Dodge Nitro Forum banner

1 - 9 of 9 Posts

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #1
BREAKING: Automakers to get $15 billion in federal loans

Posted Dec 5th 2008 10:12PM

Filed under: Government/Legal, Chrysler, LLC., Ford, GM


It's taken two rounds of Congressional hearings, some major pride swallowing and three detailed business plans, but it looks as if the Detroit 3 will be getting the federal loans they need, though not as much they asked for. A deal was reportedly reached between Democratic leaders and the White House that will supply around $15 billion in federal loans to the struggling U.S. auto industry. While General Motors, Ford and Chrysler asked for a combined maximum of $34 billion, the $15 billion is designed to ensure they stay alive until March when the issue will be readdressed with the input of a fresh Obama administration. GM and Chrysler reportedly need around $11 billion to survive the new year, while Ford has said it would only need government aid if one of the other two went under.

We're hearing that a deal was reached between Democrats and the Bush administration late Friday after top Dem. Nancy Pelosi gave in to the White House and its position that the money should come from $25 billion in loans previously approved to help the automakers retool for energy fuel efficient vehicles, rather than drawing the aid from the $700 billion Troubled Asset Relief Fund for struggling financial institutions. In return, Pelosi is seeking a guarantee that the money would be replenished in "a matter of weeks."

Both the Senate and House of Representatives have confirmed they will be meeting on Tuesday to vote on the deal, and it's expected that strong oversight of how the loans are used, whether in the form of an individual car czar or committee, will be part of the final package.


LINK:BREAKING: Automakers to get $15 billion in federal loans - Autoblog
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #2
Obama suggests some auto execs should lose jobs

Obama suggests some auto execs should lose jobs



CHICAGO – President-elect Barack Obama announced support Sunday for a short-term government bailout of the nation's carmakers that is tied to industry restructuring. He also accused auto executives of a persistent "head-in-the sand approach" to long-festering problems.

Obama said Congress was doing "the exact right thing" in drafting legislation that "holds the auto industry's feet to the fire" at the same time it tries to prevent its demise.


In an appearance on NBC's "Meet the Press" and later at a news conference, Obama at one point suggested some executives should lose their jobs.

One leading Democrat in Congress, Sen. Christopher Dodd of Connecticut, was far blunter. Rick Wagoner, the chief executive of General Motors Corp., "has to move on," said Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.

The criticism of industry leaders deepened as negotiators for the White House and Congress narrowed their differences over a plan to extend roughly $15 billion in short-term loans to any Detroit automaker that needs it. Analysts say General Motors Corp. and Chrysler LLC, in particular, are at risk for running out of money in the next few weeks, and that Ford Motor Co. may need help if the economy deteriorates further.

Democratic Sen. Carl Levin of Michigan, whose state is ground zero for the battered industry, said he was confident an agreement would emerge within the next day.

Democratic leaders have said they hope to pass the measure this week. While Levin declined to predict its approval, support among rank-and-file lawmakers presumably would improve dramatically if both White House and Obama were to signal their backing once the legislation is complete.

"The last thing I want to see happen is for the auto industry to disappear, but I'm also concerned that we don't put $10 billion or $20 billion or $30 billion or whatever billion dollars into an industry, and then, six months to a year later, they come back hat in hand and say, `Give me more,'" Obama said.

Obama, who takes office Jan. 20, has drawn some criticism from Democrats who want him to become more involved in efforts to save the industry. The president-elect said his aides are monitoring developments and considering longer-term plans.

He expressed no support for calls to allow the big carmakers to enter bankruptcy and said, "We don't want government to run companies." Instead, he said, "if taxpayer money is at stake — which it appears may be the case — we want to make sure that it is conditioned on an auto industry emerging at the end of the process that actually works, that actually functions.

"Taxpayers, I think are fed up. They're going through extraordinarily difficult times right now."

Obama did not single out any individual executive by name for criticism, and said there had been incremental progress in the past 15 years toward a more competitive line of products.

"What we haven't seen is a sense of urgency and the willingness to make tough decisions. And what we still see are executive compensation packages for the auto industry that are out of line compared to their competitors, their Japanese competitors, who are doing a lot better," he said.

Asked whether the top executives should remain in the jobs, he said, "Here's what I'll say, that it may not be the same for all the companies. But what I think we have to put an end to is the head-in-the-sand approach to the auto industry that has been prevalent for decades now."

