Post by Driftpimp on Nov 26, 2008 9:32:47 GMT 10
GM Boss Warns Three Million Jobs Could Go
Nov 24th, 2008 - The Motor Report - www.themotorreport.com.au
rick-wagoner-gmHaving recently failed to secure a second USD$25 billion leg-up from the US government, America’s Big Three (GM, Ford and, Chrysler) each have had plenty to say about the possible ramifications for the companies’ futures as well as the potential carry-on effect for the US economy. Unsurprisingly, it’s a bleak forecast.
General Motors boss Rick Wagoner has cautioned Congress that inaction on its part would result in a “catastrophic collapse” of the industry and would mean the loss of up to three million jobs.
The USD$25 billion in loans sought pales in comparison to the $156 billion in tax revenue that Wagoner explains may be lost if the government refuses to act now. Wagoner outlined the potential impact of such a decision:
“Such a level of economic devastation would far exceed the government support that our industry needs. This is about much more than just Detroit. It’s about saving the US economy from a catastrophic collapse,” he said.
Ford President Alan Mullaly joined Wagoner in joining the dots for the US Government:
“A decision to make government assistance available makes much more sense than taking the tremendous risk to our already-fragile economy that comes with inaction.”
Chrysler boss Bob Nardelli, now running a company that looks more like a basket case than a vehicle manufacturer, also took up the chorus, outlining to the Senate Panel the dire situation Chrysler faces:
“Without immediate bridge financing support, Chrysler’s liquidity could fall below the level necessary to sustain operations. Should the company fall into bankruptcy, we cannot be confident that we will able to successfully emerge,” Nardelli said.
We’ve heard so much about the US economy that it becomes easy to disregard the importance of this news. GM and Ford’s third-quarter financial results suggest that both companies could literally run out of money withing months. Some analysts do not believe GM and Chrysler can last until President-elect Obama takes office.
Chrysler, who is still hunting for a buyer, has been bankrupt before, having been saved by Lee Iococca and a USD$1.2 billion bail-out in 1979. Congress may remain reluctant to bail Chrysler out again, let alone stump up the funds GM and Ford are now seeking. Some taxpayers do not support US Federal Government intervention and massive financial aid to companies that are now reaping the bitter rewards of a mess largely of their own making.
It is going to be a nervous wait for the US auto manufacturers. And perhaps an even more nervous one for their employees.