Ijaw Dictionary Online

How Automobiles Work


THE PRESIDENT: Good
morning, everybody. One of the challenges we’ve
confronted from the beginning of this administration is what
to do with the state of the struggling auto industry. In recent months, my Auto
Task Force has been reviewing requests by General Motors
and Chrysler for additional government assistance, as well
as plans developed by each of these companies to restructure,
to modernize, and to make themselves more competitive. Our evaluation is now complete. But before I lay out what needs
to be done going forward, I want to say a few words about where
we are and what led us to this point. It will come as no surprise that
some Americans who have suffered most during this recession have
been those in the auto industry and those working for
companies that support it. Over the past year, our auto
industry has shed over 400,000 jobs, not only at plants that
produce cars, but at the businesses that produce the
parts that go into them and the dealers that sell
and repair them. More than one in 10 Michigan
residents is out of work — the most of any state. And towns and cities across
the great Midwest have watched unemployment climb higher
than it’s been in decades. The pain being felt in places
that rely on our auto industry is not the fault of our workers;
they labor tirelessly and desperately want to see
their companies succeed. It’s not the fault of all the
families and communities that supported manufacturing plants
throughout the generations. Rather, it’s a failure of
leadership — from Washington to Detroit — that led our auto
companies to this point. Year after year, decade after
decade, we’ve seen problems papered over and tough choices
kicked down the road, even as foreign competitors outpaced us. Well, we’ve reached
the end of that road. And we, as a nation, cannot
afford to shirk responsibility any longer. Now is the time to confront our
problems head-on and do what’s necessary to solve them. We cannot, and must not, and we
will not let our auto industry simply vanish. This industry is like no other
— it’s an emblem of the American spirit; a once and
future symbol of America’s success. It’s what helped build the
middle class and sustained it throughout the 20th century. It’s a source of deep pride for
the generations of American workers whose hard work and
imagination led to some of the finest cars the
world has ever known. It’s a pillar of our economy
that has held up the dreams of millions of our people. And we cannot continue
to excuse poor decisions. We cannot make the survival of
our auto industry dependent on an unending flow of
taxpayer dollars. These companies — and this
industry — must ultimately stand on their own, not
as wards of the state. And that’s why the federal
government provided General Motors and Chrysler with
emergency loans to prevent their sudden collapse at the end
of last year — only on the condition that they would
develop plans to restructure. In keeping with that agreement,
each company has submitted a plan to restructure. But after careful analysis,
we’ve determined that neither goes far enough to warrant the
substantial new investments that these companies are requesting. And so today I’m announcing that
my administration will offer GM and Chrysler a limited
additional period of time to work with creditors, unions,
and other stakeholders to fundamentally restructure in
a way that would justify an investment of additional
taxpayer dollars. During this period they must
produce plans that would give the American people confidence
in their long-term prospects for success. Now, what we’re asking
for is difficult. It will require hard
choices by companies. It will require unions and
workers who have already made extraordinarily painful
concessions to do more. It’ll require creditors to
recognize that they can’t hold out for the prospect of
endless government bailouts. It’ll have to — it will require
efforts from a whole host of other stakeholders, including
dealers and suppliers. Only then can we ask American
taxpayers who have already put up so much of their hard-earned
money to once more invest in a revitalized auto industry. But I’m confident that if each
are willing to do their part, if all of us are doing our part,
then this restructuring, as painful as it will be in the
short term, will mark not an end, but a new beginning for a
great American industry — an auto industry that is once more
out-competing the world; a 21st century auto industry that is
creating new jobs, unleashing new prosperity, and
manufacturing the fuel-efficient cars and trucks that will carry
us towards an energy-independent future. I am absolutely committed to
working with Congress and the auto companies to meet one goal:
The United States of America will lead the world in building
the next generation of clean cars. And no one can deny that
our auto industry has made meaningful progress in recent
years — and this doesn’t get talked about often enough. Some of the cars made by
American workers right now are outperforming the
best cars made abroad. In 2008, the North American
Car of the Year was a GM. This year, Buick tied for first
place as the most reliable car in the world. Our companies are investing in
breakthrough technologies that hold the promise of new vehicles
that will help America end its addiction to foreign oil. But our auto industry is not
moving in the right direction fast enough to succeed in
