
-7.7505 -1.02 TD
0.052 Tw
(to increase them. )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 151.4 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 151.4 Tm
0.052 Tw
(. I see the head nod from Ford and Chrysler. )Tj
-7.3973 -1.01 TD
0.174 Tw
(Mr. N)Tj
8 0 0 7.6194 186.3296 141.2999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 223.809 141.2999 Tm
0.174 Tw
(. Sir, I might say it a little different. I would say )Tj
-7.6809 -1.01 TD
0.23 Tw
(that obviously, given our situation, we would be open to any re-)Tj
T*
0.286 Tw
(quirements that you felt appropriate. I would have to obviously )Tj
T*
0.124 Tw
(come back and be candid with you whether our ability to schedule )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00077)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
248 0 obj
<>/ExtGState<>>>
endobj
249 0 obj
<>
endobj
250 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(74 )Tj
-15.344 -2 TD
0.214 Tw
(inventions beyond where we are, but the short answer is, in our )Tj
0 -1.02 TD
0.052 Tw
(position, we would be open to any of those discussions. )Tj
1 -1.02 TD
0.096 Tw
(Senator T)Tj
8 0 0 7.6194 203.7093 620.6 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.4129 620.6 Tm
0.096 Tw
(. OK. Back in 1979 when we bailed out Chrysler, )Tj
-8.4413 -1.02 TD
0.194 Tw
(it has probably been pointed out to you already at some point in )Tj
T*
0.182 Tw
(time, Lee Iacocca said that he would take one dollar in executive )Tj
T*
0.352 Tw
(compensation until those companies becameuntil Chrysler be-)Tj
T*
0.116 Tw
(came a profitable model. Where are you guys at on a proposal like )Tj
T*
0 Tw
(that? )Tj
1 -1.02 TD
0.052 Tw
(Mr. N)Tj
8 0 0 7.6194 185.1096 559.4 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 559.4 Tm
0.052 Tw
(. I would be willing to accept that. )Tj
-6.5589 -1.02 TD
0.19 Tw
(Mr. W)Tj
8 0 0 7.6194 188.1495 549.2 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.445 549.2 Tm
0.19 Tw
(. I would be willing to contribute to the sacrifice. )Tj
-7.7445 -1.02 TD
0.102 Tw
(A couple of years ago, I cut my own salary unilaterally 50 percent, )Tj
T*
0.052 Tw
(so I am willing to be part of the solution. )Tj
1 -1.02 TD
0.136 Tw
(Senator T)Tj
8 0 0 7.6194 204.1093 518.6 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.8129 518.6 Tm
0.136 Tw
(. I understand that, but 50 percent of $20,000 is )Tj
-8.4813 -1.02 TD
0.052 Tw
(a whole lot less than 50 percent of a six-digit figure. )Tj
1 -1.02 TD
(Mr. W)Tj
8 0 0 7.6194 186.7695 498.2 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.065 498.2 Tm
0.052 Tw
(. Agree. )Tj
-6.6065 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 488 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 488 Tm
0.052 Tw
(. OK. )Tj
-7.3973 -1.02 TD
0.106 Tw
(Mr. M)Tj
8 0 0 7.6194 186.9395 477.8 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.875 477.8 Tm
0.106 Tw
(. I absolutely respect the intent of your question as )Tj
-7.3875 -1.02 TD
0.052 Tw
(a symbolic gesture. )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 457.4 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 457.4 Tm
0.052 Tw
(. Yes. )Tj
-7.3973 -1.02 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 447.2 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 447.2 Tm
0.052 Tw
(. But it is a symbolic gesture. )Tj
-6.3335 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 437 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 437 Tm
0.052 Tw
(. That is correct. )Tj
-7.3973 -1.02 TD
0.182 Tw
(Mr. M)Tj
8 0 0 7.6194 187.6996 426.8 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.635 426.8 Tm
0.182 Tw
(. We have absolutely taken action on all the sala-)Tj
-7.4635 -1.02 TD
0.206 Tw
(ries. We have no more merits. We have no bonuses. We have no )Tj
T*
0.222 Tw
(incentives because for the entire company, we believe this is the )Tj
T*
0.128 Tw
(right thing to do during this critical period. We also need to make )Tj
T*
0.178 Tw
(sure that we can keep fielding a skilled and a motivated team to )Tj
T*
0.052 Tw
(deliver this plan that we are talking about. )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 365.6 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 365.6 Tm
0.052 Tw
(. That is right. )Tj
-7.3973 -1.02 TD
0.114 Tw
(Mr. M)Tj
8 0 0 7.6194 187.0195 355.4 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.955 355.4 Tm
0.114 Tw
(. So I think that I sure respect the intent of it, but )Tj
-7.3955 -1.02 TD
0.078 Tw
(I think the most important thing is that we not degrade our ability )Tj
T*
0.052 Tw
(to be competitive and deliver this plan. )Tj
1 -1.02 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 324.8 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 324.8 Tm
0.052 Tw
(. You guys are down the line a little bit, but I will )Tj
-8.3973 -1.02 TD
0.17 Tw
(just tell you, from my perspective, when you see things that hap-)Tj
T*
0.094 Tw
(pen with AIGyou are not AIG, thank God for that, but when you )Tj
T*
0.166 Tw
(see things that happen with AIG, with what they have done, and )Tj
T*
0.146 Tw
(I can go through the list, when I go back home, they ask me why )Tj
T*
0.28 Tw
(I give money to anybody, including the auto manufacturers, be-)Tj
T*
0.122 Tw
(cause of what those executives have done. That is just a side com-)Tj
T*
0 Tw
(ment. )Tj
1 -1.02 TD
0.15 Tw
(The last thing I will say is this. You all talked aboutI believe )Tj
-1 -1.02 TD
0.134 Tw
(you all talked about at some point in time that credit was a prob-)Tj
T*
0.174 Tw
(lem selling your vehicles at this point in time. I believe for every )Tj
T*
0.15 Tw
($1 billion invested of Federal dollars, it creates about 47,000 jobs. )Tj
T*
0.092 Tw
(Wouldnt it be better just to throw the money into jobs building in-)Tj
T*
0.258 Tw
(frastructure, whether that is research and technology infrastruc-)Tj
T*
0.06 Tw
(ture that would help the auto industry or whether that is highways )Tj
T*
0.178 Tw
(and bridges and roads, that would employ people and they would )Tj
T*
0.104 Tw
(have money to go out and buy your vehicles? Just your thought on )Tj
T*
0.09 Tw
(that. And by the way, that could hit the ground very quickly, some )Tj
0 -1.01 TD
0.052 Tw
(would argue quicker than a check. )Tj
1 -1.01 TD
0.098 Tw
(Mr. W)Tj
8 0 0 7.6194 187.2295 131.1999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.525 131.1999 Tm
0.098 Tw
(. From my perspective, we really have three issues )Tj
-7.6525 -1.01 TD
0.144 Tw
(if we want to get the industry back in the position we would like. )Tj
T*
0.06 Tw
(First of all, because of the complete failure of the credit system, the )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00078)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
251 0 obj
<>/ExtGState<>>>
endobj
252 0 obj
<>
endobj
253 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(75 )Tj
-15.344 -2 TD
0.212 Tw
(auto companies need support to be able to survive. At least over )Tj
0 -1 TD
0.052 Tw
(some period of time, we need direct funding support. )Tj
1 -1 TD
0.176 Tw
(Second of all, the auto finance companies do need to be able to )Tj
-1 -1 TD
0.052 Tw
(continue or to increase their ability to finance consumers. )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 601 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 601 Tm
0.052 Tw
(. Yes, OK. )Tj
-7.3973 -1 TD
0.11 Tw
(Mr. W)Tj
8 0 0 7.6194 187.3495 591 Tm
0 Tw
(AGONER)Tj
10 0 0 10 223.645 591 Tm
0.11 Tw
(. And third, there needs to be, I believe, some way )Tj
-7.6645 -1 TD
0.168 Tw
(to improve the consumer sentiment toward buying cars and other )Tj
T*
0 Tw
(products. )Tj
1 -1 TD
0.052 Tw
(Senator T)Tj
8 0 0 7.6194 203.2693 561 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 561 Tm
0.052 Tw
(. OK. The same question. )Tj
-7.3973 -1 TD
0.224 Tw
(Mr. N)Tj
8 0 0 7.6194 186.8296 551 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 224.309 551 Tm
0.224 Tw
(. I would agree with those three points and only )Tj
-7.7309 -1 TD
0.328 Tw
(add that certainly providing job opportunities for hard working )Tj
T*
0.14 Tw
(men and women here in the country is a great idea. My only con-)Tj
T*
0.122 Tw
(cern, Senator, would be the time lag between actually getting that )Tj
T*
0.128 Tw
(started, and again, I only reemphasize the sense of urgency, hope-)Tj
T*
0.052 Tw
(fully that you are hearing from me and my two colleagues. )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 490.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 490.9999 Tm
0.052 Tw
(. Yes. Go ahead. )Tj
-7.3973 -1 TD
0.146 Tw
(Mr. M)Tj
8 0 0 7.6194 187.3395 480.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 221.275 480.9999 Tm
0.146 Tw
(. And the only thing I would add is that what you )Tj
-7.4275 -1 TD
0.202 Tw
(are reallythe question is, how quickly can we get this economy )Tj
T*
0.16 Tw
(going again, and so I would applaud every effort we do on that. I )Tj
T*
0.144 Tw
(think that, like you said earlier, I think we know there is a lot of )Tj
T*
0.128 Tw
(work to do to get that going, so it is back to the time lag, because )Tj
T*
0.052 Tw
(we are here because of a near-term challenge. )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 421 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 421 Tm
0.052 Tw
(. OK. Doctor, go ahead. )Tj
-7.3973 -1 TD
0.176 Tw
(Mr. M)Tj
8 0 0 7.6194 187.6395 411 Tm
0 Tw
(ORICI)Tj
10 0 0 10 211.9272 411 Tm
0.176 Tw
(. I know you like to talk about strings, and I would )Tj
-6.4927 -1 TD
0.248 Tw
(admonish you, whatever solution you come up with, dont try to )Tj
T*
0.252 Tw
(micromanage these companies from here. Although I understand )Tj
T*
0.088 Tw
(your concern about fuel economy, if you want to talk about strings, )Tj
T*
0.186 Tw
(the most significant string you could tie to resurrect these econo-)Tj
T*
0.116 Tw
(mies would be on some of that money from the Federal Reserve to )Tj
T*
0.146 Tw
(the nine largest banks to get them back into securitizing the debt )Tj
T*
0.052 Tw
(that their finance companies generate. )Tj
1 -1 TD
0.206 Tw
(Senator T)Tj
8 0 0 7.6194 204.8093 330.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 232.5129 330.9999 Tm
0.206 Tw
(. OK. So just the last point, and that is a very )Tj
-8.5513 -1 TD
0.122 Tw
(good point, but the last point is, in your opinion, has the $300 bil-)Tj
T*
0.174 Tw
(lion that has been spent by the Treasury so far done anything to )Tj
T*
0.208 Tw
(help your business from a credit standpoint? Yes or no would be )Tj
T*
0 Tw
(fine. )Tj
1 -1 TD
0.19 Tw
(Mr. W)Tj
8 0 0 7.6194 188.1495 280.9999 Tm
0 Tw
(AGONER)Tj
10 0 0 10 224.445 280.9999 Tm
0.19 Tw
(. Iyet, we havent seen any measurable change, )Tj
-7.7445 -1 TD
0.12 Tw
(except for we have had the capability to use the commercial paper )Tj
T*
0.052 Tw
(facility at the Fed, so that has helped some. )Tj
1 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 250.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 250.9999 Tm
0.052 Tw
(. OK. )Tj
-7.3973 -1 TD
(Mr. N)Tj
8 0 0 7.6194 185.1096 240.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.589 240.9999 Tm
0.052 Tw
(. Not at this time. )Tj
-6.5589 -1 TD
(Senator T)Tj
8 0 0 7.6194 203.2693 230.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 230.9729 230.9999 Tm
0.052 Tw
(. OK. )Tj
-7.3973 -1 TD
(Mr. M)Tj
8 0 0 7.6194 186.3995 220.9999 Tm
0 Tw
(ULALLY)Tj
10 0 0 10 220.335 220.9999 Tm
0.052 Tw
(. I agree. )Tj
-6.3335 -1 TD
0.128 Tw
(Senator T)Tj
8 0 0 7.6194 204.0293 210.9999 Tm
0 Tw
(ESTER)Tj
10 0 0 10 231.7329 210.9999 Tm
0.128 Tw
(. Thank you, gentlemen, very much. I appreciate )Tj
-8.4733 -1 TD
0.052 Tw
(your time. )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 190.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 190.9999 Tm
0.052 Tw
(. Thank you, Senator, very much. )Tj
-7.6791 -1 TD
0.156 Tw
(Just a couple of points I want to raise, and again, you are very )Tj
-1 -1 TD
0.052 Tw
(patient and I thank my colleagues, as well. )Tj
1 -1 TD
0.196 Tw
(Our colleague from Maryland, Barbara Mikulski, has raised an )Tj
-1 -1 TD
0.204 Tw
(issue, and I wont do her justice by getting into the details of it, )Tj
T*
0.294 Tw
(but I am reminded of it with a comment I think Mr. Wagoner )Tj
T*
0.148 Tw
(made, and that is her suggestion is to provide a tax deduction for )Tj
T*
0.274 Tw
(the purchase of new automobiles. The idea is to encourage con-)Tj
T*
0.082 Tw
(sumption. I think the total cost of it, her package, is around $8 bil-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00079)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
254 0 obj
<>/ExtGState<>>>
endobj
255 0 obj
<>
endobj
256 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(76 )Tj
-15.344 -2 TD
0.218 Tw
(lion. It involves a deduction for sales taxes and the like. Do you )Tj
0 -1 TD
0.136 Tw
(have any quick comments on that idea, and I am not doing it jus-)Tj
T*
0.052 Tw
(tice, but just to conceptually the idea? )Tj
1 -1 TD
0.082 Tw
(Mr. N)Tj
8 0 0 7.6194 185.4096 611 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 222.889 611 Tm
0.082 Tw
(. Mr. Chairman, we have heard that idea and obvi-)Tj
-7.5889 -1 TD
0.102 Tw
(ously we would be the last to turn down any offer of help. My con-)Tj
T*
0.08 Tw
(cern, back to my testimony, was that before you could get the cred-)Tj
T*
0.078 Tw
(it, you have to be able to buy the vehicle, and today, relative to the )Tj
T*
0.24 Tw
(crisis, the liquidity crisis, the FICO scores that are necessary to )Tj
T*
0.322 Tw
(qualify, my concern would be that it wouldwhile it would be )Tj
T*
0.292 Tw
(great if we can get consumers into cars, our biggest immediate )Tj
T*
0.058 Tw
(challenge is to get our affiliate finance companies, whether they get )Tj
T*
0.052 Tw
(bank holding company status )Tj
1 -1 TD
(Chairman D)Tj
8 0 0 7.6194 215.1191 520.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 233.7908 520.9999 Tm
