Tuesday February 17, 07:33 AM
Crippled US auto firms to report on restructure plans
By Stephen Collinson
WASHINGTON, (AFP) - Major carmakers in the crippled US auto industry were to report to the government Tuesday on their restructuring plans, a condition of a 17.4-billion-dollar auto industry bailout funded by taxpayers.
General Motors (NYSE: GM - news) and Chrysler are to detail their plans one day after President Barack Obama said he would set up a high-level task force to steer restructuring as his administration assumes control of the fate of the "Big Three" carmakers.
The White House said the multi-agency operation would report to Treasury Secretary Timothy Geithner and top presidential economic aide Lawrence Summers, confirming that no single "car czar" would shepherd the ailing industry.
"We're anxious to take a look at the plans, understanding that it is extremely important to have a strong and viable auto industry," White House spokesman Robert Gibbs told reporters on Air Force One.
"Obviously that is likely to require some restructuring to ensure its viability, and we think some of that will be in those plans and we look forward to going through and analyzing that."
Administration officials are expected to study the auto industry plans to cut costs and restructure for several weeks before deciding a course of action.
The final plan will serve as a basis for the Treasury's decision, due by March 31, to call in or extend the loans.
The White House has made it increasingly clear that the auto firms must demonstrate considerable willingness to reshape their industry, partly in line with its desire to push the manufacture of more energy efficient vehicles.
Neither GM nor Chrysler, which is also locked in tense talks with the United Auto Workers (UAW), has received approval from the union or from creditors, and both have warned they may need more government help if economic conditions deteriorate.
With the deadline looming, General Motors and Chrysler struggled to win key concessions from their main union, while union sources familiar with the talks said automakers were making substantial demands and that something had to give.
The package would eliminate previously negotiated productivity bonuses and cost-of living adjustments to wages, halve the amount of time the company would supplement unemployment pay following a layoff and require workers to use their vacation time during temporary plant closures.
The administration said it would 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."
Gibbs said the task force would provide "a vast amount of expertise that crosses a number of governmental agencies and departments" and a fund of experience the administration needs to deal with the auto industry.
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.
But asked if the White House was ruling out bankruptcy for GM and Chrysler, White House advisor David Axelrod said on Fox News Sunday: "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, the other "Big Three" carmaker, insists it has sufficient cash reserves to survive the downturn without federal aid, despite a 5.9-billion-dollar loss in the fourth quarter of 2008.
GM was offered a loan package worth 13.4 billion dollars in December, while Chrysler was offered four billion.
Chrysler says it needs an additional three billion dollars in loans beyond the four billion approved in December, while GM too is expected to ask the Obama administration for billions more in aid.
Few surprises are expected in the submission from General Motors, which is using the proposal it handed to Congress on December 2 to guide its restructuring plans, GM spokesman Tom Wilkinson told AFP.
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