4 Min Read
(Adds GM's broadcast for employees)
By Soyoung Kim and Poornima Gupta
DETROIT, Nov 12 (Reuters) - General Motors Corp (GM.N) asked all its U.S. dealers on Wednesday to urge the Congress to approve an additional loan package to help the automaker deal with its liquidity crisis, dealers briefed on the matter said.
GM U.S. sales chief Mark LaNeve told dealers to call their representatives and senators to ask them to support GM and the auto industry, saying 3 million jobs are at risk if the industry does not receive urgent government funding.
"As we're in the midst of the deepest crisis our industry has ever faced, GM's priority is on seeking support from various U.S. government agencies and congressional leaders," LaNeve said in a letter to dealers obtained by Reuters.
Separately, GM executives also held a broadcast for employees on Wednesday, urging them to contact their representatives and senators in support of any measures to provide immediate liquidity to the U.S. auto industry, a GM employee said.
LaNeve said GM needs the quick appropriation of the first $25 billion loans already approved by Congress and needs a second package of another $25 billion in loans to "weather the storm," a dealer told Reuters.
"GM asked all the GM dealers and hundreds of thousands of employees to contact their congressmen and senators to approve this as quickly as possible," the dealer told Reuters.
Cash-strapped GM said last week it is approaching the minimum level of liquidity needed to run its operations and could run out of cash by early next year.
GM, Ford Motor Co (F.N) and Chrysler are all burning through cash amid a global credit crunch that has accelerated the decline in U.S. auto sales and placed severe limits on corporate and consumer borrowing.
Chief executives of the three automakers met U.S. House of Representatives Speaker Nancy Pelosi and Senate Majority leader Harry Reid last week to discuss a comprehensive aid package of $50 billion -- with half directed as emergency capital. The second $25 billion, to be considered later, would go to a retiree healthcare trust fund to free up cash for other priorities.
U.S. lawmakers have said in recent days that they might support efforts to aid the struggling industry.
Massachusetts Democratic Rep. Barney Frank said on Wednesday his committee will hold a hearing next week to consider a bill to provide another $25 billion in federal loans to U.S. auto manufacturers.
Frank, chairman of the House Financial Services Committee, added that the money for the loan would come from the Troubled Assets Relief Program, part of a $700 billion financial market rescue law enacted last month, if the bill passes. [ID:nN12299529]
"Next week, Congress and the current administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation's history," LaNeve said in the letter.
LaNeve told dealers the cost of allowing this industry to fail would be "catastrophic" as it would lead to a loss of 3 million jobs within the first year, U.S. personal income reduction of $150.7 billion and a government tax loss over three years of more than $156 billion.
"This level of economic devastation far exceeds the $25 billion of government support that our industry needs to bridge this current period," he added. (Reporting by Soyoung Kim and Poornima Gupta; Editing by Gary Hill and Andre Grenon)