Later, at the news conference, he appeared to temper his comments, saying that current management should be ousted if it doesn't understand the urgent need to make changes in the industry.

A breakthrough on the long-stalled rescue came Friday when House Speaker Nancy Pelosi, D-Calif, yielded to President George W. Bush on a key point: allowing the aid to come from an existing fund set aside for the production of environmentally friendlier cars.

The Big Three executives spent two consecutive days on Capitol Hill this past week pleading for as much as $34 billion in loans to help their industry survive. But they made clear that $15 billion would be enough to keep them running until the end of March 2009.

Dodd appeared on CBS' "Face the Nation" and Levin was on "Fox News Sunday."

LINK:Obama suggests some auto execs should lose jobs - Yahoo! News
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #3
Rescue Plan heads for Hill

Opposition firm as rescue heads for Hill



December 10, 2008

Updated at 1:03 p.m.

WASHINGTON – Congressional leaders put the final touches on a $14-billion rescue for General Motors Corp. and Chrysler LLC today, as Democrats planned to hold a House vote today and top Senate Republicans raised several objections, with some vowing to filibuster.

Although the House could pass the compromise today, Senate Majority Leader Harry Reid, D-Nev., said it was unlikely the Senate could act that quickly. Senate Minority Leader Mitch McConnell, R-Ky., said it would be impossible to hold a vote today, since Republicans hadn’t had the time to study the legislation.

There was still some confusion over the amount involved. The bill specifies $14 billion for the industry, drawn from loans for retooling plants. But some congressional Democrats said the plan would give up to $15 billion to automakers.

Sen. David Vitter, R-La., said on the Senate floor that the rescue plan was “ass backwards” for handing the money to the automakers first before requiring more detailed plans of how they would save themselves. GM, which has a plant in Louisiana, and Chrysler have said they need $8 billion before the end of the month to stave off insolvency.

Vitter said he would use every procedural tool at his command to delay and block any bill, and other Republicans have also vowed to filibuster. Several said it would be better if the government provided aid for the automakers to declare bankruptcy.

“From what I’ve seen thus far, I think it’s a travesty,” said Sen. Richard Shelby, R-Ala. “This is an installment on a huge bailout that would come later.”

Shelby, Vitter and other Republicans said an alternative from Sen. Bob Corker, R-Tenn., would be brought to the floor. Corker has said automakers and the UAW need to commit to steep cuts in return for aid, namely immediately cutting UAW wages to those at foreign automakers' plants and accepting half of the money for the retiree health care trust fund in stock.

The compromise did pick up the endorsement of a key Senate Republican, George Voinovich of Ohio, who urged his colleagues to vote for it.

“This is not the time for political grandstanding. Time is running out for our economy,” Voinovich said. “Unfortunately, some of my colleagues in the Senate do not understand how fragile things are and the anxiety other Americans are experiencing.”

Reid said if Republicans used roadblocks to delay the plan, the Senate would likely have to meet through the weekend to pass any bill. Reid also said vice president elect Joe Biden had vowed to come back and vote if necessary.

Procedural delays in the Senate could take several days to resolve, with backers of the rescue needing 60 votes to succeed, including those of up to 20 Republicans.

McConnell said he had no way of knowing whether the compromise reached between the Democratic leaders in Congress and the White House addressed the concerns his party had raised.

“A company that does not respond to market conditions is a company that‘s doomed to fail anyway,” he said.

Michigan Sen. Debbie Stabenow urged Congress to act.

“We cannot sit idly by and allow our manufacturing base to be decimated by the credit crisis,” she said. “In order to stay competitive in a global economy and preserve our middle class, we must make things in this country.”

The compromise strengthens the power of the federal overseer, or car czar, who will make loans to GM and Chrysler. If those companies don't make the cuts and reach deals with creditors and the union by March 31, the overseer must call back any loans and essentially force them into bankruptcy.

The bill does not force automakers to drop lawsuits against California's greenhouse-gas limits on vehicles, a clause House Democrats had strongly favored, but the White House and Republicans opposed.

While the bill would give GM and Chrysler the $14 billion the automakers say they need to survive through March 31, it also sets the terms for Ford Motor Co., which has said it will not take a loan but will ask for a $9-billion credit line. GM and Chrysler would have to grant the government stock or warrants that could give it a majority stake in either company, and also restrict executive pay and end corporate jet travel.

