Obama backs auto rescue

President-elect Barack Obama waves as he leaves the University of Chicago Laboratory schools in Chicago December 19, 2008.

CHICAGO (Reuters) - U.S. President-elect Barack Obama offered embattled U.S. automakers a promise and a threat on Friday, saying he hoped to create more autoworker jobs but only if carmakers do not squander the opportunity to reform.

Speaking after the outgoing administration of President George W. Bush offered $17.4 billion in emergency loans to Detroit's beleaguered "Big Three" car giants, Obama said he would work with both carmaker unions and management to rebuild the industry.

"My top priority in this administration is to create 2.5 million new jobs and I want some of those jobs to be in the auto industry," Obama said at a news conference.

He declined to say what, if any, changes he would make to the auto rescue plan announced by the White House after he takes office on January 20, or whether he would entertain calls by the United Auto Workers union to remove what it called "unfair" conditions in the Bush bailout plan.

But he said his economic team would discuss with workers and management ways to ensure their collective survival, saying the chance to end bad management practices and reform the industry "must not be squandered".

"I just want to make sure that when we see a final restructuring package, that it's not just workers who are bearing the brunt of that restructuring," Obama said.

"All shareholders are going to have to play a part in this process."

FILLS OUT CABINET LIST

Obama finished naming candidates for his Cabinet-in-waiting, naming his picks to head the Transportation and Labor departments and his chief trade negotiator.

Obama tapped California Democratic Rep. Hilda Solis to be labor secretary and retiring Illinois Republican Rep. Ray LaHood to head the Transportation Department -- making him the second Republican in the Cabinet. Former Dallas Mayor Ron Kirk was named to be U.S. trade representative.

The announcements round out Obama's prospective Cabinet, which includes his former rival for the Democratic presidential nomination Hillary Clinton as secretary of state and current Defense Secretary Robert Gates, who will keep his job under the new president.

Obama has also chosen New York Federal Reserve President Timothy Geithner as Treasury secretary and former Treasury chief and Harvard University president Lawrence Summers to head the National Economic Council.

Obama, who is scheduled to leave for Hawaii on Saturday for a vacation with his family, has consistently given conditional support to proposals to help U.S. automakers, who have been pushed to the brink by collapsing auto sales and the global financial crisis.

But the auto industry blowout is only one of a plateful of economic crises awaiting Obama, who is also trying to craft a major economic stimulus plan that could cost at least $600 billion in an effort to pull the country out of a deepening recession.

An Obama transition official said the White House kept the president-elect informed of its auto plan deliberations but Obama was not part of the decision.

"The administration did not ask for our opinion or approval on the package or any of its specifics," a transition official told Reuters on condition of anonymity."

(Writing by Andrew Quinn; editing by Jackie Frank)