a very tough environment. So let me discuss what measures
need to be taken by each of the auto companies requesting
taxpayer assistance, and I’ll start with General Motors. GM has made a good faith effort
to restructure over the past several months — but the plan
that they’ve put forward is, in its current form,
not strong enough. However, after broad
consultation with a range of industry experts and financial
advisors, I’m absolutely confident that GM can rise
again, providing that it undergoes a fundamental
restructuring. As an initial step, GM is
announcing today that Rick Wagoner is stepping aside
as Chairman and CEO. This is not meant as a
condemnation of Mr. Wagoner, who’s devoted his life to
this company and has had a distinguished career; rather,
it’s a recognition that will take new vision and new
direction to create the GM of the future. In this context, my
administration will offer General Motors adequate working
capital over the next 60 days. And during this time, my team
will be working closely with GM to produce a better
business plan. They must ask themselves:
Have they consolidated enough unprofitable brands? Have they cleaned up their
balance sheets, or are they still saddled with so much debt
that they can’t make future investments? Above all, have they created a
credible model for how not only to survive, but to succeed in
this competitive global market? Let me be clear: The United
States government has no interest in running GM. We have no intention
of running GM. What we are interested in is
giving GM an opportunity to finally make those much-needed
changes that will let them emerge from this crisis a
stronger and more competitive company. The situation at Chrysler
is more challenging. It’s with deep reluctance but
also a clear-eyed recognition of the facts that we’ve determined,
after careful review, that Chrysler needs a partner
to remain viable. Recently, Chrysler reached
out and found what could be a potential partner — the
international car company Fiat, where the current management
team has executed an impressive turnaround. Fiat is prepared to transfer
its cutting-edge technology to Chrysler and, after working
closely with my team, has committed to build — building
new fuel-efficient cars and engines right here
in the United States. We’ve also secured an agreement
that will ensure that Chrysler repays taxpayers for any new
investments that are made before Fiat is allowed to take a
majority ownership stake in Chrysler. Still, such a deal would require
an additional investment of taxpayer dollars, and there are
a number of hurdles that must be overcome to make it work. I’m committed to doing all I can
to see if a deal can be struck in a way that upholds the
interests of American taxpayers. And that’s why we’ll give
Chrysler and Fiat 30 days to overcome these hurdles and reach
a final agreement — and we will provide Chrysler with adequate
capital to continue operating during that time. If they are able to come to a
sound agreement that protects American taxpayers, we will
consider lending up to $6 billion to help
their plan succeed. But if they and their
stakeholders are unable to reach such an agreement, and in the
absence of any other viable partnership, we will not be able
to justify investing additional tax dollars to keep
Chrysler in business. Now, while Chrysler and GM are
very different companies with very different paths forward,
both need a fresh start to implement the restructuring
plan they develop. That may mean using our
bankruptcy code as a mechanism to help them restructure
quickly and emerge stronger. Now, I want everybody
to be clear about this. I know that when people hear
the word “bankruptcy” it can be unsettling, so let me
explain exactly what I mean. What I’m talking about is using
our existing legal structure as a tool that, with the
backing of the U.S. government, can make it easier
for General Motors and Chrysler to quickly clear away old debts
that are weighing them down so that they can get back on their
feet and onto a path to success; a tool that we can use, even
as workers staying on the job building cars that
are being sold. What I’m not talking about is
a process where a company is simply broken up, sold
off, and no longer exists. We’re not talking about that. And what I’m not talking about
is a company that’s stuck in court for years,
unable to get out. So it’s my hope that the steps
I’m announcing today will have a salutary effect — will go
a long way forward towards answering many of the questions
that people have about the future of GM and Chrysler. But just in case there’s still
nagging doubts, let me say it as plainly as I can: If you buy a
car from Chrysler or General Motors, you will be able to get
your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than
it’s ever been, because starting today, the United States
government will stand behind your warranty. But we must also recognize that
the difficulties facing this industry are due in no small
part to the weaknesses in our economy as a whole. And therefore, to support demand
for auto sales during this period, I’m directing my
team to take several steps. First, we will ensure that
Recovery Act funds to purchase government cars get out as
quickly as possible and work through the budget process to
accelerate other federal fleet purchases, as well. Second, we’ll accelerate our
efforts through the Treasury Department’s Consumer and
