DETROIT—Detroit automakers and their allies in Congress said yesterday that Barack Obama's victory could help U.S. automakers line up federal funding needed for them to survive the current economic slump.
Obama made it clear during his campaign that he understood the automakers' problems and would work to preserve the industry, Sen. Carl Levin, a Michigan Democrat, said yesterday.
White House for manufacturers, and that's what we need," Levin said.
He said he was told yesterday by Jason Furman, Obama's senior economic adviser, that government aid is atop Obama's agenda. Levin said Furman did not commit to a specific funding path for the industry but was supportive.
Obama has said he would meet with industry leaders and the United Auto Workers immediately to talk about helping automakers, but a meeting has not been scheduled.
Levin noted that Obama expressed support for doubling an Energy Department loan program for automakers to develop fuel-saving technology to $50 billion from $25 billion.
Michigan's other senator, Democrat Debbie Stabenow, said Senate Majority Leader Harry Reid of Nevada appears open to supporting "whatever we feel is the best approach for the auto industry and can get the consensus in the House to pass."
Levin said members of Michigan's congressional delegation would pursue options to help the industry, including the $700 billion Wall Street bailout or access to Federal Reserve capital.
Obama's victory over Republican John McCain came just three days before General Motors Corp. and Ford Motor Co. are to release their third-quarter results, which almost certainly will show billions in losses and cash burn rates that will push the companies closer to emptying their treasuries if auto sales don't bounce back soon.
Further job cuts by both automakers are expected tomorrow. Analysts say GM could close more plants but Ford has said it will likely impose temporary factory shutdowns and overtime cuts at some of its car plants.
GM's top executives sent an e-mail to other executives yesterday saying that "important changes" will be announced on earnings day. Spokesman Tom Wilkinson called the announcement a routine update. The e-mail did not give specifics, and Wilkinson said he could not comment on them.
"We need to talk about what we'll do to face the challenges," he said.
GM is talking with Chrysler majority owner Cerberus Capital Management LP about acquiring Chrysler. GM reportedly is after Chrysler's roughly $11 billion in cash and is seeking federal aid to make the deal happen.
A person briefed on the GM-Chrysler talks said yesterday that no announcement of a deal is imminent because much of it hinges on federal aid. The person asked not to be identified because the talks are private.
A further indication of GM's woes came yesterday when its auto financing arm, GMAC Financial Services, reported a $2.52 billion third-quarter loss. GMAC is 51 percent owned by private equity firm Cerberus, while Detroit-based GM holds the rest.
Automakers say some sort of government funding is necessary to bail out the troubled industry. They have been lobbying to speed up loans from the Energy Department pot and for access to part of the $700 billion Wall Street bailout plan and perhaps other funding.
Also yesterday, the Center for Automotive Research published a report estimating that about 2.5 million jobs across the economy would disappear in the first year if the U.S. auto industry shrinks by 50 percent.
Only 239,000 of those job losses would be at the Detroit Three - the remainder would be at parts suppliers and related industries, the Ann Arbor-based center said.
Cerberus Chairman John Snow said yesterday that Obama needs a bipartisan plan to counter the worst economic downturn in about 50 years.
"What we need is to make sure that a vital industry like autos ... which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn," Snow said in an interview on the CNBC cable channel.
"The collapse of the auto industry at this time would be devastating for a new president."
Snow, who served as treasury secretary under President Bush from 2003 to 2006, said the economy likely is in a recession that could be serious due to the credit crisis and a severe global economic contraction.