US president Barack Obama and his auto task force team have taken a tough stance against GM and Chrysler, warning that bankruptcy may be the only option for the troubled US car makers.
The Obama adminsitration was scathing of the turnaround plans of the two companies, saying that they weren’t extensive enough to justify the extra government money.
“While Chrysler GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop,” Obama said on Monday. “That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.”
He reassured US workers by insisting, “We cannot, we must not and we will not let our auto industry simply vanish.” This apparent message of support for the US car industry implies that part of the aim of Obama’s tough stance is to jolt the United Auto Workers union and the GM bondholders - who have been fighting over possible concessions to GM workers’ pension rights - into reaching an agreement.
Some analysts fear, however, that even a court-supervised bankruptcy for GM and Chrysler would cost up to a third of the three million remaining US car industry jobs - a sector that has already shed 400,000 posts over the past year.