Automakers Assemble Make-or-Break Case
Tuesday, December 2, 2008
In its second attempt to persuade Congress to grant the U.S. auto industry $25 billion in emergency loans, Chrysler plans to make the case that automakers can cut their costs and point to the future by forging an alliance to share fuel-efficient vehicle technologies.
Ford will tell lawmakers that it intends to retool plants for smaller, more fuel-efficient cars as a part of its goal of becoming the fuel-efficiency leader in every vehicle category. General Motors will address its $43.3 billion debt burden and an upcoming multibillion-dollar payment to a union-run trust that will cover employee health-care costs.
Detroit's Big Three automakers are all scrambling to reassure Congress that any money they receive will not be squandered. An appearance two weeks ago by the chief executives failed to secure the loans. Lawmakers sent them away with orders to return with detailed business plans.
Those plans are due to be delivered today.
While the automakers rushed to prepare for another round of congressional hearings this week, lawmakers grappled with how they would evaluate the business plans. Sen. George V. Voinovich (R-Ohio) sent a letter to Senate Majority Leader Harry M. Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) yesterday, expressing concern over who would judge the plans.
"I question your decision that congressional leadership and committees of jurisdiction are best positioned to make determinations about a multinational corporation's future financial prospects," he wrote.
In their own letter to automakers last week, Reid and Pelosi said they "intend to give pertinent agencies within the executive branch, the Government Accountability Office, the Board of Governors of the Federal Reserve, as well as outside experts, the opportunity to comment on [the automakers'] work."
The automakers' plight is likely to come into clear view today when companies report their sales figures from November. Analysts predict yet another month of sliding sales as the global credit crunch continued to immobilize business.
Chrysler and GM are in jeopardy of running out of money within months. Barclays Capital analyst Brian A. Johnson wrote in a research note last week that Ford is likely to fall below minimum cash levels in the second half of 2009, which would force it to tap available credit lines or request government assistance.
Anticipating another round of harsh criticism in congressional hearings this week, the United Auto Workers sent Congress documents yesterday to try to dispel what it considered to be myths about high labor costs and the virtues of pre-packaged bankruptcy.
Commerce Secretary Carlos M. Gutierrez said in an interview that the administration has been careful "not be prescriptive" about what the automakers need to do specifically.
"We believe there is a fine line between giving them a standard for the use of taxpayer money and giving them some general thoughts on what we hear, we read, we study," he said. "That should be considered. But it's not our job to tell them what specific actions to take. It's their job."