Big Three failure would raise job losses
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Scott Jagow: The leaders of Detroit’s car makers will try again to make their case before Congress today. They’ll testify before the House Financial Services Committee. So far, Congress seems pretty resistant to a bailout, despite the pleas from GM’s CEO Rick Wagoner:
Rick Wagoner: What exposes us to product failure now is not our product line-up, is not our business plan, is not our employees and their willingness to work hard, is not our long-term strategy. What exposes us to failure now is the global financial crisis.
Wagoner says the collapse of the auto industry would lead to the loss of three million jobs and a total collapse of the U.S. economy. Marketplace’s Janet Babin has more from North Carolina Public Radio:
Janet Babin: The Big Three auto executives warned law makers that the cost of keeping the industry afloat would be far less than the price of fixing the economy if they go under.
A report from Deutsche Bank backs them up — it found that if the Big Three were to go bankrupt, unemployment in the first quarter of 2009 would jump by almost 2 percent. GM is asking for $10 [billion] to $12 billion, while Ford and Chrysler want about $7 billion in government aid.
The credit crunch and economic downturn have stalled auto sales across the board. Today, Toyota said it will shutter its North American factories for two days in December. This summer, it cancelled all U.S. production of light trucks. Senate Democrats have proposed a $25 billion dollar loan to the industry, but many law makers still aren’t convinced.
I’m Janet Babin for Marketplace.
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