0.052 Tw
(. The point the Doctor just made. )Tj
-7.6791 -1 TD
0.286 Tw
(Mr. N)Tj
8 0 0 7.6194 187.4496 510.9999 Tm
0 Tw
(ARDELLI)Tj
10 0 0 10 224.929 510.9999 Tm
0.286 Tw
(. or ILCs, sir, we must getit is a parallel )Tj
-7.7929 -1 TD
0.092 Tw
(path. We have got to get the financial companies healthy. We have )Tj
T*
0.178 Tw
(got to get cash infusion to our companies. And certainly then the )Tj
T*
0.264 Tw
(tax credit would be beneficial, but I dont think in and of itself )Tj
T*
0.052 Tw
(would be enough. )Tj
1 -1 TD
0.112 Tw
(Chairman D)Tj
8 0 0 7.6194 215.7191 460.9999 Tm
0 Tw
(ODD)Tj
10 0 0 10 234.3908 460.9999 Tm
0.112 Tw
(. And I agree with the point that Dr. Morici has )Tj
-8.7391 -1 TD
0.09 Tw
(made, and that is, of course, to try and use this money to get lend-)Tj
T*
0.24 Tw
(ing going so we get securitization moving, and I think that is a )Tj
T*
0.052 Tw
(very important point, as well. )Tj
1 -1 TD
0.056 Tw
(There are some of these, and I agree, as well, on the notion about )Tj
-1 -1 TD
0.182 Tw
(micromanaging. It is one of the reasons why we wrote the Emer-)Tj
T*
0.268 Tw
(gency Economic Stabilization Plan. We stayed away from micro-)Tj
T*
0.182 Tw
(managing to give flexibility and latitude so they could respond to )Tj
T*
0.052 Tw
(the situation. So I appreciate that point. )Tj
1 -1 TD
0.178 Tw
(But let me come back to the executive compensation issue, and )Tj
-1 -1 TD
0.068 Tw
(I will tell you why. And again, you heard Senator Tester talk about )Tj
T*
0.18 Tw
(Montana. I have got to say, just last weekend in Connecticut, we )Tj
T*
0.17 Tw
(went to get lunch at a little diner, stood in line, and constituents )Tj
T*
0.168 Tw
(came up. The only issue they had for me about the economic sta-)Tj
T*
0.21 Tw
(bilization was about executive compensation. I hear it every day. )Tj
1 -1 TD
0.248 Tw
(I know it is symbolic, but I want to suggest to you here, and )Tj
-1 -1 TD
0.272 Tw
(again, I know the compensation packages that you all have are )Tj
T*
0.18 Tw
(pretty rich ones. Mr. Nardelli, I think you got $200 million when )Tj
T*
0.426 Tw
(you left Home Depot. At least that is reported. I think, Mr. )Tj
T*
0.086 Tw
(Mulally, you got last year some $28 million in compensation as the )Tj
T*
0.212 Tw
(Chief Executive Officer of Ford. And I dont know, Mr. Wagoner, )Tj
T*
0.052 Tw
(what your compensation is. )Tj
1 -1 TD
0.15 Tw
(We are going to be talking about assistance here, and I am one )Tj
-1 -1 TD
0.098 Tw
(who believes we ought to try and do this, but I think it is very im-)Tj
T*
0.296 Tw
(portant you understand the publics reaction to all of this. And )Tj
T*
0.12 Tw
(while you can make a case that there is not a direct correlation to )Tj
T*
0.09 Tw
(this, it is the concern that people have that somehow they are sub-)Tj
T*
0.216 Tw
(sidizing this. And so I would strongly urge you, because I would )Tj
T*
0.232 Tw
(certainly would write things in about golden parachutes and the )Tj
T*
0.114 Tw
(like, but I cant begin to tell you what sort of reaction there would )Tj
T*
0.254 Tw
(be from the public if you on your own would be willing to take )Tj
T*
0.086 Tw
(some steps that would reassure the American public that their dol-)Tj
T*
0.186 Tw
(lars that are going to be forthcoming are not going to be used in )Tj
T*
0.052 Tw
(any way to provide exorbitant salaries and fees to people. )Tj
1 -1 TD
0.122 Tw
(You are asking an awful lot, and I suspect what Senator Corker )Tj
-1 -1 TD
0.06 Tw
(raised, this $25 billion is not going to be the end of it. We are going )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00080)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
257 0 obj
<>/ExtGState<>>>
endobj
258 0 obj
<>
endobj
259 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 661 Tm
0 g
0 Tc
0 Tw
(77 )Tj
-15.344 -2 TD
0.146 Tw
(to be asking for more at some point here. And I would like to tell )Tj
0 -1 TD
0.094 Tw
(you that in the next couple of days, this is going to happen. I dont )Tj
T*
0.082 Tw
(think it is. You heard a lot of negative reaction to any ideas of pro-)Tj
T*
0.076 Tw
(viding help at this table. And I know that Senator Reid, the Major-)Tj
T*
0.204 Tw
(ity Leader, would very much like to achieve this if he could, but )Tj
T*
0.052 Tw
(I think it is going to be difficult under the circumstances. )Tj
1 -1 TD
0.116 Tw
(So we will have to regroup and decide how to move forward. We )Tj
-1 -1 TD
0.072 Tw
(understand the magnitude of the problem. But I wouldnt want you )Tj
T*
0.19 Tw
(to leave here without a clear idea, at least from this member, as )Tj
T*
0.124 Tw
(to the difficulty of getting something done in the next few days on )Tj
T*
0.142 Tw
(this matter. There are a lot of unanswered questions that our col-)Tj
T*
0.144 Tw
(leagues will have and we will have to work our way through this. )Tj
T*
0.104 Tw
(And I am prepared to roll up my sleeves and work through it with )Tj
T*
0.156 Tw
(my colleagues, as well. I am ready to stay here every day as long )Tj
T*
0.1 Tw
(as it takes because of the magnitude of the problem and the impli-)Tj
T*
0 Tw
(cations. )Tj
1 -1 TD
0.084 Tw
(Inaction is not a solution. That is not an answer to this Member. )Tj
-1 -1 TD
0.146 Tw
(And it may be an answer to some, but I think the majority of my )Tj
T*
0.09 Tw
(colleagues would like to take some action to help out here, to move )Tj
T*
0 Tw
(forward. )Tj
1 -1 TD
0.244 Tw
(So on that note, I thank you immensely. You have been very, )Tj
-1 -1 TD
0.194 Tw
(very patient. I want to thank Ron Gettelfinger, as well, and you, )Tj
T*
(Dr. Morici. You were rather an eloquent spokesman on the other )Tj
T*
0.052 Tw
(side. We thank you for your testimony. )Tj
1 -1 TD
0.138 Tw
(We will leave the record open for a few days here for additional )Tj
-1 -1 TD
0.292 Tw
(questions that may come and additional comments you want to )Tj
T*
0.204 Tw
(make in response to some of the questions that have been asked )Tj
T*
0.052 Tw
(here today. )Tj
1 -1 TD
0.144 Tw
(Again, I thank you all very much for being here. With that, the )Tj
-1 -1 TD
0.052 Tw
(Committee is adjourned. )Tj
1 -1 TD
([Whereupon, at 7:05 p.m., the hearing was adjourned.] )Tj
T*
0.096 Tw
([Prepared statements and response to written questions supplied )Tj
-1 -1 TD
0.052 Tw
(for the record follow:] )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00081)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
260 0 obj
<>/ExtGState<>>>
endobj
261 0 obj
<>
endobj
262 0 obj
<>
endobj
263 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(78 )Tj
/F7 1 Tf
8 0 0 8 196.16 648 Tm
0.045 Tw
(PREPARED STATEMENT OF RON GETTELFINGER )Tj
/F1 1 Tf
11.0725 -1.2375 TD
0 Tw
(P)Tj
6.4 0 0 6.0958 290.0759 638.1 Tm
(RESIDENT)Tj
8 0 0 8 325.0391 638.1 Tm
(, )Tj
-20.6624 -1.2375 TD
(I)Tj
6.4 0 0 6.0958 162.9959 628.2 Tm
(NTERNATIONAL)Tj
8 0 0 8 220.1575 628.2 Tm
(U)Tj
6.4 0 0 6.0958 226.6774 628.2 Tm
(NION)Tj
8 0 0 8 244.6934 628.2 Tm
0.0525 Tw
(, U)Tj
6.4 0 0 6.0958 256.0812 628.2 Tm
0 Tw
(NITED)Tj
8 0 0 8 280.4108 628.2 Tm
(A)Tj
6.4 0 0 6.0958 286.1867 628.2 Tm
(UTOMOBILE)Tj
8 0 0 8 327.7867 628.2 Tm
0.0525 Tw
(, A)Tj
6.4 0 0 6.0958 338.4305 628.2 Tm
0 Tw
(EROSPACE)Tj
8 0 0 8 374.8145 628.2 Tm
(, )Tj
6.4 0 0 6.0958 379.6824 628.2 Tm
(AND)Tj
8 0 0 8 397.1384 628.2 Tm
(A)Tj
6.4 0 0 6.0958 402.9143 628.2 Tm
(GRICULTURAL)Tj
8 0 0 8 452.2199 628.2 Tm
( )Tj
-26.3025 -0.9875 TD
(I)Tj
6.4 0 0 6.0958 245.0559 620.3 Tm
(MPLEMENT)Tj
8 0 0 8 287.0431 620.3 Tm
(W)Tj
6.4 0 0 6.0958 294.891 620.3 Tm
[(ORKERS)-412.5(OF)]TJ
8 0 0 8 337.2718 620.3 Tm
(A)Tj
6.4 0 0 6.0958 343.0477 620.3 Tm
(MERICA)Tj
8 0 0 8 370.1772 620.3 Tm
( )Tj
-12.6997 -1.6125 TD
(N)Tj
6.4 0 0 6.0958 275.0999 607.4 Tm
(OVEMBER)Tj
8 0 0 8 311.8647 607.4 Tm
0.0525 Tw
(18, 2008 )Tj
-19.6081 -1.6125 TD
0.12 Tw
(Mr. Chairman, my name is Ron Gettelfinger. I am President of the International )Tj
-1 -0.9875 TD
0.42 Tw
(Union, United Automobile, Aerospace, and Agricultural Implement Workers of )Tj
T*
0.1125 Tw
(America \(UAW\). The UAW represents 1 million active and retired workers, most of )Tj
T*
0.0875 Tw
(whom work or receive retirement benefits from the Detroit-based auto companies or )Tj
T*
0.205 Tw
(auto parts suppliers around the country. We appreciate the opportunity to testify )Tj
T*
0.0525 Tw
(today on the state of the domestic automobile industry. )Tj
1 -0.9875 TD
0.2 Tw
(The UAW strongly supports legislation to amend the Emergency Economic Sta-)Tj
-1 -0.9875 TD
0.1025 Tw
(bilization Act \(EESA\) to clarify that the Treasury Department should use the exist-)Tj
T*
0.105 Tw
(ing financial rescue program to quickly provide a $25 billion emergency bridge loan )Tj
T*
0.115 Tw
(to GM, Ford, and Chrysler to enable these companies to weather the current credit )Tj
T*
0.09 Tw
(and economic crises that have had such a devastating impact on our entire country. )Tj
T*
0.135 Tw
(This bridge loan would be paid from the funds that Congress has already provided )Tj
T*
0.155 Tw
(under the financial rescue program; there would not be any new federal funds. As )Tj
T*
0.2025 Tw
(with other rescue efforts under this program, the bridge loan to the auto makers )Tj
T*
0.0925 Tw
(would be conditioned on stringent limits relating to executive compensation, as well )Tj
T*
0.145 Tw
(as provisions granting the Federal government an equity stake in the auto compa-)Tj
T*
0.0525 Tw
(nies in order to protect the investment by taxpayers. )Tj
1 -0.9875 TD
0.065 Tw
(The UAW believes that the Treasury Department already has the authority under )Tj
-1 -0.9875 TD
0.1825 Tw
(existing law to make the bridge loan to the auto companies. But because there is )Tj
T*
0.08 Tw
(disagreement on this point, we believe Congress should act quickly to approve legis-)Tj
T*
0.0725 Tw
(lation to make it clear that the Treasury Department should act now to provide this )Tj
T*
0.0525 Tw
(urgently needed relief. )Tj
/F7 1 Tf
0 -1.4875 TD
0.045 Tw
(The Detroit-Based Auto Companies Are Facing a Crisis )Tj
/F1 1 Tf
1 -1.2375 TD
0.2025 Tw
(The situation now facing GM, Ford, and Chrysler is extremely dire. Because of )Tj
-1 -0.9875 TD
0.165 Tw
(the credit and financial crises that have engulfed our Nation, overall vehicle sales )Tj
T*
0.325 Tw
(have plummeted to the lowest level in 25 years. In October, sales were at an )Tj
T*
0.0775 Tw
(annualized level of 10.8 million vehicles, far below the normal level of 1618 million )Tj
T*
0 Tw
(vehicles. )Tj
1 -0.9875 TD
0.1125 Tw
(There is no great mystery as to why this enormous decline in sales has occurred. )Tj
-1 -0.9875 TD
0.1225 Tw
(Buying a vehicle is the second biggest purchase that families make. Because of the )Tj
T*
0.08 Tw
(overall credit crunch, most families cannot get credit on reasonable terms to finance )Tj
T*
0.1675 Tw
(the purchase of a vehicle. And because of the general economic uncertainty, many )Tj
T*
0.0525 Tw
(families are simply deferring any major expenditures. )Tj
1 -0.9875 TD
0.0925 Tw
(The net result is that all auto companies, not just the Detroit-based auto makers, )Tj
-1 -0.9875 TD
0.21 Tw
(have seen a sharp drop in their sales. This means that the revenues received by )Tj
T*
0.1975 Tw
(the companies have declined drastically. As a result, GM, Ford, and Chrysler are )Tj
T*
0.1425 Tw
(burning through their cash reserves at an unprecedented rate. As the recent earn-)Tj
T*
0.2 Tw
(ings reports indicate, this scenario is not sustainable. If the government does not )Tj
T*
0.1175 Tw
(act to provide immediate assistance, GM, Ford, and Chrysler could be forced to liq-)Tj
T*
0.3 Tw
(uidate. The UAW wants to underscore that this would not be a painless, pre-)Tj
T*
0.39 Tw
(packaged bankruptcy reorganization as some columnists have suggested. Con-)Tj
T*
0.2175 Tw
(sumers will not purchase vehicles from a company that has filed for bankruptcy. )Tj
T*
0.115 Tw
(And bankrupt auto companies would not be able to obtain debtor-in-possession fi-)Tj
T*
0.1025 Tw
(nancing to enable them to continue operations. Thus, the stark reality is that these )Tj
T*
0.115 Tw
(companies would be forced into a Chapter 7 liquidation, with their operations ceas-)Tj
T*
0.0525 Tw
(ing entirely and their assets sold for pennies on dollar. )Tj
/F7 1 Tf
0 -1.4875 TD
0.045 Tw
(Devastating Consequences if the Detroit-Based Auto Companies Collapse )Tj
/F1 1 Tf
1 -1.2375 TD
0.1375 Tw
(If the Detroit-based auto companies are forced into liquidation, the consequences )Tj
-1 -0.9875 TD
0.255 Tw
(would be truly devastating, not only for UAW members, but also for millions of )Tj
T*
0.23 Tw
(other workers and retirees across this Nation, and for the entire economy of the )Tj
T*
0.1575 Tw
(United States. In addition to the hundreds of thousands of workers who would di-)Tj
T*
0.17 Tw
(rectly lose their jobs at the Detroit-based auto companies, according to the Center )Tj
T*
0.2125 Tw
(for Automotive Research a total of almost 3 million workers would see their jobs )Tj
T*
0.2275 Tw
(eliminated. This includes persons who work for auto dealers, suppliers of compo-)Tj
T*
0.09 Tw
(nents and materials, and thousands of other businesses that depend on the auto in-)Tj
T*
0.18 Tw
(dustry. In addition, because the auto manufacturers depend on many of the same )Tj
0 -1 TD
0.4225 Tw
(suppliers, a disruption in the supply chain would have serious negative con-)Tj
T*
0.0525 Tw
(sequences for the remaining auto manufacturers. )Tj
1 -1 TD
0.135 Tw
(The liquidation of the Detroit-based auto companies would also have devastating )Tj
-1 -1 TD
0.1825 Tw
(consequences for millions of retirees. The retirees from these companies and their )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00082)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
264 0 obj
<>/ExtGState<>>>
endobj
265 0 obj
<>
endobj
266 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(79 )Tj
8 0 0 8 147 648 Tm
0.1575 Tw
