Published December 4, 2008

Car bosses dump jets, beg for US$34b

Three separate survival plans from Chrysler, GM, Ford under review

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(WASHINGTON) Detroit's Big Three auto executives have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as US$34 billion in their second crack at persuading Congress to throw their struggling companies a lifeline.
Waiting for help: Ford trucks parked in a lot in Detroit before being shipped out. The mood in Congress is not supportive of the carmakers, although policymakers understand that the consequences of just one of them failing are cataclysmic

In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said that they failed to take responsibility for their companies' troubles or justify a federal bailout.

'I think we learned a lot from that experience,' Ford chief executive Alan Mulally said. He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all driving the 840 km from Detroit to Washington in fuel-efficient hybrid cars for hearings today and tomorrow.

Mr Mulally and Mr Wagoner both said that they would work for US$1 a year - something Chrysler's plan said that Mr Nardelli already does - if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said that it would slash top executives' pay. Ford and GM both said that they would sell their corporate aircraft.

Congressional leaders are reviewing three separate survival plans from Chrysler LLC, General Motors Corp and Ford Motor Co as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.

In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said that they needed an immediate infusion of government cash to last until New Year's Day, and both said that they could drag the entire industry down if they fail. Ford is requesting a US$9 billion 'standby line of credit' that it says it does not expect to use unless one of the other Big Three goes belly up.

But Chrysler said that it needed US$7 billion by year's end just to keep running. And GM asked for an immediate US$4 billion as the first instalment of a US$12 billion loan, plus a US$6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date - including the prospects of shuttered factories and massive job losses - of what could happen if Congress does not step in quickly.

Democratic leaders voiced concern and a desire to do something to avert a carmaker collapse, but they made no commitments about helping an industry that has made few friends lately on Capitol Hill. 'It is my hope that we would' pass legislation to help the carmakers, House Speaker Nancy Pelosi said. Senate Majority Leader Harry Reid said that he would lay the groundwork next Monday for a possible vote on an auto bailout measure.

All three plans envision the government getting a stake in the car companies that would allow taxpayers to share in future gains if they recover.

Leaders of the United Auto Workers (UAW) labour union were also discussing further concessions at an emergency meeting in Detroit yesterday. Under consideration were the possibility of scrapping a much- maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the carmakers' payments into a multibillion-dollar union- administered health care fund. Still, an auto bailout remains a tough sell on Capitol Hill. Senator Arlen Specter, a Pennsylvania Republican, said that the mood in Congress 'candidly is not supportive' of the carmakers, although he called the consequences of just one of them failing 'cataclysmic'. 'Two of the Big Three say they cannot survive until the end of the year and if one or more goes down, all three go down,' Mr Specter said at a round-table discussion in Philadelphia.

Senator Chris Dodd of Connecticut, chairman of the Senate Banking Committee, said that the carmakers still need to prove that they can survive and be profitable. 'If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways,' he said in a statement.

His panel is to hear testimony today from the car executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans. The House Financial Services Committee is to hold a similar session tomorrow. -- AP