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Ford gets $5.9-billion loan to retool plants

June 23, 2009

Ford gets $5.9-billion loan to retool plants

By Justin Hyde and Brent Snavely
Free Press Business Writers

Updated at 12:11 p.m.

Ford Motor Co. will get $5.9 billion in loans from the Obama administration to retool 11 plants in five states for more efficient vehicles over the next two years.

The administration also awarded a $1.6 billion-loan to Nissan Motor Co. to retool its Tennessee factory for electric vehicle production, and $465 million to electric car maker Tesla Motors to build a new sedan and motor factory.

“The American innovation machine, when revved up, is without a doubt the best in the world,” U.S. Department of Energy Secretary Steven Chu said today to a standing ovation from Ford employees.

The loans are the first from a $25-billion program approved in 2007 but paid for last year by Congress to help automakers and parts suppliers offset the costs of revamping factories and engineering fuel-efficient models. The Free Press first reported the three companies had been chosen Monday.

President Barack Obama said the loans "will create good jobs and help the auto industry to meet and even exceed the tough fuel economy standards we’ve set, while helping us to regain our competitive edge in the world market."

The administration said Ford would spend the loans on upgrading more than a dozen models, including the Focus, Escape, Taurus and F-150.

Chrysler Group and General Motors Corp. were shut out of the early stages of the application process for $25 billion in available loans authorized by Congress in 2008 due to questions about their future viability. But on Tuesday, Chu said the Department of Energy began discussions with Chrysler shortly after it emerged from Chapter 11 bankruptcy and said discussions are also underway with General Motors Corp. in anticipation of the company’s ability to exit from bankruptcy.

“So there is money there – I wouldn’t say set aside – but we are trying to stretch the money as far as we can.”

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