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Auto Executives Prepare To Outline Plans
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Auto Executives Prepare To Outline Plans


Auto Executives Prepare To Outline Plans

Auto Executives Prepare To Outline Plans
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GM and Chrysler are set Tuesday to give detailed updates on their plans to restructure their business. In order to stay in the government's good graces and secure more aid the companies need, they need to impress.


From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

The Obama administration is taking a bit of a U-turn in its oversight of the ailing auto industry. Instead of appointing a single car czar to oversee the restructuring of General Motors and Chrysler, the administration will select a panel of experts. Their job will be to monitor how the company spend their billions in emergency loans.

NPR's Yuki Noguchi reports now that the two carmakers are required to submit their plans tomorrow.

YUKI NOGUCHI: Restructuring a car business doesn't just mean taking a red pen to the budget or designing new lines of green cars, although, they'll promise to do that, too. For General Motors and Chrysler, revamping their business means revamping their relationship with their entire auto ecosystem. It means getting concessions from workers and working out a deal with investors to lighten their debt burden.

Dr. HARLEY SHAIKEN (Professor of Labor, University of California, Berkeley): What we're looking at in the negotiation is the complex jigsaw puzzle.

NOGUCHI: Harley Shaiken teaches labor issues at the University of California, Berkeley.

Dr. SHAIKEN: Between stockholders, bondholders and the union negotiations, as well as our talks with the suppliers, so, there's a lot of tough issues on the table.

NOGUCHI: And it's been slow going. The United Auto Workers walked out of negotiations on Friday, then came back to the bargaining table, signaling both the difficulties and the urgency of trying to hammer out some form of compromise before tomorrow. The key union issue is how much health insurance will be covered for workers and retirees and how the car companies might pay into the union's healthcare trust fund.

Compensation for the average U.S. automaker would still likely remain high compared to foreign carmakers. But Shaiken says car companies will likely deal with that by buying out older more expensive workers and focusing instead on refreshing its workforce. Shaiken says, in any event, it's unlikely GM and Chrysler will be able to present many specifics of a deal with the unions by tomorrow. One reason the carmakers' plans may remain vague is that the law itself has been somewhat unclear.

After all, the terms of the loan were written late in the previous Bush administration and are now being interpreted by a new Obama administration. The administration's task force will be headed by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers. David Cole is chairman of the Center for Automotive Research. Cole thinks, despite the eleventh-hour changes in ongoing negotiations, the automakers will make some sweeping promises to reform the way they do business.

Mr. DAVID COLE (Chairman, Center for Automotive Research): I think you're going to see a fairly dramatic statement of what they plan to do as a part of restructuring. I don't think it's going to be understated. I think, if anything, it'll be overstated. It will be aggressive.

NOGUCHI: Do you think they'll be able to actually meet those promises?

Mr. COLE: That's - that's a good question.

NOGUCHI: GM is bigger and in better financial condition than Chrysler, but Cole says that both companies face unusually low demand for cars, in part, because of the economy. And that means business could only improve with a recovery. In anticipation of that, he says, bondholders may be willing to trade their debt for stock in the companies.

But, in the short term, the question this week is whether the companies will be able to satisfy Washington's desire for progress, and secure the additional aid they will likely need to carry them through this recession.

Yuki Noguchi, NPR News, Washington.

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