- The Washington Times - Saturday, March 28, 2009

DETROIT | The Obama administration is likely to demand deeper concessions from Chrysler LLC and General Motors Corp. in exchange for additional federal loans, a person briefed on the government’s plan said Friday.

The concessions could go beyond the requirements imposed by the Bush administration when it agreed to loan the automakers money last year, said the person, who asked not to be identified because the government’s plans have not been revealed.

President Obama is set to announce the administration’s plan for the auto industry Monday. White House press secretary Robert Gibbs said Mr. Obama’s auto task force was “winding down the decisions that have to be made” and finalizing the plan.

Both automakers are operating on a total of $17.4 billion in government loans, trying to weather the worst auto sales downturn in 27 years. In addition, GM is seeking another $16.6 billion, while Chrysler wants $5 billion more.

GM Chief Executive Rick Wagoner met with members of the task force Friday, an Obama administration official said.



The term sheets that came with the first loans require extensive restructuring, including executive pay cuts and labor costs that match Japanese automakers. Both companies also must persuade the United Auto Workers to take equity in exchange for half of the payments the companies must make to union-run trust funds that will take over retiree health care costs starting next year. And they must get debtholders to swap equity for two-thirds of the companies’ debt.

“There may be more extensive conditions than were laid out initially in the term sheets,” the person said.

Both companies face a Tuesday deadline to submit restructuring plans to the government, but neither company is likely to have everything done. Neither GM nor Chrysler have deals with the union on the trust funding or concessions from their debtholders, although talks are continuing.

“Our union is continuing to work with the task force and the auto companies to find a solution to the may issues we face,” UAW President Ron Gettelfinger said Friday through a spokeswoman.

Mr. Obama made it clear Thursday that the companies would face having to make tough concessions for additional aid, but it was not clear whether that meant concessions beyond the initial loan terms.

The president said if the companies were “not willing to make the changes and the restructurings that are necessary, then I’m not willing to have taxpayer money chase after bad money.”

Republicans were signaling their opposition to Mr. Obama’s approach.

“Everyone wants America’s automakers to not only survive, but thrive. That’s why it’s difficult to understand the logic of adding more burdens and requirements to the very companies that are struggling to stay afloat,” said Antonia Ferrier, a spokeswoman for House Republican Leader John A. Boehner of Ohio.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

 

Click to Read More and View Comments

Click to Hide