US

Automaker bailout fails in Senate

Article published on the 2008-12-12 Latest update 2008-12-12 10:59 TU

Hummer, owned by General Motors, may be in trouble.
(Photo : Reuters)

The highly-anticipated auto-industry bailout package, worth 14 billion dollars, was voted down in the US Senate Thursday, after a partisan dispute over union wage cutes derailed a last-ditch effort to pass the bill before year’s end.

Republican Senators refused to back the Bush administration’s aid plan to save the “Big Three” American car manufacturers without a guarantee from the United Auto Workers to reduce wages and bring them into line with those paid by Japanese carmakers at their US plants.

The failure to pass the bailout leaves the American auto industry, and its three million jobs, in a precarious position during the current economic downturn. Chrysler and General Motors have said that they may have to declare bankruptcy within weeks. Ford says that it is okay financially for the moment, but may need government help soon.

There will be no chance to provide government aid to automakers before Congress returns to work in early January.

In the wake of the vote, Democrats called for a portion of the 700-billion-dollar financial industry bailout to be used as an emergency fund for the automakers, something the White House and Treasury Secretary Henry Paulson ruled out.

The bill was voted down 52-35, with only 10 Republicans voting with the 40 Democrats and two independents.

Republicans objected that the bailout, which quickly passed through the House, was too weak in its demands on the car companies and contained unacceptable environmental requirements for the “Big Three”.

Hourly labour costs at GM are 69 dollars, while they’re only 48 dollars at Toyota's US factories.