Official: GM needs plan

March 9, 2009 at 12:00a.m.

GM at the Cleveland Auto Show

Workers at the Lordstown complex are moving ahead with the installation of 840 robots.

WASHINGTON (AP) — House Republican leader John Boehner said Sunday he doesn’t support handing over more federal money to keep General Motors Corp. afloat unless the automaker develops a viable and long-term business model and can pay back government loans.

“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation.”

As part of the deal that provided $17.4 billion in federal aid to General Motors and Chrysler LLC, the companies must seek changes in their contracts with the United Auto Workers by March 31.

The car companies, which have asked for an additional $21.6 billion in federal money, must bring their labor costs in line with those of foreign competitors’ plants in the U.S.

Although Ford Motor Co. has not sought federal assistance, it has reached an agreement with the UAW to freeze wages and make other concessions. Union members were expected to finish voting on the proposed agreement today.

Amid talk of a potential General Motors Corp. bankruptcy, workers at the automaker’s Lordstown complex are moving ahead with the installation of 840 robots, a $350 million investment ahead of next year’s scheduled production start on the Chevrolet Cruze.

The investment in the robots, which would weld steel parts into the body of the fuel-efficient car, is small compared to the billions of dollars that would be lost if GM failed.

But local union leaders said it’s enough to give workers reason to remain upbeat.

“I refuse to give up hope that our future is going to be bright,” said Dave Green, president of United Auto Workers Local 1714, which represents about 1,100 workers at the Lordstown metal plant. “We’re moving forward with the Cruze. We should be ecstatic about what’s going on here, but the world is messed up.”

The Lordstown assembly plant has laid off hundreds of workers and is operating only one shift as the company struggles to survive the worst auto sales climate in more than two decades.

Fear of more cuts or closures weighs on the minds of some Lordstown employees as they monitor daily news for any sign of a turnaround.

General Motors lost $30.9 billion last year and has said auditors are raising serious doubts about the company’s ability to continue operating. It maintains that an out-of-court restructuring is its best option.

Though Boehner said he hopes that GM will not have to turn to bankruptcy, Republican Sens. John McCain of Arizona and Richard Shelby of Alabama said they want the automaker to seek bankruptcy protection, which would allow for reorganization.

“I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11, they reorganize, they renegotiate their — the union management contracts and come out of it a stronger, better, leaner and more competitive automotive industry,” McCain said on “Fox News Sunday.”

Shelby, appearing on ABC’s “This Week,” said Chrysler and Ford as well as GM belong in Chapter 11 and then could get federal money as part of the process of reorganization.

“Short of that, the UAW will run those companies and run them into the ground,” he said.

Boehner said GM’s survival will depend on employees, stockholders and others with a financial interest in the company agreeing on a plan for the future.

“It’s an important institution in our country. It impacts hundreds of thousands of jobs. But they have to do the serious work that they’ve avoided doing over the last 30 years if they’re going to survive,” he said.

Workers want Congress to quickly approve the new loans because the nation’s auto industry affects millions of people directly or indirectly, said Jim Graham, president of UAW Local 1112 at the Lordstown assembly plant.

“It didn’t take them that long to give themselves raises or $350 billion to the banks,” Graham said.

Communities around Lordstown depend on manufacturing for about 36 percent of total annual payroll, much of it from the complex and nearby auto parts suppliers, said Cleveland economist George Zeller.

Workers would miss out on several hundred million dollars in lost paychecks — more than one-fifth of all paychecks in northeast Ohio’s Trumbull County — if GM were to halt all operations, Zeller said.