Automakers Seek Their Own Federal Bailout
Actor Alec Baldwin attends the Tisch School Of The Art's Gala 2012 at The New York Marriott Marquis on April 19, 2012, in New York City. / Mike Coppola/Getty Images
The heads of Detroit's automakers asked congressional leaders Thursday for "immediate and necessary funding" to help the troubled auto industry weather an economic crisis.
The chief executives of General Motors, Ford and Chrysler, and the president of the United Auto Workers union met with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid Thursday to discuss billions of dollars more in financial help for the companies.
In a statement, GM said the companies would work with Reid and Pelosi "to ensure immediate and necessary funding to keep the auto industry viable and its transformation on track during this critical time." GM said the support would "enable a competitive U.S. auto industry to contribute to our nation's economic revival." The executives declined to comment to reporters between the meetings, which were private.
They were asking for an additional $25 billion in federal loans for future health care payments for retirees.
The executives were also seeking help in accessing money from the Treasury Department or the Federal Reserve. Rep. John Dingell, D-Mich., a longtime advocate for the industry, said the meeting was productive but did not address the specifics of the industry's request.
"They're not seeking money just to spend it," he said. "They're seeking money to invest in jobs and opportunities for American workers and American industry.
In a written statement, Reid said the Bush administration "should exercise its existing authority to provide additional help to these firms," reports CBS News producer John Nolen.
Pelosi told reporters at the start of the meeting that they would discuss "how we can work together to go forward to ensure the viability of that important industry, looking out for the taxpayer and looking out for the worker."
Last month, Congress approved $25 billion in low-interest loans for domestic automakers and suppliers to retool plants to build fuel efficient vehicles. But congressional allies of the industry have said the money will not be available fast enough to help the companies.
U.S. auto sales declined to their lowest level in more than 17 years last month, prompting some auto executives to predict dire consequences if the economy doesn't improve. The companies are hoping Pelosi will include funding for the industry in an economic stimulus package if she decides to call the House back in for a lame-duck session.
Alan Reuther, the UAW's legislative director, said the executives and UAW president Ron Gettelfinger "will be making the case why additional assistance from the federal government is needed to help the companies through this severe economic credit crisis."
The Pelosi meeting with Chrysler CEO Bob Nardelli, Ford CEO Alan Mulally and GM Chairman and CEO Rick Wagoner comes at a precarious time for the industry. General Motors Corp. and Ford Motor Co. are expected to post dismal third-quarter results Friday that will show losses in the billions of dollars. Additional job cuts by both automakers also are expected Friday.
A top GM executive said Wednesday that the next 100 days will be critical for GM and the industry.
"We must be adaptable and ready to make needed changes quickly, particularly over the next 100 days," said Troy Clarke, GM's president for North America.
GM has been talking to Cerberus Capital Management LP, the majority owner of Chrysler LLC, about acquiring Chrysler. GM is reportedly seeking Chrysler's $11 billion in cash and federal aid to make the deal happen.
Auto industry officials said the companies do not intend to ask Pelosi for Congress' help in financing a merger. Gettelfinger has expressed concern that a GM acquisition of Chrysler would lead to massive job losses.
The new $25 billion in loans that the automakers want from Congress would help them make required payments to health care trust funds that were created as part of the 2007 labor deal.
Reuther said the companies are required to provide $15 billion to the fund in January 2010 and an additional $15 billion by 2012. He said the $25 billion from Congress would give the companies a better chance of immediately lining up other financing because most of the health care trust fund payments would have been covered.
"It's very important that those moneys be contributed so retirees continue to have health care," he said. "The financial community is looking at that liability, and it's a major factor in their willingness to provide loans to the companies."
The executives and Gettelfinger also want help from Congress in winning access to the $700 billion financial bailout being run by the Treasury Department and to low-rate emergency borrowing from the Federal Reserve's discount window, used in normal times by banks.
President-elect Obama expressed support for an additional $25 billion in loans on the condition that the money would go toward helping the industry build fuel efficient cars. Obama has said he would meet with industry leaders and the UAW quickly to talk about helping automakers, but a meeting has not yet been scheduled.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. The chief executives of General Motors, Ford and Chrysler, and the president of the United Auto Workers union met with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid Thursday to discuss billions of dollars more in financial help for the companies.
In a statement, GM said the companies would work with Reid and Pelosi "to ensure immediate and necessary funding to keep the auto industry viable and its transformation on track during this critical time." GM said the support would "enable a competitive U.S. auto industry to contribute to our nation's economic revival." The executives declined to comment to reporters between the meetings, which were private.
They were asking for an additional $25 billion in federal loans for future health care payments for retirees.
The executives were also seeking help in accessing money from the Treasury Department or the Federal Reserve. Rep. John Dingell, D-Mich., a longtime advocate for the industry, said the meeting was productive but did not address the specifics of the industry's request.
"They're not seeking money just to spend it," he said. "They're seeking money to invest in jobs and opportunities for American workers and American industry.
In a written statement, Reid said the Bush administration "should exercise its existing authority to provide additional help to these firms," reports CBS News producer John Nolen.
Pelosi told reporters at the start of the meeting that they would discuss "how we can work together to go forward to ensure the viability of that important industry, looking out for the taxpayer and looking out for the worker."
