Nissan staff face 75% cut in pay in bid to ease crisis
Dec 19 2008 by Sam Wood, The Journal
Hint of orderly bankruptcy in US
THE Bush administration was last night considering an orderly bankruptcy as a way of dealing with America’s beleaguered car industry.
A multi-million pound bailout stalled in the US Congress earlier this month and two of the nation’s Big Three car-makers – General Motors (GM) and Chrysler – have said they will run out of cash within weeks. Ford is in only a slightly healthier position.
President George Bush said he was working out a way to avoid having to dump his successor Barack Obama with a major catastrophe on his first day in office.
Mr Bush and the White House are working out a plan to avoid the devastating blow to the US economy, with millions of job losses, that experts have predicted would come with the failure of any one of the Detroit-based firms.
Yesterday White House Press secretary Dana Perino said: "There’s an orderly way to do bankruptcies that provides for more of a soft landing. I think that’s what we would be talking about.
"If you thought that our economy today could handle the collapse of the American auto industry, then you might come to the conclusion that doing nothing was an option. We’re going to do something."
Mr Bush, asked about a rescue plan for the car-makers during an appearance before a private group, said he had not yet decided what he would do.
But he said the idea of bankruptcies organised by the federal government was a possible way to go.
"Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think-tank.
"These aren’t normal circumstances. That’s the problem."
Mr Bush and the White House were speaking after Chrysler announced it was closing all its North American manufacturing plants for at least a month over the holidays.
GM has also been closing plants and both have said they might not have enough money to pay their bills in a matter of weeks. GM yesterday had to dismiss a report that it and Chrysler have restarted merger talks.
Prices of GM and Ford stocks were down substantially after the White House comments.
Mr Bush said the car industry was obviously very fragile and added he was worried about what an out-and-out collapse without Washington involvement would do to the psychology of the markets.
Yesterday it was disclosed that Bush and Obama will meet again for lunch at the White House, along with former US presidents Jimmy Carter, Bill Clinton and George HW Bush, on January 7.
"These men share experiences that no one else can imagine. It will be fabulous to have them all here together," Ms Perino said.
