Congress’ deadline is coming quickly
UAW chief pleads for federal aid as automakers prepare for Tuesday
WASHINGTON — The head of the United Auto Workers made a public plea Sunday for government help for U. S. carmakers as the Big Three put the final touches on stabilization plans to submit to Congress.
“We cannot afford to see these companies fail,” said Ron Gettelfinger, the UAW chief, calling on Congress to approve the aid during a special session the week of Dec. 8.
Gettelfinger said a $25 billion rescue plan for the carmakers is “not a bailout, this is a loan — a bridge loan — that will get us through until we can take a longer-term look at exactly what needs to be done in the industry.”
Democratic leaders are demanding blueprints from Chrysler LLC, Ford Motor Co. and General Motors Corp. before they will schedule votes on any new federal aid. The plans, due Tuesday, are to be scrutinized at a Senate hearing Wednesday and a House hearing on Friday.
If lawmakers like what they see, Congress may reconvene the following week to consider the auto bailout.
Members of Congress remain deeply divided on the aid, with many in both parties wary of supporting another costly government rescue on the heels of the $700 billion Wall Street bailout.
Sen. Lindsey O. Graham, R-S. C., said he would not back the help for the U. S. auto industry.
“I don’t believe it is a good idea to take $25 billion and give it to the three major car companies, which I think have a business plan that’s doomed to fail,” he said.
Like many Republicans and some Democrats, Graham said it would be better to allow one or more of the struggling companies to go under and restructure in bankruptcy.
Sen. Claire McCaskill, D-Mo., said she’s willing to consider an auto bailout, but not before Congress gets a clear accounting of the companies’ financial situation.
“We need to behave like a bank,” McCaskill said. “And we need to make sure that we get all of those internal financials and that we feel comfortable that this is a good investment for the American taxpayer.”
The Senate Banking, Housing and Urban Affairs Committee is scheduled to meet Wednesday on the automakers’ plans. The House Financial Services Committee has set a Friday session.
“They have to show a plan that shows that the $25 billion gets them to the point of viability. They have to show us a plan of how they’re going to restructure their industry. They have to show us a plan about not opposing higher fuel efficiency (standards). If they do those things, there will be support for them,” said Sen. Robert Menendez, D-N. J., a member of the Senate committee.
The UAW is willing to consider more concessions on wages and benefits as part of any new federal aid, Gettelfinger said, but other parties have to share in the sacrifice.
“We’re prepared to go back to the table,” Gettelfinger said. Still, he added, “Based on the changes we’ve made to our contracts, we are competitive” already.
In return for new federal loans, leading Democrats want the Big Three to agree to eliminate lavish executive pay packages and dividends; reimburse taxpayers; share future profits with the government; and show how they will meet fuel-efficiency standards and cover their health care and pension obligations to workers.
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., have ordered Chrysler, Ford and GM executives to address all those issues in the plans they submit to Congress.
Also Sunday, GM’s board met in Detroit to discuss the plan it wants to present to Congress. The plan may determine if Chief Executive Officer Rick Wagoner can save the company and keep his job.
Directors started reviewing the proposal at noon Sunday and will continue today, people familiar with the plans said. GM will prepare a 10-to 12-page public document and a private, more detailed plan of about 80 pages with background material, the sources said. GM said Nov. 7 it may be short by year’s end of the $11 billion minimum in cash needed to pay monthly bills.
GM shares have gained on investor optimism that a plan to slash debt, cut labor costs and possibly eliminate half the automakers U. S. brands may help win as much as $12 billion to stay in business during the steepest industry slowdown in at least a decade. The stock rose the most in a two-day period in at least 28 years in New York trading at the end of last week, and climbed five out of six days.
“We envision the current Congress will authorize a short-term bridge loan that carries GM, Ford Motor Co. and Chrysler LLC to the start of President- elect Barack Obama’s administration in January,” Himanshu Patel, a New York-based analyst at JPMorgan Chase & Co., said in a note to investors on Nov. 25. He rates GM and Ford shares “neutral.” Chrysler is not publicly traded.
GM wants to cut its $43 billion in debt, even after getting the government loans, to ensure its future viability, people familiar with the plan said last week. The automaker will ask current debt holders to exchange current bonds for lower value debt that may also include equity, the people said.
The company also may seek an end to provisions that pay union employees not to work when their plants are shut down, the people said. GM is trying to close plants and slow production to adapt to auto sales that may fall to 11.7 million cars and trucks next year from 16.1 million last year.
The largest U. S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because details haven’t been presented to Congress.
After burning through $6.9 billion in cash last quarter, GM said Nov. 7 that it had $16.2 billion as of Sept. 30, raising the prospect of falling short by years. GM has said a bankruptcy filing would be a disaster.
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