UAW won't budge ... next up Chapter 11?

Union balks and $14B auto bailout dies in Senate


Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

The breakdown left the fate of the auto industry - and the 3 million jobs it touches - in limbo at a time of growing economic turmoil. General Motors Corp. (GM) and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. (F) says it does not need federal help now, but its survival is far from certain.

Comment: GM and Chrysler will be in chapter 11 (where this belongs) in the 1st QTR '09. More from the NYTimes:

Senate Abandons Automaker Bailout Bid

The failure to reach agreement on Capitol Hill raised a specter of financial collapse for General Motors and Chrysler, which say they may not be able to survive through this month.


The failure in Congress to provide a financial lifeline for G.M. and Chrysler was a bruising defeat for President Bush in the waning weeks of his term, and also for President-elect Barack Obama, who earlier on Thursday urged Congress to act to avoid a further loss of jobs in an already deeply debilitated economy.

More from the Star Tribune: Domino effect of bankruptcy could begin quickly

GM and Chrysler are unlikely to be able to hold out until Obama takes office and that could affect their suppliers, many of which are barely holding on themselves.

With Congress unable to agree on a bailout for Detroit, the odds that General Motors and Chrysler will be insolvent by year's end are growing rapidly.

The companies have been warning that they would run out of money for some time, but crushing bills from their suppliers are coming due. It appeared unlikely that they could hold on until President-elect Barack Obama takes office next month, when he and a new Congress might be able to provide a lifeline.

1 comment:

  1. So instead of taking a $5/hour pay cut, they're going to ruin pensions for all of their retirees? There's some good thinking for you.


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