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Auto Executives Find Skeptics on Capitol Hill

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  • baypointmike
    [New York Times] Auto Executives Find Skeptics on Capitol Hill Doug Mills/The New York Times Rick Wagoner of General Motors, Ron
    Message 1 of 2 , Dec 4, 2008
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      Auto Executives Find Skeptics on Capitol Hill 

       
      Doug Mills/The New York Times

      Rick Wagoner of General Motors, Ron Gettelfinger of the U.A.W, Alan R. Mulally of Ford and Robert L. Nardelli of Chrysler. More Photos >

      Published: December 4, 2008

      WASHINGTON — As the Senate banking committee debated a potential rescue package for American automakers, the committee chairman, Senator Christopher J. Dodd of Connecticut, suggested Thursday that it would be difficult for lawmakers to approve a financial lifeline for the three companies.

      Mr. Dodd used his initial round of questioning to stress that the Bush administration or the Federal Reserve could act unilaterally to aid the auto industry. The chief executives of the Big Three — Alan R. Mulally of Ford, Rick Wagoner of General Motors and Robert L. Nardelli of Chrysler — were before Mr. Dodd's committee on Capitol Hill asking for $34 billion in assistance.

      "There are a number of ways that we could address this issue," Mr. Dodd said. "The one that has received a lot of attention is whether Congress will act. If Congress is going to act, it is going to require some significant effort of the coming days. There are alternatives to that."

      Mr. Dodd then used his questioning of a witness, Gene L. Dodaro, the acting comptroller general of the United States, to highlight the authority that the Treasury or the Fed could use to aid the auto companies, either by tapping the $700 billion economic stabilization program approved by Congress in the fall or the Fed using its existing powers to aid imperiled industries.

      "Both of those avenues of authority are available," Mr. Dodaro said.

      Mr. Dodd's skepticism about the ability of Congress to generate enough support for a new rescue plan, coupled with opening comments by Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, who announced that he would strongly oppose a taxpayer bailout for Detroit, signaled just how steep a challenge the auto executives were facing even before any them fielded a single question Thursday.

      Mr. Shelby in his opening remarks said: "I intend to oppose bailing out the Big Three auto manufacturers." And he sharply criticized the companies for failing to succeed against their foreign-based rivals.

      "The firms continue to trail their major competitors in almost every category necessary to compete," he said.

      After exhaustive discussions on how the American automobile industry got to this point of desperation, the hearing was adjourned at 3:40 p.m. "We're not going to leave town without trying," Mr. Dodd said.

      The Democratic Congressional leadership has said it is eager to aid the industry, but there is substantial rank-and-file resistance to another corporate bailout, which opinion polls indicate is deeply unpopular with the American public.

      Mr. Wagoner, the chairman of General Motors, said in response to questions that he hoped G.M. could repay any government loans by 2012. And while he acknowledged that auto executives had made mistakes over the years, he said that "forces beyond our control" had also pushed Detroit to the brink.

      And Ron Gettelfinger, the president of the United Automobile Workers, said members of his union had made "enormous sacrifices" and he did not want them to be scapegoats for an entire industry's problems. Without federal aid, he said, "we could lose General Motors by the end of this month."

      In recent days, senior Congressional aides said it might be impossible to muster the votes for a rescue package even if the auto executives made a strong case during hearings before the Senate banking committee and the House Financial Services committee on Friday.

      Congressional leaders have indicated that there is only a narrow window to approve an aid package for the automakers before Congress adjourns for the year, and that any effort to adopt legislation would probably prove futile if a protracted debate over policy or procedure were to break out.

      But as the Senate banking hearing got under way, such a debate seemed unavoidable.

      Already some conservative House Republicans have openly called for letting one or more of the three companies fail and go into some sort of bankruptcy proceeding. And Senator Mike Crapo of Idaho pressed the question about bankruptcy as an option early in Thursday's hearing.

      Also at the hearing, Senator Robert F. Bennett, Republican of Utah, raised a new idea that would call on financial firms receiving assistance under the Treasury's $700 billion program to convert any auto company debt that they hold into equity stakes, easing the cash liquidity problems of the three companies, and potentially allowing additional infusions of government cash into the financial firms.

      The debate over if and how to aid the three Detroit companies has opened numerous lines of contention among lawmakers and policy experts, including intense internal debate among Democrats who are looking forward to wider majorities in both the House and Senate next year.