(spouses and dependentsabout one million personscould suffer sharp reductions )Tj
0 -1 TD
0.065 Tw
(in their pension benefits. And they would face the loss of their health insurance cov-)Tj
T*
0.205 Tw
(eragean especially devastating blow to the roughly 40 percent who are younger )Tj
T*
0.0925 Tw
(than 65 and thus not yet eligible for Medicare. In addition, if the auto makers pen-)Tj
T*
0.3675 Tw
(sion plans are terminated, the Pension Benefit Guarantee Corporation \(PBGC\) )Tj
T*
0.32 Tw
(would be saddled with unprecedented liabilities. To prevent the collapse of the )Tj
T*
0.2025 Tw
(PBGC, which would jeopardize the retirement security of millions of workers and )Tj
T*
0.1475 Tw
(retirees, the federal government would have to provide a huge bailout for the pen-)Tj
T*
0.14 Tw
(sion guarantee program. Furthermore, under existing law, the Federal government )Tj
T*
0.0625 Tw
(would be liable for a 65 percent tax credit to cover the health care costs of pre-Medi-)Tj
T*
0.0525 Tw
(care auto retirees costing about $3 billion per year. )Tj
1 -1 TD
0.1375 Tw
(The liquidation of the Detroit-based auto companies would have serious negative )Tj
-1 -1 TD
0.21 Tw
(repercussions for the entire U.S. economy. Almost 4 percent of our Nations GDP )Tj
T*
0.1575 Tw
(is related to the auto industry, and almost 10 percent of our industrial production )Tj
T*
0.135 Tw
(by value. The collapse of the auto sector would severely aggravate the current eco-)Tj
T*
0.145 Tw
(nomic downturn, sending production and consumer spending into a deeper tailspin )Tj
T*
0.14 Tw
(while unemployment spirals higher. Federal, State, and local government revenues )Tj
T*
0.18 Tw
(would shrink even further, forcing harmful cuts in a wide range of social services )Tj
T*
0.0525 Tw
(at precisely the time they are most urgently needed. )Tj
1 -1 TD
0.1125 Tw
(The UAW submits that it would be far better for the auto industry and its work-)Tj
-1 -1 TD
0.1275 Tw
(ers and retirees, and for the Nation as a whole, for the federal government to take )Tj
T*
0.1125 Tw
(prompt action now to prevent the imminent collapse of the Detroit-based auto com-)Tj
T*
0.2 Tw
(panies. The human toll will be far less. And the ultimate cost to the government )Tj
T*
0.0525 Tw
(will be far cheaper. )Tj
/F7 1 Tf
0 -1.5 TD
0.045 Tw
(Myths About the Auto Industry )Tj
/F1 1 Tf
1 -1.25 TD
0.2225 Tw
(A number of objections have been raised by various commentators against this )Tj
-1 -1 TD
0.0675 Tw
(type of government assistance to the Detroit-based auto companies. These objections )Tj
T*
0.1375 Tw
(are largely based on myths about the auto industry that do not stand up on closer )Tj
T*
0 Tw
(scrutiny. )Tj
/F6 1 Tf
0 -1.5 TD
0.1125 Tw
(The Current Problems Facings the Detroit-Based Companies Are Not Due to Overly )Tj
2 -1 TD
0.0525 Tw
(Rich Union Contracts )Tj
/F1 1 Tf
-1 -1.25 TD
0.1675 Tw
(Some commentators have asserted that overly rich contracts negotiated by the )Tj
-1 -1 TD
0.085 Tw
(UAW are to blame for the companies current situation, and suggested that workers )Tj
T*
0.125 Tw
(and retirees should be required to take deep cuts in their wages and benefits. This )Tj
T*
0.07 Tw
(totally ignores the recent history in the auto industry and the facts regarding wages )Tj
T*
0.0525 Tw
(and benefits at the Detroit-based companies. )Tj
1 -1 TD
0.11 Tw
(The truth is that in 2005 the UAW agreed to reopen the contracts mid-term, and )Tj
-1 -1 TD
0.2 Tw
(accepted cuts in workers wages and in health care benefits for retirees. Then, in )Tj
T*
0.09 Tw
(the general 2007 collective bargaining negotiations, the UAW agreed to what indus-)Tj
T*
0.2275 Tw
(try analysts have called a transformational contract that fundamentally altered )Tj
T*
0.2175 Tw
(labor costs for the Detroit-based auto companies. This contract slashed wages for )Tj
T*
0.1575 Tw
(new hires by 50 percent. Furthermore, new hires will not be covered by the tradi-)Tj
T*
0.1825 Tw
(tional retiree health care and defined benefit pension plans. In addition, this con-)Tj
T*
0.065 Tw
(tract stipulated that beginning January 1, 2010, the liability for health care benefits )Tj
T*
0.2525 Tw
(for existing retirees would be transferred from the companies to an independent )Tj
T*
0.085 Tw
(fund \(a Voluntary Employee Beneficiary Association, or VEBA\). This agreement has )Tj
T*
0.1675 Tw
(subsequently been approved by federal courts, which have appointed a majority of )Tj
T*
0.095 Tw
(the trustees who will be independent of the UAW and responsible for managing the )Tj
T*
0.1475 Tw
(VEBA. Taken together, the changes made by the 2005 and 2007 contracts reduced )Tj
T*
0.0525 Tw
(the companies retiree health care liabilities by 50 percent. )Tj
1 -1 TD
0.165 Tw
(As a result of all these painful concessions, the gap in labor costs that had pre-)Tj
-1 -1 TD
0.26 Tw
(viously existed between the Detroit-based auto companies and the foreign trans-)Tj
T*
0.065 Tw
(plant operations will be largely or completely eliminated by the end of the contracts. )Tj
T*
0.2475 Tw
(Indeed, one industry analyst has indicated that labor costs for the Detroit-based )Tj
T*
0.0825 Tw
(auto companies will actually be lower than those for Toyotas U.S. operations. Thus, )Tj
T*
0.1075 Tw
(the truth is the UAW and our active and retired members have already stepped up )Tj
T*
0.0675 Tw
(to the plate and made the hard changes that were necessary to make our companies )Tj
T*
0.0525 Tw
(competitive in terms of their labor costs. )Tj
1 -1 TD
0.1925 Tw
(It is also important to note that union negotiated work rules cannot be blamed )Tj
-1 -1 TD
0.125 Tw
(for the current problems facing the Detroit-based companies. According to the Har-)Tj
T*
0.2475 Tw
(bour Report, the industry benchmark for productivity, union-represented workers )Tj
T*
0.205 Tw
(are actually more efficient than their counterparts at non-union auto plants. And )Tj
T*
0.125 Tw
(union-made vehicles built by the Detroit-based auto companies are winning quality )Tj
T*
0.0525 Tw
(awards from Consumer Reports, J.D. Power, and other industry analysts. )Tj
1 -1 TD
0.08 Tw
(The current plight of GM, Ford, and Chrysler is simply not attributable to overly )Tj
-1 -1 TD
0.1225 Tw
(rich union contracts. Instead, it is the result of the larger credit and economic cri-)Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00083)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
267 0 obj
<>/ExtGState<>>>
endobj
268 0 obj
<>
endobj
269 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(80 )Tj
8 0 0 8 147 648 Tm
0.1675 Tw
(ses that have engulfed our Nation, and the unprecedented drop in auto sales that )Tj
0 -0.9875 TD
0.0525 Tw
(has affected all auto makers. )Tj
1 -0.9875 TD
0.055 Tw
(Because the recent contracts negotiated by the UAW are now competitive with the )Tj
-1 -0.9875 TD
0.08 Tw
(rest of auto industry in the U.S., we do not believe there is any justification for con-)Tj
T*
0.25 Tw
(ditioning assistance to the Detroit-based auto companies on further deep cuts in )Tj
T*
0.16 Tw
(wages and benefits for active and retired workers. We would also note that in the )Tj
T*
0.1575 Tw
(cases where the Treasury Department has acted to rescue financial institutions, it )Tj
T*
0.255 Tw
(has only imposed restrictions on executive compensation. It has never mandated )Tj
T*
0.175 Tw
(cuts in wages or benefits for rank-and-file workers and retirees. Thus, there is no )Tj
T*
0.0525 Tw
(basis for singling out the auto industry for different treatment. )Tj
/F6 1 Tf
0 -1.4875 TD
0.2075 Tw
(The Current Crisis Cannot Be Blamed on the Detroit-Based Companies Producing )Tj
2 -0.9875 TD
0.0525 Tw
(Gas Guzzling Vehicles )Tj
/F1 1 Tf
-1 -1.2375 TD
0.2425 Tw
(Some pundits also have asserted that the Detroit-based auto companies are to )Tj
-1 -0.9875 TD
0.0575 Tw
(blame for their current predicament because they insisted on producing gas guzzling )Tj
T*
0.1225 Tw
(vehicles, rather than more fuel efficient vehicles that consumers wanted. According )Tj
T*
0.1925 Tw
(to this point of view, GM, Ford, and Chrysler simply were not producing vehicles )Tj
T*
0.0525 Tw
(that consumers wanted to buy. )Tj
1 -0.9875 TD
0.2575 Tw
(Unfortunately, this argument ignores the fact that the current credit and eco-)Tj
-1 -0.9875 TD
0.165 Tw
(nomic crises have resulted in a sharp drop in sales by all auto manufacturers, in-)Tj
T*
0.0875 Tw
(cluding the Japanese companies. The immediate problem is not just that consumers )Tj
T*
0.105 Tw
(arent buying the vehicles produced by the Detroit-based auto companies. The prob-)Tj
0 -1 TD
0.0525 Tw
(lem is they arent buying vehicles from any company! )Tj
1 -1 TD
0.095 Tw
(It is true that earlier this year the sharp spike in gas prices resulted in a sudden )Tj
-1 -1 TD
0.17 Tw
(shift in the product mix demanded by consumers, with sales of more fuel efficient )Tj
T*
0.165 Tw
(vehicles increasing, and sales of pickups, minivans and other larger vehicles drop-)Tj
T*
0.0675 Tw
(ping. This shift in product mix hit the Detroit-based companies the hardest, because )Tj
T*
0.3125 Tw
(their product mix was more oriented towards these larger vehicles. But it also )Tj
T*
0.17 Tw
(caught Toyota and Nissan by surprise. Because these companies had been aggres-)Tj
T*
0.1 Tw
(sively expanding production of larger vehicles, they also experienced significant dis-)Tj
T*
0 Tw
(locations. )Tj
1 -1 TD
0.0725 Tw
(The Detroit-based auto companies have been investing massive amounts of money )Tj
-1 -1 TD
0.1825 Tw
(to change their product mix and to provide consumers with a wide range of more )Tj
T*
0.13 Tw
(fuel efficient vehicles. They are aggressively moving ahead with advanced fuel sav-)Tj
T*
0.2375 Tw
(ing technologies. For example, GM plans to introduce the Volt plug in hybrid in )Tj
T*
0 Tw
(2010. )Tj
1 -1 TD
0.125 Tw
(The landmark energy legislation that was enacted by Congress in 2007, with the )Tj
-1 -1 TD
0.085 Tw
(support of the UAW and the auto companies, will require substantial improvements )Tj
T*
0.1575 Tw
(in fuel economy until the entire fleet of autos and light trucks sold in the U.S. by )Tj
T*
0.2 Tw
(all companies achieves at least 35 mpg by 2020. In addition, the Advanced Tech-)Tj
T*
0.0925 Tw
(nology Vehicles Manufacturing Incentive Program \(ATVMIP\), which was authorized )Tj
T*
0.085 Tw
(by this legislation and subsequently funded by Congress in the fall of this year, will )Tj
T*
0.15 Tw
(provide assistance to all automakersthe Detroit-based companies and the foreign )Tj
T*
0.215 Tw
(transplantsto retool facilities in this country to produce the advanced, fuel effi-)Tj
T*
0.175 Tw
(cient vehicles of the future and their key components. This will help to accelerate )Tj
T*
0.17 Tw
(the introduction of these more fuel efficient vehicles, while ensuring that they are )Tj
T*
0.0525 Tw
(produced by American workers. )Tj
1 -1 TD
0.0675 Tw
(Some commentators have questioned why this advanced vehicle retooling program )Tj
-1 -1 TD
0.325 Tw
(doesnt provide sufficient assistance for the auto companies. The answer is the )Tj
T*
0.0675 Tw
(ATVMIP is part of a long term energy policy that will provide assistance to the auto )Tj
T*
0.065 Tw
(companies and parts suppliers over a ten year period, tied specifically to the produc-)Tj
T*
0.1925 Tw
(tion of very high mileage vehicles. This program was not designed to address the )Tj
T*
0.1825 Tw
(type of immediate cash flow crisis that the Detroit-based auto companies are now )Tj
T*
0.145 Tw
(facing as a result of the sudden drop in overall auto sales. Even if the ATVMIP is )Tj
T*
0.055 Tw
(implemented quicklywhich is by no means clearat most it will only provide mod-)Tj
T*
0.0525 Tw
(est assistance to the Detroit based auto companies in the coming years. )Tj
1 -1 TD
0.115 Tw
(Other observers have questioned whether the ATVMIP could simply be expanded )Tj
-1 -1 TD
0.0675 Tw
(to allow the Detroit-based auto companies immediate access to the entire $25 billion )Tj
T*
0.29 Tw
(that was authorized and appropriated for this program. The UAW believes this )Tj
T*
0.1925 Tw
(would not make sense because it would undermine the fuel economy objectives of )Tj
T*
0.215 Tw
(this program. Furthermore, there simply are not enough retooling projects in the )Tj
T*
0.3125 Tw
(short termfor advanced vehicles or more conventional onesto make this ap-)Tj
T*
0.0525 Tw
(proach feasible. )Tj
1 -1 TD
0.2075 Tw
(Some commentators and groups have suggested that any new assistance to the )Tj
-1 -1 TD
0.15 Tw
(Detroit-based auto companies should be conditioned on even greater improvements )Tj
T*
0.2125 Tw
(in fuel economy. We recognize that President-elect Obama campaigned on a plat-)Tj
T*
0.1025 Tw
(form that included increases in fuel economy and the production of plug in hybrids, )Tj
T*
0.14 Tw
(as well as assistance to the auto industry to ensure that the vehicles of the future )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00084)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
270 0 obj
<>/ExtGState<>>>
endobj
271 0 obj
<>
endobj
272 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(81 )Tj
8 0 0 8 147 648 Tm
0.275 Tw
(are produced in this country. The UAW is looking forward to working with the )Tj
0 -1.0125 TD
0.0525 Tw
(Obama administration and the next Congress to help achieve these objectives. )Tj
1 -1.0125 TD
0.1525 Tw
(But we firmly believe it would be an enormous mistake to rush to include these )Tj
-1 -1.0125 TD
0.0575 Tw
(important new initiatives in the current emergency bridge loan for the Detroit-based )Tj
T*
0.3025 Tw
(companies. To begin with, we do not believe there is adequate time to develop )Tj
T*
0.2575 Tw
(thoughtful proposals that are workable and effective. In addition, given the des-)Tj
T*
0.1525 Tw
(perate situation facing the Detroit-based auto companies, and the devastating con-)Tj
T*
0.08 Tw
