Detroit's Big Three automakers pleaded with Congress on Tuesday for a $25 billion lifeline to save the once-proud titans of U.S. industry, warning of a national economic catastrophe should they collapse.
Millions of layoffs would follow their demise, they said, as damaging effects rippled across an already-faltering economy.
But the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans.
"Our industry ... needs a bridge to span the financial chasm that has opened up before us," General Motors Corp. CEO Rick Wagoner told the Senate Banking Committee. He blamed the industry's predicament not on failures by management but on the deepening global financial crisis.
And Robert Nardelli, CEO of Chrysler LLC, told the panel the bailout would be "the least costly alternative" when compared with damage from bankruptcy.
Sympathy for the industry was sparse.
Banking Committee Chairman Christopher Dodd, D-Conn., told the leaders of GM, Chrysler and Ford Motor Co. that the industry was "seeking treatments for wounds that I believe to a large extent were self-inflicted."
Still, he said, "At a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."
Sen. Mike Enzi, R-Wyo., complained that the larger financial crisis "is not the only reason why the domestic auto industry is in trouble."
He cited "inefficient production" and "costly labor agreements" that put the U.S. automakers at a disadvantage to foreign companies.
Angus MacKenzie, editor in chief of Motor Trend, says the whole industry is "structurally all wrong."
For example, while GM and Toyota each have about 20 percent of the U.S. market, GM has eight brands and Toyota has only three, reports CBS News correspondent Anthony Mason. General Motors has 7,000 dealerships; the Japanese automaker has just 1,500.
"It's got too many people making too many products in too many factories, selling through too many dealers," MacKenzie says.
Ford CEO Alan Mulally told senators the auto industry was "a pillar of our economy. We look forward to working with you to be part of the solution" to the financial crisis. "We at Ford are well on our way to transforming our country and building a new Ford," he said.
GM's Wagoner said that despite some public perceptions that his company was not keeping pace with the times and technological changes, "we've moved aggressively in recent years to position GM for long-term success. And we were well on the road to turning our North American business around."
"What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II."
Failure of the auto industry "would be catastrophic," he said, resulting in three million jobs lost within the first year and "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."
Chrysler's Nardelli sought to respond to critics who suggest the automakers seek Chapter 11 bankruptcy protection, as have some airlines that later emerged restructured and leaner.
"We just cannot be confident that we will be able to successfully emerge from bankruptcy," Nardelli said.
Chrysler was bailed out by the federal government once before, in 1979, with $1.2 billion in loan guarantees. The company repaid the loan, plus interest, ahead of schedule.
Joining the Big Three CEOs, Ron Gettelfinger, president of the United Auto Workers union, said the emergency loans were important for the survival of the industry and union jobs. He said the UAW recognized that "in order for these companies to be competitive, we had to make tough calls" in labor concessions.
Congressional leaders worked behind the scenes in an effort to hammer out a compromise that could speed some aid to the automakers before year's end. But the outlook seemed poor.
"My sense is that nothing's going to happen this week," Sen. Bob Corker, R-Tenn., said at the opening of the hearing.
Earlier, Majority Leader Steny Hoyer said Congress might have to return in December - rather than adjourning for the year this week, as expected - to push through an auto bailout.
"Dealing with the automobile crisis is a pressing need. We are talking about a lot of people ... and a great consequence to our economy," said Hoyer, D-Md.
Superior Industries, a wheel maker in California, has already taken a hit, reports Mason.
"We've just closed a plant is Kansas. That will be approximately 700 people," says CEO Steven Borick, who adds that his business is down more than 30 percent this year.
The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said it will delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year's end without government aid.
In the Senate, Democrats discussed but rejected the option favored by the White House and GOP lawmakers to let the auto industry use a $25 billion loan program created by Congress in September - designed to help the companies develop more fuel-efficient vehicles - to tide them over financially until President-elect Barack Obama takes office.
House Speaker Nancy Pelosi, D-Calif., and other senior Democrats, who count environmental groups among their strongest supporters, have vehemently opposed that approach because it would divert federal money that was supposed to go toward the development of vehicles that use less gasoline.
Instead, they want to draw the $25 billion directly from the $700 billion Wall Street bailout - bringing the government's total aid to the car companies to $50 billion.
A Senate vote on that plan, which would also extend jobless benefits, could come as early as Thursday, but aides in both parties and lobbyists tracking the effort privately acknowledge it doesn't have the support to advance. Treasury Secretary Henry Paulson renewed the administration's opposition on Tuesday.
Even the car companies' strongest supporters conceded Tuesday that changing the terms of the fuel-efficiency loan program might be the only way to secure funding for them with Congress set to depart for the year and the firms in tough financial shape.
"While I believe we have to have retooling going into next year, if in the short run the only way we have to be able to get some immediate help is to take a portion of that, I would very reluctantly do that - but only because I believe President-elect Obama is going to be focused on retooling and on a manufacturing strategy next year," said Sen. Debbie Stabenow, D-Mich.
Mr. Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan - not simply as a blank check.
"For the auto industry to completely collapse would be a disaster in this kind of environment," Mr. Obama told 60 Minutes' Steve Kroft in an.
The White House said the government shouldn't send any more money to the struggling auto industry on top of the already-approved loans.
"We don't think that taxpayers should be asked to throw money at a company that can't prove that it has a long-term path for success," said White House Press Secretary Dana Perino.
Sen. Mitch McConnell, R-Ky., the minority leader, said that redirecting the existing loans was "a sound way to go forward," and that he was working with Democratic Leader Harry Reid of Nevada to set a vote on such a plan.