obama has just spoken about the situation
President Obama's remarks on U.S. auto industry
March 30 (Reuters) - Following are excerpts from President
Barack Obama's Monday remarks about the U.S. auto industry's
restructuring effort:
In recent months, my Auto Task Force has been reviewing
requests by General Motors and Chrysler for
additional government assistance as well as plans developed by
each of these companies to restructure, modernize, and make
themselves more competitive.
Year after year, decade after decade, we have seen problems
papered-over and tough choices kicked down the road, even as
foreign competitors outpaced us. Well, we have reached the end
of that road.
We cannot, we must not, and we will not let our auto
industry simply vanish. But we also cannot continue to
excuse
poor decisions. And we cannot make the survival of our auto
industry dependent on an unending flow of tax dollars. These
companies -- and this industry -- must ultimately stand on
their own, not as wards of the state.
That is why the
federal government provided General Motors
and Chrysler with emergency loans to prevent their sudden
collapse at the end of last year -- only on the condition that
they would develop plans to restructure. In keeping with that
agreement, each company
has submitted a plan to restructure.
But after careful analysis, we have determined that neither
goes far enough to warrant the substantial new investments that
these companies are requesting. And so today, I am announcing
that my administration
will offer GM and Chrysler a limited
period of time to work with creditors, unions, and other
stakeholders to fundamentally restructure in a way that would
justify an investment of additional tax dollars; a period
during which they must produce plans
that would give the
American people confidence in their long-term prospects for
success.
What we are asking is difficult. It will require hard
choices by companies. It will require unions and workers who
have already made painful concessions to
make even more. It
will require creditors to recognize that they cannot hold out
for the prospect of endless government bailouts. Only then can
we ask American taxpayers who have already put up so much of
their hard-earned money to once more invest in
a revitalized
auto industry.
GENERAL MOTORS
So let me discuss what measures need to be taken by each of
the auto companies requesting taxpayer assistance, starting
with General Motors. While GM has made a good faith effort to
restructure over the past several months, the plan they have
put forward is, in its current form, not strong enough.
However, after broad consultations with a range of industry
experts and financial advisors, I'm confident that GM can rise
again,
provided that it undergoes a fundamental restructuring.
As an initial step, GM is announcing today that Rick Wagoner is
stepping aside as Chairman and CEO. This is not meant as a
condemnation of Mr. Wagoner, who has devoted his life to this
company;
rather, it's a recognition that it will take a new
vision and new direction to create the GM of the future.
In this context, my administration will offer General
Motors adequate working capital over the next 60 days. During
this time, my team will
be working closely with GM to produce a
better business plan.
They must ask themselves: have they consolidated enough
unprofitable brands? Have they cleaned up their balance sheets
or are they still saddled with so much debt that they can't
make
future investments? And above all, have they created a
credible model for how to not only survive, but succeed in this
competitive global market?
Let me be clear: the United States government has no
interest or intention of running GM. What we
are interested in
is giving GM an opportunity to finally make those much-needed
changes that will let them emerge from this crisis a stronger
and more competitive company.
CHRYSLER
The situation at Chrysler is more challenging. It is
with
deep reluctance but also a clear-eyed recognition of the facts
that we have determined, after a careful review, that Chrysler
needs a partner to remain viable. Recently, Chrysler reached
out and found what could be a potential partner -- the
international car company Fiat, where the current management
team has executed an impressive turnaround. Fiat is prepared to
transfer its cutting-edge technology to Chrysler and, after
working closely with my team, has committed to building new
fuel-efficient cars and engines here in America.
We have also secured an agreement that will ensure that
Chrysler repays taxpayers for any new investments that are made
before Fiat is allowed to take a majority ownership stake in
Chrysler.
Still, such a deal would require an additional investment
of tax dollars, and there are a number of hurdles that must be
overcome to make it work. I am committed to doing all I can to
see if a deal can be struck in a way that upholds the interests
of
American taxpayers.
That is why we will give Chrysler and Fiat 30 days to
overcome these hurdles and reach a final agreement -- and we
will provide Chrysler with adequate capital to continue
operating during that time. If they are able to come to
a sound
agreement that protects American taxpayers, we will consider
lending up to $6 billion to help their plan succeed. But if
they and their stakeholders are unable to reach such an
agreement, and in the absence of any other viable partnership,
we
will not be able to justify investing additional tax dollar
to keep Chrysler in business.
BANKRUPTCY
While Chrysler and GM are very different companies with
very different paths forward, both need a fresh start to
implement the
restructuring plans they develop. That may mean
using our bankruptcy code as a mechanism to help them
restructure quickly and emerge stronger.
Now, I know that when people even hear the word
"bankruptcy" it can be a bit unsettling, so let me
explain what
I mean. What I am talking about is using our existing legal
structure as a tool that, with the backing of the U.S.
government, can make it easier for General Motors and Chrysler
to quickly clear away old debts that are weighing them down
so
they can get back on their feet and onto a path to success; a
tool that we can use, even as workers are staying on the job
building cars that are being sold.
What I am not talking about is a process where a company is
broken up, sold off, and
no longer exists. And what I am not
talking about is having a company stuck in court for years,
unable to get out.
GOVERNMENT WARRANTY
It is my hope that the steps I am announcing today will go
a long way toward answering many of the
questions people may
have about the future of GM and Chrysler. But just in case
there are still nagging doubts, let me say it as plainly as I
can -- if you buy a car from Chrysler or General Motors, you
will be able to get your car serviced and
repaired, just like
always. Your warrantee will be safe.
In fact, it will be safer than it's ever been. Because
starting today, the United States government will stand behind
your warrantee.
AUTO SALES SUPPORT
Therefore, to support
demand for auto sales during this
period, I'm directing my team to take several steps. First, we
will ensure that Recovery Act funds to purchase government cars
go out as quickly as possible and work through the budget
process to accelerate other
federal fleet purchases as well.
Second, we will accelerate our efforts through the Treasury
Department's Consumer and Business Lending Initiative. And we
are working intensively with the auto finance companies to
increase the flow of credit to
both consumers and dealers.
Third, the IRS is today launching a campaign to alert
consumers of a new tax benefit for auto purchases made between
Feb 16 and the end of this year -- if you buy a car anytime
this year, you may be able to deduct the
cost of any sales and
excise taxes. This provision could save families hundreds of
dollars and lead to as many as 100,000 new car sales.
Finally, several members of Congress have proposed an even
more ambitious incentive program to increase car
sales while
modernizing our auto fleet.
I want to work with Congress to identify parts of the
Recovery Act that could be trimmed to fund such a program, and
make it retroactive starting today.
DIRECTOR OF RECOVERY
I am designating a
new Director of Recovery for Auto
Communities and Workers to cut through red tape and ensure that
the full resources of our federal government are leveraged to
assist the workers, communities, and regions that rely on our
auto industry.
Edward
Montgomery, a former Deputy Labor Secretary, has
agreed to serve in this role. Together with Labor Secretary
Solis and my Auto Task Force, Ed will help provide support to
auto workers and their families, and open up opportunity in
manufacturing
communities. Michigan, Ohio, Indiana, and every
other state that relies on the auto industry will have a strong
advocate in Ed.
((Washington Company News Desk, +1 202 898 8467,
julie.vorman@thomsonreuters
Keywords: AUTOS/OBAMA REMARKS
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