A 14-billion-dollar loan package aimed at bailing out the American auto industry from bankruptcy officially died on Thursday night, as it was rejected by the U.S. Senate despite the Wednesday approval by the House of Representatives.
A procedural vote conducted in Senate ended up with only 52 yeas, formally strangling the legislation, whose passage needs 60 supporting votes.
The fate was actually decided well ahead of the vote, as Democratic and Republic senators, who hold 50 and 49 seats respectively, had failed to strike a bipartisan deal on the rescue plan, designed specifically for the so-called Detroit Three, namely General Motors (GM) Corp., Ford Motor Co. and Chrysler LLC.
Republicans left a closed-door meeting where they balked at giving the automakers taxpayer-funded loans unless their powerful union agreed to cut wages next year to the level of those hired by Japanese carmakers, the auto Big-3's top competitors.
This file photo shows new trucks are displayed for sale at a Ford dealership in Encinitas, California November 11, 2008. Republican Senator George V. Voinovich of Ohio, who is a strong bailout supporter, revealed that the union refused to make the cuts before 2011, as the auto workers' contract doesn't expire until then.
Senate Majority Leader Harry Reid, who was quite optimistic about a Senate consensus earlier in the day, said he was "terribly disappointed" at the failure of the bill.
"I dread looking at Wall Street tomorrow," he said. "It's not going to be a pleasant sight."
Stressing that the auto industry has a bearing on millions of jobs in the country, Reid added: "Christmas is approaching ...This will be a very very bad Christmas for many people."
GM and Chrysler, which are under a severe strain of cash, have warned that they could be just weeks away from collapse if there is no external assistance. Ford, which said it currently has sufficient money on hand, also hopes to get a line of credit in case its finances worsen.
The three companies employ nearly 250,000 people directly, and 100,000 more jobs at parts suppliers could hang on their survival. The companies also claim that one in every 10 U.S. jobs are related to the auto industry.
"A bankruptcy filing by a major automaker would be catastrophic," commented Craig Cather, president and CEO of CSM Worldwide, an automotive forecasting and advisory service. "It won't be just a Detroit problem or a Michigan problem."
"Many suppliers can't afford another major hit to their production and cash flow. If they are forced to reorganize or possibly even liquidate, that would start a ripple effect that would undermine the health and stability of every automaker in North America," Cather told Xinhua.
And data showed that 58 percent of GM's North American suppliers also supply Asian automakers. The proportions among Chrysler and Ford suppliers are 59 percent and 65 percent, respectively.
Source:Xinhua
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