US senators have plan to save Detroit automakers

20 November 2008 18:57  [Source: ICIS news]

WASHINGTON (ICIS news)--A bipartisan group of US senators has reached agreement on a multi-billion dollar bailout plan for major US automakers on the verge of bankruptcy, Senate officials said on Thursday.


An aide to Senator George Voinovich (Republican-Ohio) said he has joined with fellow Republican Senator Christopher Bond of Missouri and Democrat Senators Carl Levin and Debbie Stabenow, both of Michigan, on a plan that could give the big three automakers short-term loans of up to $25bn (€19.75bn).


The chief executives of General Motors, Ford Motor Company and Chrysler have been on Capitol Hill for two days pleading with senators and members of the House for emergency funding they say is needed to avoid collapse of one or more of the car makers.


All of the big three auto manufacturers are based in Michigan, with operations, major plants and workforces in and around Detroit, also known as The Motor City.


Collapse of even one of the major car producers would put tens of thousands of Michigan workers out of their jobs.


The auto makers - joined by other manufacturers - argue that the job losses would be far greater and nationwide, however, because as many as one in 10 US jobs outside the auto industry is dependent on automobile manufacturing.


Collapse of any one or more of the Detroit automakers also would have profound effect on the US chemicals sector because car manufacturing is a major downstream consumer of chemicals and plastic resins.


The possible spill-over impact on thousands of automotive supplier companies and their workers is why the senators from Ohio and Missouri have joined the call for a Detroit bailout package.


The Voinovich aide said the plan to be announced later on Thursday by the four senators would allow Detroit automakers to tap into the $25bn already authorised by Congress for retooling. 


Congress authorised that money earlier this year to help the car makers reconfigure their plants and operations in order to turn out more fuel-efficient cars as required under new and more stringent automotive emissions restrictions mandated by federal law.


It is not certain, however, that shifting the $25bn in retooling funding to short-term general loans for the automakers will get full support in either the Senate or House.


($1 = €0.79)


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By: Joe Kamalick
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