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Obama plans more aid for GM, Chrysler
By Ken Thomas |
March 30, 2009, Monday
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Print Edition
Print Edition
THE Obama administration was finishing work on a plan to give more financial aid to two Detroit auto makers in return for tough cost-cutting measures that will ensure the companies' survival.
President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.
GM and Chrysler, which employ about 140,000 workers in the United States, have already received US$17.4 billion in government loans to survive the economic downturn and the worst decline in auto sales in 27 years. GM is seeking another US$16.6 billion, while Chrysler wants US$5 billion more.
With the companies running out of money heading into April, any short-term aid would help the auto manufacturers maintain their operations while they seek concessions. Administration officials declined to comment on the plan on Saturday.
Task force members have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. The conditions could be more stringent than the loan terms set by the outgoing Bush administration in December, officials have said.
Obama is due to announce his decision today at the White House.
General Motors CEO Rick Wagoner met with members of the task force on Friday. Chrysler CEO Robert Nardelli met with the panel earlier in the week.
GM and Chrysler face a deadline tomorrow to submit completed restructuring plans, but neither company is expected to finish their work. The administration's plan would be designed to speed up those efforts.
Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese auto makers with US operations.
GM owes roughly US$28 billion to bondholders, while Chrysler owes about US$7 billion in first- and second-term debt, mainly to banks. GM owes about US$20 billion to its retiree health care trust, while Chrysler owes US$10.6 billion.
President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.
GM and Chrysler, which employ about 140,000 workers in the United States, have already received US$17.4 billion in government loans to survive the economic downturn and the worst decline in auto sales in 27 years. GM is seeking another US$16.6 billion, while Chrysler wants US$5 billion more.
With the companies running out of money heading into April, any short-term aid would help the auto manufacturers maintain their operations while they seek concessions. Administration officials declined to comment on the plan on Saturday.
Task force members have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. The conditions could be more stringent than the loan terms set by the outgoing Bush administration in December, officials have said.
Obama is due to announce his decision today at the White House.
General Motors CEO Rick Wagoner met with members of the task force on Friday. Chrysler CEO Robert Nardelli met with the panel earlier in the week.
GM and Chrysler face a deadline tomorrow to submit completed restructuring plans, but neither company is expected to finish their work. The administration's plan would be designed to speed up those efforts.
Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese auto makers with US operations.
GM owes roughly US$28 billion to bondholders, while Chrysler owes about US$7 billion in first- and second-term debt, mainly to banks. GM owes about US$20 billion to its retiree health care trust, while Chrysler owes US$10.6 billion.
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