World financial crisis

US Congress considers auto industry bailout as unemployment soars

Article published on the 2008-12-06 Latest update 2008-12-06 12:31 TU

L-R: General Motors Chairman and CEO Richard Wagoner, Chrysler CEO Robert Nardelli and Ford Motor Company President and CEO Alan Mulally at a Congressional hearing, 5 December 2008
(Photo: Reuters)

Figures released by the United States Labour Department showing half a million job losses in November may push Congress to agree on a bailout plan for the auto industry. Executives for the Big Three auto makers – Chrysler, Ford and General Motors – are asking for 34 million dollars to rescue the failing sector. Congress has been arguing over the bailout, but Democrats seem to be pushing for it to go through.

President George Bush has demanded that Congress act. Some sceptical lawmakers are holding out, say that mismanagement is to blame for the automakers’ problems.

“The industry and management has brought on a lot of trouble for themselves, but a lot of the criticism in the US is motivated by animus against the United Auto Workers, the union of the auto workers, as well as basically an anti blue-collar bias,” industry specialist Robert Weissman, publisher of the Multinational Monitor, told RFI. “I think it’s very disturbing to see the double standard between Wall Street at Detroit.”

“This total double standard about complaining about workers and benefit structure for the unionized workforce in the auto industry,” he continued. “When there was no discussion whatsoever of the salary structure in Wall Street.”

The New York Times reports that Congressional Democrats will come up with 25 billion dollars in loans for the companies, but that there will be fuel efficiency conditions attached.

Weissman welcomes support “based and built around getting the companies to engage in new investments and research into fuel efficient cars and transformative technologies,” he said.

Regardless of the bailout, it is likely there will be layoffs, adding to the already record-breaking high unemployment rate. Labour Department statistics released Friday showed that 533,000 jobs were cut in the United States in November.

“It’s hard to see how they’re going to avoid layoffs,” said Weissman. Car sales are down by a third and are likely to stay that way through the end of the recession. But he worries that there is pressure from Washington for the auto industry to close factories.

“One worrisome thing that has been going on over the last several weeks in Washington is politicians pushing the industry to show its viability, and a measure of that, in large part, is a commitment to close down factories quickly,” he said. “That’s really not what Washington ought to be asking… it’s the wrong public objective. We want to preserve jobs as much as possible.”