US carmakers take bail-out plea before CongressDecember 5th, 2008 - 4:07 am ICT by IANS
Washington, Dec 5 (DPA) The heads of the three ailing US carmakers appeared before the Congress Thursday for the second time in less than a month to ask for a $34-billion bail-out in light of an economic recession.General Motors Corp, Ford Motor Co and Chrysler LLC this week submitted extensive recovery plans demanded by lawmakers as a condition for any loan. They agreed to revamp business models, cut wages and speed up the roll-out of more fuel-efficient cars.
More efficient Asian models from Japanese giant Toyota Motor Corp and others have been consistently gaining market share in the United States over the past decade.
But the US motor industry chiefs have argued the economic crisis struck at a time where serious restructuring moves were showing some signs of progress. A “bridge loan” was needed to navigate a recession that has sent US car sales to 25-year lows in the past two months, but many US legislators remain unconvinced.
Richard Shelby, the top Republican on the Senate’s Banking Committee, declared at the start of hearings Thursday that he still opposed any bail-out for the US auto industry. He suggested a forced restructuring under bankruptcy protection may be the best option.
Shelby cited the fact that the companies have upped their bail-out request from $25 billion to $34 billion in just two short weeks as evidence that this plea was only “the beginning.”
Automakers have warned that the bankruptcy of even one of the so- called Big Three could cost millions of jobs at a time when the US economy is already in a prolonged recession.
The Bush administration has said it wants to avoid any bankruptcy, but opposes an outright bail-out. Instead it wants to appropriate other funds already approved by Congress, which had been connected to specific energy improvements by the carmakers.
Senator Christopher Dodd, chairman of the Banking Committee, warned that the collapse of the US auto industry “would effect virtually every sector of our economy.”
“Let us be clear this morning. In my view we need to act,” Dodd said.