• by Karl Greenberg , December 19, 2008

General Motors CEO Rick Wagoner said Friday that the Bush administration's bailout offer is in the ballpark--albeit on the low side--of what the company had asked for initially for funding through March next year. "What we have said is, on the downside our needs might go from a baseline of $12 billion to $18 billion--so, from our way of looking at it, this covers our needs."

He said that GM will be financially viable by March 31, as stipulated by the Treasury Department.

"I don't think it's impossible," he said. "We have big steps we have to take, but it's not so inconsistent with the plan we submitted." Wagoner said GM is not entertaining the administration's suggestion that a structured bankruptcy is a viable option. "Our view has been all along that bankruptcy is a very high-risk process with negative ramifications, so our intention is to proceed, to put together a plan that doesn't require that."

GM CFO Fritz Henderson reiterated that GM's recovery plan submitted to Congress this month delineated actions in three areas: products and marketing; competitiveness; and transforming the company's balance sheet so its capital structure is serviceable. "What we need to do is execute that and do it within the time frame laid out by the Treasury Department." He said the company has, over the past 18 months, reduced capital spending from $8 billion to less than $5 billion--in part by deferring North American and global capacity (plant) projects and delaying product launches.

The administration's $17.4 billion short-term loan gives GM $13.4 billion this year and another $4 billion in February. Chrysler will get $4 billion initially.

Robert Nardelli, Chrysler's CEO, said the cash will fund "Project Genesis" the company's plan to shrink its dealer network. "The bridge loan allows us to meet cash needs, pay our suppliers, continue developing great products and move forward with the restructuring and streamlining of our organization that we began in 2007," said Nardelli in a release. "This restructuring will reduce the number of personnel layers while increasing managers' span of control, enabling us to reduce costs, make faster decisions and do our jobs effectively with fewer resources."

He says the company will go ahead with the 24 vehicle launches through 2012, with half a million electric vehicles on the road by 2013. Chrysler created the ENVI group last year to develop alternative-powertrain vehicles. "We are focusing on electric as our primary clean-vehicle technology, combined with our new products from our ENVI group."

Ford Motor Company has said it does not need federal funds--at least not immediately--but backs funding for GM and Chrysler because bankruptcy for either would force Ford down the same road.

Ford has told Congress that it plans to reach pre-tax profitability by 2011 for its automotive operations. The company said it would like access to a $9 billion line of credit, but that it will try not to rely on it.

"For Ford, a line of credit would serve only as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," said Ford chief Alan Mulally in a release.

Among programs the company says it will initiate in coming years: investing about $14 billion in the U.S. on fuel-efficiency technology during the next seven years; putting "EcoBoost" engines on current vehicles; introducing a range of hybrids, plug-in electric and battery electric vehicles by 2012; retooling American plants to build six European small vehicles, and retooling three North American truck plants to produce small, fuel-efficient vehicles.