As President-elect Barack Obama vowed to make the ailing auto industry a top priority for his transition team and moving forward into his presidency, automakers were sent reeling yesterday with General Motors Corp. stocks plunging to $3.46 a share, its lowest level since 1946.
Obama urged President George W. Bush to support immediate federal assistance to the ailing auto industry during Obama’s visit to the White House yesterday, the New York Times reported.
The two men met for a traditional changing of the guard from president to president-elect. “Obama asked for a second stimulus and to use existing measures to help the auto industry,” an aide said on Tuesday. The aide gave no further details on what measures were available currently to help the carmakers or the specific provisions of a new economic stimulus plan.
Robert Gibbs, spokesman for the president-elect, said that on the plane back from Washington after the meeting, Obama and Bush had discussed the “broad health” of the auto industry, but the newly elected president did not specifically ask for help for one single American automaker.
“Automobile manufacturing as a whole provides about 20% of country’s revenue and it’s a key incubator for employment in U.S.” says Damon Lester, president of the National Association of Minority Automobile Dealers (NAMAD).
Lester cites an aggregate of issues that led to the dismal state of the industry including an “increase in gas prices, overall consumer shift in consumer demand from tucks and SUVs to smaller fuel efficient vehicles,” and a struggling housing market which as curtailed consumer spending.
The Center for Automotive Research estimates 3 million jobs are at risk if these companies collapse.
Chrysler L.L.C., Ford Motor Co., and General Motors Corp., the Big Three U.S. automakers, are lobbying Congress for immediate access to the $700 billion rescue plan passed by Congress last month to inject capital into the financial sector.
On Saturday, Speaker of the House Nancy Pelosi and Sen. Majority Leader Harry Reid asked the Bush Administration to expand the rescue to include auto manufacturers.
President Bush was open to the idea. Presidential spokeswoman Dana Perino said Bush would listen to lawmakers if, when they come back for a post-election session, “they decide to try to do something more on the auto industry.” She said Treasury Secretary Henry Paulson would review the rescue plan again, but also suggested the administration needs Congress’ help to determine which industries might qualify for help under the new law. Obama acknowledged the severity of the industry’s dizzying collapse on Friday saying “the auto industry is the backbone of American manufacturing.”
As the incoming president made the woes of car companies a “high priority” Ford reported $129 million in revenue for the third quarter, having burned through $7.7 billion. GM also reported it lost $2.5 billion in the same period