Under Deadline, Automakers Weigh Options For General Motors and Chrysler, it's money time again in Washington. The struggling car makers will present plans to the government Tuesday to prove they can be viable going forward. They'll also try to persuade officials that the billions they've received in taxpayer loans so far haven't been a waste.
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Under Deadline, Automakers Weigh Options

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Under Deadline, Automakers Weigh Options


Frank Langfitt covers the auto business for NPR. He's in the studio. Frank, what exactly is at stake here?

FRANK LANGFITT: It's not necessarily going to be easy. We're facing shrinking sales here in the United States, a crowded marketplace and the big question sort of looming over all of this - is there really room for three domestic carmakers right now in America?

HANSEN: Well, although the plans are still somewhat secret, what's already known about the moves that the companies are making?

LANGFITT: Well, a fair bit, actually. The main focus so far has been cost cutting. Last week GM said it was going to be getting rid of about 10,000 salaried jobs. The United Auto Workers has also agreed to close its jobs bank at both companies. Now, the jobs bank - very controversial - it's a place where laid-off workers could receive almost all of their pay, but not have to actually do any work.

HANSEN: So, what are the big issues they still have to tackle?

LANGFITT: The two big things are healthcare and a heavy debt load. GM, for instance, it has to convince its lenders to take GM company stock instead of full repayment of these loans. That could be very tough for lenders to swallow. The stock is now trading at under three bucks a share. It's not very attractive.

HANSEN: So, even with these cuts and expenses, can both of these companies make it?

LANGFITT: I was talking to Kimberly Rodriguez. She's an analyst with Grant Thornton - that's a management consulting firm - and here's how she put it.

KIMBERLY RODRIGUEZ: Really, Chrysler, you could say owes the U.S. taxpayers a solution. There's no more buying of time. We're past that now.

HANSEN: So, Frank Langfitt, what happens after the companies submit these plans on Tuesday? And how does the government decide if they're really viable?

LANGFITT: But this definition of viability is pretty subjective and squishy when you look in the loan agreements, the way they were written. So, even though this is supposed to be an economic process, there's no question there's going to be probably quite a bit of politics involved.

HANSEN: What happens if the government says no?

LANGFITT: Well, in the case of Chrysler and maybe GM, catastrophe, and it's going to be very hard, frankly, for the government to say no. Because in the case of Chrysler, it would go into bankruptcy and could set off a huge ripple effect throughout this enormous chain of the automotive industry in the United States. You could see massive job losses at a time when we're already in deep recession. So, the government is in a really tough place here.

HANSEN: NPR's Frank Langfitt covers the auto industry. Thanks a lot, Frank.

LANGFITT: Happy to do it, Liane.

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