Automakers Request $34 Billion In Loans

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The Detroit auto companies made another pitch to the Senate Banking Committee for massive loans to keep operating. They were more contrite than last month and offered a lot more details. But it is still unclear whether they will get the $34 billion they say they need to keep going. The auto executives will appear before the House Financial Services Committee Friday.

RENEE MONTAGNE, host:

This is Morning Edition from NPR News. Good morning, I'm Renee Montagne. Detroit's automakers pleaded for help from Congress yesterday for the second time in less than three weeks. This time, they explained how they planned to save their companies from bankruptcy, and they asked for even more money. But as NPR's Frank Langfitt reports, it's still unclear whether Washington will give them billions in loans.

FRANK LANGFITT: The tone was very different from the one the car executives struck last month. Instead of flying in on private jets, they arrived in fuel-efficient cars. And rather than blame others for their problems, they took some responsibility. General Motors CEO Rick Wagoner kicked off the mea culpas at a hearing before the Senate Banking Committee.

Mr. RICK WAGONER (CEO, GM): We're here today because we made mistakes, which we're learning from.

LANGFITT: Then Ford CEO Alan Mulally took his turn.

Mr. ALAN MULALLY (CEO, Ford): We produced more vehicles than our customers wanted and then slashed prices.

LANGFITT: Together, the companies are asking for up to $34 billion in loans. That's $9 billion more than they said they needed last month. Each executive explained what he would do to make sure his company survived. GM said it would slash up to another 31,000 jobs. Chrysler CEO Robert Nardelli said his company had already reduced models and was developing more sensible ones.

Mr. ROBERT NARDELLI (CEO, Chrysler) : We've identified approximately $4 billion of potential cost savings and improvements. Our plan also includes producing high-quality, fuel-efficient cars and trucks...

LANGFITT: Some senators were pleased to see more specifics from the CEOs and overall, their performance was stronger than a couple of weeks back, when they were widely slammed for being vague and evasive. But other senators remained skeptical - especially Richard Shelby from Alabama, the committee's ranking Republican.

Senator RICHARD C. SHELBY (Republican, Alabama): A lot of people believe sincerely that the restructuring plans that each of your companies has provided us are not a serious set of plans, that they contain few concrete details on how your companies will return to profitability.

LANGFITT: Some critics of the Detroit companies suggest they should head to bankruptcy court. There, they say, a judge could enforce the tough, painful restructuring necessary for the firms' survival. The auto executives insist that's a death sentence. Who, they ask, wants to buy a car from a bankrupt company? At today's hearing, senators searched for a solution that would have some of the power of bankruptcy without the stigma.

Mr. GENE L. DODARO (Acting Comptroller General, U.S. Government Accountability Office): There needs to be a rigorous board put in place to oversee this process.

LANGFITT: That's Gene Dodaro. He's the acting comptroller general of the Government Accountability Office. He was talking about a government board that would force the auto firms to stick to their plans, and force others - the union, lenders, car dealers - to make tough concessions.

Mr. DODARO: One of the tasks of the board is to bring all parties to the table to have a negotiated type of an arrangement...

LANGFITT: Dodaro said the board would act like a bankruptcy court. He likened it to the federal trustee that oversaw the Chrysler bailout nearly 30 years ago. When asked, the auto executives all endorsed the idea, and a number of senators liked it, too. But whether a powerful oversight board would convince opponents to support the giant loans is unclear, and there are fears the companies will need a lot more money than they're now asking for. Mark Zandi is chief economist with Moody's Economy.com. Here's what he told the senators.

Mr. MARK ZANDI (Chief Economist, Founder, Moody's Economy.com): Under the most likely outlook for the economy and auto industry, the $34 billion in loans requested by the Big Three will not be sufficient for them to avoid bankruptcy at some point in the next two years. They would ultimately need, in my view, somewhere between $75 billion and $125 billion to avoid this fate.

LANGFITT: After the hearing, committee chairman Christopher Dodd, the Connecticut Democrat, sounded hopeful, but he has more than just his colleagues to convince. A CNN poll out this week found that 60 percent of respondents opposed loaning money to the companies.

Frank Langfitt, NPR News, Washington.

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Automakers Return To Congress To Ask For Billions

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Ford CEO Alan Mulally, UAW President Ron Gettelfinger and GM CEO Rick Wagoner appear before a panel. i

Ford Motor Co. CEO Alan Mulally (from right) testifies Thursday before the Senate Banking Committee on a plan to rescue the U.S. auto industry as United Auto Workers President Ron Gettelfinger and General Motors CEO Rick Wagoner look on. Chip Somodevilla/Getty Images hide caption

itoggle caption Chip Somodevilla/Getty Images
Ford CEO Alan Mulally, UAW President Ron Gettelfinger and GM CEO Rick Wagoner appear before a panel.

Ford Motor Co. CEO Alan Mulally (from right) testifies Thursday before the Senate Banking Committee on a plan to rescue the U.S. auto industry as United Auto Workers President Ron Gettelfinger and General Motors CEO Rick Wagoner look on.

