March 29, 2009 / 3:34 PM / 10 years ago

Obama says GM, Chrysler "not there yet"

WASHINGTON (Reuters) - U.S. President Barack Obama said in an interview broadcast on Sunday that struggling U.S. automakers had not done enough yet to become “lean, mean and competitive” under federal oversight.

U.S. President Barack Obama participates in an "Open for Questions" town hall on the economy in the East Room at the White House in Washington, March 26, 2009. REUTERS/Jim Young

Obama is expected to announce additional aid for General Motors Corp and Chrysler LLC on Monday as both automakers run down cash reserves that had been bolstered by $17.4 billion in emergency loans from the U.S. government.

Obama, who appeared in a taped interview on the CBS-TV news program “Face the Nation,” did not specify what steps he would announce, but said the automakers had more work to do to reduce costs in the face of slumping demand.

“We’re trying to let them know that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry. But it’s got to be one that’s realistically designed to weather this storm and to emerge ... much more lean, mean and competitive than it currently is,” Obama said.

“That’s going to mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody’s going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road,” he said.

Obama added: “They’re not there yet.”

GM and Chrysler have won pending contract concessions from the United Auto Workers to bring hourly wage costs in line with Japanese automakers operating factories in the United States.

But other targets set for the companies under the bailout approved in December by the Bush administration have not been met ahead of a Tuesday deadline for them to demonstrate they can be made viable with new government aid.

Together, GM and Chrysler have asked for another $22 billion in loans from the U.S. Treasury to ride out the weakest market for new cars in the United States in almost 30 years.

GM and Chrysler have so far failed to win deals to reduce their debt as required by their federal loans.

Chrysler, which is owned by Cerberus Capital Management, has set a target of eliminating $5 billion from the $11 billion it now owes to banks and the U.S. government by converting that to equity or negotiating other arrangements.

GM has been in talks with its bondholders to reduce the $27 billion in debt that they hold by two-thirds. GM and advisers to its bondholders have exchanged proposals on a debt restructuring but have made little progress toward a deal.

Reporting by Kevin Krolicki, editing by Maureen Bavdek

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below