Obama Outlines Plans for GM, Chrysler Warning that they can't depend on unending taxpayer dollars, President Barack Obama on Monday gave General Motors Corp. and Chrysler LLC a brief window to craft plans that would justify fresh government loans.
"We cannot, we must not, and we will not let our auto industry simply vanish," President Obama said at the White House.
"What we are asking is difficult," he said. "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."
The remarks come a day after the administration ousted GM Chief Executive Rick Wagoner and rejected the restructuring plans that GM and Chrysler had hoped would lead to another infusion of government cash. Instead, the White House is giving GM 60 days to come up with a strategy for viability. Chrysler has a month to wrap up a partnership with Italy's Fiat SpA.
GM on Monday said it will address "the tough issues to improve the long-term viability of the company," including the restructuring of its financial obligations, as it responded to Washington's calls for stronger plans to stay afloat.
The administration says a "surgical" structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.
"I know that when people even hear the word 'bankruptcy,' it can be a bit unsettling, so let me explain what I mean," he said. "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."
GM said it prefers to complete its restructuring out of court, saying it would complete a more accelerated and aggressive restructuring to put the company on sound long-term financial footing.
"We have significant challenges ahead of us, and a very tight timeline," said new GM Chief Executive Fritz Henderson. "I am confident that the GM team will succeed and that a stronger, healthier GM will play an important role in revitalizing America's economy and re-establishing its technology leadership and energy independence." More at Wall Street Journal