Detroit Urgently Seeks $25 Billion More in Loans
By Kendra Marr and Lori Montgomery
Washington Post Staff Writers
Thursday, November 6, 2008
Top auto industry executives and the president of the United Auto Workers plan to meet with House Speaker Nancy Pelosi today to ask for additional federal aid for the struggling U.S. carmakers.
Chief executives G. Richard Wagoner Jr. of General Motors, Alan Mulally of Ford, Robert L. Nardelli of Chrysler and UAW president Ron Gettelfinger are in Washington to argue that if there is a November stimulus package from Congress, the auto industry should receive an additional $25 billion loan to retool for production of energy-efficient vehicles, according to sources familiar with the matter who were not authorized to speak publicly about the meeting. That measure has been endorsed by President-elect Barack Obama and other Democrats.
Yesterday, the Energy Department completed the interim program rules for the existing $25 billion loan package. The rules allow automakers and suppliers to apply for government funding. Just last month the department said it could take more than a year for the money to reach the troubled automakers. Industry officials and members of Congress urged the department to accelerate the process.
"Since Congress provided funding for this loan program approximately 30 days ago, the Department has worked quickly and responsibly to draft this rule, set up a loan office and establish a credit review board to review loan applications," Secretary of Energy Samuel W. Bodman said in a statement yesterday.
Still, the loan must comply with the National Environmental Policy Act and the Congressional Review Act, which prevents a regulation from being implemented until 60 days after the next Congress convenes in January.
During his campaign, Obama said injecting financial aid into the struggling U.S. auto industry would be one of his top priorities as president. But he also said that help would come with strings attached.
"We will provide you with the resources you need to retool," Obama said last week on NBC's "Nightly News with Brian Williams." "We'll help you with some of your legacy costs in terms of health care and pension costs for your workers. But in exchange, that money has to be reinvested in creating the high-energy -- the high-efficiency cars of the future."
Detroit is seeking more immediate help. Automakers collectively reported their lowest sales in 17 years Monday, casting more uncertainty on the jobs of union workers who supported Obama during the election. General Motors, meanwhile, has sought government financing to help it complete a merger with Chrysler.
In remarks prepared for a speech before the Original Equipment Suppliers Association last night, Troy Clarke, president of General Motors North America, said the next 100 days are critical for the auto company.
"In fact, this may be the most crucial time in the history of our industry," Clarke said.
Obama has proposed doubling to $50 billion the size of a proposed loan package approved by Congress to hasten the development of fuel-efficient vehicles. Representatives in Obama's transition office could not be reached for comment.
Obama's long-term fixes for the industry have been tethered to advancing green car technologies and U.S. energy independence, according to the New Energy for America plan he unveiled in Lansing, Mich., in August.
"It's not going to be the blank check some automotive companies are hoping for," said Thilo Koslowski, Gartner's lead auto analyst based in San Jose.
Obama proposed increasing fuel-economy standards 4 percent each year and providing $4 billion for U.S. automakers to retool plants to build more fuel-efficient vehicles.
By 2015, he aims to get 1 million U.S.-built, plug-in hybrid vehicles -- autos potentially capable of getting 150 miles per gallon -- on the road. He said the government should invest $150 billion over 10 years to accelerate the commercialization of such hybrids, along with pushing the construction of low-emission coal plants and providing training for green jobs.
Under his administration, he said he would mandate that all new vehicles be capable of using biofuels and other alternatives.
And Obama said he would promote the sale of these autos. Obama promised to offer a $7,000 tax credit for people who buy advanced technology vehicles, similar to a measure approved by Congress last month. Within a year, the entire White House fleet is slated to consist of plug-ins, as security permits, and by 2012 half of the cars the federal government buys are supposed to be plug-in hybrids or all-electric.
Obama has not taken a position on a possible merger between GM and Chrysler. Obama, who voted in favor of the larger $700 billion rescue package, has remained mum on the possibility of broadening the plan to include automakers.
Speaking on NBC last week, Obama said he would meet with Detroit's Big Three and United Auto Workers "to sit down and craft a strategy that puts us on a path for an auto industry that can compete with anybody in the world."
But the $4 billion he proposed for research and development, as well as $7,000 incentives for consumers, might not be enough to perfect technologies, mass produce them and make the vehicles affordable on such an fast timetable, according to a CSM Worldwide report analyzing Obama's plan.
Plug-in hybrids from General Motors and Toyota both rely on pricey lithium-ion battery technology. GM said its plug-in Chevrolet Volt, slated to appear in showrooms in 2011, will be priced at as much as $40,000.
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