US ultimatum for carmakers: restructure or face bankruptcy
The struggling US car industry will be given one last chance to restructure operations or lose the government's support, President Barack Obama announced Monday, declaring that General Motors Corp and Chrysler LLC had so far failed to prove that they can survive, dpa reported.
In a dramatic government intervention in the industry, the White House forced out long-time GM chief executive Rick Wagoner, who will be replaced by the company's president Fritz Henderson.
GM, the largest US carmaker, will be given 60 days to reach new deals with labour unions, creditors and others to return to profitability.
By contrast, the White House determined that Chrysler is unable to survive on its own. The third-largest US carmaker will have 30 days to reach an agreement with Italian firm Fiat, which is considering taking a minority stake in the company.
"We cannot, and must not and we will not let our auto industry simply vanish," Obama said. "But we cannot continue to excuse poor decisions. We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars."
The US government has already given GM 13.5 billion dollars and Chrysler 4 billion dollars as US car sales have plummeted more than 35 per cent in the current recession.
Obama said the government would provide the two companies with enough capital to survive until the new deadlines. He held out the possibility of a bankruptcy for one or both firms if they cannot restructure on their own.