CHICAGO, November 8 – US President-elect Barack Obama vowed swift moves to help the country\’s auto industry recover from an economic crisis that has brought car-making giants to their knees, after General Motors said on Friday it was on the brink of collapse.
"The news coming out of the auto industry this week reminds us of the hardship it faces," he told reporters, speaking after meeting with his new team of heavyweight economic advisers in his first news conference since winning Tuesday\’s election.
"Hardship that goes far beyond individual auto companies to the countless suppliers and small businesses and communities throughout our nation who depend on a vibrant American auto industry," he said.
"I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust."
His comments came in the wake of a fresh slew of bad news from US automakers and other gloomy economic data.
The biggest US-automaker General Motors warned that it would run out of cash in the first half of next year and appealed to the US government for help to save it from collapse.
It also said it had suspended takeover talks with another struggling car maker, Chrysler, and reported a deepening of its cost-cutting plan.
Ford Motor Co. also warned of tough times ahead as it reported heavy financial losses and plans to slash an additional 10 percent from its salaried North American worker costs, citing the impact of a global slowdown that has already gravely weakened the US auto industry.
Ford, the number-two US automaker, said it had lost 129 million dollars in the third quarter and had consumed 7.7 billion dollars of cash.
Congress recently authorized 25 billion dollars in loan guarantees to help US automakers develop more fuel-efficient vehicles, but the companies have called for extra support with no strings attached.
"The auto industry is the backbone of American manufacturing and a critical part of the attempt to reduce dependence on foreign oil," Obama said. "I would like to see the administration do everything it can to accelerate the retooling assistance that Congress has already enacted."
GM said it "has taken a host of aggressive \’self help\’ actions to improve its business, but additional support from the US government to aid the auto industry during this industry downturn is essential."
GM and Ford said Friday in a conference call that they and other automakers had asked for an extra 25 billion dollars in government-backed loan guarantees during talks with Democratic House of Representatives Speaker Nancy Pelosi on Thursday in Washington.
"In the meeting yesterday we talked about near-term industry support in the range of 25 billion," said GM president and chief executive Rick Wagoner. "No one said yes or no to that figure and so I don\’t think that\’s anywhere near a final one."
He said that "letting GM go" would be far more significant than the bankruptcy of the investment bank Lehman Brothers, which sparked the latest round of the financial crisis in September.
Obama said he would act swiftly to attack the broader economic crisis on several fronts.
"We are facing the greatest economic challenge of our lifetime. We will have to act swiftly to resolve it," Obama said, with his economic advisors standing behind him.
"Immediately after I become president, I will confront this economic crisis head on by taking all necessary steps to ease the credit crisis, help hard-working families and restore growth and prosperity."
However he signalled he would not attempt to intervene in economic policy before his inauguration on January 20.