By Kevin Krolicki and John Crawley
DETROIT/WASHINGTON (Reuters) - U.S. automakers led by General Motors Corp
GM's board began to review the top U.S. automaker's revamped business plan on Sunday and has been asked to endorse steps that include consideration of dropping or selling off the Pontiac, Saab and Saturn brands, according to people with knowledge of the plan, which will be announced on Tuesday.
Ford Motor Co
Chrysler LLC, now controlled by Cerberus Capital Management, said its board was meeting to review the plan leading lawmakers have demanded by Tuesday ahead of potentially make-or-break hearings set for later in the week.
Chrsyler, widely seen as the most vulnerable of the Detroit Three, needs to spell out a plan that would allow it to take a share of the federal funding even as it seeks a partnership with other automakers, analysts said.
"Just as General Motors is too big to fail, Chrysler is too small to survive on its own," said IHS Global Insight analyst Aaron Bragman.
Plans from all three Detroit automakers are expected to cap executive compensation while pointing toward new concessions expected from the United Auto Workers union, analysts said.
The union is likely to be asked to give up job security guarantees for workers at U.S. plants that close and asked to renegotiate how the automakers will pay into a trust fund set to take over responsibility for retiree health care from 2010.
In addition, GM is almost certain to ask its bondholders to swap some portion of its existing $44 billion debt in exchange for a deeply discounted payout and some equity interest in the restructured company, analysts say.
Under fire for fighting fuel economy standards for years, the Detroit-based automakers also are expected to detail plans to build more fuel-efficient cars and roll out alternatives to gas-powered vehicles.
GM, Ford and Chrysler have all declined to discuss their restructuring plans before submitting them to key lawmakers on Tuesday.
But analysts say Detroit is gambling that plans that show labor, management, creditors and investors sharing in sacrifices at a time of crisis for the industry will win the companies the political support that has so far eluded them in Washington.
"Going in it was pretty clear that the powers that be in Washington we're interested in seeing the automakers come back with plans with more concessions," said Dennis Virag of the Ann Arbor, Michigan-based Automotive Consulting Group. "I think they will get the funding."
But the complicated plans for the automakers hinge on major changes that could take months to complete.
Partly for that reason, the UAW said it supports a two-step process that would see Congress approve emergency funding for the industry this week with a follow-up review next year after President-elect Barack Obama takes office.
NO PRIVATE JETS THIS TIME
The cash squeeze is most pressing at GM, which ended the September with $16 billion in cash after burning through $6.9 billion in the past quarter. The automaker has warned that it needs a minimum of $11 billion to operate and has warned it could fall short of cash by early next year without government help.
After being pilloried for flying private jets to attend November hearings where skeptical lawmakers rejected their pleas for a bailout, the three auto chief executives will make alternate travel plans this time, their companies said.
Ford Chief Executive Alan Mulally will drive a Ford hybrid vehicle from Detroit. GM Chief Executive Rick Wagoner and Chrysler CEO Bob Nardelli will both fly commercial or make other arrangements.
Automakers also are hoping to mobilize more political support for their sequel appearance on Capitol Hill.
A lobby called "The Engine of Democracy," backed by Dura Automotive Systems and other auto suppliers and dealers, on Monday launched a Web site to argue the case for aid and plans a press conference on Friday in Washington with workers in auto-related industries from all 50 states.
Sen. Carl Levin, a Michigan Democrat, said on Monday that he expected the automakers would make "a compelling case for bridge loans."
The industry's appeal for aid will be scrutinized this week in two hearings. The Senate Banking Committee will hold a session on Thursday morning, and the House of Representatives Financial Services Committee on Friday morning.
POLITICAL PRESSURE
There's plenty of political pressure in the Democratic-led Congress to help the auto industry. Lawmakers realize that if the automakers shut down, the U.S. economy would take a major hit, driving up unemployment and further rattling an already distressed housing market.
But the auto industry also has suffered from a long-running image problem in the U.S. Congress, made worse when executives flew private jets to Washington to plead their case.
Critics charge that lawmakers who have sided with Detroit bear some of the blame for its decline by allowing it to build gas-guzzling cars that many Americans no longer want.
Rep. Henry Waxman, a California liberal, wrested control of the Energy and Commerce Committee last month from Rep. John Dingell of Michigan, a long-time ally of the auto industry.
Waxman is expected to help Obama push for greater fuel efficiency and reduce emissions to help ease global warming.
Currently, Democrats need Republican support to push any rescue package through the Senate and for any bill to be signed by President George W. Bush.
(Additional reporting by Jui Chakravorty in New York; editing by Carol Bishopric)
