3 December 2008

$28-billion to save Detroit 3

This article is extracted from the 3 December 2008 edition of “globeandmail.com”.

The wounded Detroit Three auto makers increased their plea for emergency U.S. government help to $28-billion (U.S.) yesterday and the largest of them warned of imminent collapse and economic catastrophe if Washington denies the request.

General Motors Corp., fighting for its life, asked for $12-billion and possibly another $6-billion in backup funds if U.S. sales continue to deteriorate.

"A failure by GM would likely trigger catastrophic damage to the U.S. economy," General Motors warned the U.S. Congress in stark language that included a request for $4-billion by the end of December and another $4-billion in January.

"Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," GM said….

If the $6-billion GM request is included, the amount now totals $34-billion in bridge loans and credit lines, compared with $25-billion two weeks ago.

The plans present a vision of smaller, more nimble manufacturers with lower costs offering many more environmentally friendly vehicles in fewer dealerships and generating profits early in the next decade if they survive the recession.

They presented yet another sign of how that recession is battering sales with dreadful November results representing the second successive month that U.S. sales fell to less than 11 million on an annualized basis….

Neither the Ford nor GM submissions mentioned Canada or any impact on the manufacturing operations the companies have in Ontario….