The U.S. auto industry, already the recipient of
$25 billion in government loans, could be getting more largess if a group of Michigan lawmakers get their way. Members of the Michigan congressional delegation on Thursday
sent a letter
to Treasury Secretary Hank Paulson and Federal Reserve Board Chairman Ben
Bernanke urging the agencies to use the authority granted to them in
the $700 billion bailout bill to promote liquidity in the auto
industry.
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The representatives in their letter say "there is no single segment of America's economy that is more critical to the financial well-being of millions of Americans than the automotive industry," claming one in 10 American jobs is related to auto manufacturing.
A cynic might question that number and note that while U.S. automakers only directly employ 355,000 the politicians seem to be taking credit for the 4.5 million workers that help making U.S. manufactured steel, aluminum, iron, copper, plastics, rubber, electronics and computer chips regardless of what percentage of those products actually go into domestic cars.
But without question, automakers and their dealers are struggling, with General Motors Corp. seeking $15 billion in fresh liquidity (including cuts) to survive a sales slowdown and dealerships forced into bankruptcy as credit facilities have dried up.
Meanwhile, the cuts continue. General Motors executives in a memo to employees leaked Thursday warned to expect further job cuts and reduced benefits for salaried workers as the company looks to save cash and weather the current sales slowdown. Across town Chrysler LLC said it would cut 1,825 jobs by eliminating a shift at a Jeep plant in Toledo, Ohio, and by closing an SUV factory in Newark, Del.
While most would likely blame the problems Detroit's automakers are facing more on decades of poor decision-making, bad vehicle designs and high costs, the companies are unlikely to pass up on a chance to blame the ongoing credit crunch and get their hands on some of the bailout cash being thrown around. And given that it is an election year (as the bipartisan letter shows), the odds seem strong that at least some further assistance will be forthcoming.
Let's just hope the companies are able to use the cash to survive this recession, build better vehicles and get their houses in order. Otherwise, it's pretty safe to assume that whenever the economy hits the next speedbump, we can expect to see the Michigan delegation blaming that downturn for Detroit's woes and seeking out more assistance. - Lou Whiteman
See Dealscape post on Congress approving $25 billion in loans for automakers
See the letter and accompanying press release
See Dealwatch: Autos
Lou Whiteman is a senior writer for The Deal.
