Automakers hopeful Obama can bring change
DETROIT – Detroit automakers and their allies in Congress said Wednesday Barack Obama’s victory could help U.S. automakers line up federal funding needed for them to survive a terrible economic slump.
Obama made it clear during his campaign that he understood the automakers’ problems and would work to preserve the industry, U.S. Sen. Carl Levin, D-Mich., said Wednesday.
“I’m very optimistic that we’re going to have a fighter in the White House for manufacturers, and that’s what we need,” Levin said.
Levin said he was told Wednesday by Jason Furman, Obama’s senior economic adviser, that government aid is atop Obama’s agenda. Levin said Furman did not commit to a specific funding path for the industry but was supportive.
Obama has said he would meet with industry leaders and the United Auto Workers immediately to talk about helping automakers, but a meeting has not yet been scheduled.
Levin noted that Obama expressed support for doubling an Energy Department loan program for automakers to develop fuel-saving technology to $50 billion from $25 billion.
Michigan’s other senator, Democrat Debbie Stabenow, said Senate Majority Leader Harry Reid, D-Nev., appears open to supporting another $25 billion in flexible funding.
Reid, she said, appeared open to supporting “whatever we feel is the best approach for the auto industry and can get the consensus in the House to pass.”
Levin said members of Michigan’s congressional delegation would pursue options to help the industry, including the $700 billion Wall Street bailout or access to Federal Reserve capital.
Obama’s victory over Republican John McCain came just three days before General Motors Corp. and Ford Motor Co. are to release their third-quarter results, which almost certainly will show billions in losses and cash burn rates that will push the companies closer to emptying their treasuries, if auto sales don’t bounce back soon.
Further job cuts by both automakers are expected on Friday. Analysts say GM could close more plants but Ford has said it will likely do temporary factory shutdowns and overtime cuts at some of its car plants.
GM’s top executives sent an e-mail to other executives Wednesday saying that “important changes” will be announced on earnings day. Spokesman Tom Wilkinson called the announcement a routine update. The e-mail did not give specifics and Wilkinson said he could not comment on them.
“We need to talk about what we’ll do to face the challenges,” he said.
GM is talking with Chrysler majority owner Cerberus Capital Management LP about GM acquiring Chrysler. GM reportedly is after Chrysler’s roughly $11 billion in cash and is seeking federal aid to make the deal happen.
A person briefed on the GM-Chrysler talks said Wednesday that no announcement of a deal is imminent because much of it hinges on federal aid. The person asked not to be identified because the talks are private.
House Speaker Nancy Pelosi on Wednesday again called for a lame-duck session of Congress to enact a stimulus program to shore up the sinking economy. It was unclear whether aid for the troubled automakers would be part of that package.
Automakers say some sort of government funding is necessary to bail out the troubled industry. They have been lobbying to speed up loans from the Energy Department pot, and for access to part of the $700 billion Wall Street bailout plan and perhaps other funding.
Also on Wednesday, the Center for Automotive Research published a report estimating that about 2.5 million jobs across the economy would disappear in the first year if the U.S. auto industry shrinks by 50 percent.
Only 239,000 of those job losses would be at the Detroit Three – the remainder would be at parts suppliers and related industries, the Ann Arbor-based center said.