Washington - Chief executives from the United States' iconic
Big Three automakers faced a skeptical audience this week as they
took their plea for a 25-billion-dollar bail-out to US lawmakers.
Despite warnings of an economic 'tsunami' if any one of General
Motors Corp, Ford Motor Co or Chrysler LLC declares bankruptcy,
legislators are unwilling or unable to give the ailing automakers
what they want, at least for now.
Nevada Senator Harry Reid, leader of the centre-left Democratic
majority in the upper chamber, late Wednesday cancelled a Thursday
vote by the full Senate. He suggested that Congressional action was
unnecessary if President George W Bush, who has two months left in
office, would simply give the carmakers a 25-billion-dollar bail-out
from the 700-billion-dollar rescue package approved just weeks ago
for the financial sector.
As we have said all along, the Treasury already has the authority
and resources to protect thousands of Americans who work in our
nation's struggling auto industry,' Reid said. 'If the Bush
administration has any interest in saving Detroit, it has the power
to do so.'
While acknowledging the reality that he lacked the votes to act,
Reid seemed to also be positioning his Congressional Democrats to
blame the centre-right Republicans for any automotive bankruptcies.
Weeks after being battered in the November 4 elections, most
Republicans and some Democrats who have not supported special help
for the auto industry find themselves aligned with a skeptical
public.
A survey last week by the respect Gallup organization found that
49 per cent of respondents opposed an automotive bail-out, to 47 per
cent in favour.
It marked a sign of just how much ill-will exists toward an
industry that has failed to modernize and keep up with more fuel-
efficient competitors from Asia over the last decade.
Lawmakers had tough words for the three chief executives who
appeared before committees of both the US Senate and the House of
Representatives on Tuesday and Wednesday. Many legislators argued
that the Big Three had followed a failed business model and should
simply be allowed to file for bankruptcy.
'The Big Three stand as emblems of the American dream, and they've
been an integral part of the American economy for generations,' said
Congressman Max Bauchus, the top Republican on the House's Financial
Services Committee.
But Bauchus wasn't about to be seduced by the American romance
with the automobile: 'The American way to solve this problem is not
to depend on the government for a solution. The government handing
them taxpayer money ... will only lead to prolonged pain.'
The corporate chiefs were forced to defend their heavy salaries
and criticized for not making their own sacrifices in the face of an
industry meltdown. Legislators pointed to perks like the private jets
they used to fly to Washington for the congressional hearings.
'There's a delicious irony in seeing private luxury jets flying
into Washington, DC, and people coming off of them with tin cups in
their hands saying that they're going to be trimming down and
streamlining their businesses,' said Congressman Gary Ackerman, a New
York Democrat.
'It's almost like seeing a guy show up at the soup kitchen in high
hat and tuxedo.'
Both General Motors and Chrysler said they will soon run out of
money for daily operations if they don't get a government loan. GM
chief executive Rick Wagoner warned that 3 million jobs would be lost
if the company goes under.
With the United States already likely in a recession, executives
argued that the last thing the world's largest economy needs is a
collapse of the automotive industry.
Together, the three automakers employ more than 240,000 people,
while another 2.3 million work for suppliers. The executives spoke of
4.5 million jobs being dependent on the auto industry, which accounts
for about 4 per cent of US economic output.
Michigan politicians on both sides of the political aisle made an
especially impassioned pleas for aid, as a bankruptcy will
disproportionately affect the automakers' base of operations in
Detroit.
The industry has been in trouble for a while. GM reported a 39-
billion-dollar loss last year, the largest in company history.
Hundreds of thousands of jobs have already been eliminated.
While legislators blamed the automakers' failure on poor business
models, executives insisted that they were making good progress in
reorganization efforts before the global financial crisis ballooned
out of control in September.
Auto sales in the US plummeted 32 per cent in October to their
lowest level since 1991 as consumers cut back on purchases and
struggled to get car loans. Credit has seized up across the country
as banks, fearful of their own collapse, began hording cash.
Democrats in Congress have been pushing for the 25-billion-dollar
bail-out to be approved, arguing it should be taken out of the 700-
billion-dollar rescue package approved for the financial sector.
The Bush administration and their fellow Republicans in Congress
have balked, instead offering to simply modify the conditions on an
existing 25-billion-dollar loan connected to fuel-efficiency
standards.
That means any additional auto bail-out package will likely have
to wait until a more sympathetic president-elect Barack Obama takes
office next year - if automakers can last that long.
GM SUV OwnerNov 20th, 2008 - 20:27:40
Please let these 3 automakers and their spoiled exec's go extinct. Toyota's CEO earns less than a million and provides better leadership. Anything over a million just gets you corruption. The whole notion that you need to pay big bucks to get good execs is a farce. Maybe Detroit needs to start hiring Japanese execs and CEO's. Just like the cars you get better value for the money.
Report this comment