Chip Somodevilla/Getty Images
GM CEO Rick Wagoner arrives on Capitol Hill. i

GM CEO Rick Wagoner (left) arrives Thursday in a prototype electric vehicle with Michigan Democrats Sen. Carl Levin (center) and Rep. Sander Levin for a Senate hearing on a proposed bailout of the auto industry on Capitol Hill. Win McNamee/Getty Images hide caption

itoggle caption Win McNamee/Getty Images
GM CEO Rick Wagoner arrives on Capitol Hill.

GM CEO Rick Wagoner (left) arrives Thursday in a prototype electric vehicle with Michigan Democrats Sen. Carl Levin (center) and Rep. Sander Levin for a Senate hearing on a proposed bailout of the auto industry on Capitol Hill.

Win McNamee/Getty Images

Executives of the Big Three U.S. automakers pleaded Thursday for a $34 billion government bailout, acknowledging that the industry had made mistakes but pledging to speed up cost-cutting measures that would get the companies back on track.

"We're here today because we made mistakes," General Motors chief executive Rick Wagoner told the Senate Banking Committee. Wagoner, who drove to the hearing in a test version of the electric Chevrolet Volt, apologized for asking for the loans.

"We're sorry to be asking for this support," he said. "We wish the market conditions were better, but they're not, so this is what we need to do."

Senate Banking Committee Chairman Christopher Dodd (D-CT) was sympathetic, acknowledging that the carmakers have already made some tough decisions.

"Some of the companies ought to be commended for going back to the drawing board, making tough decisions and stepping forward today," he said.

But Alabama Sen. Richard Shelby, the panel's top Republican, declared that he had opposed the bailout for financial firms and felt the same way about the auto industry.

"Applying the same standard, I intend to oppose bailing out the Big Three auto manufacturers," he said.

Sen. Charles Schumer (D-NY) questioned why lawmakers should trust the automakers with taxpayers' money.

"I don't trust the car companies' leadership," he said, but he acknowledged that the automakers cannot be allowed to fail.

The executives of GM, Ford Motor Co. and Chrysler LLC were joined at the Senate Banking hearing by the head of the United Auto Workers, Ron Gettelfinger, whose union announced Wednesday that it was prepared to make concessions to help the car makers trim costs.

In his testimony Thursday, Gettelfinger warned bluntly that in the absence of action by Congress: "I believe we could lose General Motors by the end of this month." He said the situation was dire and that time was of the essence.

Gettelfinger told the committee, "We are prepared to do our part." But he also said workers for the auto companies shouldn't have to make disproportionate sacrifices.

Big Three Struggling

The Big Three are struggling to stay afloat heading into 2009 during an economic recession, a steep decline in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves last quarter.

The executives have presented corporate survival plans that would include massive restructuring. They told Congress that they will focus on higher fuel efficiency cars, if they receive the government loans.

GM. wants $4 billion and Chrysler asked for $7 billion before the end of the year. GM wants another $8 billion in early 2009 and a $6 billion line of credit in case it's needed. Ford has asked for a $9 billion line of credit.

Wagoner said his company's plan — which includes cutting costs and refocusing on high efficiency vehicles — would turn the company around.

"It's a blueprint for creating a new General Motors," Wagoner said in detailing the plan and request for aid.

Last month, the CEOs went to Congress seeking a $25 billion bailout, but they left empty-handed after lawmakers expressed skepticism over the industry's ability to restructure in a way that would put it on a long-term path to profitability.

Their case was further weakened when it was reported that GM's Wagoner, Ford's Alan Mulally and Chrysler's Bob Nardelli arrived in Washington aboard luxury corporate jets.

As part of their restructuring plans, the auto CEOs agreed to eliminate their fleets of corporate jets and forgo their salaries.

Concessions From The UAW

The UAW was also prepared to make concessions. In Detroit on Wednesday, following an emergency meeting of the union's leaders, the UAW announced that it would allow the Big Three to delay payments to a multibillion-dollar health care trust. The UAW also agreed to end a jobs bank program that pays laid-off workers most of their salaries and said it could begin talks that could lead to wage concessions.

But any wage concessions would require a vote by the union's rank-and-file membership. At Wednesday's meeting in Detroit, retired GM worker Frank Hammer handed out fliers urging no concessions.

"We're concerned that more concessions means more foreclosures," Hammer told NPR. "You all know how bad the foreclosures are here in the city of Detroit. We can't have more of this. Where are people going to go? What are people going to do?"

In the streets outside the Capitol, all three companies were trying to put their best foot forward, showing off futuristic, green car models. Wagoner's Chevrolet Volt is an extended-range electric vehicle expected to go on sale in 2010.

But even with a promise of change, the automakers likely face more hard questioning. Critics say the companies have been poorly managed and have so far failed to show how they will avoid the need for more loans in the future.

Senate Majority Leader Harry Reid (D-NV) and House Speaker Nancy Pelosi (D-CA) said the hearings would help determine whether Congress will have the special session next week to consider the bailout.

From NPR staff and wire reports

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