Obama’s Plans for the Auto Industry

WASHINGTON — President Barack Obama said Wednesday he’s prepared “to offer serious help” to Detroit’s auto industry, but only if its executives, workers and suppliers prove they’ll make the difficult changes needed for long-term success.

“My message is,” Obama said, “get me a plan.”

Speaking to the Free Press and reporters from about a dozen other newspapers in a wide-ranging interview, Obama signaled that government may have more aid to offer domestic automakers if they develop plans that detail their proposals to prod sales and make enough profits to sustain themselves in the future against an unmistakable drop in demand.

That could be especially good news for Chrysler LLC, which has said it needs another $3 billion on top of the $17.4 billion loan it and General Motors Corp. were granted in mid-December by President George W. Bush. Obama did not mention either carmaker by name but said he’s “monitoring the progress that is being made.”

Both automakers are required to submit plans to the Treasury Department on Tuesday and, if they are found lacking, the government could call the loans by the end of March, almost certainly triggering a bankruptcy.

It comes as the industry keeps losing jobs. This week, GM said it would cut 10,000 white-collar jobs worldwide, including 3,400 in the United States.

Although Obama declined to discuss details of possible help for the domestic auto industry, he reiterated his belief that a disorderly bankruptcy — one without significant preplanning to ensure that it had as minimal an effect as possible on the interconnected supply chain — could be “disastrous, not just for those states that are very reliant on autos, but for the economy as a whole.”

Late last year, when the automakers went before Congress to lobby for aid, there were estimates that as many as 3 million jobs could be lost nationwide if all three of Detroit’s automakers went belly-up all at once.

Ford Motor Co. is the only domestic automaker not seeking government money, saying it believes it can weather the horrendous sales climate.

In the interview, Obama declined to discuss specifics in the economic stimulus deal that emerged in Congress on Wednesday. He did say the stimulus includes money to help spark new technology — including $2 billion to develop and make the batteries needed for plug-in electric vehicles and hybrids of the future — and as much as $300 million to help convert federal fleets to more fuel-efficient vehicles.

But he said future help for automakers means not only that all the stakeholders “put some skin in the game” and make concessions if necessary but that the plans submitted by auto companies beginning next week take “into account what the auto market is going to look like over the next several years.”

“You know, if a plan is presented to us on 20 million” in annual “sales when we just know that’s not going to happen, then we’re going to have to ask them to go back to the drawing board,” he said.

SOURCE: FREEP.COM

Tags: automakers, bailout, Chrysler LLC, financial assistance, financial plans, General Motors Corp, President Barack Obama, treasury department

This entry was posted on Thursday, February 12th, 2009 at 12:23 pm and is filed under In The News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.