      Lawmakers from states like Michigan and Ohio that are heavily dependent on the automobile industry are calling for swift action to help the companies. Environmental advocates are insisting that there should be no easing of any of the fuel-efficiency goals, including provisions of a 2007 energy bill that could give the automakers access to $25 billion in federally subsidized loans.

      Lawmakers from states like Pennsylvania, which has a large number of unionized workers, are more amenable to throwing a lifeline to the industry, but southern conservatives like Mr. Shelby of Alabama and even some Western Democrats have no similar incentives to get behind a rescue plan.

      Mr. Dodaro said in his testimony that any federal aid to the three carmakers should be supervised by a powerful board, but Senator Charles E. Schumer, Democrat of New York, suggested that a single individual be assigned that mission, partly for the sake of speed.

      As for the auto companies' self-inflicted pain, Mr. Schumer said he still did not trust their leadership. But he, too, said the companies could not be allowed to fail. And he said formal bankruptcy proceedings would be a death sentence for Detroit.

      "Nobody's going to buy a car from a bankrupt company," Mr. Schumer said.

      In his comments, Mr. Wagoner acknowledged that the executives had left Washington empty-handed two weeks ago. "It's fair to say that last month's hearings were difficult for us," Mr. Wagoner said Thursday. "But we learned a lot."

      This time, the executives are seeking more money — $34 billion — and they also have altered their approach. Instead of telling lawmakers about the fallout to the economy if the carmakers collapsed, the executives talked about building fuel-efficient cars and long-term strategies.

      G.M. said in its plan that it would significantly reduce jobs, factories, brands and executive compensation in a broad effort to become more competitive with American plants operated by Toyota, Honda and other foreign auto companies.

      The plan also called for increased production of hybrid, flex-fuel and other fuel-efficient vehicles, and "an increased commitment to energy-efficient technologies."

      Two companies, G.M. and Chrysler, have both said they are dangerously close to running out of cash to run their operations by the end of the year. Ford is somewhat healthier, but is also seeking a government credit line.

      Although the auto executives once again heard criticism over mistakes they and their predecessors have made, the got a measure of sympathy too. For instance, Senator Jon Tester, Democrat of Montana, said the carmakers were getting a lot more scrutiny than did the banks and investment houses who were the main beneficiaries of the recent $700 billion financial rescue package.

      "I'd like to have those birds in here again," Mr. Tester said.

    • baypointmike
      ...
      Message 2 of 2 , Dec 4, 2008
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        --- In UnboundedEducation@yahoogroups.com, "baypointmike" <baypointmike@...> wrote:
        >
        >
        > [New York Times] <http://www.nytimes.com/>
        >
        > Auto Executives Find Skeptics on Capitol Hill
        > Doug Mills/The New York Times
        > Rick Wagoner of General Motors, Ron Gettelfinger of the U.A.W, Alan R.
        > Mulally of Ford and Robert L. Nardelli of Chrysler. More Photos >
        > <http://www.nytimes.com/slideshow/2008/12/04/business/1204-AUTOS_index.h\
        > tml>
        > By DAVID M. HERSZENHORN
        These Giants of Industry never noticed sales of gasguzzlers dropped and the Toyota Prius had a ever growing Waiting List. 

        They relied more on advertisement than updating their Assembly Line, the key to productivity and reduced costs, after convincing UAW members this is the only option to avoid going out of business

         and updating car designs to reduce Assembly Line problems in a cost-effective manner.   

        >
        > The plan also called for increased production of hybrid, flex-fuel and
        > other fuel-efficient vehicles, and "an increased commitment to
        > energy-efficient technologies."
        >
        > Two companies, G.M. and Chrysler, have both said they are dangerously
        > close to running out of cash to run their operations by the end of the
        > year. Ford is somewhat healthier, but is also seeking a government
        > credit line.
        >
        > Although the auto executives once again heard criticism over mistakes
        > they and their predecessors have made, the got a measure of sympathy
        > too. For instance, Senator Jon Tester, Democrat of Montana, said the
        > carmakers were getting a lot more scrutiny than did the banks and
        > investment houses who were the main beneficiaries of the recent $700
        > billion financial rescue package.
        >
        > "I'd like to have those birds in here again," Mr. Tester
        > said.
        >

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