By DPA,
Washington : Chiefs of the three US automakers went before Congress Tuesday seeking an emergency injection of government money to stave off bankruptcies that could cost the US economy millions of jobs.
The so-called Big Three – General Motors Corp, Ford Motor Co and Chrysler LLC – are asking for $25 billion from the $700-billion financial rescue package passed in October, arguing that the ongoing credit crisis has pushed their already struggling industry to the brink of collapse.
“The recent plunge in vehicle sales threatens not only the company’s turnaround but in fact our real survival,” GM chief executive Rick Wagoner told the Senate Banking Committee.
US auto sales have plummeted as consumers struggled to obtain car loans, a repercussion of the US mortgage market meltdown that has curtailed lending in many different sectors. Auto sales tumbled 32 percent in October to their lowest level since 1991.
“We are asking for assistance for one reason: to address the devastating automotive industry recession caused by our nations’ financial meltdown,” Chrysler chief executive Robert Nardelli said.
Executives and legislators warned that a collapse of even one of the three carmakers, all centred in the traditional car-making hub of Detroit, Michigan, could result in the loss of as much as 3 million jobs at a time where the US economy is already likely in recession.
The industry as a whole accounts for about 4 percent of US economic output, but its reach stretches well beyond the automotive sector itself.
“This is not just any industry. It has critical implications for our country,” said Democratic Senator Christopher Dodd, chairman the Banking Committee.
But the Big Three executives faced a group of lawmakers skeptical that the US auto industry was worthy of rescue after a decade of failed strategies favouring out-of-date, petrol-guzzling vehicles.
“Are we here in the Senate being asked to facilitate a stronger, more competitive auto manufacturing sector or to perpetuate a market failure?” asked Senator Richard Shelby, the top Republican on the committee.
The auto industry has already seen $25 billion approved as part of separate legislation earlier this year to develop lower-emissions technology, but has sought another $25 billion from the government’s financial rescue package to remain solvent.
Most Democrats in Congress support the automotive bail-out but have run up against opposition from Republicans and the administration of President George W. Bush, who leaves office Jan 20.
Treasury Secretary Henry Paulson earlier Tuesday said that the October bail-out should be strictly limited to stabilizing the financial sector but suggested that more money could be appropriated under the emissions legislation already passed.