U.S. President George Bush is offering billions of dollars in loans to help battered U.S. automakers survive long enough to restructure their businesses, but he is demanding tough concessions in return.
Washington is offering 13-point-four billion dollars in government loans soon, with another four billion dollars in February. Mr. Bush said every segment of the auto industry -- workers, management, lenders, and others -- will have to make concessions to make the plan work.
The companies must cut the pay of workers, get rid of executive jets, and make some payments to bond-holders and retirement funds in stock instead of cash. President-elect Barack Obama urged the companies not to "squander" the chance to reform bad management practices and save the industry and millions of jobs that depend on it. He said the patience of the American people is "running out" and there are some "painful" steps that have to be taken. But Mr. Obama said he wants to be sure that workers are not the only ones who bear the burden.
The companies have until the end of March to come up with plans to make their businesses viable in the future or be forced to quickly repay the loans. The Chief Executive Officer, Richard Wagoner of the largest U.S. automaker, General Motors, said he is grateful for the government help and "highly confident" the company can meet the test. GM will get most of the loan money and Chrysler will get the rest. Ford officials applauded the decision to aid the industry, but said they do not yet need help.
U.S. automakers are reeling from the global recession, which has led to tightening credit, falling consumer demand, and the worst sales in decades. The situation is forcing Chrysler to close all 30 of its plants for at least a month, beginning today. The Big Three U.S. automakers could soon get an additional boost.
A spokesman says Canadian Prime Minister Stephen Harper will outline his country's aid package for the auto industry Saturday. Canada's industry minister, Tony Clement has said the government was willing to provide an estimated three billion dollars in loans to the car companies -- but only if the U.S. acted first. The loan amount is proportional to Canada's share of the North American auto industry.