Officials said the new plan stiffens the rules for making automakers viable, including how that will be defined once their restructuring plans are in place.

As with the draft, the pact creates an industry overseer, which could be more than one person, who must lend money to troubled automakers immediately. GM and Chrysler would have to prove as early as February that they had made progress in the cuts promised as part of their turnaround plans.

The draft had given the overseer flexibility to judge whether automakers made enough progress by March 31. The compromise provides only one 30-day extension for the companies; if they are still faltering, the government must call back its loan and likely trigger the automakers' collapse.

The overseer still can't order cuts by creditors and unions, but officials said the requirement that the loan come back would sharpen the overseer's powers. The bill also bars automakers from drawing money from any other government program to stave off bankruptcy, in an attempt to calm fears of repeat pleas for rescue.

The compromise addresses a major concern for Ford, which said a credit line could put it into default with other lenders if the government's loan took precedence over all other debt.


LINK:Opposition firm as rescue heads for Hill | Freep.com | Detroit Free Press
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #4
House OKs bailout for auto industry

House OKs bailout for auto industry


Dec. 11, 2008, 6:16AM


WASHINGTON -- A House-passed bill to speed $14 billion in loans to Detroit's automakers stands on shaky ground in a bailout-weary Congress, undermined by Republican opposition that could derail the emergency aid in the Senate.

Republicans are challenging lame-duck President George W. Bush on the proposal, arguing that any support for the domestic auto industry should carry significant concessions from autoworkers and creditors and reject tougher environmental rules imposed by House Democrats.

The House approved the plan late Wednesday on a vote of 237-170. It would infuse money within days into cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough cash to make it through 2009, would also be eligible for federal aid.

Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks, and concerns that a carmaker collapse would erase tens of thousands of jobs and jolt an already bleak economy.

Democrats and the Bush White House hoped the Senate would vote on the legislation as early as today. But based on concerns raised by GOP senators -- and a still-uncertain level of support even among Democrats -- they had a lot of work to do.

The measure's murky outlook reflected the difficulty of approving another federal financial rescue on the heels of the deeply unpopular, $700 billion Wall Street bailout, as the clock ticks down on the current Congress and Bush's influence is at a low ebb.

``People realize that this bill is an incredibly weak bill (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it,'' said Sen. Bob Corker, R-Tenn.

Even Republicans representing states with automobile plants said the proposal was far from ideal. Sen. Kit Bond, R-Mo., whose state is home to five auto plants, said he wanted to see changes. Sen. George Voinovich, R-Ohio, said the bill lacked the necessary Republicans to pass the Senate.

The measure would create a government ``car czar,'' to be named by Bush to issue the loans, empowered with the ability to yank back the loans and force the carmakers into bankruptcy next spring if they fail to cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Opposition wasn't limited to Republicans.

Democratic Sen. Max Baucus of Montana is opposing the measure because of a provision to bail out transit agencies that were involved in transactions now considered unlawful tax shelters.

Under the House-passed bill, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The automakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the Big Three, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

Democrats agreed to scrap language - which the White House had declared a deal-breaker - that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states. But they kept a provision to force the automakers to abide by those states' limits - a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.
Senate Democrats unveiled a nearly identical measure that omitted the requirement, but that bill still faced long odds.

The Bush administration is expected to work with President-elect Barack Obama's team on choosing the industry czar. The overseer would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more.

The measure also would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the $700 billion Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.

Also included in the bill is an unrelated pay raise for federal judges.


LINK:House OKs auto bailout but passage in Senate shaky | Business | Chron.com - Houston Chronicle
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #5
Sweden gives Volvo, Saab billions in aid

December 11, 2008

Sweden gives Volvo, Saab billions in aid


STOCKHOLM, Sweden -- The Swedish government has decided to provide its ailing auto industry with a $3.4-billion support package.

The plan offers credit guarantees, emergency loans and research funds to boost companies in the "Swedish automotive cluster," the government said.

Swedish automakers Volvo and Saab, which are owned by Ford Motor Co. and General Motors Corp., respectively, employ about 20,000 people in Sweden.

The two companies have been appealing to the government for support because of the financial woes of their U.S. owners, who are also seeking as much as $34 billion in loans from Congress.

The Swedish plan, which requires approval from lawmakers, was announced just hours after the U.S. House of Representatives approved a bill to get $14 billion in emergency loans to the struggling U.S. auto industry.

