In Washington, Car Companies Plead for Bailout
Executives of Detroit’s Big Three automakers traveled to Washington on Thursday to press their case for more financial aid from the federal government because of the bleak prospects for their industry.
And those prospects are likely to dim further on Friday, when General Motors and Ford are expected to report deeper job and production cuts, along with huge third-quarter losses. Analysts expect each to report losses of more than $2 billion, excluding special charges or write-downs.
The meeting in Washington, with Capitol Hill’s top Democrats — the House speaker, Nancy Pelosi, D-Calif., and the Senate majority leader, Harry Reid, D-Nev. — centered on a request by GM, Ford Motor Co. and Chrysler for as much as $25 billion in loans to help the companies as they burn through their cash cushions during the worst sales market in 15 years.
The loan request is in addition to $25 billion in low-interest loans to be available from the Energy Department to assist automakers in developing more fuel-efficient vehicles.
The meeting, which lasted an hour and a half, was attended by GM’s chairman, Rick Wagoner; Ford’s chief executive, Alan R. Mulally; Chrysler’s chairman, Robert L. Nardelli; and the president of the United Auto Workers, Ron Gettelfinger.
After the meeting, Rep. John D. Dingell, D-Mich., called the discussions “extremely productive” but offered no details on when, or if, an aid package might be forthcoming.
Pelosi issued a statement saying the group discussed “how to protect hundreds of thousands of workers and retirees, safeguard the interests of American taxpayers, and use cutting-edge technology to transform blue-collar jobs to green-collar jobs for generations to come.”
When a spokesman for Pelosi, Nadeam Elshami, was asked if Congress would take up a proposal when it returns to Washington on Nov. 17, he said, “I wouldn’t go that far.”
Reid was also not specific about what aid Congress might provide. The Detroit executives slipped out of meetings with Pelosi and Reid, avoiding reporters in both places.
The expected third-quarter losses from GM and Ford, the two largest American automakers, will come on top of dismal financial results for the first six months of the year, during which GM lost $18.8 billion and Ford lost $8.6 billion. The companies will also reveal how quickly they are burning through their available cash.
“I have never seen anything like this,” said David Healy, who recently retired after 40 years as an auto analyst, most recently with Burnham Securities. “But if they can get the federal money, I think there’s a decent chance they can survive.”
Both GM and Ford are expected to announce measures on Friday to conserve their rapidly dwindling cash reserves.
GM is likely to announce another round of cuts for white-collar jobs, as well as temporary layoffs at factories, early holiday shutdown of facilities and delays in programs to develop new vehicles.
Ford is expected to cease work at some plants to reduce production of slow-selling models, and possibly seek more buyouts from employees.