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GM CEO Defends Auto Industry’s Bid for Government Aid

Auto industry executives testified before Congress Wednesday, asking lawmakers to provide aid to the struggling companies and responding to criticisms of poor management. General Motors' CEO Rick Wagoner discusses the industry's crisis and his company's case for government help.

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    Now, should Washington throw automakers a lifeline? That was the question on Capitol Hill for a second straight day, as the chiefs of the big three returned to make their case.

    NewsHour congressional correspondent Kwame Holman begins our coverage.


    The CEOs of General Motors, Ford, and Chrysler told the House Financial Services Committee that they were victims of the credit crisis, the summer's high oil prices, and the worsening economy.

    Alan Mulally of Ford.

  • ALAN MULALLY, CEO, Ford Motor Company:

    We have taken decisive action to deal with the current new crisis. We have reduced production to match the dramatically lower demand. We have further reduced employment, and we have eliminated all raises and bonuses for 2009.

    We took these measures while protecting the new vehicles that will secure our future.

    Now, we believe we must join our competitors in asking for your support to gain access to an industry bridge loan that will help us navigate through this difficult economic crisis.


    That bridge loan would be $25 billion from the federal government. But many in Congress say the crisis in the U.S. auto industry largely is of its own making: a failure to innovate; an over-reliance on low-mileage SUVs and light trucks, sales of which now have cratered; and the heavy costs of the pensions and benefits of workers have the three companies burning through billions.

    Some in and out of Congress have suggested the domestic carmakers should be allowed to fail and go into bankruptcy.

    Robert Nardelli of Chrysler, which was taken into private hands last year.


    Independent research firms have quantified the fallout of a domestic automaker bankruptcy to the overall economy, and the impact would be devastating.

    REP. JOHN CAMPBELL (R), California: Gentlemen, before I lost my mind and went into politics, I spent 25 years in the retail car business, most of that time as a dealer principal and dealer owner.


    California Republican John Campbell brought some of his own automotive experience to the hearing and asked how the automakers would change in the future if given a bridge loan.

    REP. JOHN CAMPBELL What are you going to do differently than was your plan to change the other side of that bridge?


    In the automobile business, it's just so important that we are making the vehicles that people really do want and they really do value, most important thing.

    And with the fuel prices moving up and the awareness about energy security, energy independence, sustainability, the consumer has moved up fuel economy right up there next to the top on their purchase decision.


    United Auto Workers Union President Ron Gettelfinger was asked whether his members, who agreed to wage and benefit concessions last year, would make more.

  • RON GETTELFINGER, United Auto Workers President:

    We have those negotiations ongoing all the time. And I might add also that the UAW can't be the low-hanging fruit, the men and women, the only ones at the table.

    And so, while we're at the table, we would respectfully request that others come in to the party and sacrifice as well, because we certainly believe that the men and women, both active and retired, have sacrificed, sir.


    While several members from Rust Belt states were supportive of the plan, others questioned the CEOs' commitment to substantial reform. New York Democrat Gary Ackerman noted the auto CEOs came to Washington on private jets.

    REP. GARY ACKERMAN (D), New York: There's a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands, saying that they're going to be trimming down and streamlining their businesses. It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo.


    Texas Republican Randy Neugebauer said the companies should fend for themselves in the marketplace without help from the cash-strapped federal government.

    REP. RANDY NEUGEBAUER (R), Texas: Where does this stop? And why should we give you money, quite honestly, we don't have?


    This isn't about losing a company. This is about losing an industry, an industry that has an overarching effect on literally thousands of small businesses, to your point — we call them dealers — literally thousands of suppliers, for example, the tanning company that provides the leather for our cars.

    So I think this isn't about just a single company and making a decision to let it go down.


    With time running out in this pre-Thanksgiving congressional session, hopes were dim for action on helping the automakers this year.


    And now to our Newsmaker interview with General Motors' CEO Rick Wagoner. He sat down with Judy Woodruff at G.M.'s Washington office earlier today.

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