(sequences their collapse would have for millions of workers and retirees and the en-)Tj
T*
0.2075 Tw
(tire U.S. economy, the UAW does not believe it is appropriate to hold emergency )Tj
T*
0.0525 Tw
(assistance hostage to broader fuel economy/environmental initiatives. )Tj
1 -1.0125 TD
0.1975 Tw
(The Detroit-based companies need an immediate bridge loan from the Treasury )Tj
-1 -1.0125 TD
0.1175 Tw
(Department in order to have sufficient cash to be able to continue their operations. )Tj
T*
0.1375 Tw
(These companies will not be able to continue on the path to producing the greener )Tj
T*
0.0525 Tw
(vehicles of the future if they are forced to liquidate in the coming months. )Tj
/F7 1 Tf
0 -1.5125 TD
0 Tw
(Conclusion )Tj
/F1 1 Tf
1 -1.2625 TD
0.2725 Tw
(The UAW appreciates the opportunity to testify before this Committee on the )Tj
-1 -1.0125 TD
0.14 Tw
(state of the domestic auto industry. We strongly urge Congress to act this week to )Tj
T*
0.1075 Tw
(approve legislation that will provide immediate assistance to GM, Ford, and Chrys-)Tj
T*
0.3525 Tw
(ler to enable them to continue in business, and to avoid the devastating con-)Tj
T*
0.07 Tw
(sequences that a collapse of these companies would have for millions of workers and )Tj
T*
0.0525 Tw
(retirees across our country. Thank you. )Tj
ET
0 G
0 J 0 j 0.4 w 10 M []0 d
1 i
291 468.6 m
321 468.6 l
S
BT
/F7 1 Tf
8 0 0 8 201.96 452.3 Tm
0.045 Tw
(PREPARED STATEMENT OF ALAN R. MULALLY )Tj
/F1 1 Tf
2.8425 -1.2625 TD
0 Tw
(P)Tj
6.4 0 0 6.0958 230.0359 442.2 Tm
[(RESIDENT)-412.5(AND)]TJ
8 0 0 8 285.0951 442.2 Tm
(C)Tj
6.4 0 0 6.0958 290.871 442.2 Tm
(HIEF)Tj
8 0 0 8 310.3365 442.2 Tm
(E)Tj
6.4 0 0 6.0958 316.1125 442.2 Tm
(XECUTIVE)Tj
8 0 0 8 353.8308 442.2 Tm
(O)Tj
6.4 0 0 6.0958 360.0547 442.2 Tm
(FFICER)Tj
8 0 0 8 385.0595 442.2 Tm
(, )Tj
-15.3199 -1.2625 TD
(F)Tj
6.4 0 0 6.0958 267.8359 432.1 Tm
(ORD)Tj
8 0 0 8 285.0551 432.1 Tm
(M)Tj
6.4 0 0 6.0958 292.607 432.1 Tm
(OTOR)Tj
8 0 0 8 314.095 432.1 Tm
(C)Tj
6.4 0 0 6.0958 319.8709 432.1 Tm
(OMPANY)Tj
8 0 0 8 349.5028 432.1 Tm
( )Tj
-10.1154 -1.6375 TD
(N)Tj
6.4 0 0 6.0958 275.0999 419 Tm
(OVEMBER)Tj
8 0 0 8 311.8647 419 Tm
0.0525 Tw
(18, 2008 )Tj
-19.6081 -1.6375 TD
0.14 Tw
(Thank you Mr. Chairman, Senator Shelby and Members of the Committee. I ap-)Tj
-1 -1.0125 TD
0.18 Tw
(preciate the opportunity to be here with you today representing Ford Motor Com-)Tj
T*
0.145 Tw
(pany as you consider issues that are absolutely critical to this venerable American )Tj
T*
0.0525 Tw
(company and to the Nation. )Tj
1 -1.0125 TD
(In my judgment, there are two fundamental questions on the table today: )Tj
/F8 1 Tf
0 -1.5125 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.195 Tw
(Is there a competitive and sustainable future for our domestic automotive in-)Tj
0 -1.0125 TD
0 Tw
(dustry? )Tj
/F8 1 Tf
-1.015 -1.2625 TD
()Tj
/F1 1 Tf
1.015 0 TD
0.1625 Tw
(Is the provision of government assistance to help bridge the domestic auto in-)Tj
0 -1.0125 TD
0.0625 Tw
(dustry through these difficult economic times more favorable to our Nation than )Tj
T*
0.0525 Tw
(the costs of inaction? )Tj
-1.015 -1.5125 TD
0.1125 Tw
(I respectfully submit that the answer to these questions is a resounding yes. The )Tj
-1 -1.0125 TD
0.1325 Tw
(domestic industry is increasingly more competitive and sustainable and is in many )Tj
T*
0.085 Tw
(respects on par with our foreign competitors. A decision to make government assist-)Tj
T*
0.1025 Tw
(ance available makes much more sense than taking the tremendous risks to our al-)Tj
T*
0.0525 Tw
(ready fragile economy that come with inaction. )Tj
/F7 1 Tf
0 -1.5125 TD
0.045 Tw
(Fords Competitive Transformation )Tj
/F1 1 Tf
1 -1.2625 TD
0.2025 Tw
(As you are well aware, we face serious problems in our economy, and the auto )Tj
-1 -1.0125 TD
0.155 Tw
(industry has been among the most heavily affected by the turmoil in the financial )Tj
T*
0.175 Tw
(markets and the impact that turmoil has had on spending for consumer products. )Tj
T*
0.2475 Tw
(As public attention has shifted from the credit and financial institution crisis to )Tj
0 -1 TD
0.0925 Tw
(larger economic issues, we in the auto industry find ourselves at the center of a na-)Tj
T*
0.1875 Tw
(tional debate on the future of our industry. Much of the commentary Ive read in )Tj
T*
0.155 Tw
(the last few weeks is highly critical of our industry, and a common refrain is that )Tj
T*
0.0525 Tw
(our companies need a new business model. )Tj
1 -1 TD
0.135 Tw
(I completely agree. What many of the commentators and critics fail to recognize, )Tj
-1 -1 TD
0.1375 Tw
(however, is that we at Ford are on our way to realizing a complete transformation )Tj
T*
0.0525 Tw
(of our companybuilding a new Ford that has a very bright future. )Tj
1 -1 TD
0.165 Tw
(The reason I came to Ford 2 years ago after 37 years in the aerospace industry )Tj
-1 -1 TD
0.1225 Tw
(working for Boeing was because of my confidence that the incredible talent and re-)Tj
T*
0.1975 Tw
(sources of the Ford Motor Company could and should be redirected into an effort )Tj
T*
0.2325 Tw
(to transform Ford so it can be one of the strongest competitors in todays global )Tj
T*
0.29 Tw
(automotive market. Inspired by the compelling vision outlined by our Executive )Tj
T*
0.1 Tw
(Chairman Bill Ford, Ford had already begun its transformation from a company fo-)Tj
T*
0.195 Tw
(cused in this country largely on trucks and SUVs. All of our efforts over the last )Tj
T*
0.185 Tw
(two years have been directed toward speeding up the transformation of Ford to a )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00085)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
273 0 obj
<>/ExtGState<>>>
endobj
274 0 obj
<>
endobj
275 0 obj
<>
endobj
276 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(82 )Tj
8 0 0 8 147 648 Tm
0.2275 Tw
(global profitable business based on the highest quality, sustainable, fuel-efficient, )Tj
0 -1.0125 TD
0.0525 Tw
(safe, fun-to-drive and best-value world class vehicles. )Tj
1 -1.0125 TD
0.2325 Tw
(With that in mind, Id like to take a few minutes to tell you about the trans-)Tj
-1 -1.0125 TD
0.07 Tw
(formation under way at Ford to give you a vision for the future that we are creating )Tj
T*
0 Tw
(today. )Tj
1 -1.0125 TD
0.0525 Tw
(Our plan for the past 2 years has been consistent. )Tj
/F8 1 Tf
0 -1.5125 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.245 Tw
(We have been aggressively restructuring to operate profitably at the current )Tj
0 -1.0125 TD
0.0525 Tw
(lower demand and changing model mix. )Tj
/F8 1 Tf
-1.015 -1.2625 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.1325 Tw
(We have been accelerating development of the safe, fuel-efficient, highest-qual-)Tj
0 -1.0125 TD
0.0525 Tw
(ity new products that customers want and value. )Tj
/F8 1 Tf
-1.015 -1.2625 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.0525 Tw
(We have been working to finance our plan and improve our balance sheet. )Tj
/F8 1 Tf
-1.015 -1.2625 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.1075 Tw
(And we have been working together as one teamwith our employees, dealers, )Tj
0 -1.0125 TD
0.0525 Tw
(suppliers and union partnersleveraging our global assets like never before. )Tj
-1.015 -1.5125 TD
0.0925 Tw
(Our goal has been and remains to create a viable, highly focused, fully integrated )Tj
-1 -1.0125 TD
0.0675 Tw
(Ford Motor Companya lean enterprise delivering profitable growth for all over the )Tj
T*
0.0525 Tw
(long term. )Tj
/F6 1 Tf
1 -1.5125 TD
0 Tw
(Restructuring. )Tj
/F1 1 Tf
7.2139 0 TD
0.29 Tw
(Few companies in the history of our country have restructured )Tj
-8.2139 -1.0125 TD
0.34 Tw
(more aggressively. I can tell you that in my experience, the union under Ron )Tj
T*
0.0525 Tw
(Gettelfinger is working with us as part of the solution. )Tj
1 -1.0125 TD
0.075 Tw
(In a very short period of time, working together, we have reduced excess capacity, )Tj
-1 -1.0125 TD
0.105 Tw
(closing 17 plants in North Americaincluding more than one-third of our assembly )Tj
0 -1 TD
0.11 Tw
(plantsin the past 5 years. We have also reduced our workforce by 51,000 employ-)Tj
T*
0.175 Tw
(ees in the past three years, shrinking our hourly workforce from 83,000 to 44,000 )Tj
T*
0.0525 Tw
(and reducing salaried head count by around 12,000 from a base of 33,000. )Tj
1 -1 TD
0.2375 Tw
(We negotiated a new contract with our UAW partners to begin a path toward )Tj
-1 -1 TD
0.1925 Tw
(competitiveness and offset some of the massive legacy costs that come with doing )Tj
T*
0.175 Tw
(business in America for more than 100 years. Most significantly, that contract es-)Tj
T*
0.12 Tw
(tablished a trust that funded our retiree health care obligation and removed the li-)Tj
T*
0.1325 Tw
(ability from Fords balance sheet effective 2010. Ford has fully met the funding re-)Tj
T*
0.0775 Tw
(quirements associated with that agreement, including setting aside an initial $4 bil-)Tj
T*
0.0525 Tw
(lion contribution in January of this year. )Tj
1 -1 TD
0.14 Tw
(Our agreement with the union also established an entry level wage that reduces )Tj
-1 -1 TD
0.0975 Tw
(future costs and will make us more competitive going forward longer-term. And, for )Tj
T*
0.1275 Tw
(the first time ever, it included no base wage increase during the 4-year period cov-)Tj
T*
0.0525 Tw
(ered by the agreement. )Tj
1 -1 TD
0.245 Tw
(We have also been engaged in a broader effort to cut our costs, and in North )Tj
-1 -1 TD
0.1775 Tw
(America alone have reduced our costs by $5 billion compared with year-end 2005. )Tj
T*
0.11 Tw
(We also plan further cost and cash improvements to offset the increasing weakness )Tj
T*
0.0525 Tw
(in the global automotive industry. )Tj
/F6 1 Tf
1 -1 TD
0 Tw
(Product. )Tj
/F1 1 Tf
4.4274 0 TD
0.2425 Tw
(We are not simply on a journey to cut and shrink our way to profit-)Tj
-5.4274 -1 TD
0.13 Tw
(ability. Instead, we very much recognize the need for a product-led transformation, )Tj
T*
0.0575 Tw
(and believe we have the products to achieve just that. We have dramatically acceler-)Tj
T*
0.1425 Tw
(ated the introduction of new vehicles; 43 percent of our vehicles will be new or re-)Tj
T*
0.18 Tw
(freshed in 2009, and 100 percent of the Ford, Lincoln and Mercury lineup will be )Tj
T*
0.0525 Tw
(new or refreshed by the end of 2010 compared with 2006 models. )Tj
1 -1 TD
0.1825 Tw
(Keenly aware that the world is changing as we transform our company, we are )Tj
-1 -1 TD
0.18 Tw
(shifting from an emphasis on large trucks and SUVs to a more balanced portfolio )Tj
T*
0.1375 Tw
(that also emphasizes smaller and more fuel-efficient vehicles here in the U.S.the )Tj
T*
0.175 Tw
(same world-class small vehicles that have been so successful for us in other high- )Tj
T*
0.1975 Tw
(fuel-cost markets. By the end of 2010, two-thirds of our spending here will be on )Tj
T*
0.0525 Tw
(cars and crossoversup from one-half today. )Tj
1 -1 TD
0.065 Tw
(We are delivering the best or among the best fuel economy with every new vehicle )Tj
-1 -1 TD
0.4025 Tw
(we introduce. This is possible through affordable, fuel-saving technologies like )Tj
T*
0.0575 Tw
(EcoBoost engines, which use gasoline turbocharged direct-injection technology for up )Tj
T*
0.115 Tw
(to 20 percent better fuel economy, up to 15 percent fewer CO2 emissions and supe-)Tj
T*
0.2225 Tw
(rior driving performance versus larger-displacement engines. We are doubling ca-)Tj
T*
0.145 Tw
(pacity for four-cylinder engines here to meet the consumer trend toward more effi-)Tj
T*
0.195 Tw
(cient powertrains and vehicles. We also are doubling the number of offerings and )Tj
T*
0.0725 Tw
(volume of our hybrids in the next year alone, and we have a plan for delivering new )Tj
T*
0.0525 Tw
(electric vehicles and plug-in vehicles. )Tj
1 -1 TD
0.1075 Tw
(Ford is taking advantage of our scale and global product strengths. We are deliv-)Tj
-1 -1 TD
0.0625 Tw
(ering a balanced portfolio of small, medium and large cars, utilities and trucks, with )Tj
T*
0.21 Tw
(a sharp focus on the Ford Blue Oval brand across the globe. Going forward, this )Tj
T*
0.11 Tw
(balanced portfolio will provide the flexibility to adapt more easily to changes in our )Tj
T*
0.0525 Tw
(environment and to begin to grow profitably as the global economy rebounds. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00086)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
277 0 obj
<>/ExtGState<>>>
endobj
278 0 obj
<>
endobj
279 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(83 )Tj
8 0 0 8 155 648 Tm
0.0975 Tw
(Our new products will be assembled in plants featuring lean manufacturing tech-)Tj
-1 -0.9875 TD
0.135 Tw
(niques, and, in nearly all facilities, flexible body shops will make them competitive )Tj
T*
0.1525 Tw
(with the best in the business. A number of our powertrains will be built in plants )Tj
T*
0.1675 Tw
(that can flex among the I4, V6, V8, or diesel engines. As we make these changes, )Tj
T*
0.175 Tw
(we are fixing the fundamentals of the business, including a further significant re-)Tj
T*
0.17 Tw
(duction in structural costs next year. We also will continue the ongoing consolida-)Tj
T*
0.2125 Tw
(tion of our dealer and supplier network. Our plans call for reducing our supplier )Tj
T*
0.1625 Tw
(network by more than 60 percent and thereby improving supplier capacity utiliza-)Tj
T*
0.0525 Tw
(tion and financial viability. )Tj
1 -0.9875 TD
0.305 Tw
(We have continued to improve quality with four consecutive years of marked )Tj
-1 -0.9875 TD
0.1925 Tw
(progress. This is another area where much of the recent commentary has not yet )Tj
T*
0.2025 Tw
(caught up with reality. Most recently, Ford, Lincoln, and Mercury vehicles collec-)Tj
T*
0.1175 Tw
(tively reduced what we call things gone wronga metric used to assess quality )Tj
T*
0.075 Tw
(by 7.7 percent compared with last year. That puts Fords quality on par with Honda )Tj
