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Treasury Department Offers To Help Automakers


From the studios of NPR West, this is Day to Day. I'm Alex Cohen.


I'm Madeleine Brand. Coming up, a car part supplier says it's time for everyone to stop pointing fingers and come up with a way to save the auto industry.

COHEN: Today, the White House said, this nation could not withstand the body blow that a bankruptcy in the U.S. auto industry would create. That message came after the Big Three failed to win congressional support for $14 billion in bridge loans last night. General Motors and Chrysler say they can't make it through this month without federal aid. Joining us now to discuss the plight of U.S. automakers is NPR's Yuki Noguchi. So the Treasury Department says it's ready to take action but this seems a little bit different. Haven't they been opposed to using any of the financial bailout money for carmakers?

YUKI NOGUCHI: Yeah, that's absolutely right. I mean, it leaves the White House in a sort of strange position. After all, they had worked out this deal with congressional Democrats and now, they'll have to decide whether they're going to basically circumvent members of their own party. Until now, the White House really resisted spending the so-called TARP money and, you know, the TARP refers to the Troubled Asset Relief Program, on anything but helping the banks, as you say, not even for helping homeowners. But now, that resistance seems to go away. The Treasury and the White House now seem prepared to do that because if they don't, these two carmakers have really said they're out of options.

COHEN: So they've reached a bit of an impasse in Congress. Where did this conversation break down?

NOGUCHI: Well, it lacked support from most of the Republicans in the Senate. One of the big financial problems these companies have are the higher labor costs that they bear compared to other carmakers. As part of any deal that congressional Republicans wanted stiffer timelines to basically get the union pay to match that of non-union pay within the next year. And that appears to be where things really broke down.

COHEN: And what's been the reaction from the other side?

NOGUCHI: Well, the United Automobile Workers Union this morning held a news conference, and UAW President Ron Gettelfinger said that workers were actually willing to make further pay sacrifices, but that Republicans were asking for too much. They were asking for concessions that would have put them at a disadvantage compared to, say, Toyota.

Mr. RON GETTELFINGER (President, United Automobile Workers): We could not accept the effort by the Senate GOP caucus to single out workers and retirees for different treatment and to make them shoulder the entire burden of any restructuring.

NOGUCHI: Gettelfinger said that, you know, that actually, if you take the total compensation for union workers, it's already comparable or even lower than some of the other foreign companies. But I think most economists who've looked at this issue believe that Detroit's costs are still far higher than their rivals.

COHEN: So, if the Treasury is now possibly providing money for General Motors and Chrysler, does that mean that these companies will be OK for now?

NOGUCHI: For now, yeah. That's the operative word. I mean, the consensus view is maybe until early next year when the new administration comes in. What the companies get out of this is the chance to avert bankruptcy, which is something the carmakers really, really resisted because they're afraid that consumers just won't buy cars from companies that are in bankruptcy. Regardless, they're going to need to do a restructuring.

COHEN: As a part of this ecosystem, we're going to hear in a moment from a car parts maker. You know, there's been a lot of finger pointing here, at the union, at the carmakers. What about all these companies that support the Big Three? Do they need to accept any responsibility in all of this?

NOGUCHI: Well, I think there's a general understanding that the entire industry is going to have to undergo a major restructuring, and that is going to include all of the suppliers as well as the big companies. And that's going to have, you know, a massive effect on the U.S. economy. And there are those who believe bankruptcy is a hard but effective way to get that restructuring done.

COHEN: NPR's Yuki Noguchi, thank you.

NOGUCHI: Thank you. Transcript provided by NPR, Copyright NPR.

Alex Cohen
Alex Cohen is the reporter for NPR's fastest-growing daily news program, Day to Day where she has covered everything from homicides in New Orleans to the controversies swirling around the frosty dessert known as Pinkberry.
Yuki Noguchi
Yuki Noguchi is a correspondent on the Science Desk based out of NPR's headquarters in Washington, D.C. She started covering consumer health in the midst of the pandemic, reporting on everything from vaccination and racial inequities in access to health, to cancer care, obesity and mental health.