Promise - and warning - to US carmakers

Promise - and warning - to US carmakers 

Chicago - United States President-elect Barack Obama has offered embattled American carmakers a promise and a warning, saying he hoped to create more auto worker jobs, but only if the companies do not squander the opportunity to reform.
He also offered a ‘bold’ stimulus plan to pull the US economy out of recession, but refused to be pinned down on the spending amount needed to do so.

After the outgoing administration of President George W. Bush last Friday offered US$17.4 billion (S$25.2 billion) in emergency loans to Detroit’s beleaguered ‘Big Three’ car giants, Mr Obama told a news conference that he would work with carmaker unions and management to rebuild the industry.

‘My top priority in this administration is to create 2.5 million new jobs and I want some of those jobs to be in the auto industry,’ he said.

Mr Obama declined to say what, if any, changes he would make to the auto rescue plan announced by the White House after he takes office on Jan 20, or whether he would entertain calls by the United Auto Workers union to remove what it called ‘unfair’ conditions in the Bush bailout plan.

But he said his economic team would discuss with workers and management ways to ensure their collective survival, saying the chance to end bad management practices and reform the industry ‘must not be squandered’.

‘I do want to emphasise to the Big Three automakers and their executives that the American people’s patience is running out,’ he said, adding that the auto executives must come up with a restructuring plan that is sustainable.

Mr Obama said it was clear that any plan to put the car industry back on track would involve ‘painful steps’. ‘I just want to make sure that when we see a final restructuring package, that it’s not just workers who are bearing the brunt of that restructuring,’ he added.

‘All shareholders are going to have to play a part in this process.’

Mr Obama, who left for Hawaii yesterday for a vacation, has consistently given conditional support to proposals to help US automakers, which have been pushed to the brink by collapsing auto sales and the global financial crisis.

The auto industry blowout is one of a plateful of economic crises awaiting the president-elect.

He is also trying to craft a major economic stimulus plan likely to cost upwards of US$600 billion in an effort to pull the country out of a deepening recession.

Pressed on the dollar figure for his proposed package, Mr Obama declined to give a number.

‘What we’ve seen, in terms of the evaluation of economists from across the political spectrum, is that we’re going to have to be bold when it comes to our economic recovery package,’ he said.

On the other hand, he was mindful of burgeoning US budget deficits and said he would ensure that the money was spent wisely in the package, which will include billions for projects like repairs of roads and bridges and subsidies for renewable energy initiatives.

‘We’re not intending to spend money lightly,’ he said. ‘We are going to be inheriting a deficit that is probably above a trillion dollars. And so, look, I’m a taxpayer like everybody else, and I don’t want to see money wasted.’

Meanwhile, Congress will use the remaining US$350 billion in a US bank-rescue package to force the Bush administration and Mr Obama into providing foreclosure aid as the pace of people losing their homes soars.

Lawmakers will agree to release the funds in exchange for Treasury Secretary Henry Paulson and Mr Obama agreeing to programmes that cut interest rates and forgive a portion of a mortgage’s principal, House Financial Services Committee chairman Barney Frank said.

Reuters, AFP, Bloomberg

 
Source : Straits Times - 21 Dec 2008

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