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Motown bosses beg for funds.



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2CN AM Motown bosses beg for funds

05/12/2008

Motown bosses beg for funds

AM - Friday, 5 December , 2008 08:03:00

Reporter: Mark Simkin

PETER CAVE: The bosses of America's biggest three car companies are back on Capitol Hill, caps and begging bowls in their hands. The manufacturers say they desperately need $34-billion.

Their last appearance before Congress was a disaster and the CEOs acknowledge they've made mistakes.

Our Washington correspondent Mark Simkin has been keeping an eye on the proceedings. I spoke to him a short while ago and asked what's changed since last time.

MARK SIMKIN: Well the biggest change is the mode of transport the CEOs have used. Two weeks ago you may recall Peter, they flew corporate jets to plead poor and beg for taxpayers' money. It didn't go down very well - a very bad look.

This time the CEOs have jumped in their hybrid cars and driven the nine hours from Detroit to Washington. And they've brought with them a different business plan, promises to slash jobs, close factories, reduce the number of brands.

And they've also brought with them a recognition that in the real PR war, they have to do a lot better and they've had to admit that they have actually made some mistakes themselves.

Here's what Rick Wagoner, the CEO of General Motors, had to say.

RICK WAGONER: GM has been an important part of American culture for 100 years and most of them time as the world's leading auto maker. We're here today because we made mistakes which we're learning from, because some forces beyond our control have pushed us to the brink, and most importantly because

saving General Motors and all this company represents is a job worth doing.

PETER CAVE: The CEO of General Motors, the appropriately named Rick Wagoner.

Just what's at stake here? How dire is their situation?

MARK SIMKIN: Well if you listen to what the car companies are saying it is absolutely, extremely dire. According to General Motors it is running out of money. According to the head of the Auto Workers' Union, General Motors, if it doesn't get this cash infusion, could be out of business before the end of the year.

And in terms of what's at stake, if General Motors went down it would likely drag the other two car companies with it. They estimate that as many as three-million US jobs could be lost.

There was talk of ripple effects through the economy and as one economist put it in the hearing, "no, not a ripple effect, this would be an economic tsunami."

PETER CAVE: The car companies are promising some drastic restructuring. Are they prepared to take enough pain to satisfy the politicians?

MARK SIMKIN: Some of the politicians wouldn't be satisfied with anything other than sort of ritualistic humiliation and extreme pain I think Peter. Some of them have said today, look we're just not going to bail you out. You need to go bankrupt. Why can't you behave like every other American company would?

Others have taken the other approach and said well, other companies? How about all those big finance companies? We've bailed them out. We'd better bail out these companies too.

At the end of the day it doesn't look like there are enough votes in Congress though at the moment to give the car companies the money they say they so desperately need and there isn't any agreement on exactly how should that money be packaged, how should they get it to them. So it's looking very serious indeed because the money isn't there as yet but the companies are saying we need it sooner rather than later or we're going bust.

PETER CAVE: Are they prepared to let one of them go down the gurgler though?

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MARK SIMKIN: I don't think they're willing to do that but then again, in Congress as you know things move very slowly and there's always a blame game that can be played. At the moment a lot of people in Congress are saying we don't want you to go bust but it's the administration, it's the White House's job to fix this. The White House is saying well it's up to Congress. And unfortunately that leaves a very big gap in the middle and through that one of these car companies could potentially fall.

PETER CAVE: Mark Simkin in Washington.

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