The short term future of the ‘big three’ US manufacturers looks slightly less shaky as reports from across the pond suggest Congress is closer to voting for a multi-billion dollar bailout.
A proposed bailout bill unveiled yesterday contains a number of conditions that it’s hoped will curtail the car giants’ freedom to foul up in future, and agreement appears likely this week in spite of widespread reservations in Congress.
Conditions include the appointment of a government ‘car czar’ who will make sure all future decisions pass a financial viability test, and who would have the power to direct all negotiations inside the companies, and with unions and creditors.
The amount in the bailout piggybank has yet to be decided, but something in the region of $15 billion is being mooted. The carmakers will then have a March 31st deadline to submit full restructuring plans, after which the loans could be recalled if sufficient progress is not being made.
As part of the price to be extracted in return for taxpayer support, the loans may also be made conditional on carmakers ending their legal battle against stringent new ‘green’ regulations being enacted by many states in the US.
Forcing the US industry to accept tough new standards is likely to accelerate the pace of green developments across the global industry – or what remains of it when the credit crunch is over. Some analysts believe the US bailout will increase the likelihood of other governments being forced to support domestic car production. Here in the UK, the Society of Motor Manufacturers and Traders maintains it needs access to credit, not government handouts – but rumours abound that Tata is already begging for £1 billion of UK taxpayer support for its Land Rover and Jaguar operations.
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