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Let GM, Ford Die, Some Say

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The Associated Press

Published: November 17, 2008

WASHINGTON - Hard-line opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.

The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors, Ford and Chrysler have offered to reduce the size of the rescue to win backing in Congress.
Senate Democrats today plan to introduce legislation attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote may happen Wednesday.

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said a bailout would only postpone the U.S. auto industry's demise.

"Companies fail every day and others take their place. I think this is a road we should not go down," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. "They're not building the right products," he said. "They've got good workers but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense."

Added Kyl, the Senate's second-ranking Republican: "Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."

PARTS SUPPLIERS AIL

NEW YORK - The financial woes of U.S. automakers have grabbed Washington's attention, but similar problems at auto suppliers have the potential to set off a cataclysmic chain of events in the industry if key parts makers run out of cash and fail.

Auto suppliers' sales have tumbled this year because of the steep drop in demand for new vehicles, which has forced suppliers to burn through their cash reserves and slash costs, said Craig Fitzgerald, an automotive analyst with Southfield, Mich.-based Plante & Moran.

The Motor & Equipment Manufacturers Association is hoping to win a piece of a proposed rescue package that would use $25 billion of the $700 billion financial industry bailout to help GM, Ford and Chrysler.

The Associated Press

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