News and Articles

The president-elect of the United States, Barack Obama, on Friday praised the decision by the outgoing president, George W. Bush to support the automotive industry with a package of U.S. $ 17,000 million.

Obama warned, however, the three major automotive companies (General Motors, Ford and Chrysler) not wasting this opportunity, to make a reform of poor management practices and move forward in the development of less polluting cars.



President George W. Bush justified the decision to offer financial assistance to the automotive industry because, otherwise, its collapse would seriously the economic crisis facing the country.

The president stressed that allowing the industry fell into bankruptcy would not be "a responsible action."

In the short term the car manufacturers will receive U.S. $ 13,400 billion package of U.S. $ 700,000 million approved to rescue Wall Street. The rest will arrive before the end of March.

However, Bush noted that the companies have to make tough decisions, as the industry needs to change. The reform will require "significant concessions from all players in the automotive industry," said the president.

The BBC correspondent in Washington, Kevin Connolly, said that the high salaries paid by the three major U.S. companies compared with their competitors, in addition to the benefits of their pension plans and health care for retirees, are among the aspects that Manufacturers will have to deal with, in exchange for receiving the money.

Plan rejected

The companies had originally requested the government about U.S. $ 34,000 million in soft loans to stay afloat, but not even an agreement between the House of Representatives and the White House for only U.S. $ 14,000 million managed to overcome the reluctance in the Senate.

Precisely, the last hope for the automotive era that finally the government decided to assist them with a financial rescue fund of U.S. $ 700,000 million that was approved for the rescue of banks and investment funds.

All the automotive companies have announced production cuts since the economic crisis caused a decline in sales.

On repeated occasions, Chrysler, Ford and GM warned that millions of jobs would be lost if the government did not approve an aid package.

The reporter economic issues from the BBC, Mark Gregory, said that without the aid package Chrysler and GM probably would have been declared bankrupt in a few weeks.

Gregory added that not everyone thought the breakup of the companies would have an effect as devastating as suggested by the automotive sector.

Under the rules for U.S. companies that fall into bankruptcy are given the opportunity to renegotiate their debts.

Our correspondent says that many Republicans think they would have been better in the long run, let broken to create conditions that would facilitate decision-making tough, especially the cut in wages, which would allow companies to maintain a truly competitive level.