John Crawley and Kevin Drawbaugh
WASHINGTON (Reuters) - The chief executives of the major U.S. auto companies pledged to refocus on higher fuel efficiency and lower production costs as they asked Congress again on Thursday for billions of dollars in emergency cash.
Reeling from a steep slump in auto sales and a global credit crunch, the CEOs of Detroit's once mighty Big Three came hat in hand to Washington with no clear prospect that they will get the $34 billion in assistance they seek.
As the Senate Banking Committee began its second hearing in as many weeks with the CEOs, there was wide agreement among lawmakers and the Bush administration that the automakers need help, but deep division about how to go about it.
"Inaction is no solution," said Banking Committee Chairman Christopher Dodd in opening remarks at the hearing, convened amid skepticism among lawmakers about Detroit's past failures to ween itself from gasoline guzzlers and make cars consumers want to buy.
General Motors Corp and Chrysler LLC are saying they face possible failure absent quick government help, with millions of good-paying American jobs at stake.
"I don't trust the car companies' leadership," said New York Democratic Sen. Charles Schumer. But, he added, "We can't let the industry fail.
GM wants $4 billion and Chrysler $7 billion by year's end. GM also wants another $8 billion in early 2009 and a $6 billion line of credit if its cash position deteriorates further.
Ford Motor Co says it has sufficient funds for the moment but wants access to a $9 billion line of credit.
The executives drove to Washington, abandoning the executive jets that drew sharp criticism two weeks ago.
Wagoner arrived at the Capitol building in a light blue Chevrolet Volt electric prototype, having driven from Detroit to Washington for the hearing in a Chevrolet Malibu Hybrid.
No resolution of the aid issue is expected until next week at the earliest, when the full Congress reconvenes.
The CEOs will appear at another hearing before a House of Representatives committee on Friday.
ECONOMY IN PERIL
The economy, already a year into recession, would suffer "severe and sweeping" damage if one or more of the automakers failed, said Dodd, a Connecticut Democrat.
But Alabama Sen. Richard Shelby, the top Republican on the committee, voiced doubts shared by some senators on whether taxpayer funds are well-spent helping struggling businesses.
Shelby opposed the $700-billion bailout of Wall Street and the banks and "applying the same standard, I intend to oppose bailing out the Big Three auto manufacturers," he said.
On a combined basis, sales by the three automakers plunged 40 percent in November.
The three submitted viability plans to Congress earlier this week on the insistence of lawmakers after the CEOs testified to the same committees two weeks ago without definite plans for the future and were sent home empty-handed.
Dodd said the automakers' plans are not perfect, but do make a case for government assistance -- and a better one than seen from any of the banks already being bailed out.
Citing his company's plan, General Motors CEO Rick Wagoner pledged in prepared testimony to execute a bankruptcy-like turnaround at the world's largest automaker.
"It's a blueprint for creating a new General Motors," Wagoner said in detailing the plan and request for aid.
The United Auto Workers (UAW) union importantly pledged on Wednesday to surrender job security protections and make other concessions to help the companies survive the downturn.
"It is imperative that the federal government act this month to provide an emergency bridge loan to the domestic auto companies," UAW President Ron Gettelfinger told the committee.
"Without such assistance, GM could run out of funds by the end of the year and Chrysler soon after. These companies would then be forced to liquidate," he said.
BANKRUPTCY DEBATED
GM has repeatedly dismissed filing for bankruptcy as an option, saying it would damage consumer confidence in its products. Wagoner told reporters before the hearing that bankruptcy is "not our plan" and said it would be a shame for the United States to drop out of the auto technology race.
Wagoner was joined at the hearing by Ford's Alan Mulally Bob Nardelli of Chrysler, owned by private equity firm Cerberus Capital Management.
Mulally arrived at the Capitol in a shiny white Ford Escape Hybrid, which company spokesmen said he drove from Detroit.
Ford and Chrysler also object to bankruptcy to save their industry. But some lawmakers are exploring the possibility of conditioning federal aid on an speedy court restructuring of one or more of the Detroit manufacturers.
The White House said on Thursday it was too early to judge the viability plans and that the administration wanted to hear the testimony to Congress first.
The Bush administration, along with some auto state senators from both parties, has favored helping the industry by redirecting $25 billion in funds from an existing Energy Department fuel-efficiency retooling loan program.
But many congressional Democrats oppose this and want the administration to dedicate a portion of its $700-billion bank bailout, known as the Troubled Asset Relief Program, to assist the automakers.
The head of the Government Accountability Office (GAO), the investigative arm of Congress, said Congress could consider a two-step approach with an immediate infusion of cash to avert any collapse, followed by a program for distributing additional loans over time based on certain criteria being met.
Gene Dodaro, acting GAO comptroller general, said an oversight board could administer the financing. He added that the Bush administration has legal authority to use money from its bank rescue program to help Detroit. Moreover, Dodaro said, the Federal Reserve could step in under certain circumstances.
Shares of GM were down 8 percent to $4.51 in early afternoon trading, while Ford was 1.4 percent higher at $2.89, both on the New York Stock Exchange.
(Reporting by John Crawley, Karey Wutkowski and Rachelle Younglai in Washington, with Kevin Krolicki and David Bailey in Detroit. Writing by Kevin Drawbaugh; Editing by Tim Dobbyn)