U.S. automobile manufacturers need to reorganize to ensure their viability, House Speaker Nancy Pelosi said, as the head of the United Auto Workers called for government aid before President-electBarack Obama takes office.
Ron Gettelfinger, president of the UAW, said government assistance would be a ``loan, not a bailout'' to shore up General Motors Corp., Ford Motor Co. and Chrysler LLC.
The Democrats plan for help ``will provide immediate, targeted assistance to allow the carmakers, together with affected unions, time to develop a plan to assure the long-term viability of the industry,'' Pelosi said.
Under legislation being drafted by Democrats, automakers would receive $25 billion in loans out of a $700 billion financial-rescue package approved earlier this year. President George W. Bush's administration opposes using the plan's funds for carmakers and Republican legislators have voiced opposition.
A GM collapse alone would cost the government as much as $200 billion for costs associated with unemployment insurance and other programs after millions of auto-related job losses, according to a forecast from IHS Global Insight Inc. in Lexington, Massachusetts.
A survey by Peter D. Hart Research Associates that was commissioned by GM found 55 percent of Americans support government loans for the auto industry. Thirty percent of those surveyed on Nov. 11 and 12 opposed loans. The poll of 804 adults had a margin of error of 3.5 percentage points.
Briefing Congress
A USA Today/Gallup poll taken between Nov. 7 and 9 found 47 percent of 1,010 adults surveyed said providing loans or other assistance to automakers was ``not very important.''
GM is briefing congressional leaders, officials of the Bush administration and Obama's transition team this weekend on the impact of a bankruptcy by the automaker, the Wall Street Journal reported. Obama takes office on Jan. 20.
``We're on a cliff here,'' Gettelfinger told reporters on a conference call yesterday. ``We need to get this bridge loan and we need it in this lame-duck session'' of the Congress, he said.
``Would you buy a car from a bankrupt automaker? We don't see bankruptcy as a viable option,'' the union president said, adding that assistance is needed ``before Senator Obama takes office.''
Pelosi said ``the Democratic plan includes even stronger limits on executive compensation and assurances to protect the taxpayer.''
The industry restructuring must ``meet standards for fuel efficiency that ensure the competitiveness of U.S. autos,'' Pelosi said in a statement.
Energy Department Loan
The ``appropriate source of funding for this short-term assistance'' is the financial-rescue bill already authorized by Congress, Pelosi said. ``Any effort to divert funds from'' $25 billion of Energy Department loans approved earlier to promote fuel efficiency ``is a step backward in assuring the viability and competitiveness of the U.S. auto industry,'' Pelosi's statement said.
White House spokeswoman Dana Perino issued a statement to reporters reiterating the Bush administration's opposition to the use of the financial-rescue package to aid the auto industry. The money ``should be used for its intended purpose, stabilizing and strengthening our financial system,'' Perino said.
The Bush administration is ``actively calling on Congress'' to pass legislation that would accelerate getting loans to the automakers without using money from the financial-markets rescue plan, Perino said on Nov. 14.
Fuel Efficiency
Bush wants Congress to amend the legislation on the Energy Department loans to ``help accelerate much needed funds'' to companies that show ``long-term viability'' and a ``willingness to make tough decisions,'' Perino said. Those loans were aimed at helping automakers develop more fuel-efficient vehicles.
GM, Ford and Chrysler are using up cash as U.S. auto sales have fallen 15 percent this year through October. Detroit-based GM said last week that it may run short of funds before the end of the year and Auburn Hills, Michigan-based Chrysler said on Nov. 13 survival would be difficult without aid.
Ford, based in Dearborn, Michigan, used $7.7 billion of cash reserves during the third quarter. Chief Executive Officer Alan Mulally said on Nov. 7 Ford has ``sufficient liquidity.''
``We are here because of what is going on in the economy,'' Gettelfinger said. The credit crunch and low consumer confidence are hurting auto sales, he said.
The union leader also said the UAW would resist further givebacks by members. The union agreed in 2007 contracts with the automakers to cut wages and end fixed pensions for new hires. Starting in 2010, GM, Ford and Chrysler are scheduled to shed retiree health-care obligations for U.S. factory workers to a union-managed trust.
``We have made dramatic, dramatic changes,'' Gettelfinger said.
