Automakers Warn of Failure

GM chief executive G. Richard Wagoner Jr., right, listens while Chrysler CEO Robert Nardelli speaks during a Senate Banking Committee hearing on the state of the auto industry. GM and Chrysler have said that without a bailout, the firms could run out of cash next year.
 

The chieftains of Detroit's Big Three automakers made a desperate appeal to skeptical lawmakers yesterday for $25 billion in emergency loans to forestall the possible collapse of the domestic auto industry, offering to cut their own salaries in exchange for government aid.

But the chances were looking increasingly bleak that Congress would quickly approve a lifeline to help the firms survive some of the most devastating economic conditions since Henry Ford founded the Ford Motor Co. in 1903.

In testimony before the Senate Banking Committee, the chief executives of Ford, General Motors and Chrysler blamed the failure of the global credit system for driving down auto sales and plunging their firms into crisis. Chrysler chief executive Robert L. Nardelli revealed that his company had considered filing for bankruptcy protection, but decided it would take too long to reach an accord with suppliers, lenders and labor.

"We're in a very fragile position," Nardelli said.

Even Ford, the strongest of the three, is worried about its long-term survival. Ford chief executive Alan R. Mulally said in written testimony that because the auto industry is "uniquely interdependent" on a nationwide chain of suppliers, the failure of even one of the companies could cause a "severe disruption" that would be felt by every auto plant in the country "within days, if not hours."

"In the face of incredibly fragile economic conditions and the interdependence of our industry, we believe it is appropriate at this time to join our competitors in asking for your support to protect against an uncertain economic future," Mulally wrote.

The stakes are high, the executives argued. The U.S. auto industry employs 240,000 workers. It is the largest purchaser of American-made steel, aluminum, iron, copper, plastics, rubber and electronic chips. Last year, it bought $156 billion in U.S. auto parts, supporting jobs in all 50 states. Auto sales typically account for 4 percent of the gross national product.

(By Linda Davidson -- The Washington Post)