The auto industry in the United States is in trouble. Roiled by financial crisis, the industry shed over five hundred thousand jobs in November alone, AP has reported. What has gone so horribly wrong with these iconic companies and what can be done to save them?
These were pretty much the questions bogging decision makers down at Washington as the “Big Three” came knocking on the doors of the US congress. What do they want? Well, a “bail out” of about $ 15 Billion.
Associated Press has reported that the White House and congressional Democrats are working to provide this so as to avoid these companies from collapsing.
House Speaker Nancy Pelosi said the House would consider legislation next week to provide "short-term and limited assistance" to the U.S. auto industry while it undergoes "major restructuring,” the news agency reported.
The Senate is scheduled to be in session next week.
The spread of a crisis
GM chief executive Rick Wagoner said the firm needed a loan to span the "financial chasm" that had opened up, the BBC reported.
He reportedly told the Senate banking committee that the global financial crisis had caught up with the auto makers, not bad management.
Millions of jobs and four per cent of the GDP of the US could be at stake.
Support for the car makers hasn’t been whole hearted however.
The committee chairman, Christopher Dodd, a Democrat, said that the industry was "seeking treatment for wounds that were largely self-inflicted" the report said.
How will it all be done?
Some reports suggest that GM, Chrysler and Ford hope to convince members of the US Congress to vote on the car industry bail-out.
The Independent newspaper has said that the size of the package has not been finalised, but it is expected to be about 15 billion dollars (£10.1 billion).
The three top executives had put the figure to about 34 billion dollars (£22.9 billion).
"It sounds like we have agreement on those basic principles that would be required for a bill that the president could sign," Press secretary Dana Perino told the newspaper today.
Asked if an initial vote could be held tomorrow, she said that "it seems pretty soon if we haven't seen the language yet".
The White House wants the Big Three carmakers to show a detailed plan for how they will be viable in the long term and the Bush administration has said it will not support emergency help for car companies from taxpayers without such a plan.
New problems, new president?
Another school of analysts believe that outgoing president George Bush may not take a decision and leave it upto his successor president-elect Barack Obama to steer the industry out of difficult times.
While Obama has kept a low profile on the subject, CNN has reported that behind the scenes, the incoming administration is working hard on finding ways to ease the crisis.
President-elect Barack Obama and his advisers are studying options to deal with the auto industry.
Obama and his advisers are studying options for helping the automobile industry beyond what Congress does or doesn't do before he steps into office.
A possible short-term loan could be on its way to ease the crisis for the auto giants.
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