The top executives of the three major U.S. automobile manufacturers are vowing to streamline their companies in return for billions of dollars in federal aid to shore up the beleaguered industry. The officials appeared before Congress on Thursday for the second time in two weeks.
Ford, Chrysler and General Motors executives are seeking a total of $34 billion in emergency loans to deal with the current economic downturn that has seen a steep drop in automobile sales worldwide.
Two weeks after members of Congress criticized the automakers for not doing enough to make their companies more competitive and economically viable, the executives returned with plans to streamline their operations, as lawmakers had requested.
In testimony before the Senate Banking Committee, President and Chief Executive Officer of the Ford Motor Company, Alan Mulally, sounded a note of humility.
"You were clear that the business model has to change. I couldn't agree more," he said.
Each executive detailed how he planned to make his company more efficient and profitable.
"Key highlights include a renewed and expanded commitment to new technologies, especially advanced propulsion and green jobs, increased production of fuel-efficient vehicles, a reduction in the number of brands, models and retail outlets so we can focus our resources," said Richard Wagoner, Chairman and CEO of General Motors.
As the executives appealed for federal aid in return for streamlining their companies, other witnesses warned of dire consequences if Congress does not approve the funding.
Ron Gettelfinger, President of the United Auto Workers union, said the carmakers, particularly General Motors, would fail without an immediate loan.
"I believe we could lose General Motors by the end of this month," said Gettelfinger.
Mark Zandi, Chief Economist and co-founder of Moody's Economy.com, warned of dire consequences if that happened.
"Bankruptcy at this point in time would be cataclysmic for the economy at this time," he said.
Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, expressed his own concern as he made the case for approving the federal aid.
"Inaction is no solution. Inaction would only add more uncertainty and instability to our economy," he said.
But Senator Richard Shelby of Alabama, the top Republican on the committee, expressed skepticism that a federal rescue package would promote the necessary change in how the auto companies are run.
"Every time government endeavors to alter any of these dynamics, it undermines and distorts the forces at work in all of them. I believe this can impose a cost that is too high to pay," he said.
Congress could vote on aid to automakers when it returns for a brief post-election session next week.
In the meantime, the three auto executives are to return to Capitol Hill on Friday to testify before a House committee.
The executives drove the 840 kilometers from Detroit, Michigan to Washington in hybrid cars, after they were sharply criticized by lawmakers for making their last trip in corporate jets.