WASHINGTON, Nov 5 (Reuters) - President-elect Barack Obama courted distressed U.S. automakers during his campaign and pledged to help them, but the industry’s health is so bad it may not be able to wait for him to take office.
“He’s not here until January (20th) and that’s a long time in the life of these companies at the moment,” John Engler, a former Michigan governor and president and chief executive of the National Association of Manufacturers, said on Wednesday.
Engler expects fundamental changes in industry before Obama's inauguration. Engler was not specific. General Motors Corp GM.N said on Wednesday it plans to reveal new cost cuts when it reports quarterly earnings on Friday. Results at GM and Ford Motor Co F.N are expected to be dismal.
Both GM and Ford congratulated Obama on his election and associated overall U.S. economic weakness with Detroit’s worsening financial prospects.
Automakers hold out hope the Bush administration, reluctant to bail out Detroit, will act before yielding power to Obama. Carmakers, their allies in Congress and other industries have called on the Treasury Department to extend loans or other capital as a stop gap.
In coming weeks, companies and their lobbyists plan to “dial up” their urgency. Industry plans to underscore its belief that its immediate problems are not of its own making -- that the dire predicament is closely linked to the global credit crunch and survival depends on federal intervention.
While GM and Ford struggle, prospects at Chrysler LLC are the most uncertain. People involved in discussions about its future say the smallest of the U.S. manufacturers could merge, be spun off or be pushed into bankruptcy if not helped soon.
Engler said a Chrysler failure could cost up to 1 million jobs throughout the economy.
“It’s not just the three auto companies, it’s suppliers, all the way down the chain,” Engler said.
While Obama is not yet in office, industry sources say he could still pressure the Bush administration and exert leverage on the Democratic-led Congress, if he believes action is needed to avert a broad economic crisis in manufacturing.
House of Representatives Speaker Nancy Pelosi called on Wednesday for a $61 billion stimulus plan to spur the U.S. economy, but said passage later this month would depend on Senate Republicans and the mood of the White House.
Pelosi met on Monday with auto industry allies in Congress and key committee chairmen. There is no consensus yet on an aid proposal for Detroit.
Carmakers, their lobbyists and congressional officials have suggested up to $25 billion in direct loans with few or no strings attached to help them through the current crisis, officials said.
Government red tape is holding up another $25 billion in advanced technology loans for automakers that was approved in September. During the campaign, Obama called on the Bush administration to accelerate that financing.
The United Auto Workers (UAW) has suggested billions in congressionally approved aid could go to covering retiree health care costs, freeing up money that companies would otherwise have to contribute for benefits. (Additional reporting by David Bailey in Detroit; Editing by Andre Grenon)
Our Standards: The Thomson Reuters Trust Principles.