This story was written by Gina Akers, The Daily Vidette
As the United States economy slopes further downward, the banks are not the only ones requesting a federal bailout. General Motors, Ford, Chrysler and the United Auto Workers union are pushing for a U.S. government rescue package as well.
"There is an urgent need for federal assistance not just for our members, but for millions of workers and retirees and for thousands of companies who depend on the auto industry for jobs, retirement benefits and revenue," UAW President Ron Gettelfinger said in a news release.
General Motors and Ford released their third quarter results on Friday. Ford reported a $2.9 billion quarterly operating loss and GM reported a $4.2 billion operating loss.
Illinois State University economics professor Neil Skaggs believes the automobile industry's losses will contribute to the already declining economy.
"The auto industry obviously is a large industry. If they're not selling and they're laying off lots of workers, it's going to have a negative [impact] on the economy," Skaggs said. "It will raise the unemployment rate and it contributes to the recession that we certainly are going to have."
Due to the losses, GM announced it has suspended talks about a potential merger with Chrysler.
"We're putting considerations of an acquisition aside for now," Julie Gibson, manager of financial communications at GM, said. "We have to focus on our own financial condition and improving that and doing what we need to do to get through the next couple of months."
The steps GM is taking include "plant closures, the accelerating of plant closures, cutting back on production, selling assets including Hummer brand and ACDelco brand [and] head count reduction," according to Gibson.
Head count reduction means not only laying off 5,500 employees, but offering early retirement packages for thousands of employees as well.
Although these steps may help, some believe the government needs to step in.
"The U.S. Treasury and the Federal Reserve can help immediately by taking steps to provide liquidity to auto manufacturers so they can get through the difficulties caused by an across-the-board decline in auto sales," Gettelfinger said.
Skaggs is against a bailout for the auto industry.
"The government should let them collapse. If the government continues to prop them up, they're not going to downsize the way they need to downsize," Skaggs said.
He believes the $700 billion bailout for the Wall Street banks was a good idea, but said it is different for the auto industry.
"There's a big difference in the banking system and the auto manufacturing industry," Skaggs said. "If the banking system had a complete liquidity collapse where no one could get loans, you're not talking about one section of the economy, you're talking about the entire economy."
The UAW union is looking to the country's newly elected leader to help the suffering industry.
"We look forward to meeting in the near future with President-elect Barack Obama to discuss these same issues," Gettelfinger said. "He has been a leader in the U.S. Senate in working to provide assistance to the auto industry and U.S. manufacturing.
"We share his vision of a revitalized U.S. economy based on good jobs and good wages and timely assistance to the U.S. auto industry is a critical first step in achieving these goals."