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GM, Chrysler Want More Money From Uncle Sam


This is MORNING EDITION from NPR News. I'm Ari Shapiro.


And I'm Steve Inskeep.

It turns out the place to see the future of the auto industry was Saturday Night Live. When auto companies appealed for help last year, the comedy show staged a mock congressional hearing where auto executives revealed their plan to survive.

(Soundbite of TV show, "Saturday Night Live")

Mr. JASON SUDEIKIS (Actor, Comedian) (as Rick Wagoner): Now, assuming we receive the 25 billion in aid some time this weekend, on January 1st, 2009, we will request another 25 billion.

(Soundbite of laughter)

Mr. SUDEIKIS (as Rick Wagoner): Then on June 15th, we will ask for 50 billion.

INSKEEP: Okay. The exact dates and amounts were off a bit but the concept holds up. After receiving some money, the companies filed plans yesterday to depend on more of it. Here's NPR's Frank Langfitt.

FRANK LANGFITT: In early December, the American auto market was bad; today it looks considerably worse. The lack of credit and consumer anxiety has decimated demand. Both car companies say that under the circumstances they need more money to stay afloat and restructure their businesses. On a conference call yesterday, Chrysler CEO Robert Nardelli painted a stark picture of the market.

Mr. ROBERT NARDELLI (CEO, Chrysler): We have continued to see an unprecedented decline in the automotive sector. We are now projecting 10.1 million units for this year, which is a 40-year low for our industry.

LANGFITT: Until recently, the Detroit companies were scaled to produce for market about 16 million cars and trucks. Now, they have to shrink - and fast. In its plan, Chrysler called for cutting another 3,000 jobs - that's on top of 32,000 it cut last year. And Chrysler, by far the smaller of the two companies, insisted it could still survive on its own, or in a partnership with the Italian carmaker Fiat.

But some analysts weren't convinced. Michael Robinette is an auto forecaster with the Michigan firm CSM Worldwide.

Mr. MICHAEL ROBINETTE (Auto Forecaster, CSM Worldwide): It's going to be a significant jump between now and 2011 or 2012 when Chrysler can begin to make Fiat-designed vehicles to be sold under their dealerships. In the automotive world that's an eternity.

LANGFITT: Many observers think Chrysler is a candidate for bankruptcy. The company even included that scenario in its plan, but Nardelli then shot it down.

Mr. NARDELLI: I want to emphasize that this is not a course of action we're recommending.

LANGFITT: GM's plan had deeper cuts than Chrysler's. The company said it would slash its global workforce by 47,000 jobs, and it would close another five plants in North America. GM CEO Rick Wagoner ticked off the brands that could be headed for the scrap heap.

Mr. RICK WAGONER (CEO, General Motors): We will make a final decision to sell or phase out Hummer by March 31st of this year.

LANGFITT: The news for Saturn wasn't much better. Wagoner said if he can't sell it or spin it off, Saturn will go out of business in 2011. And he added that Saab could be headed for bankruptcy.

Kimberly Rodriguez is an auto analyst with Grand Thornton, the management consulting firm. She said GM's plan was better than she expected.

Ms. KIMBERLY RODRIGUEZ (Auto Analyst, Grand Thornton): Seriously, the plan was surprising in its depth. I think encouraging would be the one word I'd use. I think it did reach to those levels that we believe are necessary to make GM a viable entity going forward.

LANGFITT: Though, on one of the most sensitive issues - reducing union costs -both plans were vague. The United Auto Workers said they had reached "tentative understandings" with the firms on labor contracts. But those understandings were never spelled out. Again, Kimberly Rodriguez.

Mr. RODRIGUEZ: I do think there's a bit more negotiating to be had on the labor side. So, jury really is out until we get some more detail.

LANGFITT: Most of that negotiating will probably focus on retiree healthcare, a huge expense. In 2007, the companies agreed to pay billions of dollars into a trust fund. The union was then supposed to take over responsibility for retiree health care, but the recession hit. Now the companies can't afford those payments.

One person who may be able to help both sides hash out their differences is Ron Bloom. Bloom is a key adviser to the president's Auto Taskforce, and his unusual background seems suited to the job. He's a former investment banker who works for the United Steelworkers Union, and he's helped create health care trust funds for struggling companies.

Mr. LEO GERARD (United Steelworkers Union): I think that they recognize that that's a unique talent.

LANGFITT: Leo Gerard leads the United Steelworkers and until now, he was Bloom's boss.

Mr. GERARD: I don't think they could've picked a person who can better bridge the financial community, manufacturing and workers in the workplace who are struggling to make ends meet every day.

LANGFITT: Bloom will join Treasury Secretary Timothy Geithner and Presidential Economic Adviser Larry Summers in trying to determine whether GM and Chrysler can be viable and whether they deserve more taxpayer money, which, according to the plans, could eventually total nearly $40 billion. A decision is expected at the end of March.

Frank Langfitt, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Frank Langfitt is NPR's London correspondent. He covers the UK and Ireland, as well as stories elsewhere in Europe.