Detroit's Big 3 carmakers pursued their plea for a bailout in Washington again yesterday, and this time, they each had a plan to turn around their floundering companies. But it's unclear whether their renewed pleas will be enough to convince Congress.
The heads of struggling auto giants General Motors, Ford, and Chrysler reappeared on the Hill yesterday to make their case anew. This time, they came more prepared. The most ambitious business plan proposed was by General Motors, the world's largest auto company, currently teetering on the verge of collapse. It set out a plan to recapture revenue through deep cuts—including slashing 20 percent of its jobs, shutting nine factories, and trying to reduce pay through talks with the United Automobile Workers union.
Along with a more structured plan, however, the Big 3 also had an even bigger request: $34 billion in loans, compared with the $25 billion they'd asked for two weeks ago.
Their appeals came at the same time as news that the car industry experienced its worst sales month in 26 years. The companies have been struggling for decades to compete with the smaller, cheaper cars of foreign rivals. But this year's spike in fuel prices and the deep credit market crisis were the final blows.
This morning, the president of General Motors said bankruptcy is not an option for the industry. But without a loan, he said at yesterday's hearings, the company might not make it through the year. "There is no plan B," he said.
But that doesn't mean that lawmakers will be convinced that taxpayers' money is the solution. Although House Speaker Nancy Pelosi said that she wants to pass legislation to help automakers and Senate Majority Leader Harry Reid said he expects a vote on the bill next week, other legislators have said they disagree with the loan package.
Even many people living in Michigan—expected to be a bastion of support for the bailout—have been saying that they don't think that all of the Big 3 should get rescued.
That's just making the automakers increasingly desperate. On top of the other cuts, the chief executives at Ford and General Motors offered to slash their pay to $1 a year if they get a government loan—which is what Chrysler's chief executive is getting now.
And this week, they've come to Washington not by corporate jet but by car. Hybrid car.
- Read about why the Big 3 could become the Big 2.
- Read the 7 worst ways to rescue Detroit.
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