T*
0.0525 Tw
(and Toyota. )Tj
1 -0.9875 TD
0.135 Tw
(We achieved a leading number of top safety picks from the U.S. Insurance Insti-)Tj
-1 -0.9875 TD
0.2275 Tw
(tute of Highway Safety, with the 2009 Ford Flex and the 2009 Lincoln MKS re-)Tj
T*
(cently earning top honors. This builds on Fords achievement of having the most )Tj
T*
0.0525 Tw
(U.S. government five-star safety ratings in the automobile industry. )Tj
1 -0.9875 TD
0.125 Tw
(The speed and breadth of our product-led transformation is demonstrated by sig-)Tj
-1 -0.9875 TD
0.0525 Tw
(nificant actions taking place just this week. )Tj
/F8 1 Tf
1 -1.4875 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.2025 Tw
(Tomorrow at the Los Angeles Auto Show, we unveil two all-new hybrids, the )Tj
0 -0.9875 TD
0.3425 Tw
(Ford Fusion Hybrid and the Mercury Milan Hybrid. Both beat the Toyota )Tj
T*
0.18 Tw
(Camry Hybrid in fuel efficiency by at least five miles per gallon. The conven-)Tj
T*
0.0525 Tw
(tional versions of these new vehicles also beat the Camry in fuel economy. )Tj
/F8 1 Tf
-1.015 -1.2375 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.095 Tw
(These vehicles are from the same Fusion family that is being recognized on the )Tj
0 -0.9875 TD
0.345 Tw
(cover of one of the Nations most prestigious consumer magazines for out-)Tj
T*
0.11 Tw
(standing reliability and qualityquality that respected third parties now agree )Tj
T*
0.0525 Tw
(is on par with Honda and Toyota. )Tj
/F8 1 Tf
-1.015 -1.2375 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.1125 Tw
(Also today, Ford is submitting our application to the Department of Energy for )Tj
0 -0.9875 TD
0.0775 Tw
(direct loans authorized by Congress last year in section 136 of the Energy Inde-)Tj
T*
0.1625 Tw
(pendence and Security Act of 2007. We appreciate Congress support for these )Tj
T*
0.1925 Tw
(loans, as they will provide access to lower-cost capital for retooling plants for )Tj
T*
0.0725 Tw
(more fuel-efficient vehicles. While no company has yet received funding through )Tj
T*
0.125 Tw
(this program, we believe it will be important in the long term in deploying ad-)Tj
T*
0.0525 Tw
(vanced technologies. )Tj
/F8 1 Tf
-1.015 -1.2375 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.2775 Tw
(On Friday, we end large SUV production at our Michigan Truck Plant and )Tj
0 -0.9875 TD
0.2225 Tw
(begin converting the facility to build fuel-efficient small vehicles. It is one of )Tj
T*
0.1725 Tw
(three large truck plants that we are converting to small vehicle production in )Tj
T*
0.0525 Tw
(the next two years. )Tj
/F6 1 Tf
-1.015 -1.4875 TD
0.19 Tw
(Financing Our Plan. )Tj
/F1 1 Tf
10.4209 0 TD
(To fund our transformation, we have taken many steps to )Tj
-11.4208 -0.9875 TD
0.0525 Tw
(protect Fords liquidity position, including: )Tj
/F8 1 Tf
1 -1.4875 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.28 Tw
(Raising $23 billion of available liquidity through an enterprise-wide secured )Tj
0 -0.9875 TD
0.1425 Tw
(credit facility, going to the capital markets at the right time in 2006 to secure )Tj
T*
0.0525 Tw
(that financing. )Tj
/F8 1 Tf
-1.015 -1.2375 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.145 Tw
(Selling Aston Martin, Jaguar, and Land Rover so that we could have an abso-)Tj
0 -0.9875 TD
0.0525 Tw
(lute laser focus on growing the Ford brand. )Tj
/F8 1 Tf
-1.015 -1.2375 TD
0 Tw
()Tj
/F1 1 Tf
1.015 0 TD
0.1425 Tw
(Selling other businesses such as Hertz to aid our liquidity and to focus on our )Tj
0 -0.9875 TD
0.0525 Tw
(core business. )Tj
-1.015 -1.4875 TD
0.19 Tw
(Similarly, Ford Credit, our captive finance company, has consolidated abroad to )Tj
-1 -0.9875 TD
0.23 Tw
(preserve capital to support U.S. consumers and our Ford dealers here. Our Ford )Tj
T*
0.17 Tw
(Credit team is optimistic that recent announcements from the Administration will )Tj
T*
0.1325 Tw
(help unfreeze the term securitization markets with the same success we have seen )Tj
T*
0.0525 Tw
(lately in asset-backed commercial paper markets. )Tj
1 -0.9875 TD
0.13 Tw
(The consolidation efforts alone have not been sufficient to overcome the financial )Tj
-1 -0.9875 TD
0.0775 Tw
(market disruption which has significantly diminished our access to traditional fund-)Tj
T*
0.0525 Tw
(ing sources. )Tj
1 -0.9875 TD
0.0575 Tw
(Unsecured financing has declined dramatically during the past 12 months and im-)Tj
-1 -0.9875 TD
0.2475 Tw
(paired our ability to fully support dealer and consumer needs, or to achieve our )Tj
T*
0.085 Tw
(growth objectives. Such funding is either non-existent or available today only at un-)Tj
T*
0.0525 Tw
(economic terms. )Tj
1 -1 TD
0.245 Tw
(Securitization markets, our primary funding source, have likewise been frozen. )Tj
-1 -1 TD
0.315 Tw
(The asset-backed commercial paper and public term securitization markets also )Tj
T*
0.11 Tw
(have declined significantly, greatly impairing the companys ability to support deal-)Tj
T*
0.225 Tw
(er and consumer financing needs. Accordingly, many of our low-volume financing )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00087)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
280 0 obj
<>/ExtGState<>>>
endobj
281 0 obj
<>
endobj
282 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(84 )Tj
8 0 0 8 147 648 Tm
0.165 Tw
(products have been eliminated or curtailed as we wait for the credit and financial )Tj
0 -0.9875 TD
0.0525 Tw
(markets return to some state of normalcy. )Tj
1 -0.9875 TD
0.175 Tw
(Our Ford Credit team is optimistic that government assistance in the form of a )Tj
-1 -0.9875 TD
0.0825 Tw
(purchase program for future term securitizations will allow us to continue financing )Tj
T*
0.145 Tw
(consumers and dealers. The CPFF has been successful in this regard for providing )Tj
T*
0.0525 Tw
(liquidity to our asset-backed commercial paper program. )Tj
1 -0.9875 TD
0.1725 Tw
(In addition, it is important that the FDIC approve Ford Credits industrial loan )Tj
-1 -0.9875 TD
0.165 Tw
(bank application as another way for us to be able to offer automobile financing to )Tj
T*
0.0875 Tw
(credit-strapped consumers. First filed in June 2006 and refiled in February after an )Tj
T*
0.32 Tw
(18-month FDIC-imposed moratorium, Ford Credits application for an industrial )Tj
T*
0.115 Tw
(loan bank is still pending further review by the FDIC. We believe that the applica-)Tj
T*
0.0925 Tw
(tion and business plan meet the statutory requirements for approval in every mate-)Tj
T*
0.2175 Tw
(rial respect. During this extended period, Ford Credit has operated and will con-)Tj
T*
0.0625 Tw
(tinue to operate at a significant competitive funding disadvantage to its competitors. )Tj
T*
0.29 Tw
(Both domestic \(GMAC\) and foreign competitors \(Toyota and BMW\) benefit from )Tj
T*
0.075 Tw
(FDIC-insured industrial banks and access to stable, low cost FDIC-insured deposits. )Tj
/F7 1 Tf
0 -1.4875 TD
0.045 Tw
(Financial Results and Economic Climate )Tj
/F1 1 Tf
1 -1.2375 TD
0.1225 Tw
(The bottom line of all of our efforts is that we are now competitive with the best )Tj
-1 -0.9875 TD
0.2025 Tw
(in the worldand it has shown in our financial results. In each quarter of 2007, )Tj
T*
0.0625 Tw
(we delivered year-over-year improvements, excluding special items, and on the same )Tj
T*
0.15 Tw
(basis posted a $100 million profit globally in the first quarter of this year. We ap-)Tj
0 -1 TD
0.0525 Tw
(peared to be well on our way to returning to sustainable profitability next year. )Tj
1 -1 TD
0.135 Tw
(As this year has progressed, however, our companies, dealers, suppliers and cus-)Tj
-1 -1 TD
0.185 Tw
(tomers have faced an unprecedented economic crisis and a severe credit crunch. I )Tj
T*
0.095 Tw
(know that the Committee is all too familiar with the circumstances of our economy, )Tj
T*
0.0525 Tw
(but just a few statistics put the situation we face in sharp focus. )Tj
1 -1 TD
0.265 Tw
(While the domestic auto industry has made mistakes in the past, the current )Tj
-1 -1 TD
0.1125 Tw
(problems have been exacerbated by one of the worst economies in nearly three dec-)Tj
T*
(ades. The mix of the housing crisis, credit crunch, wildly fluctuating gas prices and )Tj
T*
0.07 Tw
(major spikes in commodity prices has lead to an unprecedented reversal in the busi-)Tj
T*
0.1975 Tw
(ness environment that is driving not just the U.S. but markets around the world )Tj
T*
0.0525 Tw
(into a synchronized economic downturn. )Tj
1 -1 TD
0.0925 Tw
(Spending by consumers fell at an annual rate of more than 3 percent in the third )Tj
-1 -1 TD
0.1 Tw
(quarter \(as compared to the second quarter\). According to the early November 2008 )Tj
T*
0.275 Tw
(reading of consumer confidence from the University of Michigan Survey of Con-)Tj
T*
0.1575 Tw
(sumers, this is the first time in the 50-year history of that survey that consumers )Tj
T*
0.1175 Tw
(were unanimous in their view that the economy is in recession. Consumers assess-)Tj
T*
0.15 Tw
(ment of their economic and financial conditions is the worst since the early 1980s, )Tj
T*
0.1025 Tw
(when the U.S. economy encountered two consecutive recessions. The unemployment )Tj
T*
0.21 Tw
(rate of 6.5 percent is well above the low point of 4.4 percent in March 2007 and )Tj
T*
0.09 Tw
(likely will rise significantly in coming months. Job losses are over 1.1 million in the )Tj
T*
0.0525 Tw
(first 10 months of this year, and further reductions in employment are expected. )Tj
1 -1 TD
0.1275 Tw
(The auto sector is highly reliant on well-functioning credit marketsfrom manu-)Tj
-1 -1 TD
0.18 Tw
(facturers and suppliers to dealers and consumers. Our industry is one of the first )Tj
T*
0.2025 Tw
(to suffer from bad economic conditionsindeed, spending on new vehicles histori-)Tj
T*
0.2225 Tw
(cally represents about 4 percent of GDP and therefore will predictably be closely )Tj
T*
0.1675 Tw
(tied to those conditions. The early evidence of weak economic growth began to set )Tj
T*
0.1325 Tw
(in during the first half of this year, with consumers facing a weaker job market at )Tj
T*
0.055 Tw
(the same time that rising food and energy prices were taking up an increasing share )Tj
T*
0.1025 Tw
(of their disposable incomes. As the financial crisis persisted, both credit availability )Tj
T*
0.33 Tw
(and consumers weakened confidence contributed to a drastic decline in vehicle )Tj
T*
0.31 Tw
(sales. There has been a broad-based tightening of origination and underwriting )Tj
T*
0.1125 Tw
(standards for automotive financing, spreading beyond the sub-prime arena to affect )Tj
T*
0.21 Tw
(many prime borrowers as well. The Federal Reserve Senior Loan Officers survey )Tj
T*
0.155 Tw
(shows that banks willingness to extend consumer installment loans has only been )Tj
T*
0.125 Tw
(weaker at one time in the past 30 years, and that was in June of 1980. More than )Tj
T*
0.0575 Tw
(60 percent of banks have tightened standards for consumer credit in the most recent )Tj
T*
0 Tw
(survey. )Tj
1 -1 TD
0.11 Tw
(During the last 6 months, light vehicle sales fell at a 45 percent annualized rate, )Tj
-1 -1 TD
0.19 Tw
(the worst slide since mid-1980. In October, the annualized sales rate for the U.S. )Tj
T*
0.21 Tw
(industry was only 10.5 million unitscompared to over 16 million units just last )Tj
T*
0.1325 Tw
(year. This means the industry has lost over 5 million vehicle salesthe equivalent )Tj
T*
0.0525 Tw
(of two companies the size of Ford in North Americain a single year. )Tj
1 -1 TD
0.1475 Tw
(October was the worst auto sales month the U.S. industry has seen in 25 years, )Tj
-1 -1 TD
0.2275 Tw
(and we expect it will not be the weakest result we see over this economic cycle. )Tj
T*
0.1675 Tw
(Total industry volumes in 2009 are expected to be weaker than in 2008 on a full- )Tj
T*
0.0525 Tw
(year basis, with significant pressure in the first half of next year. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00088)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
283 0 obj
<>/ExtGState<>>>
endobj
284 0 obj
<>
endobj
285 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(85 )Tj
8 0 0 8 155 648 Tm
0.08 Tw
(This is not just a case of the domestic auto industry failing to anticipate changing )Tj
-1 -0.9875 TD
0.13 Tw
(economic conditions. Very few in any industry, of course, predicted the kind of eco-)Tj
T*
0.06 Tw
(nomic headwinds we face today. Certainly our foreign competitors have not been im-)Tj
T*
0.215 Tw
(mune from the downdraft. Toyota, Honda, and Nissan each reported a decline in )Tj
T*
0.22 Tw
(sales of more than 23 percent in October. Importantly for Ford, we have held or )Tj
T*
0.15 Tw
(slightly increased our market share in the midst of this declining market. But im-)Tj
T*
0.1575 Tw
(portantly, despite our best efforts, our industrys ability to weather this storm has )Tj
T*
0.0525 Tw
(been directly affected by the external financing environment. )Tj
1 -0.9875 TD
0.1225 Tw
(The decline in the overall market has been the result of two problemseconomic )Tj
-1 -0.9875 TD
0.1775 Tw
(uncertainty that discourages Americans from making major purchases, and a lack )Tj
T*
0.1175 Tw
(of available credit so even some people who want to buy a car are unable to secure )Tj
T*
0 Tw
(credit. )Tj
1 -0.9875 TD
0.2025 Tw
(This unprecedented pressure on our industry, which is the result of a financial )Tj
-1 -0.9875 TD
0.18 Tw
(crisis that was not of our industrys making, is coming just at the time when our )Tj
T*
0.1775 Tw
(efforts to restructure Ford have finally begun to bear fruit. The real challenge for )Tj
T*
0.1 Tw
(this Nation is to find a way to allow our successful restructuring efforts to continue )Tj
T*
0.1725 Tw
(despite these challenging times. To do otherwise would be a disservice to the mil-)Tj
T*
0.105 Tw
(lions of employees at our plants, suppliers, dealers, and customers who are depend-)Tj
T*
