UAW leader says blame economy for Detroit 3 woes

[Mrs. Sharon B. Hodge]

UAW leader says blame economy for Detroit 3 woes
By MARK WILLIAMS, AP Business Writer


COLUMBUS, Ohio – Even as Detroit's Big Three teeter on collapse, United Auto
Workers President Ron Gettelfinger said Saturday that the problem is not the union's contract with the automakers and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

"The focus has to be on the economy as a whole as opposed to a UAW contract," Gettelfinger told reporters on a conference call, noting the labor costs now make up 8 percent to 10 percent of the cost of a vehicle.

"We have made dramatic, dramatic changes and the UAW was applauded for that," he said.

Instead, Gettelfinger blamed the problems the auto industry is suffering from on things beyond its control — the housing slump, the credit crunch that has made financing a vehicle tough and the 1.2 million jobs that have been lost in the past year.

"We're here not because of what the auto industry has done," he said. "We're here because of what has happened to the economy."

Gettelfinger also called on Congress to act quickly on a bailout plan for the auto industry, saying action is necessary before President-elect Barack Obama takes office in January.

He said if one automaker were to file for bankruptcy, the others may follow. He said the automakers would find it difficult to restructure under bankruptcy laws and instead could end up out of business. "Would you buy a car from a bankrupt automaker?" he asked.

The Center for Automotive Research, which receives funding from the auto industry, has warned that the collapse of the Big Three could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and more than $150 billion in tax revenue over the next three years.

Gettelfinger called on Congress to act quickly to provide loans to help the automakers until the economy improves and the automakers can move ahead with their plans to become more competitive.

"We cannot afford to allow to see this industry collapse. There is a real concern that could happen."

General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking $25 billion from the government to get them through the economic crisis and the worst sales slump in more than 25 years. GM appears to be in the worst shape, warning that it can't borrow from normal sources.

The nation's largest automaker said it had $16.2 billion in cash at the end of September, raising the possibility that GM will fall below the minimum of $11 billion to $14 billion needed for day-to-day operations by the end of the year.

Democrats in the lame-duck Congress are pressing for a bailout of Detroit's Big Three with money from the $700 billion Wall Street rescue package. But President George W. Bush and many Republicans have come out against the idea, arguing that the financial rescue package was not intended for such uses, and that a bailout would reward poor management and lead other industries to demand government handouts.

In a statement Saturday, House Speaker Nancy Pelosi said the Democratic proposal gives automakers time to develop plans to assure their long-term viability, including meeting new fuel-efficiency standards and developing new technology.

"A restructured, competitive American automobile industry will continue to play a crucial role in our national economy and in the global marketplace," she said.