n GM, Ford and Chrysler warn of peril to the U.S. if they fail.
BY JULIE HIRSCHFELD DAVIS
The Associated Press
WASHINGTON – Detroit’s Big Three automakers pleaded with Congress on Tuesday for a $25 billion lifeline to save their teetering industrial titans from collapse, warning of economic catastrophe for the nation as well as their once-proud companies if they are denied.
Millions of layoffs would follow, they said. Even national security would be at risk.
“Our industry … needs a bridge to span the financial chasm that has opened up before us,” General Motors CEO Rick Wagoner told the Senate Banking Committee in prepared testimony. He blamed the industry’s predicament not on failures by management but on the deepening global financial crisis.
And Robert Nardelli, CEO of Chrysler LLC, told the panel in his prepared remarks: “The crippling of the industry would have severe and debilitating ramifications for the industrial base of the United States, would undermine our nation’s ability to respond to military challenges and would threaten our national security.”
But the new rescue plan appeared stalled on Capitol Hill, opposed by Republicans and the Bush administration who don’t want to dip into the Treasury Department’s $700 billion financial bailout program to come up with the $25 billion in loans.
Sympathy for the industry was sparse.
Banking Committee Chairman Christopher Dodd, D-Conn., told the leaders of GM, Chrysler and Ford that the industry was “seeking treatment for wounds that were largely self-inflicted.”
Still, he said, “Hundreds of thousands would lose their jobs” if the companies were allowed to collapse.
Wagoner said that despite some public perceptions that General Motors was not keeping pace with the times and technological changes, “We’ve moved aggressively in recent years to position GM for long-term success. And we were well on the road to turning our North American business around.”
“What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II.”
Failure of the auto industry “would be catastrophic,” he said, resulting in three million jobs lost within the first year and “economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis.”
Chrysler’s Nardelli also blamed the industry’s predicament on the overall financial panic. And he sought to respond to critics who suggest the automakers seek Chapter 11 bankruptcy protection, as have some airlines that later emerged restructured and leaner. “We cannot be confident that we will be able to successfully emerge from bankruptcy,” Nardelli said.
Chrysler was bailed out by the federal government once before, in 1979, with loan guarantees. The company repaid the loan, plus interest, ahead of schedule.
Congressional leaders worked behind the scenes in an effort to hammer out a compromise that could speed some aid to the automakers before year’s end. But the outlook seemed poor.
“My sense is that nothing’s going to happen this week,” Sen. Bob Corker, R-Tenn., said at the opening of the hearing.