0.0525 Tw
(ing upon our success as well as to the American public. )Tj
1 -0.9875 TD
0.09 Tw
(As quickly as these changes have been occurring, of course, we at Ford have been )Tj
-1 -0.9875 TD
0.1025 Tw
(taking fast and decisive action to deal with them. We reduced our production levels )Tj
0 -1 TD
0.0825 Tw
(dramatically in the face of a shrinking industry demand. In the third quarter alone, )Tj
T*
0.1375 Tw
(we reduced North American production by 219,000 units from the 637,000 vehicles )Tj
T*
0.1175 Tw
(we produced in the third quarter of 2007. Our fourth quarter plans call for produc-)Tj
T*
0.125 Tw
(tion decreases in excess of 210,000 units from the fourth quarter of last year, leav-)Tj
T*
0.175 Tw
(ing the company with a full year reduction of over 600,000 units in 2008. We are )Tj
T*
0.245 Tw
(firmly committed to managing production carefully rather than simply producing )Tj
T*
0.0525 Tw
(units we know the market cannot absorb. )Tj
1 -1 TD
0.2625 Tw
(We have announced plans to further reduce employment and cut benefits and )Tj
-1 -1 TD
0.185 Tw
(compensation at all levels. We have eliminated merit raises and bonuses in 2009, )Tj
T*
0.0525 Tw
(and we continue not to pay any dividends to our shareholders. )Tj
1 -1 TD
0.16 Tw
(Even as we take these steps, however, we continue to protect our investment in )Tj
-1 -1 TD
0.295 Tw
(the fuel-efficient new vehicles that we believe will secure our future. Operating )Tj
T*
0.1275 Tw
(under our One Ford principle, we intend to deliver more vehicles worldwide from )Tj
T*
0.18 Tw
(fewer core platforms, further reduce costs and allow for the increased use of com-)Tj
T*
0.105 Tw
(mon parts and systems. The result will be a lineup of highly acclaimed, smaller ve-)Tj
T*
0.0525 Tw
(hicles in global segments \(sub-compact, compact, and mid-size vehicles, and commer-)Tj
T*
0.185 Tw
(cial vans\) beginning in mid-2009. About 40 percent of Fords entries in these seg-)Tj
T*
0.0825 Tw
(ments will be shared between Ford North America, Ford Europe, and Ford Asia Pa-)Tj
T*
0.2025 Tw
(cific by 2010, with 100 percent alignment achieved by 2013. And, as I mentioned )Tj
T*
0.1275 Tw
(earlier, we are committed to deliver every new product with the best or among the )Tj
T*
0.0825 Tw
(best fuel economy in its segment, driven by the most extensive powertrain upgrades )Tj
T*
0.0525 Tw
(ever for Ford. )Tj
/F7 1 Tf
0 -1.5 TD
0.045 Tw
(The Bridge to Transformation )Tj
/F1 1 Tf
1 -1.25 TD
0.1475 Tw
(What I have outlined so far is the dramatic transformation taking place at Ford )Tj
-1 -1 TD
0.21 Tw
(and the intense economic headwinds we now face as we attempt to continue and )Tj
T*
0.12 Tw
(complete that transformation. The question remains whether we as a company and )Tj
T*
0.17 Tw
(collectively as an industry will have time given the unprecedented short-term eco-)Tj
T*
0.0525 Tw
(nomic conditions to complete our transformation for the long term. )Tj
1 -1 TD
0.185 Tw
(Speaking only for Ford, we are hopeful that we have enough liquidity based on )Tj
-1 -1 TD
0.165 Tw
(current planning assumptions and planned cash improvement actions, but we also )Tj
T*
0.2375 Tw
(know that we live in tumultuous economic times in which rapid and unexpected )Tj
T*
0.205 Tw
(change seems to be the norm rather than the exception. While we are cautiously )Tj
T*
0.055 Tw
(confident, we must also be prudent, and prudence at this point requires that we pre-)Tj
T*
0.0525 Tw
(pare ourselves for the prospect of deteriorating economic conditions in 2009. )Tj
1 -1 TD
0.1575 Tw
(We also know that at least one of our competitors has reported that, absent the )Tj
-1 -1 TD
0.2925 Tw
(ability to secure additional funding, its estimated liquidity will fall significantly )Tj
T*
0.1675 Tw
(short of the minimum required to operate its business in the first two quarters of )Tj
T*
0.0525 Tw
(next year unless conditions rapidly improvewhich we dont expect. )Tj
1 -1 TD
0.2475 Tw
(If any one of the domestic companies should fail, we believe there is a strong )Tj
-1 -1 TD
0.17 Tw
(chance that the entire industry would face severe disruption. Ours is in some sig-)Tj
T*
0.2775 Tw
(nificant ways an industry that is uniquely interdependentparticularly with re-)Tj
T*
0.165 Tw
(spect to our supply base, with more than 90 percent commonality among our sup-)Tj
T*
0.2125 Tw
(pliers. Should one of the other domestic companies declare bankruptcy, the effect )Tj
T*
0.175 Tw
(on Fords production operations would be felt within daysif not hours. Suppliers )Tj
T*
(could not get financing and would stop shipments to customers. Without parts for )Tj
T*
0.055 Tw
(the just-in-time inventory system, Ford plants would not be able to produce vehicles. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00089)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
286 0 obj
<>/ExtGState<>>>
endobj
287 0 obj
<>
endobj
288 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(86 )Tj
8 0 0 8 155 648 Tm
0.31 Tw
(Our dealer networks also have substantial overlap. Approximately 400 of our )Tj
-1 -0.9875 TD
0.1425 Tw
(dealers also have a GM or Chrysler franchise at their dealership, and we estimate )Tj
T*
0.11 Tw
(that as many as 25 percent of our top 1,500 dealers also own GM or Chrysler fran-)Tj
T*
0.21 Tw
(chises. The failure of one of the companies would clearly have a great impact on )Tj
T*
0.0525 Tw
(our dealers with exposure to that company. )Tj
1 -0.9875 TD
0.2775 Tw
(In short, a collapse of one of our competitors here would have a ripple effect )Tj
-1 -0.9875 TD
0.09 Tw
(across all auto makers, suppliers, and dealersa loss of nearly 3 million jobs in the )Tj
T*
0.0525 Tw
(first year, according to an estimate by the Center for Automotive Research. )Tj
1 -0.9875 TD
0.205 Tw
(In the face of incredibly fragile economic conditions and the interdependence of )Tj
-1 -0.9875 TD
0.075 Tw
(our industry, we believe it is appropriate at this time to join our competitors in ask-)Tj
T*
0.11 Tw
(ing for your support to protect against an uncertain economic future that threatens )Tj
T*
0.16 Tw
(all of the progress we have made to accomplish a goal that serves the interests of )Tj
T*
0.0775 Tw
(this Nationcreating a strong and viable American automotive industry. I know we )Tj
T*
0.235 Tw
(can achieve this goal because we at Ford are implementing the transformational )Tj
T*
0.1175 Tw
(changes that are required to achieve itas long as we can survive the present eco-)Tj
T*
0.0525 Tw
(nomic turmoil. )Tj
1 -0.9875 TD
0.0975 Tw
(Our request today is to gain access to an industry bridge loan that would provide )Tj
-1 -0.9875 TD
0.065 Tw
(all of us with an available tool to navigate through this difficult economic and finan-)Tj
T*
0.1475 Tw
(cial crisis. We would suggest that the loans be structured in a revolving format so )Tj
T*
0.1675 Tw
(that the exposure to the taxpayer would be limitedand, if used, we would repay )Tj
T*
0.0525 Tw
(with interest. )Tj
/F7 1 Tf
0 -1.4875 TD
0.045 Tw
(The Public Interest )Tj
/F1 1 Tf
1 -1.2375 TD
0.105 Tw
(It should come as no surprise that we who are testifying before you today believe )Tj
-1 -0.9875 TD
0.2225 Tw
(the domestic automotive industry should be supported and preserved as it trans-)Tj
T*
0.0775 Tw
(forms to meet the new challenges of meeting changing consumer demands and envi-)Tj
T*
0.07 Tw
(ronmental imperatives in a difficult economic environment. The question before you, )Tj
T*
0.0525 Tw
(however, is one of the public interestis the public interest better served by offering )Tj
T*
0.1375 Tw
(aid to the industry at this time or by letting market and regulatory forces work to )Tj
T*
0.0525 Tw
(whatever future they might bring? )Tj
1 -0.9875 TD
0.175 Tw
(I respectfully submit that the public interest is clearthis industry merits your )Tj
-1 -0.9875 TD
0.185 Tw
(support. I have already detailed at length the ways in which our iconic American )Tj
T*
0.0675 Tw
(Ford Motor Company is transforming itself for the future, and I know my colleagues )Tj
T*
0.12 Tw
(from General Motors and Chrysler are equally confident of presenting a compelling )Tj
T*
0.0525 Tw
(vision of the future. We all believe that future is worth supporting. )Tj
1 -0.9875 TD
0.2075 Tw
(But perhaps the most compelling reason for you to support our industry comes )Tj
-1 -0.9875 TD
0.1125 Tw
(upon consideration of the consequences that would be visited on our already fragile )Tj
T*
0.0525 Tw
(economy if this industry should collapse. )Tj
1 -0.9875 TD
0.15 Tw
(At the end of 2007, Chrysler, Ford, and General Motors directly employed about )Tj
-1 -0.9875 TD
0.275 Tw
(240,000 American workers and indirectly supported more than 4.5 million other )Tj
T*
0.1825 Tw
(workers in the U.S. The Detroit Three are among the Nations largest purchasers )Tj
T*
0.31 Tw
(of U.S.-manufactured steel, aluminum, iron, copper, plastics, rubber, electronics, )Tj
T*
0.085 Tw
(and computer chips. Last year, they provided health care to nearly 2 million Ameri-)Tj
T*
0.0525 Tw
(cans and paid pension benefits to 775,000 retirees or their survivors. )Tj
1 -0.9875 TD
0.1075 Tw
(One recent study estimated that in the event the Detroit Three were to cease op-)Tj
-1 -0.9875 TD
0.0825 Tw
(erations in 2009, employment loss would be nearly 3.0 million jobs, personal income )Tj
T*
0.165 Tw
(would be reduced by over $150 billion, and the loss to the government in tax rev-)Tj
T*
0.1 Tw
(enue would be more than $60 billionin the first year alone. Even a 50 percent re-)Tj
T*
0.095 Tw
(duction in our operations would result in devastating losses to the economy, accord-)Tj
T*
0.0525 Tw
(ing to this study. )Tj
1 -0.9875 TD
0.1525 Tw
(Many more statistics are available. Each would demonstrate that the collapse of )Tj
-1 -0.9875 TD
0.1925 Tw
(the U.S. automotive industry would be a calamity for the entire economy. This is )Tj
T*
0.105 Tw
(not a claim that any individual company is too big to fail, although of course that )Tj
T*
0.13 Tw
(sort of claim seems to have been at work in some recentand far more costlyac-)Tj
T*
0.23 Tw
(tions taken in other sectors in response to the economic crisis. Rather, ours is a )Tj
T*
0.065 Tw
(claim that a large swath of the industry rises and falls together, and that the indus-)Tj
T*
0.1775 Tw
(try collectively is too big and too important to fail. The linkages we have through )Tj
T*
0.07 Tw
(our suppliers, dealers, workers and customers mean that there are very few isolated )Tj
T*
0.14 Tw
(events in our industry. I would therefore urge you as you consider our request not )Tj
T*
0.17 Tw
(to think of individual companies but rather of the industryand the economyas )Tj
T*
0.0525 Tw
(a whole. )Tj
1 -0.9875 TD
0.1025 Tw
(Of course, more than mere economics are at play. It would not be overstating the )Tj
-1 -1 TD
0.15 Tw
(case to observe that our Nations ability to engage in heavy manufacturing is very )Tj
T*
0.055 Tw
(much at stake and is a matter of national security. No less an authority than former )Tj
T*
0.17 Tw
(NATO Commander General Wesley Clark eloquently made that point in a column )Tj
T*
0.0525 Tw
(in last Sundays )Tj
/F6 1 Tf
7.8264 0 TD
(New York Times )Tj
/F1 1 Tf
8.0084 0 TD
(that I commend to the Committee: )Tj
-13.8348 -1.5 TD
0.215 Tw
(More challenges lie ahead for our military, and to meet them we need a )Tj
0 -1 TD
0.15 Tw
(strong industrial base. For years the military has sought better sources of )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00090)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
289 0 obj
<>/ExtGState<>>>
endobj
290 0 obj
<>
endobj
291 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(87 )Tj
8 0 0 8 163 648 Tm
0.0825 Tw
(electric power in its vehiclesnecessary to allow troops to monitor their ra-)Tj
0 -0.9875 TD
0.18 Tw
(dios with diesel engines off, to support increasingly high-powered commu-)Tj
T*
0.1675 Tw
(nications technology, and eventually to support electric propulsion and in-)Tj
T*
0.0925 Tw
(novative armaments like directed-energy weapons. In sum, this greater use )Tj
T*
0.08 Tw
(of electricity will increase combat power while reducing our footprint. Much )Tj
T*
0.125 Tw
(research and development spending has gone into these programs over the )Tj
T*
0.0525 Tw
(years, but nothing on the manufacturing scale we really need. )Tj
0 -1.2375 TD
0.21 Tw
(Now, though, as Detroit moves to plug-in hybrids and electric-drive tech-)Tj
0 -0.9875 TD
0.1125 Tw
(nology, the scale problem can be remedied. Auto makers are developing in-)Tj
T*
0.295 Tw
(novative electric motors, many with permanent magnet technology, that )Tj
T*
0.0925 Tw
(will have immediate military use. And only the auto industry, with its vast )Tj
T*
0.1725 Tw
(purchasing power, is able to establish a domestic advanced battery indus-)Tj
T*
0.205 Tw
(try. Likewise, domestic fuel cell productionwhich will undoubtedly have )Tj
T*
0.0525 Tw
(many critical military applicationsdepends on a vibrant car industry. )Tj
-1 -1.4875 TD
0.185 Tw
(Our industry is proud of the role we have played through the years in meeting )Tj
-1 -0.9875 TD
0.1475 Tw
(our national security needs, and we believe that role will continue to be critical in )Tj
T*
0.0525 Tw
(the years to come. )Tj
/F7 1 Tf
0 -1.4875 TD
0 Tw
(Conclusion )Tj
/F1 1 Tf
1 -1.2375 TD
0.195 Tw
(We live in difficult and challenging times, and have discovered in recent weeks )Tj
-1 -0.9875 TD
0.1525 Tw
(and months that both old solutions and new must be re-examined and adjusted to )Tj
T*
0.0525 Tw
(meet rapidly changing conditions. )Tj
1 -0.9875 TD
0.165 Tw
(At Ford Motor Company, we remain committed to constant examination and re-)Tj
-1 -0.9875 TD
0.085 Tw
(sponse as we face new challenges. With each of those challenges, however, I become )Tj
T*
0.155 Tw
(more convinced than ever that we have the right plan to transform Ford and that )Tj
T*
0.1475 Tw
