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Auto team’s visit gives rise to hope

March 10, 2009

Auto team’s visit gives rise to hope

Obama’s group sees firsthand challenges GM, Chrysler face

BY JUSTIN HYDE, TIM HIGGINS and JEWEL GOPWANI
FREE PRESS BUSINESS WRITERS

After weeks of hearing about Detroit’s problems, President Barack Obama’s auto task force — charged with finding a fix for the long-ailing U.S. auto industry — came Monday to see firsthand what’s wrong and what’s worth saving.

There’s little time left for the team to make decisions.

The task force faces a March 31 deadline to decide whether General Motors Corp. and Chrysler LLC have made enough progress on their turnaround plans to keep the government loans. The automakers, and their teetering suppliers, say they need billions more, within weeks, to stay afloat.

The task force will continue to gather data, but its members will soon turn to winnowing options for the U.S. auto industry, which has been crushed by a plunge in vehicle sales that shows no signs of easing.

"We are working as hard as we can to make sure we fully understand the situation," said an administration official close to the task force, who spoke on condition of anonymity following the meetings Monday.

"We also very much recognize the magnitude of the challenge here and want to make sure we are as deliberate in this process as we are focused on the urgency. In the private sector, transactions of this magnitude would take months, and we are trying to do this due diligence and fact gathering as quickly and efficiently as we can."

With drives in preproduction Chevrolet Volts, a two-hour meeting with UAW President Ron Gettelfinger and a tour of Chrysler’s sprawling Warren truck plant, the four members of the task force had no downtime in their Detroit foray, the first visit to the city for some of them.

Some workers viewed the visit as a positive sign.

"Anytime you can get politicians or anyone in charge to come down to see what’s going on, it’s a good thing," said Warren truck autoworker Carnell Glenn, 55, of Clinton Township. "Everybody is trying to be optimistic."

Team knows need is urgent

Monday’s visit caps weeks of meetings with industry leaders and experts by the team.

The administration has ruled out a disorderly bankruptcy, but all other options — including a government-funded bankruptcy — remain.

GM and Chrysler have said they need $2 billion and $5 billion, respectively, by the end of the month to stay in business.

GM has asked for as much as $16.6 billion on top of the $13.4 billion it already has received in government loans. Chrysler already has received $4 billion, which would bring its total request to $9 billion.

Aaron Bragman, an industry analyst from IHS Global Insight, said the auto task force will need to take action soon to help auto suppliers, Chrysler and GM avoid insolvency.

"From what I hear, the urgency has not been lost on them," Bragman said.

If the task force decides that GM and Chrysler have not made enough progress on their turnaround plans by March 31, the government loans could be called back, and the companies could be allowed to fail.

The administration official said the team would act in agreement with the loans, but declined to identify a more specific timetable for presenting any plan.

And though the task force’s visit did not include parts suppliers, who have warned of an imminent wave of bankruptcies, the official said the suppliers’ problems were "something we’re very aware of, and we’re going to have at the front of our minds as we move forward."

GM called the day’s visit a "constructive glimpse" at the company’s workers, their efforts and "the technology of solutions that are behind the pages of our viability plan."

"We were pleased to host the task force so they could experience firsthand the new products and technologies that are an integral part of GM’s near- and long-term competitiveness," GM said in a statement, adding that it would provide any other help to task force members "as they move quickly to address their critical tasks."

What the group saw and did

Monday’s visit to Detroit was a whirlwind day for the four members of the task force who made the trip, including lead advisers Steven Rattner, a Wall Street financier, and Ron Bloom, a former investment banker and adviser to the United Steelworkers.

It began with a meeting at UAW’s Solidarity House headquarters, with Gettelfinger and other officials. The UAW has agreed to contract changes at GM and Chrysler to cut costs, but the union is still in talks on altering its retiree health care trusts, a key part of their turnaround plans.

About noon, the team arrived at GM’s Warren Tech Center for a visit that lasted about three hours.

GM encouraged task force members to get in one of two preproduction Chevrolet Volts, an electric drive vehicle scheduled for sale next year, and a fuel-cell Chevrolet Equinox, a person familiar with the efforts said.

They had lunch, met with GM Chief Executive Rick Wagoner and discussed with GM executives the company’s long-term plans before heading to Chrysler’s nearby Warren truck plant.

Bloom pulled up to the plant where the Dodge Ram is built in a silver Jeep Grand Cherokee, where Chrysler Chief Financial Officer Ron Kolka greeted the members. The team then met with Chrysler Chief Executive Officer Bob Nardelli and copresidents Jim Press and Tom LaSorda, touring the facility and reviewing current and future products, including plans for electric vehicles.

"We look forward to continuing our dialogue," Chrysler said in a statement following the two-hour meeting.

Oscar Mendez, a 15-year Chrysler worker, said he was glad they visited his plant.

"Hopefully, they take into consideration … the people that build the trucks here and their families," said Mendez, 36, of Lincoln Park.

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