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After months of countering the arguments of those who feel the companies should just be allowed to fail, the Federal government is making somewhere between a $50 billion and $100 billion commitment to the survival of the domestic automotive sector. This includes direct loans to Chrysler and GM, support to GMAC to ensure consumer financing, a $5 billion supplier support program, and a federal guarantee of all Chrysler and GM warranties.
The President has stated repeatedly that the domestic auto industry is critical to our national economy and that his goal is to ensure that the Big 3 are in a position to build the cars of the future.
I am pleased that Chrysler has emerged from court so quickly and has now finalized their partnership with Fiat. I believe these two companies complement each other and together have a stronger future.
GM is now in bankruptcy proceedings. Because of the willingness of the workers to make additional sacrifices to preserve GM’s future, GM enters bankruptcy with important agreements in place that should facilitate a quicker exit from court. Workers and suppliers will continue to get paid, and health care and pension benefit obligations will move forward with the new company.
At every juncture, I have emphasized the importance of preserving jobs in the U.S., and it is good news that each of the three domestic companies has now announced plans to make small cars in the U.S. as this has been a major source of planned outsourcing. GM has indicated it will not import cars from China, and recently the Lake Orion plant in Michigan was selected as the site for future small production, an outcome that I worked actively on with the Governor and the entire Michigan Congressional Delegation.
I also want to be clear that both President Obama and GM CEO Fritz Henderson have emphasized that, while the government is a significant investor, business decisions have been and will continue to be made by GM’s management, not by the federal government.
We are now working to provide additional federal support for auto suppliers during these next 30-60 days. There was a $5 billion federal program started in March but it does not appear to have done enough to support businesses throughout the entire supply chain.
Just recently, Congress approved a voucher for individuals interested in turning in an older car and purchasing a new car. At the heart of the current crisis is the extremely depressed car sales market because the financial crisis has limited access to loans and the recession has severely cut into family budgets. When this is implemented it should help to boost auto sales.
At the same time, I am working on programs important to the future of the auto industry. I introduced legislation to double the funding for re-tooling loans so that our companies can upgrade plants for advanced technology vehicles. We are also working actively to secure federal funds for battery development and other advanced technologies. As you know, the battery will power GM’s new Volt and we want to make sure to manufacture that technology in Michigan.
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