US auto sector in crisis, big three cry for bailout

TOUGH DRIVE: The big three companies, GM, Chrysler and Ford are in deep financial trouble

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Washington: The US Senate will vote this week on emergency loans to the auto industry. But the measure faces strong opposition from many Republicans. There are concerns whether Washington will cut a cheque for the sinking automotive industry.

The final round of the Congress with the US president Bush in a lame duck session is set to be a showdown centered on the hemorrhaging auto industry.

The US Commerce Secretary, Carlos Gutierrez said, "One out of ten jobs in this country are auto related. 20 per cent of our retail sales are auto related or of automobiles. So this is a national problem."

Michigan Democrat Senator Carl Levin is drafting the Senate's version of the auto industry lifeline. The bill could see a key vote as early as Wednesday.

The bailout proposal could include a US$ 25 billion loan to the big three automotive makers, GM, Chrysler and Ford.

This money could be carved out of the US$ 700 billion financial bailout package.

But it is going to be no easy task to sell the proposal to the Senate Republicans or to the Bush administration.

"There is a line of industries waiting at the treasury waiting just to see if they can get their hands on those 700 billion dollars. That is for the financial system, to stabilise the financial system. That should not be used," said Senator Levin.

"They would be in a lot of people's judgment a lot better off to go through Chapter 11 where they could reorganize, get rid of the management, get rid of the boards, the people who have brought them to where they are today," said Senator Richard Shelby, a top Republican on the Senate Banking Committee.

He says that the Democratic plan would reward poor management at GM, Ford and Chrysler and calls it money wasted.

Republican leaders, along with Bush administration are pushing an alternative plan. Theirs is the plan that would pull money from an existing US$ 25 billion loan programme meant to help automakers that produce more fuel efficient vehicles.