(our best days are ahead of us. The reality is that Ford already is well on our way )Tj
T*
0.195 Tw
(to realizing a complete transformation of our companybuilding a new Ford that )Tj
T*
0.0525 Tw
(has a very bright future. )Tj
1 -0.9875 TD
0.075 Tw
(With your help, we will together ensure that bright future for Ford and the entire )Tj
-1 -0.9875 TD
(American auto industry. With your help, we will create a safeguard to deal with the )Tj
T*
0.1025 Tw
(current unprecedented economic uncertainty, while all of us at Ford continue to de-)Tj
T*
0.27 Tw
(liver on our plan. And, as we continue to be an important part of communities )Tj
T*
0.1525 Tw
(across America, we look forward to working with you to be part of the solution on )Tj
T*
0.0525 Tw
(the road to economic recovery. Thank you. )Tj
ET
0 G
0 J 0 j 0.4 w 10 M []0 d
1 i
291 375.8 m
321 375.8 l
S
BT
/F7 1 Tf
8 0 0 8 199.36 359.7 Tm
0.045 Tw
(PREPARED STATEMENT OF ROBERT NARDELLI )Tj
/F1 1 Tf
3.26 -1.2375 TD
0 Tw
(C)Tj
6.4 0 0 6.0958 231.2159 349.8 Tm
[(HAIRMAN)-412.5(AND)]TJ
8 0 0 8 284.3679 349.8 Tm
(C)Tj
6.4 0 0 6.0958 290.1438 349.8 Tm
(HIEF)Tj
8 0 0 8 309.6093 349.8 Tm
(E)Tj
6.4 0 0 6.0958 315.3853 349.8 Tm
(XECUTIVE)Tj
8 0 0 8 353.1036 349.8 Tm
(O)Tj
6.4 0 0 6.0958 359.3275 349.8 Tm
(FFICER)Tj
8 0 0 8 384.3323 349.8 Tm
(, )Tj
-13.3465 -1.2375 TD
(C)Tj
6.4 0 0 6.0958 283.3359 339.9 Tm
(HRYSLER)Tj
8 0 0 8 317.9759 339.9 Tm
(LLC )Tj
-6.1745 -1.6125 TD
(N)Tj
6.4 0 0 6.0958 275.0999 327 Tm
(OVEMBER)Tj
8 0 0 8 311.8647 327 Tm
0.0525 Tw
(18, 2008 )Tj
-19.6081 -1.6125 TD
0.2025 Tw
(Mr. Chairman, Members of the Committee, I appreciate this opportunity to ad-)Tj
-1 -0.9875 TD
0.1025 Tw
(dress the current economic and financial crisis, the impact it is having on the auto-)Tj
T*
0.0525 Tw
(motive industry, and the need for immediate action. )Tj
1 -0.9875 TD
0.1075 Tw
(During the 15 months Ive been part of Chrysler, and since weve emerged as the )Tj
-1 -0.9875 TD
0.22 Tw
(first privately held American auto company in 50 years, Ive been proud to work )Tj
T*
0.195 Tw
(with a team of dedicated men and women determined to restore this 83-year old, )Tj
T*
0.0525 Tw
(iconic American brand to its rightful place in the automotive industry. )Tj
1 -0.9875 TD
0.275 Tw
(We are asking for assistance for one reason: to address the devastating auto-)Tj
-1 -0.9875 TD
0.16 Tw
(motive industry recession caused by our Nations financial meltdown, and the cur-)Tj
T*
0.06 Tw
(rent lack of consumer credit, which has resulted in the critical lack of liquidity with-)Tj
T*
0.0525 Tw
(in our industry. )Tj
1 -0.9875 TD
0.175 Tw
(With credit markets frozen, our customersaverage working Americansdo not )Tj
-1 -0.9875 TD
0.1825 Tw
(have access to competitive financing to purchase or lease vehicles. Our dealers do )Tj
T*
0.0825 Tw
(not have access to market competitive funding to place wholesale orders for new ve-)Tj
T*
0.2125 Tw
(hicles, resulting in the constriction of cash inflows to auto manufacturers. At the )Tj
T*
0.08 Tw
(same time, Chrysler has billions of dollars in cash payment obligations every month )Tj
T*
0.1725 Tw
(to pay wages, to pay suppliers, to fund health care and pensions, all in the range )Tj
T*
0.0525 Tw
(of $4 to $5 billion per month. )Tj
1 -0.9875 TD
0.11 Tw
(This crisis has already driven U.S. sales to a 25-year low. In 2008 alone, our vol-)Tj
-1 -0.9875 TD
0.0975 Tw
(ume domestically has dropped from 17 million units to 11 milliona 38 percent de-)Tj
0 -1 TD
0.085 Tw
(cline. That volume drop is more than the total U.S. sales of Ford and Chrysler com-)Tj
T*
0 Tw
(bined. )Tj
1 -1 TD
0.1675 Tw
(Therefore without immediate bridge financing support, Chryslers liquidity could )Tj
-1 -1 TD
0.2675 Tw
(fall below the level necessary to sustain operations in the ordinary course. This )Tj
T*
0.0875 Tw
(would put at risk health care coverage for retirees, which is part of Chryslers near-)Tj
T*
0.12 Tw
(ly $20 billion total health care obligation, $2 billion in annual pension payments to )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00091)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
292 0 obj
<>/ExtGState<>>>
endobj
293 0 obj
<>
endobj
294 0 obj
<>
endobj
295 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(88 )Tj
8 0 0 8 147 648 Tm
0.2475 Tw
(our retirees and surviving spouses, approximately $7 billion in current payables, )Tj
0 -0.9875 TD
0.0625 Tw
($35 billion in future annual supplier business, and 56,600 direct Chrysler employees )Tj
T*
0.0525 Tw
(earning $6 billion in wages. )Tj
1 -0.9875 TD
0.1325 Tw
(Independent research firms have quantified the fallout of a domestic auto maker )Tj
-1 -0.9875 TD
0.1425 Tw
(bankruptcy to the overall economy, and the impact is devastating: 2.33 million in )Tj
T*
0.105 Tw
(lost jobs, $275$400 billion in lost wages, and $100$150 billion in lost government )Tj
T*
0 Tw
(revenue. )Tj
1 -0.9875 TD
0.1125 Tw
(But this is not a good option for Chrysler, and more importantly, for the auto in-)Tj
-1 -0.9875 TD
0.0525 Tw
(dustry or the broader economyfor the following reasons: )Tj
1 -1.4875 TD
0.09 Tw
[(1.)-555(We believe that retail sales would be impacted materially as a result of declin-)]TJ
1.39 -0.9875 TD
0.11 Tw
(ing consumer confidence, and we will be forced to heavily discount existing in-)Tj
T*
0.0525 Tw
(ventory to move our product. )Tj
-1.39 -1.2375 TD
0.115 Tw
[(2.)-555(Given our common supplier baseat Chrysler, 96 of our top 100 suppliers are )]TJ
1.39 -0.9875 TD
0.26 Tw
(common to Ford and GMthe bankruptcy of any one domestic auto maker )Tj
T*
0.24 Tw
(would place enormous pressure on the supply chain and, consequently, that )Tj
T*
0.0525 Tw
(companys competitors. )Tj
-1.39 -1.2375 TD
0.0975 Tw
[(3.)-555(Our factories would likely be idled for a significant period of time while we re-)]TJ
1.39 -0.9875 TD
0.0525 Tw
(negotiate contracts with each of our thousands of individual suppliers. )Tj
-1.39 -1.2375 TD
0.125 Tw
[(4.)-555(Restructuring and reorganization costs and expenses will be materially higher )]TJ
1.39 -0.9875 TD
0.085 Tw
(in connection with a Chapter 11 process: supplier and dealer support and mar-)Tj
T*
0.1475 Tw
(keting costs will increase, general economic dislocation will follow and signifi-)Tj
T*
0.0525 Tw
(cant fees and expenses will be paid to an army of bankruptcy professionals. )Tj
-1.39 -1.2375 TD
0.08 Tw
[(5.)-555(The overall amount and cost of financing the restructuring will be significantly )]TJ
1.39 -0.9875 TD
0.065 Tw
(higher in a Chapter 11 process than the working capital bridge we are request-)Tj
T*
0.0525 Tw
(ing here today. )Tj
-1.39 -1.2375 TD
0.21 Tw
[(6.)-555(And finally, we cannot be confident that we will able to successfully emerge )]TJ
1.39 -0.9875 TD
0.0525 Tw
(from bankruptcy. )Tj
-1.39 -1.4875 TD
0.115 Tw
(Thats why as an industry we are requesting a $25 billion working capital bridge )Tj
-1 -0.9875 TD
0.0775 Tw
(to survive this liquidity crisis. However, both our private equity owner and I believe )Tj
T*
0.1575 Tw
(that while the immediate bridge financing is critical, the long-term solution to the )Tj
T*
0.14 Tw
(industrys problems and challenges requires industry consolidation and cost ration-)Tj
T*
0.0525 Tw
(alization to eliminate excess industry capacity and redundant costs. )Tj
1 -0.9875 TD
0.205 Tw
(I would expect Congress to insist that the American taxpayer be protected. We )Tj
-1 -0.9875 TD
0.175 Tw
(are willing to provide full financial transparency, and welcome the government as )Tj
T*
0.105 Tw
(a stakeholderincluding as an equity holder. We are fully prepared to comply with )Tj
T*
0.0925 Tw
(the current conditions and policies already put in place as mandated by the govern-)Tj
T*
0.0525 Tw
(ment, under the recently enacted Emergency Economic Stabilization Act. )Tj
1 -0.9875 TD
0.11 Tw
(Our private equity owner, Cerberus Capital Management, L.P., has made it clear )Tj
-1 -0.9875 TD
0.165 Tw
(that it will forgo any benefit from the upside that would, in part, be created from )Tj
T*
0.2475 Tw
(any government assistance that Chrysler LLC may obtain. The principal of Cer-)Tj
T*
0.14 Tw
(berus Capital has stated that he will enter into legally binding agreements requir-)Tj
T*
0.0875 Tw
(ing the contribution to the government of the General Partners future profits inter-)Tj
T*
0.0525 Tw
(est related to Chrysler LLC which he might receive if any are ever earned. )Tj
1 -0.9875 TD
0.185 Tw
(Immediately on the separating from Daimler in August 2007, and being new to )Tj
-1 -0.9875 TD
0.0825 Tw
(the automotive industry, I recognized the need to question and sometimes challenge )Tj
T*
0.13 Tw
(the status quo, and seek significant opportunities to improve performance through-)Tj
T*
0.1675 Tw
(out the business. We began an aggressive restructuring and transformation of our )Tj
T*
0.0525 Tw
(business as an independent American auto company. )Tj
1 -0.9875 TD
0.18 Tw
(During the first 60 days, we approved more than 400 line item design changes, )Tj
-1 -0.9875 TD
0.0575 Tw
(representing an investment of half a billion dollars in improvements to our products )Tj
T*
0.0725 Tw
(reliability, durability, fit and finish, and consumer appeal. We offered our customers )Tj
T*
0.1625 Tw
(a lifetime powertrain warranty to build their confidence. Due to a focused product )Tj
T*
0.2625 Tw
(quality improvement effort during the past year, weve seen our warranty claim )Tj
T*
0.0525 Tw
(rates drop by 29 percent and the improvement trend continues. )Tj
1 -0.9875 TD
0.0575 Tw
(We made tough decisions to reduce operating costs and adjusted production sched-)Tj
-1 -0.9875 TD
0.1475 Tw
(ules immediately. We prioritized every product investment with a strong emphasis )Tj
T*
0.1975 Tw
(on improving energy security and environmental sustainability by introducing ad-)Tj
T*
0.0575 Tw
(vanced powertrain technologies, while at the same time we discontinued four vehicle )Tj
T*
0.2175 Tw
(models. We also identified over $1 billion in non-earning assets to sell and were )Tj
T*
0.0525 Tw
(more than 75 percent toward achieving that goal. )Tj
1 -0.9875 TD
0.16 Tw
(Since 2007, Chrysler has reduced 1.2 million units of capacity, which represents )Tj
-1 -1 TD
0.1325 Tw
(over 30 percent of our previous installed capacity, and which resulted in the elimi-)Tj
T*
0.09 Tw
(nation 12 production shifts. Over the past 10 months alone, weve reduced our fixed )Tj
T*
0.1875 Tw
(costs by $2.2 billion, and unfortunately, by the end of the year, we will have fur-)Tj
T*
0.1425 Tw
(loughed over 32,000 employees. That is the most gut-wrenching part of this job, to )Tj
T*
0.1625 Tw
(see the effect on the lives of good men and women who lose their jobs through no )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00092)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
296 0 obj
<>/ExtGState<>>>
endobj
297 0 obj
<>
endobj
298 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(89 )Tj
8 0 0 8 147 648 Tm
0.08 Tw
(fault of their own, but because of the actions the Company is forced to take in these )Tj
0 -1.0125 TD
0.0525 Tw
(difficult times. )Tj
1 -1.0125 TD
0.1675 Tw
(We have increased our manufacturing productivity to equal Toyota as Americas )Tj
-1 -1.0125 TD
0.1375 Tw
(most productive auto maker in terms of hours of assembly per vehicle, and our re-)Tj
T*
0.12 Tw
(cently negotiated labor agreement was an important step in making our cost struc-)Tj
T*
0.0525 Tw
(ture more competitive with transplants by 2010. )Tj
1 -1.0125 TD
0.2225 Tw
(To further enhance our product portfolio, support growth and improve our cost )Tj
-1 -1.0125 TD
0.2025 Tw
(structure, we continue to aggressively pursue strategic alliances and partnerships )Tj
T*
0.095 Tw
(with other companies. I believe more restructuring and consolidation is required for )Tj
T*
0.0575 Tw
(the industry to be viable in the long-run. We would welcome the opportunity to have )Tj
T*
(an open discussion with the new Administration and Congress on a collaborative ap-)Tj
T*
0.225 Tw
(proach to restructuring that would ensure any Government resources invested in )Tj
T*
0.1625 Tw
(the industry are used efficiently and help achieve important national public policy )Tj
T*
0 Tw
(objectives. )Tj
1 -1.0125 TD
0.2075 Tw
(It is equally important that the lack of liquidity to provide loans and leases to )Tj
-1 -1.0125 TD
0.15 Tw
(customers and financing to dealers is addressed immediately. It is imperative that )Tj
T*
0.11 Tw
(our affiliated financial companies receive access to competitive liquidity and financ-)Tj
T*
0.115 Tw
(ing capacity. They must in order to provide credit to our customersaverage work-)Tj
T*
0.0525 Tw
(ing Americansand support wholesale orders from our dealers. )Tj
1 -1.0125 TD
0.105 Tw
(Historically, over 90 percent of all new vehicles were purchased or leased with fi-)Tj
-1 -1.0125 TD
0.2375 Tw
(nancing assistance, and the lack of readily available financing has simply frozen )Tj
T*
0.1025 Tw
(sales. A perfect example of this consumer credit crisis is that 20 percent of our rev-)Tj
T*
0.1675 Tw
(enue disappeared overnight when our finance company was unable to offer leases. )Tj
T*
0.0525 Tw
(These sales literally vanished. )Tj
1 -1.0125 TD
0.12 Tw
(At Chrysler, 75 percent of our dealers rely on Chrysler Financial to finance their )Tj
-1 -1.0125 TD
0.1975 Tw
(business, and 50 percent of all customers finance their vehicle purchases through )Tj
T*
0.205 Tw
(the Chrysler Financial. Normally, these loans and leases are securitized and sold )Tj
T*
0.0525 Tw
(in the secondary market to generate fresh liquidity and financing capacity. )Tj
1 -1.0125 TD
0.085 Tw
(Today, there is virtually no secondary market, and therefore, no way to raise cap-)Tj
-1 -1.0125 TD
0.16 Tw
(ital. Money is not available for dealers to finance their wholesale orders, invest in )Tj
T*
0.2725 Tw
