GM, Ford and Chrysler are the three car companies most affected by the recession. © WorldCarFans.com
The Obama administration takes action to save the auto industry
By: Jennifer Ammon
President Obama and his administration are currently asking General Motors and Chrysler to continue to restructure or face bankruptcy. These companies are working on plans to streamline, modernize and become more competitive. The Task Force said the companies’ original plans to restructure “simply did not go far enough,” according to a White House post.
“GM can rise again, providing that it undergoes a fundamental restructuring,” said Obama.
GM has 60 days to produce a better business plan. CEO and Chairman, Rick Wagoner, was asked to resign by the Obama Administration, according to The White House Press Office. He was replaced by Federick Henderson.
President Obama seeks to make it clear that the government does not wish to take over GM however.
Chrysler, on the other hand, has until the end of the month to reach an agreement with a partner in order to remain viable and receive an additional $6 billion loan. Chrysler and Italian carmaker Fiat, are working with the United Auto Workers Union and debt holders daily to try to slash Chrysler’s costs in time, according to the New York Associated Press. Jim Press, Chrysler’s President and Vice Chairman, noted that the government’s May 1 deadline allows enough time for Chrysler and Fiat to reach an agreement to help save Chrysler from bankruptcy.
“Fiat is prepared to transfer its cutting-edge technology to Chrysler and has committed to build new fuel-efficient cars and engines right here in the United States,” said Obama.
Obama does not wish to see the American auto industry vanish and referred to it as an emblem of the American spirit; a “once and future symbol of America’s success”. He hopes to see the U.S. lead the world in building cleaner cars.
“For years we have seen many American automakers lead in production of large, gas guzzling SUV’s. Now with gas prices bobbing between two and four dollars almost yearly, people are turning to more reliable and economical cars. American automakers need to establish efficiency and reliability in their products if they wish to stay afloat,” says Honda mechanic, Chris Marra, of Toms River, New Jersey.
The U.S. government hopes that by backing the two companies, it will be easier for them to quickly clear away debts that are “weighing them down” so they can get back on their feet said Obama.
The Obama Administration wants the American people to remain confident with their GM and Chrysler cars. The U.S. government will now be standing behind each warranty, according to a press release on March 30.
Kevin Onions, a Rowan University Junior majoring in History, said “I think if they keep getting bailed out and getting money toward them, then they won’t be motivated to make a better product.”
Robert Gibbs, the White House Press Secretary, said “What the President has maintained throughout his process is that America needs viable automobile manufacturers, but viability means that they are operating without government assistance. I think that’s what all of us want to see.”
Some think that the president’s actions crossed over the line of what separates government from private industry while others feel it was necessary.
Dave Mayer, a Political Science Professor at Rowan said, “I think it’s important to state that extraordinary times make for extraordinary decisions. I don’t think the government really had a choice.”
Bob Hohwald, a History Professor at Rowan said, “The government has always been involved in the auto industry. Free industry means that government helps when needed, or at least it has since 1932 with the New Deal.”
Also a History Professor at Rowan, James Adams, said, “If all they are doing is giving GM and Chrysler an opportunity to stabilize their business models with the intention of returning control to private investors, then I have no problem with their involvement. On the other hand, if they intend to dictate operations, define what types of automobiles are produced and insist upon enforcing a specific idea of payroll, then I think that’s a bad idea.”
Adams also touches on the fact that if conditions do not improve, the government may still have no choice but to either nationalize the companies or to let them go bankrupt, thus leading to Ford’s domination of the American auto industry; an automaker that did not take bailout funds.
Many Americans, over 400,000, who have been working in the auto industry and the industries that support it, have suffered during these poor economic times, according to the president.
According to the Office of the Press Secretary on April 9, Obama said it will take time for the United States to improve our current economic situation.
President Obama finished by saying, “But I am 100 percent committed to a strong American auto industry, and we will stand with America’s auto workers and their families during these difficult times.”
President Obama speaks to CBS News on March 30, 2009 about the auto industry.
