Friday, March 27, 2009

Obama and Auto Task Force Say there will be Major Restructuring coming to GM and Chrysler

Obama on autos: Aid ahead but at a price

GM, Chrysler updating plans for revival

WASHINGTON -- Heading toward Monday's announcement of his plans to help Detroit's auto industry, President Barack Obama said Thursday that the carmakers would need to make painful changes to get more federal help.

I think it is appropriate for us to say, 'are there ways for us to provide help to the U.S. auto industry to get through this very difficult time?' " he said during an online question-and-answer session. "But the price is you've got to finally restructure to deal with these long-standing problems.
"That means that everybody's going to have to give a little bit -- shareholders, workers, creditors, suppliers, dealers -- everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable."

His task force is expected to unveil a framework Monday that sets new terms for General Motors Corp. and Chrysler LLC to get more federal help beyond the $17.4 billion in loans they already have.

While noting the credit crisis and a sales slump that may reach new lows in March, Obama also revived criticisms of the industry he made in a 2007 speech to the Detroit Economic Club. He chastised the car companies for mismanagement, and said they could not rely on gas-guzzling SUVs as their sole source of profits.

"If they're not willing to make the changes," he said, "then I'm not willing to have taxpayer money chase after bad money."

Meanwhile, GM and Chrysler are preparing updates to their turnaround plans in the face of ever-worsening U.S. sales.

On Thursday, two forecasters pegged March's auto sales at annual rates below 10 million vehicles, the worst-case scenarios envisioned by the automakers.

Lowering their sales and production forecasts would raise the chances of even-deeper cuts, following GM's announcement Thursday that about 7,500 UAW workers agreed to buyouts and early retirements.

Here's a look at where their turnaround plans stand:

Chrysler, GM

• The UAW tentatively has agreed to end the so-called jobs bank, which pays laid-off workers most of their regular pay. The union also has made other unannounced concessions. Talks continue on replacing some cash payments the companies were to make for what the union's retiree health care trust is owed with company stock....More

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