Official: U.S. automakers to get $17.4 billion
Published 11:05 am Friday, December 19, 2008
Ailing automakers will get $17.4 billion in loans from the federal government under a rescue package the White House announced on Friday for the industry crushed by the financial credit crisis and deepening recession.
However, that news only translates into a wait and see situation as far as local steelworkers wanting to get back to work at AK Steel’s Ashland Works.
In November close to 1,000 union and independent contractors who work at the Ashland Works were idled as the mill was put on standby because of the financial crisis hitting the Big Three automakers.
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“I don’t know about this. They just announced it,” Mike Hewlett, president of the Steelworkers Union Local 1865, said this morning. “We got to see what their plans are. We still have work on our furnace to bring it back off.”
Right now, the union expects to sit down with AK Steel officials the first part of next week to see when maintenance crews and some laborers would be getting back into the mill, Hewlett said.
That could happen the first week of January.
“We have to find out what needs to be done,” he said. “I wish they had got in sooner.”
However, that could give the union and the company a chance to see how the bailout will be used.
What Hewlett is looking for is to see what the auto industry does as far as retooling for the upcoming models.
“If they are going to more of a hybrid, their new lines,” he said. “By that time by watching the auto industry does, will give us a good lead-in. The only thing the company has said is the middle of January and they have not changed that yet.”
A senior administration official, speaking on condition of anonymity because of the sensitivity of the issue, said $13.4 billion in short-term financing from the $700 billion Wall Street rescue program is being made available and another $4 billion will be accessible once the Bush administration or incoming administration of President-elect Barack Obama draws down the second bloc of funds from the financial rescue package.
“$17.4 billion, it depends on how and where they apply it,” Hewlett said.
President George W. Bush will make an announcement on the auto bailout at 9 a.m.
The announcement comes none too soon for the carmakers. Sales are running at their slowest pace in 26 years and the Big Three’s operating cash is dwindling.
General Motors Corp. and Chrysler LLC have said they would run out of cash within weeks without government help. Ford has not sought billions in federal bailout loans, but a collapse of the other two could hurt Ford as well.
The official said the administration expects that GM and Chrysler will request access to the funds.
According to terms of the deal, the firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable, the official said. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.
The Associated Press also contributed information for this story.