Monday, November 17

GM fighting hard to stave off bankruptcy

Reuters NEW YORK

GENERAL Motors has been telling US government officials that a bankruptcy filing by the automaker would set off a chain reaction hitting hundreds of its suppliers and dealers as well as its Detroit rivals, ‘The Wall Street Journal’ reported.

Citing people familiar with the situation, the Journal said on its that GM’s auto-industry
bailout lobbying effort in Washington was reaching out to congressional leaders, the outgoing Bush White House and members of the transition team of president-elect Barack Obama, with meetings going on over the weekend.

Central to the campaign is the idea that a bankruptcy filing by GM would trigger a domino effect, potentially crippling the nation’s industrial base, the newspaper said.

Detroit automakers have sought emergency assistance to help them survive a steep
and worsening drop in sales that they blame on the global credit crisis and slumping economy. GM has said it could run out of cash by early next year.

Democrats are proposing a bailout of distressed automakers through $25 billion in loans from the Treasury Department’s $700-billion corporate rescue programme.

The White House opposes that move and says that $25 billion already appropriated for loans to make automobiles more fuel-efficient
should be accelerated. According to the newspaper, GM is arguing that bankruptcy would threaten jobs and the government’s pensionbenefit insurance arm, which covers millions of workers outside the auto industry, by swamping the fund and further burdening a strained federal budget.

“There is no Plan B being discussed beyond a government bailout,” the Journal quoted one top GM adviser as saying on Friday. Another person close to the company said executives re
cently told the board they were “increasingly optimistic” GM would receive a liquidity infusion before December, it said. GM is also flooding dealers, supplier executives, employees and union members with letters encouraging their participation in the effort, the newspaper said.

United Auto Workers president Ron Gettelfinger said in a rare news conference that US automakers urgently needed a federal loan to survive, but added their work force should not be blamed for the industry crisis.

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