WASHINGTON, D.C. — Yesterday, Michigan Sen. Carl Levin and Sen. Christopher Bond (R-Mo.) worked to draft a compromise on a $25-billion aid package for Detroit automakers, after two days of testimony by automaker and supplier execs detailing the severity of the financial crisis in the auto industry. However, plans to bring the bill up for vote yesterday were nixed.
The Senate yesterday told automakers that they need to come up with a plan before they will get any financial assistance from the government. Automakers have until Dec. 2 to create a plan demonstrating “accountability and viability.” Senate Majority Leader Harry Reid said Congress would return the week of Dec. 8 to consider the proposal.
At a news conference yesterday, House Speaker Nancy Pelosi stated, "It is all about accountability and about viability. Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future, until they show us the plan, we cannot show them the money.”
In her remarks, Pelosi acknowledged that many aspects of the nation’s stability are contingent upon stability in the auto industry.
"The auto industry is very important to our country,” Pelosi said. “It is essential, its survival is essential, to maintaining our industrial and manufacturing base. That industrial base is essential to our national security. So, for reasons of our national security, for reasons that relate to the health of our financial community, and for reasons that relate to the needs of the workers who will be affected by this, it is essential that we see some restructuring, some path to viability, from the auto industry.”
In addition to testimony from automaker executives, the supplier industry was represented as well. Jim McElya, executive chairman of Cooper Standard Automotive, in his written testimony called upon Congress to include suppliers in any auto industry financial assistance package.
“A potential bankruptcy by a major vehicle manufacturer will cause serious disruptions and will directly impact the ability of the entire industry to function,” McElya stated. “At the same time, suppliers must have an infusion of working capital to continue to operate.”
McElya’s testimony explained the highly interdependent relationship that exists between vehicle manufacturers and the supply base and highlighted the economic contributions of motor vehicle parts suppliers that spread deep into the economy, far beyond Michigan, and affect all 50 states. He also described the increasing role supplier companies play in the industry’s research and development, of even more importance as vehicle manufacturers strive to provide safer and more fuel efficient vehicles.
McElya cited the current circumstances facing the auto industry including the lack of available credit and decline in vehicle sales and the specific impact on the supplier industry, with some analysts stating that as much as half of the supply base is in distress. “The dramatic and sudden contraction of the auto industry will directly impact the supply base,” McElya said, “and the failure of the supply base will impact a wide range of car manufacturers.”