GM, Chrysler Could Receive More Federal Aid: Obama

President Obama said Thursday that struggling U.S. auto companies could expect some government aid if they commit to restructuring as part of an official rescue plan due to be unveiled soon.

In a town hall-style meeting featuring questions from a live audience and sent over the Internet, Obama also warned that the United States was likely to lose more jobs in the recession and that the economy was in for a "difficult time" for much of this year.

AP

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Obama's White House task force has a March 31 deadline to determine whether General Motors and Chrysler, controlled by Cerberus Capital Management, can be made competitive and worthy of up to $22 billion in additional bailout funds.

GM and Chrysler have been driven to the brink of failure by a deepening downturn in U.S. car sales, which slumped by more than a third in January and February and hit their lowest levels in 27 years.

The White House said Thursday that Obama would unveil his plan to aid the auto industry before leaving on a European trip Tuesday.

"What we're expecting is that the automakers are going to be working with us to restructure. We will provide them some help," Obama said in the White House question-and-answer session. "I know that it is not popular to provide help...to auto companies," he added.

"If they're not willing to make the changes and the restructurings that are necessary, then I'm not willing to have taxpayer money chase after bad money."

White House spokesman Robert Gibbs said later that Obama had been frustrated with U.S. carmakers for some time.

"I think there's a frustration on the part of this president and on the part of many Americans that we didn't just get into this situation because of the global economic slowdown," Gibbs told a briefing.

GM and Chrysler received $17.4 billion in taxpayer assistance in December after saying they could not survive without it. Ford Motor , which is also struggling financially, has not sought a bailout.

Obama, who has long said U.S. car companies should focus on more fuel-efficient cars, said all of the players connected to the industry would have to make sacrifices.

"Everybody's going to have to give a little bit: shareholders, workers, creditors...suppliers, dealers," he said. "Everybody is going to have to recognize that the current model—economic model—of the U.S. auto industry is unsustainable."

The request for additional funding, which is being reviewed by a White House panel led by former investment banker Steve Rattner, hinges on their ability to win concessions from the United Auto Workers union and creditors.

As part of its sweeping restructuring efforts, GM said Thursday that 7,500 U.S. hourly workers represented by the UAW had accepted buyout offers to leave its payroll by April 1.

Including the latest round of buyouts, GM has cut 60,500 jobs since 2006 — more than half of its U.S. factory work force — as U.S. auto sales have slowed and its own cash position has weakened.

Separately, Chrysler said it would extend a buyout program that it offered to all its 26,000 U.S. hourly workers last month.

GM and Chrysler have won pending contract changes from the UAW intended to help them cut hourly wage costs to the level of Japanese automakers operating plants in the United States.

But both automakers have yet to reach related deals with the UAW that would allow them to pay the union in stock rather than cash for half of their remaining obligations to a trust fund for retiree health care, Voluntary Employee Beneficiary Association.

GM bondholders also face pressure to write off two-thirds of the more than $27 billion they are owed in exchange for stock in a recapitalized company.

Advisers to GM bondholders met with Rattner and the autos task force earlier this month but complained as recently as Sunday that they had been shut out of ensuing talks with both U.S. government representatives and the GM executives.

A person briefed on those negotiations said Thursday that the two sides had begun talking again this week.

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