The bosses of the United States’ big three carmakers appeared before Congress last week to plead the case for a $25-billion government aid package for the industry.
The chief executives of General Motors, Ford and Chrysler were summoned to hearings over their call for low-interest loans to stave off bankruptcy — 48 hours before the critical Congress test vote.
Although GM has warned that its cash shortage could lead to insolvency by Christmas if Congress does not approve the funding, the outgoing administration of George W Bush firmly opposes providing a loan through the $700-billion financial bailout approved last month.
“There’s not an appetite in Congress or in the administration to open up the [bailout] funding for individual industries,” White House spokesperson Dana Perino said. “Once you start down that road, it’s a slippery slope.”
The three car firm bosses — who were joined by the president of the United Auto Workers union — faced a furious fight to sway Republican support for their request. Democrats had set the stage for a pivotal Senate vote last week on a plan that combines the $25-billion with a $6-billion extension of unemployment benefits for laid-off US workers.
But only two Republicans have agreed so far, and the absence of President-elect Barack Obama — now resigned from the Senate — means that nine more Republican votes are needed.
Bush wants Congress to loosen the conditions on an already approved $25-billion loan intended to help the companies to remodel their factories to produce fuel-efficient vehicles.
Workers in Britain and the rest of Europe have looked anxiously towards Detroit’s big three companies — which employ thousands on that side of the Atlantic.
German Chancellor Angela Merkel faced pressure this week from executives and union leaders at Opel to offer more than €1-billion in loan guarantees in case its owner, GM, goes bust. Merkel is promising a decision by Christmas.
GM, which lost $4-billion in the third quarter, warned that it could run out of the minimum cash it needs to keep its business going in the first half of 2009.
It “owes” Opel €1-billion in internal loans.
But Peer Steinbruck, finance minister, said there could be no question of a blanket guarantee for Opel because of the spillover effect on other car firms — and manufacturing as a whole.
Dave Osborne, national officer of the Unite union, said that General Motors was looking for substantial cost savings from European operations, which include the Vauxhall car plant at Ellesmere Port and a van plant in Luton, southern England. —