(their facilities, and hire and train employees. Competitive loans for the average )Tj
T*
0.105 Tw
(working Americanour customersare virtually nonexistent. This has directly and )Tj
T*
0.2125 Tw
(dramatically depressed vehicle sales, putting at risk not only auto manufacturers )Tj
T*
0.105 Tw
(but also the widespread network of suppliers, vendors. In Chryslers case, 3,200 en-)Tj
T*
0.0925 Tw
(trepreneurs, small businesses owners called dealers, and the approximately 140,000 )Tj
T*
0.2875 Tw
(people they employ in every State across the country. The National Automobile )Tj
T*
0.07 Tw
(Dealers Association estimates more than 700 of them will go out of business by year )Tj
T*
0.0525 Tw
(end. If we dont secure a bridge loan, all 13,600 dealers are at risk. )Tj
1 -1.0125 TD
0.1425 Tw
(There are 4.5 million people depending on this industry, and without assistance, )Tj
-1 -1.0125 TD
0.1375 Tw
(nearly three million of them could lose their jobs in the next 12 months, according )Tj
T*
0.1975 Tw
(to a research memorandum published November 4, 2008, by the Center for Auto-)Tj
0 -1 TD
0.16 Tw
(motive Research. Failing to act now will hurt many American families and under-)Tj
T*
0.3 Tw
(mine our countrys economic recovery, far outweighing the costs related to sup-)Tj
T*
0.0525 Tw
(porting an industry that touches every district in every state of the Nation. )Tj
1 -1 TD
0.0975 Tw
(The crippling of the industry would have severe and debilitating ramifications for )Tj
-1 -1 TD
0.2 Tw
(the industrial base of the United States, would undermine our Nations ability to )Tj
T*
0.185 Tw
(respond to military challenges and would threaten our national security. Chrysler )Tj
T*
0.1825 Tw
(has long contributed to our national defense. Our Jeep was an indispensable part )Tj
T*
0.0525 Tw
(of our Nations efforts in World War II and Korea. )Tj
1 -1 TD
0.09 Tw
(Immediate financial assistance will serve the country and the economy directly in )Tj
-1 -1 TD
0.105 Tw
(two key ways. First, the lifeblood of the U.S. economy will continue to flow. The in-)Tj
T*
0.2325 Tw
(dustry will be able to continue to pay at its current levels $22 billion in annual )Tj
T*
0.0675 Tw
(wages to our employees, $13 billion in annual pensions to our retirees and surviving )Tj
T*
0.0575 Tw
(spouses, and meet our current commitment of $102 billion in healthcare costs to em-)Tj
T*
0.21 Tw
(ployees. We will continue to pay $156 billion annually to our suppliers and work )Tj
T*
0.0725 Tw
(to keep them strong by providing significant additional financial relief for distressed )Tj
T*
0.0525 Tw
(suppliers fighting to stay in business. )Tj
1 -1 TD
0.08 Tw
(Second, Americas auto companies are investing in innovation. Capital investment )Tj
-1 -1 TD
0.21 Tw
(in new technologies, improved operations, and future product will be able to con-)Tj
T*
0.055 Tw
(tinue, including a combined $12 billion in annual spending for research and develop-)Tj
T*
0.0875 Tw
(ment. As an industry, we are moving full speed ahead to make the transition to ad-)Tj
T*
0.085 Tw
(vanced propulsion vehicles that will help support national energy security and envi-)Tj
T*
0.0525 Tw
(ronmental sustainability goals. )Tj
1 -1 TD
0.21 Tw
(Chrysler plans to emerge from the current downturn as a lean, agile company. )Tj
-1 -1 TD
0.27 Tw
(We are, and will continue to be the quintessential American car company. Cur-)Tj
T*
0.1725 Tw
(rently, 73 percent of our sales are in the U.S., 61 percent of our vehicles are pro-)Tj
T*
0.1825 Tw
(duced in the United States, 74 percent of employees work in the U.S., 78 percent )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00093)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
299 0 obj
<>/ExtGState<>>>
endobj
300 0 obj
<>
endobj
301 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(90 )Tj
8 0 0 8 147 648 Tm
0.125 Tw
(of our materials are purchased in the U.S. and 62 percent of our dealers are based )Tj
0 -1.0125 TD
0.0525 Tw
(in the U.S. )Tj
1 -1.0125 TD
0.1425 Tw
(Today, Chrysler has a very strong pipeline, with a product renaissance for 2010. )Tj
-1 -1.0125 TD
0.16 Tw
(In September we revealed our ENVI electric vehicle program, and announced that )Tj
T*
0.14 Tw
(we will begin producing one of these electric-drive models for North American con-)Tj
T*
0.4175 Tw
(sumers in 2010. This underscores our commitment to deliver environmentally )Tj
T*
0.21 Tw
(friendly, fuel-efficient vehicles to customers, and to meet this social responsibility )Tj
T*
0.0525 Tw
(faster and more broadly than any other manufacturer. )Tj
1 -1.0125 TD
0.115 Tw
(Today we are asking you to help us bridge a chasm created by an unprecedented )Tj
-1 -1.0125 TD
0.09 Tw
(financial meltdown. We are also asking you to consider investing in a company that )Tj
T*
0.0525 Tw
(will deliver real results for the American taxpayer. )Tj
1 -1.0125 TD
0.065 Tw
(I recognize that this is not an insignificant amount of money. However, we believe )Tj
-1 -1.0125 TD
0.095 Tw
(this request is the least costly alternative considering the options we face. with less )Tj
T*
0.0575 Tw
(impact on human capital, and would provide stimulus, as opposed to further depress )Tj
T*
0.0525 Tw
(the economy. Thank you very much. )Tj
ET
0 G
0 J 0 j 0.4 w 10 M []0 d
1 i
291 523.2 m
321 523.2 l
S
BT
/F7 1 Tf
8 0 0 8 182.12 506.9 Tm
0.045 Tw
(PREPARED STATEMENT OF G. RICHARD WAGONER, JR. )Tj
/F1 1 Tf
5.415 -1.2625 TD
0 Tw
(C)Tj
6.4 0 0 6.0958 231.2159 496.8 Tm
[(HAIRMAN)-412.5(AND)]TJ
8 0 0 8 284.3679 496.8 Tm
(C)Tj
6.4 0 0 6.0958 290.1438 496.8 Tm
(HIEF)Tj
8 0 0 8 309.6093 496.8 Tm
(E)Tj
6.4 0 0 6.0958 315.3853 496.8 Tm
(XECUTIVE)Tj
8 0 0 8 353.1036 496.8 Tm
(O)Tj
6.4 0 0 6.0958 359.3275 496.8 Tm
(FFICER)Tj
8 0 0 8 384.3323 496.8 Tm
(, )Tj
-13.9965 -1.2625 TD
(G)Tj
6.4 0 0 6.0958 278.5839 486.7 Tm
(ENERAL)Tj
8 0 0 8 309.1919 486.7 Tm
(M)Tj
6.4 0 0 6.0958 316.7437 486.7 Tm
(OTORS)Tj
8 0 0 8 339.6237 486.7 Tm
( )Tj
-8.8805 -1.6375 TD
(N)Tj
6.4 0 0 6.0958 275.0999 473.6 Tm
(OVEMBER)Tj
8 0 0 8 311.8647 473.6 Tm
0.0525 Tw
(18, 2008 )Tj
-19.6081 -1.6375 TD
0.08 Tw
(Good afternoon, Mr. Chairman. Im Rick Wagoner, Chairman and Chief Executive )Tj
-1 -1.0125 TD
0.1375 Tw
(Officer of General Motors. Thank you for the opportunity to speak today about the )Tj
T*
0.0525 Tw
(future of Americas domestic auto industry. )Tj
1 -1.0125 TD
0.085 Tw
(Id like to acknowledge for the Committee the audiences that I represent: General )Tj
-1 -1.0125 TD
(Motors directly employs approximately 96,000 people in the United States. We have )Tj
T*
0.17 Tw
(6,500 dealers across the country, who employ another 340,000. Last year, we pur-)Tj
0 -1 TD
0.1275 Tw
(chased more than $30 billion of goods and services from more than 2,000 suppliers )Tj
T*
0.1225 Tw
(in 46 States. Our pension program covers nearly 475,000 retirees and spouses, and )Tj
T*
0.1125 Tw
(our health benefits extend to about one million Americans. We have about one mil-)Tj
T*
0.21 Tw
(lion registered stockholders. And 70 million of our vehicles are registered to U.S. )Tj
T*
0.0525 Tw
(citizens22 million of them purchased in the last 5 years. )Tj
1 -1 TD
0.115 Tw
(As recent news coverage has made abundantly clear, many people have a picture )Tj
-1 -1 TD
0.1075 Tw
(of GM that has not kept pace with our progress. In fact, GM has made tremendous )Tj
T*
0.165 Tw
(progress transforming our business in recent years. Since 2005, weve reduced our )Tj
T*
0.1725 Tw
(annual structural costs in North America by 23 percent, or $9 billionand expect )Tj
T*
0.105 Tw
(to reduce them an additional $34 billion by 2011. We negotiated a landmark labor )Tj
T*
0.1575 Tw
(agreement with the UAW last year that will enable us to virtually erase our com-)Tj
T*
0.1 Tw
(petitive gap. And weve addressed pension and retiree health care costs in the U.S., )Tj
T*
0.0675 Tw
(on which we spent $103 billion over the last 15 years. As a result of these and other )Tj
T*
0.1025 Tw
(actions, we are now matchingor bestingforeign auto makers in terms of produc-)Tj
T*
(tivity, quality, and fuel economy. By 2010, well match them on labor costs, as well. )Tj
1 -1 TD
0.2425 Tw
(On the product side, were building vehicles that consumers want to buylike )Tj
-1 -1 TD
0.0675 Tw
(Cadillac CTS, Motor Trend magazines 2008 Car of the Year, and Chevy Malibu, the )Tj
T*
0.1825 Tw
(2008 North American Car of the Year. Weve also made huge progress developing )Tj
T*
0.085 Tw
(advanced propulsion technologies. In 2009, GM will offer 20 models in the U.S. that )Tj
T*
0.185 Tw
(get at least 30 miles per gallon highwaytwice our nearest competitorand nine )Tj
T*
0.25 Tw
(hybrids. We have more than 3 million flex-fuel vehicles on the road in the U.S. )Tj
T*
0.1875 Tw
(Weve established the worlds largest hydrogen fuel-cell test fleet here in the U.S. )Tj
T*
0.1625 Tw
(And were running all-out to get the Chevy Volt extended range electric vehicle to )Tj
T*
0.0525 Tw
(market as soon as possible. )Tj
1 -1 TD
0.175 Tw
(In short, weve moved aggressively in recent years to position GM for long-term )Tj
-1 -1 TD
0.265 Tw
(success. and we were well on the road to turning our North American business )Tj
T*
0.1475 Tw
(around. Last October, following the negotiation of a new labor agreement with the )Tj
T*
0.0925 Tw
(UAW, our stock price climbed to $42.64 per-share, based on analysts views that we )Tj
T*
0.165 Tw
(had finally overcome the cost-competitiveness gap with foreign auto makers. Since )Tj
T*
0.1025 Tw
(then, our industry has been hit hard by the global financial markets crisis, and the )Tj
T*
0.105 Tw
(recent plunge in vehicle sales threatens not only GMs ongoing turnaround, but our )Tj
T*
0.0525 Tw
(very survival. )Tj
1 -1 TD
0.18 Tw
(In response, we have moved quickly to keep our company on track. Since June, )Tj
-1 -1 TD
0.205 Tw
(weve taken steps to: reduce our North American manufacturing capacity; further )Tj
T*
0.1325 Tw
(shift production to cars and crossovers; sell off parts of the company; suspend divi-)Tj
T*
0.3875 Tw
(dend payments; reduce headcount; eliminate raises, discretionary bonuses, and )Tj
T*
0.145 Tw
(401\(k\) matches for salaried employees; and eliminate health-care coverage for U.S. )Tj
T*
0.0525 Tw
(salaried retirees after age 65. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00094)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
302 0 obj
<>/ExtGState<>>>
endobj
303 0 obj
<>
endobj
304 0 obj
<>stream
/GS1 gs
BT
/F1 1 Tf
10 0 0 10 300.44 666 Tm
0 g
0 Tc
0 Tw
(91 )Tj
8 0 0 8 155 648 Tm
0.125 Tw
(These and other actions are designed to improve GMs liquidity by $20 billion by )Tj
-1 -1 TD
0.15 Tw
(the end of 2009. They affect every employee, retiree, dealer, supplier, and investor )Tj
T*
0.0525 Tw
(in our company. )Tj
1 -1 TD
0.055 Tw
(Mr. Chairman, I do not agree with those who say we are not doing enough to posi-)Tj
-1 -1 TD
0.1725 Tw
(tion GM for success. What exposes us to failure now is not our product lineup, or )Tj
T*
0.115 Tw
(our business plan, or our long-term strategy. What exposes us to failure now is the )Tj
T*
0.1175 Tw
(global financial crisis, which has severely restricted credit availability, and reduced )Tj
T*
0.0525 Tw
(industry sales to the lowest per-capita level since World War II. Our industry, which )Tj
T*
0.1025 Tw
(represents Americas real economy, needs a bridge to span the financial chasm that )Tj
T*
0.0675 Tw
(has opened before us. Well use this bridge to pay for essential operations, new vehi-)Tj
T*
0.135 Tw
(cles and powertrains, parts from our suppliers, wages and benefits for our workers )Tj
T*
0.1525 Tw
(and retirees, and taxes for State and local governments that help deliver essential )Tj
T*
0.1 Tw
(services to million of Americans. In the process, well continue to reinvent the auto-)Tj
T*
0.0875 Tw
(mobile, and improve the Nations energy security, through development of advanced )Tj
T*
0.0525 Tw
(technologies like those in the Chevy Volt. )Tj
1 -1 TD
0.14 Tw
(And what would it mean if the domestic industry were allowed to fail? The soci-)Tj
-1 -1 TD
0.1825 Tw
(etal costs would be catastrophic: three million jobs lost within the first year, U.S. )Tj
T*
(personal income reduced by $150 billion, and a government tax loss of more than )Tj
T*
0.065 Tw
($156 billion over 3 years, not to mention the broader blow to consumer and business )Tj
T*
0.1775 Tw
(confidence. Such a level of economic devastation would far exceed the government )Tj
T*
0.215 Tw
(support that our industry needs to weather the current crisis. Thats why this is )Tj
T*
0.0775 Tw
(about much more than just Detroit, its about saving the U.S. economy from a cat-)Tj
T*
0.17 Tw
(astrophic collapse. In short, helping the auto industry bridge the current financial )Tj
T*
0.1875 Tw
(crisis will not only prevent massive economic dislocation now, it will also produce )Tj
T*
0.195 Tw
(enormous benefits for our country later. We want to continue the vital role weve )Tj
T*
0.18 Tw
(played for America for the past 100 years, but we cant do it alone. You can help )Tj
T*
0.245 Tw
(us through this crisis. In return, we will repay the taxpayers faith and support )Tj
T*
0.0525 Tw
(many times over, for many years to come. )Tj
1 -1 TD
(Thank you, and I look forward to your questions. )Tj
/F5 1 Tf
6.5 0 0 6.5 25 20 Tm
1 g
0 Tw
[(VerDate Nov 24 2008 )-1076.9(11:12 Sep 22, 2009)-1076.9(Jkt 048080)-1076.9(PO 00000)-1076.9(Frm 00095)-1076.9(Fmt 6621)-1076.9(Sfmt 6621)-1076.9(L:\\HEARINGS 2008\\11-18 EXAMINING THE STATE OF)]TJ
74.1793 0 TD
( THE DOMESTIC AUTOMOBILE IN)Tj
ET
BT
6.5 0 0 6.5 610.8174 20 Tm
(D)Tj
ET
endstream
endobj
305 0 obj
<>/ExtGState<>>>
endobj
306 0 obj
<>stream
adobe:docid:photoshop:f3ca574c-9c8a-11de-9dda-bb50176882ec
endstream
endobj
307 0 obj
<>stream
HypU'@ Kl.Jds\VԲ\(RR!ZVD\@8QIEM@TM21Q6\=&ީ;0=sgo* . 9
_ ;먹}x̵xgݳ'wɀ-O$ 8Ydk&A|=w5pX[sE|7 S[/rG-S"D>30' 3$ \妼?~2lybM&>-Y1%:$C"Sm}2+;c[ճe[ N24 k6D?sTgegg