General Motors, teetering on the brink of insolvency, has taken the extraordinary step of calling on employees and dealers to personally urge lawmakers to approve another loan package that might keep the beleaguered automaker from going under.
In an e-mail obtained by Wired.com, Troy Clarke, president of GM North America, urged 29,000 employees to contact their representatives and senators and tell them to support the automaker and the domestic auto industry, saying 3 million jobs are at stake. "Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis," he wrote.
Mark LaNeve, the automakers head of U.S. sales, made a similar plea in a letter sent to dealers nationwide, according to Reuters, which obtained a copy of the letter. Reuters also reported that GM repeated the plea during a company-wide broadcast Wednesday.
Although all of the Big Three have been hit hard by the economic meltdown — auto sales hit their lowest point in 25 years last month — GM has been beaten bloody. The General’s sales tumbled 45 percent in October, it lost $2.5 billion in the third quarter, its stock hit a 65-year low today and the company is burning through cash so fast it could run out of money early next year. Things are so bad in Detroit that the Center for Automotive Research says (.pdf) one or two of the Big Three could go down for good, taking millions of jobs and tens of billions of dollars out of the economy, and some analysts say a federal bailout is the only thing that will save GM.
Congress has already approved $25 billion in loans for the auto industry. GM says it isn’t enough and told employees to beg for more.
"This level of economic devastation far exceeds the $25 billion of government support that our industry needs to bridge this current period," Clarke wrote in the e-mail. "Today, I want you to take the time to contact your members of Congress to ask them to support America’s domestic auto industry.”
It would be difficult to overstate the urgency of the crisis. GM’s shares sank to $2.92 one day after the company revealed in a federal filing that its "ability to continue as a going concern" is in doubt because it may run out of money. The company’s reserves have been dwindling at a rate of $2 billion a month this fall; at that rate, its cash could fall below the $10 billion it needs to keep running as early as January, according to The New York Times.
LaNeve said in the e-mail to dealers that GM needs Congress to move quickly in appropriating the $25 billion it has already approved for the industry and needs another $25 billion in loans "to weather the storm." Chief executives with the Big Three met last week with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to discuss a comprehensive aid package worth $50 billion. Lawmakers have increasingly shown a willingness to support the struggling auto industry, and Rep. Barney Frank, D-Massachusetts, said today that his committee will hold a hearing next week to consider approving another $25 billion for automakers.
UPDATE, 4:05 P.M. PST — GM spokesman Tom Wilkinson tells Wired.com that Clarke’s e-mail went out to roughly 29,000 salaried employees (not the "hundreds of thousands" earlier reported). Clarke sent the e-mail because "many don’t realize how far along GM and Ford were in restructuring before the global economic crisis" and they "don’t understand the importance" of federal assistance in protecting U.S. jobs. GM believes "politicians will be sensitive" to employees’ calls for Congress to support GM and the auto industry.
Photo of GM’s global HQ and Troy Clarke, head of GM North America, by General Motors.
UPDATE, 7:00 A.M. PST Nov. 13: Jalopnik has a copy of the letter LaNeve sent to GM’s dealers.
The text of Clarke’s e-mail obtained by Wired.com:
Dear Employee,
Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis.
As you know, we have taken the tough, necessary actions over the last few years to strengthen our competitive position. With our UAW partners we have reshaped our business and will have reduced our structural costs by more than $13 billion by 2010 and have closed the quality and efficiency gaps with our competitors. We also are building products that have received great customer acceptance and acclaim, as we have seen with the Chevy Malibu, Cadillac CTS and our family of crossovers. And, there’s more to come with the Chevy Volt which will position GM as a global technology leader as well as more hybrids and fuel efficient passenger cars like the Chevy Cruze.
The consequences, however, of a portion of the domestic auto industry collapsing extend far beyond GM’s ability to continue its transformation. One in 10 American jobs depend on our industry, as well as the health of communities, dealers and suppliers in all 50 states. As you know, nearly 3 million employees, retirees, and their families also depend on us for their pensions and health care. Because of our economic contribution, the cost of allowing this industry to fail would be catastrophic: 3 million jobs lost within the first year; U.S. personal income reduced by $150.7 billion; a government tax loss over three years of more than $156 billion.
This level of economic devastation far exceeds the $25 billion of government support that our industry needs to bridge this current period. Today, I want you to take the time to contact your members of Congress to ask them to support America’s domestic auto industry. Please call the following number to be connected with your legislators 1-866-927-2233. Directions and key messages are in the attached document to assist you with the calls. Also attached is a fact sheet that includes the economic figures cited above.
Additionally, you can visit www.gmfactsandfiction.com http://www.gmfactsandfiction.com to obtain further information on the auto industry and GM. Support for the domestic auto industry will contribute to a stronger economy, save millions of jobs, and establish U.S. manufacturing and technology leadership in the global marketplace. As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.
Thank you for your urgent action and ongoing support.
Troy Clarke President GM North America