Democrats and the White House hoped the bill could be enacted by week's end, but it is jeopardized by opposition from Republicans in the Senate.

The Swedish government said its support package was needed to safeguard "the continued success of the Swedish automotive industry," even if the industry's crisis deepens. It also called for quicker development of green technology.

The plan, which offers a total of 28 billion Swedish kroner, includes a maximum of 20 billion kronor in credit guarantees to automotive companies, and up to 5 billion kronor in rescue loans to bail out companies in crisis. The government said it would also earmark 3 billion kronor for research and development in the automotive sector.

"The measures will be taken with the clear assumption that the state does not intend to acquire any of the existing automotive manufacturers," the government said in a statement. "They are also based on continued openness in relation to the ongoing process in the U.S. automotive industry and conclusions drawn by current or any new owners."

The government said the plan was in line with the proposals in the European Commission's economic recovery plan.

LINK:Sweden gives Volvo, Saab billions in aid | Freep.com | Detroit Free Press
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #6
$14B auto bailout dies in Senate

$14B auto bailout dies in Senate

By JULIE HIRSCHFELD DAVIS and KEN THOMAS, Associated Press Writer Julie Hirschfeld Davis And Ken Thomas, Associated Press Writer 13 mins ago

WASHINGTON – A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.


"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.

Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.

Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

GM said in a statement is was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said.

The White House said it was evaluating its options in light of the breakdown.

"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.

The implosion followed an unprecedented marathon negotiations at the Capitol among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.

Aid the automakers gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.

The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued postelection Congress, with Bush's influence at a low ebb.

Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and also urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.

Congressional Republicans were already in open revolt against Bush over an auto bailout deal the White House negotiated with congressional Democrats, passed by the House passed on Wednesday.

The developments unfolded after Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to the White House-backed rescue bill passed by the House on Wednesday.

He and other Republicans said wages and benefits for employees of Detroit's Big Three should be renegotiated to bring them in line with those paid by Japanese carmakers Toyota, Honda and Nissan in the United States.

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package and the Senate dropped them from its package.

Some Senate Democrats joined Republicans in turning against the House-passed bill — despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.

The House-passed bill would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would be compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.

McConnell said that measure "isn't nearly tough enough."

Supporters had an uphill battle pressing the rescue package on a bailout-fatigued Congress — particularly a measure designed to span the administrations of a lame-duck president and his successor. Before the late-day negotiations, patience had begun wearing thin at the Capitol as lawmakers looked ahead to adjourning for the holidays.

The House approved its plan late Wednesday on a vote of 237-170. Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks.

A pair of polls released Thursday indicated that the public is dubious about the rescue plan.

Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Just 45 percent of Democrats and 31 percent of Republicans supported the idea.

In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #7
Treasury ready to prevent collapse of automakers

Treasury ready to prevent collapse of automakers

December 12, 2008
Last Update: 12:14 pm


WASHINGTON (AP) - The United Auto Workers union is welcoming the Bush administration's vow to prevent the possible failure of any U.S. automakers in the next few weeks.

After the Senate rejected a $14 billion rescue plan for the industry, the White House today says the economy "could not withstand a body blow" that a "disorderly bankruptcy in the auto industry" would create.

Bush press secretary Dana Perino says Congress doesn't "have the votes to do anything," so the White House will have to consider other options.

The Treasury Department says it "will stand ready to prevent an imminent failure until Congress reconvenes" and takes action.

Tapping the $700 billion financial rescue is one of the few remaining options for General Motors and Chrysler, which have said the could run out of cash within weeks.

In Detroit, UAW President Ron Gettelfinger says while he doesn't know exactly what that would mean, the statements from the White House and the Treasury come as "great news."


LINK:Treasury ready to prevent collapse of automakers - Newswatch50.com... We're Always On!
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #8
Nardelli: White House statement is promising

Nardelli: White House statement is promising

Posted Friday, Dec 12, 2008 at 10:50 am in Messages From Our Leaders

Dear Employees:


We are all obviously disappointed in what transpired in the Senate last night. While a majority of Senate members supported the bridge loan request (52 in total, including 10 Republicans), the required 60 votes necessary were not achieved. While concessions from all key constituents were a condition of the loan, attempts to negotiate specific industry cost concessions during Senate consideration failed, leading to the breakdown.

