Despite the economic turmoil in Detroit, Michigan, the nation’s automobile industry hub, US President Barack Obama discarded the suggestion of designating a “Car Czar.” Instead, the U.S. President assigned the chairman of the National Economic Council, Lawrence H. Summers, and Treasury secretary Timothy F. Geithner, as co-leaders of a presidential panel tasked to investigate and research remedial solutions for the auto industry. Their focus is on the restructuring of Detroit-based car manufacturers General Motors and Chrysler.
Both appointees will oversee the $17.4 billion loan already arranged in place for G.M. and Chrysler.
Another name is also tapped to act as senior adviser for the presidential auto panel. Ron Bloom, an expert in corporation overhauls with an experience dealing with labor unions of steel and airline companies, is said to be included in the auto crisis panel.
Mr. Bloom will bring in his expertise as an investment banker with prior engagements in Wall Street. With labor unions of both car manufacturers expected to lock horns with the panel the companies’ stakeholders, Mr. Bloom’s credibility will help in coming up with acceptable and productive arrangements with unions.
Initially, the “Car Czar’ slot was tailored for several business executives, among them private equity executive Steve Rattner. It is still unclear why the administration deviated from its original plan or whether Mr. Rattner would have a spot on the panel, which is now named the Presidential Task Force on Autos.
The task force members will be coming from different agencies, including the departments of treasury, labor, transportation, commerce and energy. Several members of the panel have already been working closely with G.M. and Chrysler on the viability of their restructuring plans, which will be presented to the government.
Last January, $4 billion was given to Chrysler. Chairman Robert L. Nardelli revealed that the company will request $3 billion more to keep the operations running. General Motors, on the other hand, already borrowed $9.4 billion and is slated to get another $4 billion if the panel sees their overhaul plan viable.
The Ford Motor Company, another major Detroit-based car manufacturer, did not file for financial aid from the federal government and is not required to submit a revamp plan for approval despite the $14.6 billion loss it suffered last year. The said drop in revenue is the biggest in Ford’s history. The federal government, however, is willing to lend Ford Motors should the company choose to ask for help.
General Motors has stated in an official announcement that it welcomes the new task force and that the company looks forward to sharing its business strategies “to restore our company to viability and to meet the requirements of its loan agreements.”
The government expects the auto industry to sell between 10 million and 11 million vehicles in the United States this year, far below the 16.2 million mark the industry sold two years ago.
New York Times article about President Obama’s decision about the auto industry.
Official Chrysler biography of Robert L. Nardelli.
Robert Nardelli doubts Chrysler would survive bankruptcy.