The Wall Street Journal is reporting that within days the President’s Task Force on Autos is expected to announced more government aid for embattled automakers GM and Chrysler.
Interviews with Task Force members suggest the administration doesn’t want to automakers to slip into bankruptcy protection. Rather they are expected to say they see viable futures for the companies, but only if management, union, and bondholders make sacrifices. A new “firm timeline” for concessions will be provided.
The Task Force has been charged with a very daunting task that some pundits say they are ill prepared for. The team is led by Steven Rattner, a former journalist, who analogizes saving the auto industry to solving a Rubik’s cube.
“It’s like a Rubik’s cube, trying to untwist it and trying to get all the colors to line up,” he said. “So we’ve learned a lot about how car dealers work, and how companies get paid when they sell a car to a dealer, and why there are a certain number of dealers more than are optimal. Have we learned everything? Of course not, but I think we are learning what we need to learn to do this job.”
Besides not yet achieving concessions from the UAW and bondholders, predicting future auto demand is also a big challenge for the team.
“The biggest variable” the team has had to wrestle with, he says, is “what the demand for cars will be in five years.”
It appears likely that GM will be receiving the $16.6 billion it is asking for, but is unlikely to be getting it as a lump sump, but rather in a metered fashion as certain negotiating milestones are met.
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