Source: Obama to add cutbacks

DETROIT (AP) — The Obama administration is likely to impose deeper concessions on Chrysler LLC and General Motors Corp. in exchange for additional federal loans, a person briefed on the government’s plan said Friday.

The concessions could go beyond the requirements imposed by the Bush administration when it agreed to loan the automakers money last year, said the person, who asked not to be identified because the government’s plans have not been revealed.

President Barack Obama will announce the administration’s plan for the auto industry Monday. White House press secretary Robert Gibbs said Obama’s auto task force was “winding down the decisions that have to be made” and finalizing the plan.

General Motors CEO Rick Wagoner met with members of the task force Friday, an Obama administration official said.

Both automakers are operating on a total of $17.4 billion in government loans, trying to weather the worst auto sales downturn in 27 years. In addition, GM is seeking another $16.6 billion, while Chrysler wants $5 billion more.

Chrysler and GM both employ thousands in Ohio, a state which has ties to the auto industry second only to Michigan.

The term sheets that came with the first loans require extensive restructuring, including executive pay cuts and labor costs that match Japanese automakers. Both companies also must persuade the United Auto Workers to take equity in exchange for half of the payments the companies must make to union-run trust funds that will take over retiree health care costs starting next year. And they must get debtholders to swap equity for two-thirds of the companies’ debt.

“There may be more extensive conditions than were laid out initially in the term sheets,” the person said.

Both companies face a Tuesday deadline to turn in finished restructuring plans to the government, but neither company is likely to have everything done. Neither GM nor Chrysler have deals with the union on the trust funding or concessions from their debtholders, although talks are continuing.

“Our union is continuing to work with the task force and the auto companies to find a solution to the may issues we face,” UAW President Ron Gettelfinger said Friday through a spokeswoman.