General Motors’ board has already met to discuss its plan, as has the board of Chrysler, and it is expected that both will show a large amount of cost cutting and development focus on fuel efficient technologies. Ford will also be presenting its new business plan to Congress this week, but has declined to comment on whether its board has reviewed any plans yet.
Most of the changes to the failed proposals presented last month are expected to cover large reductions in executive remuneration, as well as the possible elimination of the United Auto Workers’ ‘Jobs Bank’ benefit, which forces the Detroit 3 to pay around 90% of lost wages to hourly workers that are let go. Furthermore, Congress is pushing for the Detroit 3 to cut back on many worker benefits which it claims are «unsustainable» if the industry wants to survive the economic downturn, reports Automotive News.
The government will be taking a hard line with the proposals, and loans are unlikely to be given out without drastic cuts to other areas of excessive spending. GM has already started reducing its private jet fleet in a symbolic show of their willingness to change, but other more concrete solutions will need to be shown to Congress to convince them that GM has the capacity to become successful again. Last week a report emerged claiming GM may even be forced to drop some brands, with Saab, Pontiac and Saturn all listed.
Meanwhile, Chrysler’s CEO has taken the call for executive remuneration to be reduced, claiming that he is willing to work for a salary of $1. Chrysler’s cash reserves, like GM’s, are thinning quickly and the fate of the company will be in a precarious position if it has to wait for president-elect Obama to take office before it receives support.