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Detroit Automakers Told To Produce Report Specifying Details of Bailout Request
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Congressional leaders agreed to give Detroit automakers more time to make their case for a $25 billion emergency bailout, but they demanded that General Motors, Ford and Chrysler provide detailed plans for using the money.
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., agreed to call Congress back into session next month to revisit the bailout.
“The sad reality is that no one has come up with a plan that can pass the House and the Senate and get signed by President Bush,” Reid said.
As for the auto bailout, during two days of testimony this week, the chief executives of GM, Ford and Chrysler, along with the head of the United Auto Workers, failed to convince lawmakers the companies were becoming more cost-efficient and competitive.
They also did not allay fears that the proposed $25 billion in emergency loans would be just the first of many government payments needed to keep the Big Three afloat.
The crisis that is gripping Ontario’s automotive cities requires “urgent” action to save hundreds of thousands of jobs across the province, a meeting of municipal leaders heard this morning.
Officials from 22 Ontario cities meeting here pledged unified action to lobby the federal and provincial governments for aid to the industry which employs one in six Ontarians.
“There is no time to wait. We have to move now to save jobs in the automotive industry, we need to fight for this,” London Mayor Ann Marie DeCicco-Best said during a break at the meeting of leaders from Ontario’s automotive cities.
“We have to be loud and if we do not do this now, it will be too late.”
The mayors also agreed any action that needs to be taken must be co-ordinated with the aid package now under negotiation with the U.S. federal government, she added.
“America’s plan will be to protect their jobs. If we do not have a plan, what happens to our jobs?,” said DeCicco-Best.
“If the automakers go into bankruptcy, it will be catastrophic.” Said PeterWhite, chief executive of the London Economic Development Corp.
UPDATE: November 24, 2008 05:00 am
Some local businesses are keeping a close eye on Washington as the federal government ponders a $25 billion bailout for the auto industry.
But Bernie Andrews of Regional Economic Development Inc. said Mid-Missouri might be uniquely positioned to weather the forecast economic storm if some or all of the Big Three automakers are forced to declare bankruptcy.
“We’ve taken some of the big hits from those auto parts suppliers to the U.S. auto industry already in recent years, so it is not one fell swoop,” he said.
Previously, Andrews said, Columbia was viewed as ideal for auto industry parts manufacturers because of its location on Interstate 70 between St. Louis and Kansas City. But that changed as the Ford plant in Claycomo near Kansas City sheds jobs and with the Chrysler plant in Fenton apparently headed for closure and the General Motors plant in Fenton downsizing.
“It doesn’t look good for the automotive parts industry for Missouri unless some things change for some domestic companies,” Andrews said.
There are some parallels in both cases to the troubles faced today by the Big Three—General Motors Corp , Ford Motor Co and Chrysler, owned by private equity firm Cerberus Capital Management LP [CBS.UL].
The main lessons seem to be that the U.S. automakers must produce a viable turnaround plan and the government must set clear benchmarks to measure progress or providing aid may be futile.
Congress has demanded the former, it can set the latter.
“You can throw all the money in the world at a problem, but if your production strategy is wrong it won’t help,” said Timothy Whisler, a Saint Francis University professor and author of “The British Motor Industry 1945-1994: A Case Study in Industrial Decline.”
Auto executives need to provide more specifics about how they plan to spend taxpayers’ money and crimp their highflying lifestyles if they hope to get aid from the federal government, congressional leaders and key members of the incoming Obama administration said Sunday.
“What we can’t give is a blank check for an industry that isn’t prepared to retool itself,” David Axelrod, a senior adviser to President-elect Barack Obama, said.
To qualify for government aid, the automakers — General Motors (GM), Ford (F) and Cerberus Capital-owned Chrysler — will have to agree to extensive government oversight, a ban on dividends and “excessive” executive compensation, and production of more fuel-efficient vehicles, the Democratic congressional leaders said in a letter to the auto executives Friday.
Their letter outlined the reasons why many Democrats and Republicans want to help Detroit. “One in 10 American jobs is related to auto manufacturing,” Reid and Pelosi wrote. “Our national security depends on the industry’s technologies and manufacturing capacity.” Obama, in his first press conference as president-elect earlier this month, sounded a similar note, calling the U.S. auto industry “the backbone of American manufacturing.”
