1. So where’s Cerberus in all this? they own Chrysler.
2. Chrysler extends their 2 week holiday shut down to 4 weeks but will not save as much as one might hope. Assembly line workers will still be paid (less than full but still more than Toyota-America workers) by Chrysler and state unemployment benefits.
Savings will still come from not powering factories and not buying parts to build vehicles – Oops tough luck small business suppliers; we said you were why we needed to save Detroit, but - tough.

This looks like a sensible attempt to stabilize the two companies. I expect it to fail but hope it works.

If the February report shows they can't avoid bankruptcy I hope Obama will not throw more money to them.

Where is Chrysler? IMO totally dead regardless. They don't have the product and their dealer network is weak.

Notice the UAW workers have until 12/31/2008 without any reduction in pay and benefits. But the car makers get the first money on 12/29/2008.

Two days aren't much. But it may show that the companies need the cash to pay severance. And it also may indicate anyone in the job bank or laid off at years end will be grandfathered.

I think the suppliers already have seen the future and have virtually zip people making parts for GM and Chrysler. They just won't be recalling workers in early 2009.

The posting doesn't mention permanently closing plants. That is always a political hassle as well as a fight with the union. Plants may come under the generic 'work rules' provision.

I think this is sounds good. If they get even close to most targets, I will be elated.

* Meet CAFE and emissions requirements; [GOOD]

* Begin domestic manuf. of advanced tech vehicles. [Um, with what money and exactly toward what end?]

* Convert existing public debt into equity or debt. [Sure]

* Reduce US employee compensation to equal that of Nissan, Toyota and Honda in the US.[GOOD]

* Eliminate compensation/benefits to US employees who have been fired, laid-off, furloughed or idled.[GOOD]

* Apply work rules comparable to those of Nissan, Toyota or Honda in the US.[GOOD]

* At least one-half of future payments to VEBA to be in stock.{OK}

* Restrict excessive executive compensation/privileges; [GOOD]

* Divest corporate aircraft[GOOD]

* Review transactions > $100 million [So the GOVERNMENT decides this – What a joke]

Also - what about Ford?

This is a necessary short term solution only that : 1- attacks the UAW( funding the VEBAS in 50 pct or more of stock- talk about a gamble)
2- fails to address the real issues
3- at least lets a responsible adult revisit the situation after 1/20/09
at that point I hope President Obama takes this better idea for a bailout as a second step:
A Better Bailout Plan
For years now, the Big Three automakers have been unable to produce cars competitively, largely because they have to buy their employees’ and retiree’s healthcare through private insurance whereas workers in all other industrialized nations are covered by cost-effective national healthcare plans. Even the foreign manufacturers who produce here undercut Detroit by recruiting a younger, healthier workforce.
Now that the bottom has dropped out of the market, the Big Three are facing certain bankruptcy and need a bailout, possibly for loans to fund the $51 billion they owe to the VEBAs they promised to set up for their retiree’s healthcare. However, the VEBAs will purchase health insurance through private, for-profit, higher cost providers as compared to Medicare, with only a 3% overhead.
Before dumping billions of taxpayer dollars onto Management and stockholders, wouldn’t it far better to nullify the VEBA’s and to allow the UAW workers and retirees to be the first to enroll in a program based on the Conyers-Kucinich Bill (H.R. 676), an expanded Medicare plan. Like Social Security, the H.R. 676 program would be funded by a payroll tax of 4.5% from employers and 3.3% from employees.
Will this save money for Detroit? You bet. It will immediately cut thousands per car and truck off unit costs while requiring only incremental and smaller taxpayer assistance. If we’re going to bail out the Big Three, let’s do it in a way that solves a real problem that is strangling U.S. manufacturing; the burden of private health insurance. It's time for single payer for the whole country but Detroit needs it first, now!

If salaries and productivity are not successfully addressed mcuh before the end of 2009, bail outs will not be enough to stop GM and Chrysler from going chapter 11 by next summer. That would not neccessarily be that bad.

All GM and Chrysler gas guzzlers, on dealers lots, could be going very cheap shorthly.

If GM and/or Chrysler were to fold, Ford employees may see the light and accept conditions similar to Honda, Toyota and Nissan.

USA and Canada would not run shorth of new vehicles. The other world class manufacturers could easily supply all the vehicles the market can sell.

