U.S. President George Bush and President-elect Barack Obama are urging automakers to swiftly draw up plans to make their companies viable, now that a newly-announced government loan will buy them time to do so.
In his weekly radio address Saturday, President Bush said his administration's new loan program gives automakers three months to put restructuring plans in place.
Mr. Bush on Friday announced $13.4 billion in emergency loans to General Motors and Chrysler, with another four billion dollars becoming available in February. But the plan calls for concessions, including worker pay cuts and a cap on pay for executives.
Saturday, Canada announced it will provide $3.3 billion in emergency loans to ailing U.S. automakers that have subsidiaries in Canada.
U.S. President-elect Barack Obama on Friday said auto companies will have to take "painful" steps to restructure their businesses. He also warned auto companies that the public's patience with bad management is "running out." Mr. Obama said auto workers should not bear the brunt of the industry's restructuring.
The United Auto Workers' Union criticized the White House plan, saying it unfairly singles out workers for pay cuts.
The companies have until March 31 to draw up restructuring plans or they will be forced to quickly repay the loans. Mr. Bush said if a company fails to come up with a plan to become profitable, the loan will provide time for the company to organize what he called an "orderly" bankruptcy to improve its chances of survival.
Richard Wagoner, the chief executive officer of the largest U.S. automaker, General Motors, said he is grateful for the government help and "highly confident" the company can meet the test. GM will get most of the loan money and Chrysler will get the rest. Ford officials applauded the decision to aid the industry, but said they do not yet need help.
U.S. automakers are reeling from the global recession, which has led to tightening credit, falling consumer demand, and the worst sales in decades. The situation is forcing Chrysler to close all 30 of its plants for at least a month, beginning Saturday.