President Barack Obama says General Motors Corp and Chrysler LLC must emerge from their restructuring as "leaner, meaner" companies and that a substantial market awaits them if they make the right decisions. Obama said in an interview broadcast Saturday on the cable television station C-SPAN that the beleaguered automakers should aim to have product lines that appeal to consumers - and that means fuel efficient and high-performance vehicles that Americans hunger for.
He defended government intervention in the industry, saying the administration could not let either company simply dissolve. "Our auto industry is the foundation for economies all across the Midwest," Obama said, "and ultimately, for the country as a whole. And had we allowed GM or Chrysler simply to liquidate that would have been a huge anti-stimulus on the economy as a whole, and could have dragged us even deeper into recession or even depression."
The president said that he believes GM ultimately "is going to be a strong company and we are going to be pulling out as soon as the economy recovers and they've completed their restructuring." Nevertheless, several members of Congress appealed directly to the administration Friday to slow down the restructuring, saying they were worried about shuttered car dealerships, job losses and the big unknown of a GM bankruptcy.
They said that a pending June 1 deadline for a GM bankruptcy created more uncertainty for the industry and could lead to a rash of additional job losses and dealership closings. Chrysler filed for bankruptcy protection last month, and plans to sell the vast majority of its assets to a group led by Italy's Fiat Group SpA and form a new company. A sale hearing is scheduled for May 27, with the deal expected to close about 30 days later.
Ford Motor Co has so far spared itself from needing a federal bailout after taking steps over the last few years to cut costs, focus on its core brands, and introduce new vehicles and advanced features.
GM borrowed an additional $4 billion from the government Friday on top of $15.4 billion it previously received. The administration has demanded that the restructuring include cutting labour costs, reducing debt, shedding dealerships and brands, and closing excess factories. "Keep in mind what's happened in the auto industry," Obama said. "Right now, we're seeing- we're projecting that maybe this year the auto industry as a whole sells 10 million cars in the United States.
Well, replacement numbers for the auto industry, you know, that the number of cars to replace cars on the road is closer to 14, 15, 16 million. And what that means is when the economy recovers and consumers say, you know the old clunker has finally given out. I need to get a new car." Obama said he believes the automakers have been "weighed down by a legacy of some bad management decisions, health care costs and the whole host of other things that they are now in the process of cleaning up."
"We're confident that they can emerge and take advantage of that new market and actually be very profitable and thrive," the president said. "But it means going through some pain now, and the thing I worry about most is that so much of that pain is borne by workers and communities that have historically been the backbone of the auto industry and so we're going to have to work intensely with those communities." "If some of those auto jobs don't come back, then what we're going to have to do is make sure that those workers are effectively retrained," Obama said.