Last month, Congress approved $25 billion in low-interest loans for domestic automakers and suppliers to retool plants to build fuel efficient vehicles. But congressional allies of the industry have said the money will not be available fast enough to help the companies.
U.S. auto sales declined to their lowest level in more than 17 years last month, prompting some auto executives to predict dire consequences if the economy doesn't improve. The companies are hoping Pelosi will include funding for the industry in an economic stimulus package if she decides to call the House back in for a lame-duck session.
Alan Reuther, the UAW's legislative director, said the executives and UAW president Ron Gettelfinger "will be making the case why additional assistance from the federal government is needed to help the companies through this severe economic credit crisis."
The Pelosi meeting with Chrysler CEO Bob Nardelli, Ford CEO Alan Mulally and GM Chairman and CEO Rick Wagoner comes at a precarious time for the industry. General Motors Corp. and Ford Motor Co. are expected to post dismal third-quarter results Friday that will show losses in the billions of dollars. Additional job cuts by both automakers also are expected Friday.
A top GM executive said Wednesday that the next 100 days will be critical for GM and the industry.
"We must be adaptable and ready to make needed changes quickly, particularly over the next 100 days," said Troy Clarke, GM's president for North America.
GM has been talking to Cerberus Capital Management LP, the majority owner of Chrysler LLC, about acquiring Chrysler. GM is reportedly seeking Chrysler's $11 billion in cash and federal aid to make the deal happen.
Auto industry officials said the companies do not intend to ask Pelosi for Congress' help in financing a merger. Gettelfinger has expressed concern that a GM acquisition of Chrysler would lead to massive job losses.
The new $25 billion in loans that the automakers want from Congress would help them make required payments to health care trust funds that were created as part of the 2007 labor deal.
Reuther said the companies are required to provide $15 billion to the fund in January 2010 and an additional $15 billion by 2012. He said the $25 billion from Congress would give the companies a better chance of immediately lining up other financing because most of the health care trust fund payments would have been covered.
"It's very important that those moneys be contributed so retirees continue to have health care," he said. "The financial community is looking at that liability, and it's a major factor in their willingness to provide loans to the companies."
The executives and Gettelfinger also want help from Congress in winning access to the $700 billion financial bailout being run by the Treasury Department and to low-rate emergency borrowing from the Federal Reserve's discount window, used in normal times by banks.
President-elect Obama expressed support for an additional $25 billion in loans on the condition that the money would go toward helping the industry build fuel efficient cars. Obama has said he would meet with industry leaders and the UAW quickly to talk about helping automakers, but a meeting has not yet been scheduled.
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Posted by incog-nito
Excuse me but you may notice that I was only referring to mpg, as in mpg(allon) of gas. You are correct that most of the energy is lost, been that way for 100+ yrs and if it could be higher it already would have. Engineers are always looking to maximize and they''ve been working on this for much longer than you''ve been around. My answer was related to gas fueled vehicles. Are there more efficient forms of transport? Absolutely! I wanted to address the myth of lawyers mandating the laws of physics to engineers. You cannot create more BTU''s than are inherently in a gallon of gas and there are losses in the chemical side also.
There is a downside to having the dirt poor workforce you conservative wing-nuts wish for.
Besides, the US auto makers aren''t going out of buisiness because of unions, it''s because of bad management.
They refuse to make this car: http://www.afstrinity.com/
With retirement and health care, that would be a lot of concessions. But if they are not competitive, ther they are going out of business.
-Heather Mazzenga
Posted by bm6005 at 12:38 PM : Nov 08, 2008
The Auto industry, like the financial industry, paid executives insane amounts of money as compared to the average worker. We weren''t in this together. If you did an analysis of the Dow 30 stocks, and compared the salaries of executives to the median wage earner, you''d find that in all these industries corruption and low accountability supported poorly developed and marketed products.
So what we are all in together, is the emergency net that is there when socialism replaces the median earners because capitalism paid so well for the top earners they didn''t do things better.
And I''ve spent the last week with a rented Sebring (company''s choice, not mine) that''s full of plastic, has trouble going uphill in a headwind, and has only slightly better visibility than an Abrams tank. Chrysler wants a bailout so they can keep making this cr@p?
On another trip I had a different make rental car that could wind up to 85 mph without problems and got about 45 mpg - and it was F-f-f-f (choke, gasp, hack) French!!! So I don''t wanna hear that American manufacturers are so fantastic when they can get beat by a bunch of "grenouilles" (look it up).
Capitalism = build a good product and succeed, build a crummy product and fail. Socialism = be inefficient but stay afloat with government subsidies and bailouts. Doesn''t look to me like the Little 3 are in favor of a free market anymore, does it?
Posted by WarDogLRS
He''s not even in office yet fool! This is the "effect" from your trickle down heroes you MORON!! Let''s have more trickle down, I just love it. Got my brokerage statement today. My investments are down 30%! I''ll give you trickle down you ******!!
Posted by WarDogLRS
He''s not even in office yet fool! This is the "effect" from your trickle down heroes you MORON!! Let''s have more trickle down, I just love it. Got my brokerage statement today. My investments are down 30%! I''ll give you trickle down you ******!!