Humbled and fighting for survival, Detroit’s once-mighty automakers appealed to Congress on Tuesday with a retooled case for a bailout as large as US$34 billion, pledging to slash work forces, car lines and executive pay in return for a federal lifeline.
General Motors Corp and Chrysler LLC said they needed immediate cash infusions to last until New Year’s and warned they could drag the entire industry down if they should fail.
Chrysler said it needed US$7 billion by the end of the year, and General Motors asked for a quick US$4 billion as the first installment of as much as US$18 billion to stay afloat and weather even worse economic storms.
Ford Motor Co had a more upbeat report, but the other two members of the US Big Three painted the direst portraits to date, including the prospects of shuttered factories and massive job losses, of what could happen if Congress does not quickly step in.
New sales figures underscored the seriousness of the situation. US auto sales plunged 37 percent last month to their worst level in more than 26 years, with GM’s sales falling 41 percent and Chrysler’s dropping 47 percent, while Ford’s sales dropped 31 percent.
House of Representatives speaker Nancy Pelosi said on Tuesday that bankruptcy for US automakers “is not an option” and that a short-term loan program “is an appropriate way to go.”
All three companies’ plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.
Along with stabilization plans, the auto executives were offering a host of symbolic concessions.
Ford CEO Alan Mulally, GM CEO Rick Wagoner and Chrysler chief Bob Nardelli planned to road-trip from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.
Mulally and Wagoner both said they would work for US$1 per year, which Chrysler’s plan said Nardelli already does, if their companies took any government loan money, while Ford offered to cancel management bonuses and salaried employees’ merit raises next year.
Ford and GM both said they would sell their corporate aircraft.
Ford, in far better shape than GM and Chrysler, asked for a US$9 billion standby line of credit to stabilize its business but said it did not expect to tap the funds unless one of Detroit’s other Big Three declared bankruptcy.
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