George Bush came through with a 17.4 billion dollar loan to GM and Chrysler. $13.4 billion will come from TARP funds in December and January. $4 billion will be available in February assuming the Congress authorizes the second half of the original $700 billion rescue package.
[Here’s the White House ‘Fact Sheet’ on the loan package. ]
GM with receive 9.4 billion in December and January and an additional $4 billion in February. Chrysler will not participate in the February distribution. Ford is not participating in the loan package.There are strings attached. Some are silly and symbolic such as ‘no use of corporate jets’ and one a real problem with the UAW. The automakers were grateful for the opportunity.
Today Chrysler CEO Bob Nardelli issued a statement saying the company was grateful for the helping hand and said, “Chrysler is committed to meeting these requirements.”
GM likewise said the decision “will lead to a leaner, stronger General Motors,” adding, “We appreciate the President extending a financial bridge at this most critical time for the U.S. auto industry and our nation’s economy.”
The deal also includes non-binding “target” provisions, including making UAW work rules and wages competitive with workers at foreign car companies in the U.S.
The issue here is ‘work rules and wages’. By most estimates the actual gross wage pay of the workers are on parity now. By different calculations that include the health benefits, which are highly reduced at the non-union plants, then there is a difference. The bigger issue will come over ‘work rules’. Work rules potentially covers a large area. It could mean requiring the union to act as if no union existed. The UAW will not allow that to happen but their reaction was muted.
“We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed, as we join in the coming months with all stakeholders to create a viable future for the U.S. auto industry.”