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RENEE MONTAGNE, host:

Detroit's big three automakers are also looking for government assistance. So far leaders in the Democratic Party have been willing to lend a hand. Congressional Democrats have urged the Bush administration to use some of the $700 billion financial rescue plan to help the car companies. And yesterday at the White House, President-elect Obama pushed President Bush to support immediate action. To find out what a bailout could mean, we've got Joe White on the line. He's in Detroit where he covers the auto industry for The Wall Street Journal. Good morning.

Mr. JOE WHITE (Senior Editor, The Wall Street Journal): Good morning.

MONTAGNE: Now, General Motors' stock price tumbled yesterday to its lowest level in over 60 years. What could happen if the government does not step in, starting, if you don't mind, with how many jobs might be lost?

Mr. WHITE: There could be a lot of jobs lost. There's probably going to be a lot of jobs lost in this deal either way because the company - if the company gets bailed out, it still has to shrink. If they collapse and have to seek a Chapter 11 bankruptcy protection, which is a possibility that the company has now raised officially, there could be tens of thousands of jobs lost. And there's a lot of concern that those job losses wouldn't just be at GM. They would also be at the companies that make parts for GM, supply, you know, consulting services, IT, dealerships, all of that. So there's a lot of concern about the ripple effects.

MONTAGNE: You know, the bankruptcy option. Auto executives have been unusually reluctant to file for Chapter 11. Why is that?

Mr. WHITE: Yeah. I mean, in contrast to airlines, which have done it in order to restructure. I think it's because the auto executives believe that consumers just won't buy a car from a company that's in bankruptcy. Because the buyer will say, well, who's going to be - who's going to stand behind the warranty for this car, which, you know, you want coverage for three or four years, maybe, or longer? They'll worry that the value of the car will drop if it's perceived to be from a company that might not be around.

And so I think that there's a great reluctance to do that. Aside from the other obvious reasons - which, you know, you'll wipe out the shareholders and the executives will take a hit in terms of their compensation, or possibly have to leave - I think the larger problem is that they just fear that a bankrupt car company is a car company that nobody will want to buy from.

MONTAGNE: Right. Although, of course, for car companies reorganizing debts, cutting costs, streamlining production, some of that could be the good thing that might come out of a bankruptcy.

Mr. WHITE: Oh, yeah. I mean, there's a debate going on around this very question that, you know, General Motors clearly has to restructure in a much more profound way than it has to date. The question is - and they have to unload sizable costs for retiree pensions and health care. Maybe the best way to do that is through a Chapter 11 proceeding. At least that's what some people are starting to argue. And, you know, the markets have been warning about this for years, or for several years anyway. And now appears to be the moment of truth. The question is whether the government will essentially finance the reorganization rather than putting it through a court.

MONTAGNE: Late last week in his first press conference, President-elect Obama called the big three, and I'm quoting here, "the backbone of American manufacturing." But what about foreign companies, like Toyota, that have plants in the U.S.? I mean, how are they doing by comparison? What would a bailout do for them?

Mr. WHITE: Well, that's right. I mean, there are two American auto industries. The one in Detroit, the three Detroit companies, are unionized and they've been here for the better part of the century. They have enormous costs for retirees, particularly health care for retirees, that they can't carry anymore. It's too much of a burden. There is this other auto industry that's largely non-union, mostly in the South or the mid-South, and is owned by Toyota, Honda, BMW, Mercedes, and other foreign companies. They're not having a good year either, but they're not collapsing. And they're not looking for a bailout. And part of the reason why is that they don't have these huge legacy cost burdens. Part of the reason why is that they're set up for the 21st century.

MONTAGNE: Joe, thank you very much. Joe White is a senior editor for The Wall Street Journal, and he covers the car industry from Detroit. For more information on the Detroit automakers' request for a bailout, you can visit npr.org. And you're listening to Morning Edition from NPR News.

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