Detroit carmakers meet Pelosi to plead for aid

The chief executives of Detroit's three carmakers and the head of the United Auto Workers union made a joint appeal in Washington yesterday for extra government aid for their beleaguered industry

Tue:Nov: 11: 05:05 PM

Rick Wagoner of General Motors, Ford Motor's Alan Mulally, Chrysler's Bob Nardelli and the UAW's president, Ron Gettelfinger, all met Nancy Pelosi, speaker of the House of Representatives.

Ms Pelosi, whose support is crucial in driving a rescue plan through the Democratic-dominated Congress, said prior to the meeting that they would discuss "how we can work together to go forward to ensure the viability of that important industry, looking out for the taxpayer and looking out for the worker".

President-elect Barack Obama indicated during the recent campaign that, if elected, he would "immediately" meet the carmakers and Mr Gettelfinger. During his campaign he suggested the US car industry should receive up to $50bn in direct government loans.

Mr Mulally's presence at yesterday's meeting was designed to drive home the message that support is required for the entire Detroit-based industry, not merely to smooth the way for GM's proposed takeover of Chrysler.

The depth of the carmakers' plight will become clearer today, when GM and Ford are set to report sizeable third-quarter losses and dwindling cash flow. They are also expected to announce further production cuts.

Analysts expect that, barring government support or a sudden upturn in the market, GM and Chrysler will run out of cash sometime next year. Ford has more breathing room thanks to what Mr Mulally describes as a $23.5bn "home-improvement" loan arranged in late 2006.

The carmakers are seeking government aid beyond the $25bn in low-cost loans, recently approved by Congress as part of last year's energy package, to help finance the production of more fuel-efficient vehicles. However, these loans, administered by the energy department, are unlikely to be available until next year.

A more immediate option under discussion is $25bn in "bridging finance" to tide the carmakers and their suppliers over the cash crunch. The money could also be used to help the three Detroit companies meet their commitment to fund union-managed healthcare trusts due to be set up in 2010.

GM shares tumbled by almost 14 per cent to $4.80 yesterday. Ford shares lost 5.3 per cent. Chrysler is 80 per cent owned by Cerberus Capital Management, the New York buy-out firm.

Canada's motor industry, which is closely integrated to the US market, has also asked for government aid.

Source:http://www.ft.com/cms/s/0/b42a9364-ac70-11dd-bf71-000077b07658.htm