Monday February 16, 05:55 PM
Obama to set up US auto industry task force
WASHINGTON (AFP) - President Barack Obama is to set up a task force to steer the restructuring of the crippled US auto industry instead of relying on just one "car czar," an administration official said Monday.
As two giant automakers prepare to unveil painful recovery plans to the government on Tuesday, the official said the force would be headed by Treasury Secretary Timothy Geithner and White House economic advisor Lawrence Summers.
The administration will also bring on board Ron Bloom, a renowned restructuring expert to work at the Treasury, but the administration will not pick one single official to oversee the ailing "Big Three" auto giants.
"There will be no 'car czar,'" the White House official said, on condition of anonymity.
US automakers are coming under White House pressure to make painful choices as Tuesday's deadline looms for cap-in-hand General Motors (NYSE: GM - news) and Chrysler to present their recovery plans.
GM and Chrysler, which are receiving 13.4 billion dollars in government loans, have to present preliminary plans to the Treasury Department outlining their steps to reduce costs and plan for the future.
The administration official said the White House expected GM and Chrysler to show immediate progress towards restructuring goals from Tuesday onwards, as it mulls the industry's future.
The final plan will serve as a basis for the Treasury's decision to call in or extend the loans is due by March 31.
The administration will analyze the restructuring plans over the next few weeks and work through them with the car giants.
The presidential task force will encompass a string of US government agencies including the departments of Treasury, labor, transportation, commerce and energy, as well as White House energy and economics officials.
Geithner will also be tasked with overseeing 17.4 billion dollars in federal bailout agreements between the automakers and the US government, under the plan.
David Axelrod, a senior Obama advisor, said on Sunday that the collapse of talks between GM and the United Auto Workers on backing the restructuring plan underlined the gravity of the situation.
"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."
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.
But asked if the White House was ruling out bankruptcy for GM and Chrysler, Axelrod added: "I'm not going to prejudge anything... We'll wait and see what they have to say on Tuesday."
The two companies were brought to the brink of bankruptcy last year as auto sales collapsed amid a credit crunch and widening recession.
Analysts forecast 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.
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.
Chrysler says it 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.
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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