US manufacturers seek quick help for automakers

10 November 2008 22:19  [Source: ICIS news]

WASHINGTON (ICIS news)--US manufacturers on Monday called for quick action by Congress next week for a multi-billion dollar rescue plan for floundering automakers and urged federal legislators to avoid imposing new taxes.


John Engler, president of the National Association of Manufacturers (NAM), again raised an alarm to Congress about the precarious financial state of the big three US automakers based in Detroit, Michigan - General Motors (GM), Ford Motor Company and Chrysler.


“The auto industry in America cannot be sustained under these extraordinary economic conditions without additional support,” Engler said.


“Congress must act,” he added.


Along with US housing, the automobile industry is a major downstream consuming sector for the chemicals sector.


Engler, a former Michigan governor, noted that Ford reported on Friday losses of $3bn (€2.3bn) in the third quarter and GM lost $2.5bn.


GM’s sales of cars and light trucks fell 45% in October, he pointed out, “its worst month since World War II”.


Shares of GM fell more than 25% on Monday to $3.24, also near its World War II stock value.


“Ford and GM report they could run out of money toward the end of the first quarter, so the case for bridge loans to cover that period is strong,” Engler said.


Engler joined other top US business officials last week in warning that the nation's automotive sector is on the verge of collapse.


Congress will reconvene on Monday next week, 17 November, amid broad expectations that the legislature will quickly pass a stimulus bill that will include as much as $50bn in loans for auto makers.


However, Engler cautioned that Congress should not be tempted to raise taxes on US business in order to pay for the stimulus package.


“First of all, when considering a stimulus package, do no harm,” Engler said, citing the historic admonition of Hippocrates to physicians.


“Do not raise tax rates, do not increase taxes on energy production, do not expand regulations,” he added.  Earlier this year Democrats in Congress had pressed for a windfall profits tax on US energy companies, a measure that President-elect Barack Obama also advocates.


He said that US corporate tax rates are already the second-highest among industrialized countries.


Engler said that in addition to emergency loans for the auto industry, the stimulus package should include immediate funding for more than $20bn in infrastructure projects that can be begun quickly, including improvements to US highways and bridges but also to inland waterways that are critical arteries for energy and agricultural commodities.


NAM’s 14,000 member firms include a large number of chemical and plastics producers and applications companies.


($1 = €0.78)


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By: Joe Kamalick
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