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White House ups pressure on US automakers
AFP - Monday, February 16
DETROIT, Michigan (AFP) - - US automakers came under White House pressure Sunday to make painful choices as a deadline loomed this week for cap-in-hand General Motors and Chrysler to present their recovery plans to the government.
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David Axelrod, a senior adviser to President Barack Obama, said the collapse of talks between GM and the United Auto Workers union underlined the gravity of the situation ahead of Tuesday's restructuring deadline.
"We need a thriving auto industry in this country," he said on Fox News Sunday, stressing that millions are employed by GM, Chrysler and Ford and by related suppliers.
"But as the president has said many times, that's going to involve significant restructuring of the industry so that they're looking forward and not back in producing the kind of cars that people are going to buy in the future," Axelrod said.
"And that's going to involve concessions on the part of everyone, not just the auto workers, but shareholders, creditors and, of course, the executives who run the company."
GM and Chrysler, which are receiving 13.4 billion dollars in government loans, have until Tuesday to present preliminary plans to the Treasury Department outlining their steps to reduce costs and plan for the future.
The final plan that will serve as a basis for the Treasury's decision to call in or extend the loans is due by March 31.
The two companies were brought to the brink of bankruptcy last year as auto sales collapsed amid a credit crunch and widening recession, but Congress responded with skepticism late last year to their recovery plans.
Ford insists it has sufficient cash reserves to survive the downturn without federal aid despite a 5.9-billion-dollar loss in the fourth quarter.
Negotiations on union backing for the restructuring at GM collapsed over the weekend after the UAW reportedly balked at management's plans to reform pensions for retired workers.
"Obviously this is a difficult situation, and everyone's going to have to continue to work toward a solution," Axelrod said in response.
Asked if the White House was ruling out bankruptcy for GM and Chrysler, he added: "I'm not going to prejudge anything... We'll wait and see what they have to say on Tuesday."
Neither GM nor Chrysler, which is also locked in tense talks with the UAW, has received approval from the union or from creditors and both have warned they may need more government help if economic conditions deteriorate.
Analysts forecast that total auto sales will come in at between 10 million and 11 million units this year, which would be the industry's worst performance since World War II after adjusting for population growth.
Chrysler said its plan will not be affected by an alliance announced last month with Italy's Fiat, which some analysts say could complicate the private automaker's efforts to persuade reluctant lawmakers to extend more aid.
"We will be able to do it on our own," said Chrysler vice chairman Jim Press, who added that despite concerns about Fiat benefiting from US government help, the alliance will "save American jobs and speed introduction of fuel-efficient cars."
"I can tell you we have accepted the fact that there really is a harsh new reality in the auto industry," Press said in a speech to the Economic Club of Chicago Thursday, detailing 32,000 jobs cuts that are in the works.
But Chrysler needs an additional three billion dollars in loans beyond the four billion dollars approved in December, as well as concessions from creditors and the UAW, Press stressed.
Few surprises are expected in the submission from General Motors, which is using the plan it handed to Congress on December 2 to guide its restructuring plans, GM spokesman Tom Wilkinson told AFP.
GM has already slashed more than one million units of capacity over the past year and could cut more when it makes its preliminary submission to Treasury, he said.
The company last week announced plans to eliminate the jobs of an additional 3,400 of its 29,000 salaried employees worldwide and to offer early retirement packages to all its 62,000 hourly US workers.
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The General Motors logo at an automotive sales lot in Burlingame, California. US automakers came under White House pressure Sunday to make painful choices as a deadline loomed this week for cap-in-hand General Motors and Chrysler to present their recovery plans to the government.
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