Big Three closes factories, awaits loans
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GM, Ford and Chrysler plan to close almost 60 factories while awaiting some news on a proposed financial relief package.
The automakers hope that Pres. Bush approves emergency loans to get them through the rest of the year, according to news reports. Without $14 billion in federal aid, the manufacturers will be out of money by early 2009, they say.
GM, Ford and Chrysler began another round of cuts, spurred by sales declines this year of 22 percent, 19 percent and 28 percent, respectively, compared with the 16 percent industrywide average, a Bloomberg report states.
Chrysler will shut all 30 of its plants for at least a month starting Dec. 19, and Ford plans to idle nine of 15 North American assembly plants in the first week of January.
GM also indicated that a new $370 million factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.
The Chairman of the National Automobile Dealers Association, Annette Sykora, says that with each passing day, more dealerships are closing and more people are losing their jobs.
"These are desperate times in many communities around the country," Sykora said in a written statement issued Thursday. "We've heard encouraging words from the White House, but time is of the essence. A lot of people are depending on the White House to provide the bridge loans to prevent a collapse of the auto industry. We need action now.”
This year alone 900 dealerships out of 19,700 are expected to close, with a loss of almost 50,000 jobs, according to NADA.
Sykora said she agrees with the White House that it would be "irresponsible to further weaken and destabilize our economy." Failure of an automaker would have a domino effect on dealers and suppliers. Bankruptcy would further threaten the availability of credit for dealers for consumer purchases and financing the vehicle inventory on their lots.