GM, Chrysler Seek Billions More in Aid
Wednesday, February 18, 2009
General Motors and Chrysler, two flagships of traditional American manufacturing, reported yesterday that the decline of the U.S. economy has outpaced their bleakest expectations of just two months ago, forcing them to significantly boost their request for billions of dollars in government aid.
The companies said they plan to cut an additional 50,000 jobs worldwide, drop as many as six brands and shutter 14 plants in an attempt to survive one of the deepest recessions in decades.
Once-popular lines such as GM's Hummer and Saturn will be spun off or, failing that, eliminated. Saab is up for sale. Chrysler will stop production of the PT Cruiser, Aspen and Durango by the end of the year.
"Today's plan is significantly more aggressive because it has to be," GM chief executive G. Richard Wagoner Jr. said. "We have taken stronger actions; we needed to."
The automakers yesterday said they may need as much as $21.6 billion in additional loans -- $5 billion for Chrysler and the rest for GM. The requests announced yesterday come on top of $17.4 billion the companies received in recent months.
GM has just $9 billion in cash on hand, enough to last through March, and Chrysler has $2.4 billion. The companies have both said that without additional aid, they could be forced to seek bankruptcy protection.
"We have continued to see an unprecedented decline in the automotive sector," Chrysler chief executive Robert L. Nardelli said in a conference call.
The Obama administration and leaders in Congress agreed to review the automakers' requests, compelling officials to weigh the risks of making another huge investment in the industry against having one or two of the nation's most important manufacturers go bankrupt.
"The president of the United States wants to see a strong and vibrant auto industry that's employing tens of thousands of hardworking Americans and building the cars of tomorrow for Americans right now. That's what this president wants to see," Obama spokesman Robert Gibbs told reporters aboard Air Force One.
Some members of Congress, however, are expressing skepticism about more aid for the automakers. "In general, all of us in this country are becoming far more concerned about continual potential bailouts, continuing taxpayer money going into companies, going into institutions," Sen. Bob Corker (R-Tenn.) said, "and I think at some point we're going to have to take some tough medicine."
In addition to U.S. loans, GM is also requesting financial support from the governments of Canada, Germany, Britain, Sweden and Thailand.
The latest requests came as the companies submitted to the U.S. government their plans for becoming viable, a requirement set by the Bush administration when it offered the first round of loans in December.