Big 3 going back to sales room, with new bid for bailout bucks

WASHINGTON — Their first attempt was a lemon, but the Big Three U.S. automakers have a second chance this week to convince Congress that it should give them a $25 billion bailout — or, as they call it, a bridge loan to the future.

Setting the stage for what could be a crucial moment for the car companies and American industry, General Motors, Ford and Chrysler were scheduled to provide lawmakers with detailed plans today on how they would use federal money to ensure their long-term survival and not just dodge an immediate collapse.

Later in the week, the companies' chief executives will return to Capitol Hill, attempting to reverse their disastrous performances when they first asked for help in November.

When they appeared before the same committees then, even their usual congressional supporters came away frustrated.

"They just weren't saying anything," said Senate Banking Committee Chairman Christopher Dodd, D-Conn.

One thing is certain: All three now see the wisdom of appearing humble. They've forsworn the use of private jets — which became a symbol of corporate highhandedness in Round One — for the return trip to Washington.

Ford Chief Executive Alan Mulally plans to drive to Washington in a gas-electric hybrid vehicle. GM and Chrysler said their CEOs would not be flying in private jets.

But skeptics still abound. And the companies' detailed reports to Congress, just like their executives' new travel plans, might be more about public relations than economics. Analysts say the expected promises to renegotiate labor contracts, cut benefits costs or reduce product lines might placate some in Congress but will be hard to achieve.

So far, only a few details of the proposals have emerged, including eliminating or selling brands.

GM has had its Hummer unit on the block since June, and it is now understood to be considering the sale of Saab or Pontiac and Saturn.

Ford, meanwhile, sold Jaguar and Land Rover earlier in 2008. And Monday, Mulally added another high-end line to the for-sale list: Volvo.

But saying a brand is for sale and actually selling it are two different things, said Robert Schulz, auto-industry analyst for Standard & Poor's.

With lending for corporate acquisitions all but frozen, there might be few takers for even prestige marquees like Volvo.

"There's no obvious candidate to offload these assets to," Schulz said.

Industry experts say it's likely the United Auto Workers leadership will be asked to make further cost concessions.

Yet, labor specialists wonder how much more the union can give. In 2007, the UAW signed a landmark deal with the Big Three that will effectively unload retiree health-care costs starting in 2010.

UAW legislative director Alan Reuther said the union would discuss further givebacks but added: "We're not prepared to be the only ones making sacrifices."

Savings from renegotiated UAW contracts are a huge future relief for the companies — about one-third of the frequently cited $74 hourly cost of UAW workers goes to retiree benefits. But it also means that once those savings are realized, Detroit's labor costs are likely to be on par with those of Asian automakers producing cars with nonunion labor in the U.S. such as Toyota.

Even if the UAW agreed to more cuts, the savings to the Big Three might be surprisingly small.

Only a few years ago, GM's UAW payroll was well over 100,000 employees. Today it's barely 55,000. As a result, even an across-the-board 20 percent pay cut "would result in a savings of only $1.1 billion per year," said Michigan State University professor Richard Block, a specialist in labor relations. "That's enough to keep them going for what — two weeks?"

Part of a turnaround plan has to focus on developing attractive products and revamping marketing to get consumers buying. But the current sales environment is dismal.

This year, U.S. vehicle sales are on pace to drop below 13 million units, compared with more than 16 million in 2007. Forecasters don't expect sales to top 15 million before 2011, at the earliest.

Information from McClatchy Newspapers is included in this report.