Despite this setback, we will continue to make our case in Washington that an immediate, short-term bridge loan is critical for Chrysler to survive the current financial crisis and is just as important to the health of the overall American economy. We also will continue our discussions with the White House and with the Treasury Department, and will continue to seek funding options for Chrysler and Chrysler Financial through existing programs including the Troubled Assets Relief Program (TARP).

To that end, we were pleased to see the commitment from the White House in the following statement released today:

“It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.

While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.”

I also want you to know that we are in on-going discussions with the presidential transition team, and key members of the incoming administration are aware of the importance of addressing the short-term and long-term viability of our industry and our company.

All of us can help with these efforts. First and foremost, we must eliminate every unnecessary cost in every aspect of our business. While a bridge loan is critical to manage through this financial crisis, we must continue to manage the factors under our control. Continued cost reduction is important to ensure the future viability of the company. At the same time, let’s not forget that we have a solid plan for recovery and viability, great products in our pipeline and the most dedicated people in the business. Let’s all maintain our commitment to each other to work toward a great future for our Company.

I also would encourage every U.S. employee to take a minute today and call the White House comment line at (202) 456-1111, or send a note to the White House at [email protected]. Voice your support for immediate action to assist Chrysler and the millions of Americans who depend on the automotive industry. Urgent action is needed to prevent the failure of this important industry that provides $293 billion in annual economic benefit to this country. Please tell your friends and family to do the same. Together, we will make our voices heard.

Thank you for your continued support.

Bob
 

·
Super Moderator
Joined
·
23,865 Posts
Discussion Starter #9
Canada Still May Give Aid to Carmakers

Canada Still May Give Aid to Carmakers, Flaherty Says (Update1)

Dec. 12 -- Canadian Finance Minister Jim Flaherty said the government is considering aid to carmakers even after a bailout plan in the U.S. was rejected yesterday.

“This is an ongoing issue,” Flaherty, 58, told reporters in Saint John, New Brunswick today. “Our government is open to helping the industry. This is a day-by-day thing, obviously, in terms of developments in the United States.”

The Canadian government is weighing whether to provide aid to the Canadian units of Chrysler LLC, General Motors Corp. and Ford Motor Co. after U.S. lawmakers last night rejected a $14 billion bailout package, increasing the prospect of bankruptcy for GM and Chrysler. The U.S. Treasury said today it stands ready to prevent the failure of American automakers, saying in a statement from Washington that assistance would be available “until Congress reconvenes.”

GM has asked for C$800 million ($645 million) in aid from Canada by month’s end, an additional C$1.2 billion line of credit through March and then C$400 million in the second quarter.

“We’re going to look at all our options,” David Paterson, the unit’s vice president of corporate and environmental affairs, said in an interview today.

Ontario Woes

The U.S. automakers, which last year produced more vehicles in Ontario -- Canada’s biggest province and industrial heartland -- than in Michigan, already cut their Canadian employment to 27,800 workers as of November, down 40 percent from a peak of 46,400 in 2002, according to the Canadian Auto Workers union.

GM has 12,574 active workers in Canada, Chrysler 7,865 and Ford 7,402. Those figures exclude laid-off union employees who have recall rights.

GM is accelerating the planned closing of its truck plant in Oshawa, Ontario, to May from July, trimming as many as 8,000 workers, and last week said it will cut 700 jobs at a car plant in the same town.

Detroit-based GM has said it lacks the minimum $11 billion needed to pay bills by the end of this month without help. Chrysler has said it will run out of money by early next year. Alan Mulally, Ford’s chief executive officer, said his company doesn’t need emergency U.S. loans though he predicted last week that it could be dragged into bankruptcy by the failure of GM.

‘Waste of Time’

Aid for the companies’ Canada operations may “be a waste of time because they’ll probably end up in some sort of bankruptcy within weeks,” said Aaron Fennell, a Toronto-based broker at the Canadian unit of MF Global Ltd., the world’s largest broker of exchange-traded futures and options.

“If that happens you can throw as much money at it as you want and it’s just going to be wasted,” he said. “If the parent is bankrupt, there’s no point in supporting the Canadian subsidiaries.”

The U.S. bailout collapse is “not good news” for the Canadian dollar, Fennell said. The currency fell 0.4 percent to C$1.2418 per U.S. dollar at 10:13 a.m. in Toronto from C$1.2367 late yesterday. One Canadian dollar buys 80.53 U.S. cents.




LINK: Bloomberg.com: Canada
 
1 - 9 of 9 Posts
Top