Wednesday, November 26, 2008
The auto industry must present its case next week.
DETROIT (AP) — A list of job cuts, shuttered factories, canceled bonuses and commitments to fuel-efficient cars won’t be enough next week when U.S. automakers get another shot to persuade Congress to give them $25 billion in loans.
Through the Thanksgiving weekend, teams will be tagging more meat to throw at skeptical lawmakers who vilified the automakers’ top executives the last time they went to Washington. That means executive pay cuts, union concessions, and perhaps even higher fuel economy requirements and a glimpse at top-secret product plans.
At General Motors Corp., the largest of the Detroit Three and probably the most needy, teams are preparing a detailed plan, first for GM’s board Monday, then for delivery to Congress by its Tuesday deadline. The House Financial Services Committee plans to hear testimony on the loan requests Dec. 5.
According to a Washington Post story, when Detroit’s Big Three automakers return to Capitol Hill next week to re-plead their case for a $25 billion emergency loan, they may be flanked by a posse of supporters.
A plan is taking shape for auto suppliers, dealers and factory workers to caravan from Detroit to Washington in American-made, fuel-efficient vehicles. The National Automobile Dealers Association is considering flying in dealers from around the country to deliver the “message of Main Street,” underscoring the urgency of the industry’s crisis.
But the talk comes as U.S. automakers race to craft revitalization plans that they hope will prove to Congress that they are worthy of a $25 billion emergency loan. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., expect the plans by Tuesday, and Congress might vote on the loan package Dec. 8.
Steve Adamske, a spokesman for the House Financial Services Committee chairman Barney Frank, D-Mass., said Tuesday that each company is expected to submit a report that will be made public to “give confidence to the people that we’re not giving good money after bad.”
A person briefed on the plan GM is building says it will contain more than just details of past restructuring that has slashed production and cut the company’s U.S. payroll from 177,000 eight years ago to the current 104,000.
The person, who didn’t want to be identified because of the plan hasn’t been finalized, says it is likely to include new, more visible sacrifices from top executives, even working for $1 per year. Also on the table are concessions from the United Auto Workers, including elimination of the much-criticized jobs bank in which laid-off workers keep getting most of their pay.
Sen. Debbie Stabenow, D-Mich., said the companies need to talk about advanced vehicles under development and give a specific accounting of how much in loans they need and why.
“The image that they project is very important. It’s important that they show at every level they understand how serious this is and that they’re willing to make sacrifices as well,” Stabenow said.
All three automakers are strapped for cash as U.S. auto sales have plummeted to a 25-year low, but GM is likely in the worst shape. It has burned through nearly $14 billion in the first nine months of this year and warned that it could reach the minimum amount of cash required to run the company by year’s end. Chrysler LLC isn’t far behind, but Ford Motor Co. says it can hang on through 2009 because of a huge loan it took out before credit markets froze up.
Detroit’s carmakers employ nearly a quarter-million workers, and more than 730,000 others produce materials and parts for cars. If just one of the automakers should declare bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.
2008, The Associated Press. All Rights Reserved.