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Episode 60 – Suppliers Seek Loans, Nissan Moving Production, UAW Doesn’t Have To Cut Pay

January 16th, 2009 at 12:00pm

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Nissan is moving some of its production out of Japan and into India, Thailand and other low-cost countries. Suppliers will ask the American government for economic aid to avoid bankruptcy. GM says it doesn’t need more pay cuts from the UAW. All that and more, plus a preview of this week’s episode of Autoline Detroit where John interviews top executives from GM, Chrysler, BMW and Toyota.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Nissan is moving some of its production out of Japan. Suppliers will ask the American government for economic aid. And GM says it doesn’t need more pay cuts from the UAW.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Friday, January 16, 2009. And now, the news.

In an unprecedented move for a Japanese company, Nissan announced it will move some production out of Japan and into India, Thailand and other low-cost countries. While Japanese automakers do build cars in those countries, the AP reports this would be the first time a company’s best selling model in the Japanese market would be moved to another country. The Japanese yen is surging against other currencies, especially the dollar, making it very expensive to export cars and components out of Japan.

GM’s bondholders are banding together to negotiate with the company (subscription required), the Wall Street Journal reports. GM owes its bondholders $27.5 billion, and part of the agreement with the government to get a bridge loan is to cut that debt by two-thirds. That means tough bargaining lies ahead, since GM is going to have to get all its major bondholders to agree to taking a bath on their investment in the company.

Unexpectedly, GM says the UAW doesn’t have to make more pay cuts as part of the viability plan it has to present to Congress. The Detroit Free Press reports the cuts aren’t needed since there isn’t a significant difference in pay between the UAW and the U.S. transplant workers. GM feels it can negotiate in other areas, such as work rules, to get the cost savings it needs.

Automakers aren’t the only ones in trouble. So are their suppliers. That’s why the Motor Equipment Manufacturers Association and the Original Equipment Suppliers Association want guaranteed bank loans from the government, the Free Press reports. It’s true. If suppliers collapse, they’ll take the car companies down with them, no matter how much money the government gives to the car companies.

On the heels of the announcement that GM is giving LG Chem the contract to make batteries for the Chevrolet Volt, LG Chem’s parent company posted a record fourth quarter loss. Reuters reports that LG lost nearly half a billion dollars in the 4th quarter.

And to make sure more advanced batteries are made in the US, Congress is proposing $3.5 billion in research money for alternative-fuel vehicles and advanced batteries. The bill also provides money to retrofit or replace older diesel-powered vehicles, like school buses.

Coming up next, a preview of this week’s episode of Autoline Detroit. We’ll be back, right after this.

On this episode of Autoline Detroit I’m joined by Mark LaNeve from GM, Frank Klegon of Chrysler, Don Esmond from Toyota and Jim O’Donnell of BMW. Here’s a preview of that show with Mark LaNeve, GM’s Vice President of Vehicle Sales, Service and Marketing, talking about the perception problems facing GM.

And remember, if you want to hear the rest of my interview with these top-level industry insiders, you can watch the entire episode of Autoline Detroit on our website right now.

One more thing before we go: the winner of this week’s trivia contest. We challenged you to name the make of car pictured here. And as many of you responded, it’s a Graham, a 1938 Graham. These cars are known for their prominent hoods that jut out at the top, a feature that earned them the nickname “sharknose.”

As always, my crack team has randomly selected today’s winner from the pool of correct responses. Pookie, the envelope por favor! And this week’s winner is, Martyn Schorr of Sarasota Florida, congratulations Martyn Schorr. You’ve just won an Autoline coffee mug and a special-edition Autoline 10th Anniversary DVD.

And that brings us to the end of today’s show. As always, thanks for watching, we’ll see you next week.

4 Comments to “Episode 60 – Suppliers Seek Loans, Nissan Moving Production, UAW Doesn’t Have To Cut Pay”

  1. William R. Walling Says:

    John,
    “Your Autoline Detroit segment shall be historic as individuals among principles interviewed will depart there positions later this year.”
    ‘Gallows humour’ assuredly but during these difficult times true non the less.
    Recommend listening for strained sales forecasts to identify the likely departing.

  2. JIm Thykeson Says:

    John: The ‘Big-3′ should ask congress to force the trans-plants to provide after worklife care for their employees,i.e. a pension, replete with health-care and pension. This is the stumbling block that makes competing with the Asians and Germans so unfair. We should not bend to the whims of the or standards of the new guys but just the reverse; they should bend to ours. If they don’t want to play the game our way, then kick them out.

  3. JIm Thykeson Says:

    John: The ‘Big-3′ should ask congress to force the trans-plants to provide after worklife care for their employees,i.e. a pension, replete with health-care and pension. This is the stumbling block that makes competing with the Asians and Germans so unfair. We should not bend to the whims or standards of the new guys but just the reverse; they should bend to ours. If they don’t want to play the game our way, then kick them out.

  4. John Says:

    John McElroy,

    Thanks for the U.S. Battery info. Jobs for the U.S. Middle Class are key to any economic recovery.

    More from the Detroit News:

    “The House bill will face changes when the U.S. Senate introduces its own bill, which is expected to shift more of the $2 billion in battery research money to grants not loans.”

    “General Motors Corp. spokesman Greg Martin praised the support for battery research.

    “It’s good to see the stimulus bill recognizes that to keep pace in the global technology race, the U.S. must make the capability to produce advance batteries a national, competitive priority,” Martin said. “Greater advance battery funding can help jumpstart a green manufacturing sector and get advanced vehicles like the Chevy Volt on the road at greater numbers.” ”

    This is great news for all U.S. Citizens, keep us informed.

    Thank You.