No bailout amount will save a company when people aren't buying their products.

This is far too big of a risk. As it is, we are only getting 20% - a pittance. The people should simply buy the three companies for far less than this. After the purchase, the government can rationalize the product ranges, refinance the debt, put the employees on Medicare, and restructure assets to place deserving retirees into the federal employee retirement system. Marketing can emphasize the American content as a sign of patriotism. Product will not overlap below capacity, and will increasingly showcase national transportation priorities. Management will be paid according to Federal government pay classes. Hopefully, the public will buy into the plan as our best last hope for a domestic personal transportation industry. If it all works (and it must), the companies can go public after a decade of building-up the public trust. Then god help us once again.

Giant:

A good reality check.

JC:

Chapter 11 may be the minimum required to restructure the cos and rewrite the union and managers contracts.

In any case, USA and Canada will not run out of new vehicles. There are many other world class manufacturers ready to supply.

Chapter 11 seems like the only way. There is some hope that Detroit would then support the suppliers, at least for the foreseeable future, at a reduced level.
But they might still need more bailouts. Are we just delaying the inevitable? I don’t think we are ready to have no domestic auto industry?
How did we get here?
The current recession of course contributed.
UAW wages vs. foreign wages? This can be improved to US wages vs. foreign wages. Is this enough?
I don’t think there are other major reasons for why Detroit is in this situation. If so, what are they, and how CAN THEY BE RECTIFIED?

Whatever happens - please don't look at the $700Billion Congress has ponied to "save" the two BK housing agencies: Fannie May and Freddi Mac.

Why pay attention to a massive failure of *government* and banks when it's so much easier to dump on industry? Yep, these annoying car people are just plain irresponsible with money... And that's NOT an elephant in the living room!

ToppaTom:

The Big-3 cannot indefinately brain wash 90+% of North Americans to keep on buying unjustifed, oversized gas guzzling 3+ Ton dinosaurs.

Potential buyers have been progressively droping out of Big-3 claws, from over 90% in early 1960's to less than 44% by the end of 2008.

In reality, the Big-3 may have to further downsize to as little as 33% of the North American market, unless they build reliable vehicles that the majority wants to buy.

Can the current Big-3 substantially increase their share of the market? Can all three (3) survive with a much smaller share of the market? The answer to both questions is most likely NOT.

Have a look at what happened to the aircraft industry in the last 40 years.

To rectify the situation, the Big-3 may have to downsize, merge, restructure, rewrite the union contracts, fire 60+% of the top managers, close 50% of the dealers, produce more efficent ICE vehicles (with more high quality imported parts and sub-assemblies if required), mass produce or assemble affordable PHEVs, establish a joint venture with one or two advanced battery manufacturers, build more realiable vehicles, stop brain washing North American into buying oversized dinosaurs, ask potential buyers what they want most, inform potential buyers what changes are being done to build what they want, stop fighting CAFE, etc.

Right on sulleny; the bankers have no excuses like Asian labor costs or the UAW, yet their millions in compensation and golden parachutes are intact – they should be in jail ( the bankers, not the parchutes).
The term “brain wash” is a superficial, emotional label used because terms like “American love affair” do not bring enough negative connotation for some people.
Americans bought and drove big cars for many years because they were a bargain (compared to American small cars) and people liked the room and ride, much like owning a big house (like Al and Barack and ... do).
Likewise, there was certainly some sense of status and pride but using the term “brain washed” here shows a shallow vocabulary.
"Brainwashing" is more apt (but incorrect still) for the 10 year spurt of hybrid sales; there was the illusion, and even the claim of economy.
Big cars were no illusion. Even now they are too much of a bargain in total cost of ownership.
If we do not increase gas tax or CAFÉ or other social engineering soon, we will run right into $150/bbl oil again; not to mention the continuing climatic and other effects of millions of 10 to 20 mpg vehicles.

Today’s flower children cling firmly to beliefs like, "The Big-3:
1. Brainwashed us into buying big cars
2. Are cooperating with Big oil in some nefarious way
3. Do not want American small cars to succeed
4. Make stupid decisions."
and more.
But to resort to simplistic paranoia is not the way to address the phenomena of pride in big cars and the loss of industry over seas. The concept is not that advanced.

money to GM is money down the drain.