Obama forming task force, drops 'car czar' idea

President Barack Obama has decided to form a government task force for restructuring the struggling US car industry instead of naming a “car czar” with sweeping powers, a senior administration official said on Sunday.

Obama is appointing Treasury Secretary Timothy Geithner as his “designee” for overseeing auto bailout loans and as co-head of the new high-level panel along with White House economic adviser Lawrence Summers, the official said.

But Obama, who took office on January 20 and last week won congressional approval of a massive economic stimulus programme, has dropped the idea of having a single “car czar” empowered to handle the politically sensitive task of revamping the auto industry.

“There is no ‘car czar,’” the official said, speaking on condition of anonymity.

There was no immediate word on when Obama, due to return to Washington on Monday after spending the long Presidents Day holiday weekend back home in Chicago, planned to unveil his strategy.

But General Motors and Chrysler are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving $13,4-billion in emergency aid at the end of Bush administration.

The clock was ticking on crucial talks between GM and the United Auto Workers, which resumed on Sunday after negotiations had broken off. If GM cannot win deals to cut debt and costs, the carmaker would be left reliant on an expanded bailout from the Obama administration or forced to consider bankruptcy.

Obama, in an interview with regional US newspapers last week, said the federal government may offer more help to ailing carmakers if they show they can be commercially viable. He cautioned the companies needed to submit realistic plans.

The administration official said the automakers were expected to submit their restructuring plans on time and that government teams were working with the companies and their stakeholders to resolve remaining issues.

“We will continue to engage with them on a daily basis, as we have been over the course of the last two months, to work through various issues,” the official said.

“Once received, we will analyse the reports and over the course of the next week or two will meet with the companies to work through them,” the official added.

Carmakers and their stakeholders will be expected to “show progress in meeting the restructuring goals set forth in their plans” by the end of the month, the official said.

Presidential task force
The presidential task force will be drawn from the departments of Treasury, Labor, Transportation, Commerce, and Energy, the National Economic Council, the White House Office of Energy and Environment and the Council of Economic Advisers and the Environmental Protection Agency.

It will be overseen by Geithner and Summers, the official said.
Ron Bloom, a corporate restructuring expert and former executive at Lazard Freres, was named to the administration’s car team as a senior adviser at Treasury.

Union negotiators who had walked away from the bargaining table on Friday over differences with GM over the central issue of how to fund retiree healthcare costs were back at the table on Sunday, according to a source briefed on the situation.

It was unclear if any agreement could be reached by Tuesday’s deadline for submitting restructuring plans.

Meanwhile, GM and a committee of its bondholders were locked in high-stake talks aimed at reducing debt at the struggling automaker by about $18-billion.

GM spokesperson Steve Harris said the carmaker’s board would convene on a conference call on Monday to review a draft of the restructuring plan although work on it was likely to continue right up until the deadline for submission.

Both GM and Chrysler have said they expect to meet cost-cutting targets set out under the government bailout, which include making blue-collar labour costs competitive with Japanese automakers that operate factories in the Untied States. UAW representatives could not be reached for comment.

GM, Chrysler and Ford have cut 250 000 jobs since the start of the decade and are looking to cut more.

Ford, which is seeking a $9-billion line of credit from the US government, remains in talks with the UAW intended to secure any concessions granted to its rivals. - Reuters

Client Media Releases