Business Lending Initiative. And we are working intensively
with the auto finance companies to increase the flow of credit
to both consumers and dealers. Third, the IRS is launching a
campaign to alert consumers of a new tax benefit for auto
purchases made between February 16th and the end of this year —
if you buy a car anytime this year, you may be able to deduct
the cost of any sales and excise taxes. And this provision could save
families hundreds of dollars and lead to as many as
100,000 new car sales. Finally, several members of
Congress have proposed an even more ambitious incentive program
to increase car sales while modernizing our auto fleet. And such fleet modernization
programs, which provide a generous credit to consumers who
turn in old, less fuel-efficient cars and purchase cleaner cars,
have been successful in boosting auto sales in a number
of European countries. I want to work with Congress to
identify parts of the Recovery Act that could be trimmed to
fund such a program, and make it retroactive starting today. Now, let there be no doubt,
it will take an unprecedented effort on all our parts — from
the halls of Congress to the boardroom, from the union hall
to the factory floor — to see the auto industry through
these difficult times. And I want every American to
know that the path I’m laying out today is our best chance to
make sure that the cars of the future are built where they’ve
always been built — in Detroit and across the Midwest — to
make America’s auto industry in the 21st century what it was in
the 20th century — unsurpassed around the world. The path has been chosen
after consulting with other governments that are
facing this crisis. We’ve worked closely with the
government of Canada on GM and Chrysler, as both those
companies have extensive operations there. The Canadian government has
indicated its support for our approach and will be announcing
their specific commitments later today. While the steps I’m taking will
have an impact on all Americans, some of our fellow citizens will
be affected more than others. So I’d like to speak directly to
all those men and women who work in the auto industry or live
in countless communities that depend on it. Many of you have been going
through tough times for longer than you care to remember. And I won’t pretend that
the tough times are over. I can’t promise you there
isn’t more difficulty to come. But what I can promise you is
this: I will fight for you. You’re the reason
I’m here today. I got my start fighting for
working families in the shadows of a shuttered steel plant. I wake up every single day
asking myself what can I do to give you and working people all
across this country a fair shot at the American Dream. When a community is struck by
a natural disaster, the nation responds to put it
back on its feet. While the storm that has hit our
auto towns is not a tornado or a hurricane, the damage is clear,
and we must likewise respond. And that’s why today I’m
designating a new Director of Recovery for Auto Communities
and Workers to cut through the red tape and ensure that the
full resources of our federal government are leveraged to
assist the workers, communities, and regions that rely
on our auto industry. Edward Montgomery, a former
Deputy Labor Secretary, has agreed to serve in this role. And together with Labor
Secretary Solis and my Auto Task Force, Ed will help provide
support to auto workers and their families, and open up
opportunity to manufacturing communities in Michigan and Ohio
and Indiana and every other state that relies on
the auto industry. They will have a
strong advocate in Ed. He will direct a comprehensive
effort that will help lift up the hardest-hit areas by using
the unprecedented levels of funding available in our
Recovery Act and throughout our government to create new
manufacturing jobs and new businesses where they’re needed
most — in your communities. And he will also lead an effort
to identify new initiatives we may need to help support your
communities going forward. These efforts, as essential as
they are, are not going to make everything better overnight. There are jobs that
won’t be saved. There are plants
that may not reopen. There’s little I can say that
can subdue the anger or ease the frustration of all whose
livelihoods hang in the balance because of failures
that weren’t theirs. But there’s something I
want everybody to remember. Remember that it is precisely in
times like these — in moments of trial and moments of hardship
— that Americans rediscover the ingenuity and resilience that
makes us who we are; that made the auto industry what it once
was and what it will be again; that sent those first
mass-produced cars rolling off the assembly lines; that built
an arsenal of democracy that propelled America to victory in
the Second World War; and that powered our economic prowess
in the first American century. Because I know that if we can
tap into that same ingenuity and resilience right now, if we can
carry one another through this difficult time and do what must
be done, then we will look back and say that this was the moment
when the American auto industry shed its old ways, marched into
the future, remade itself, and once more became an engine of
opportunity and prosperity not only in Detroit, not only in our
Midwest, but all across America. I’m confident we can make that
happen, but we’ve got a lot of work to do. Thank you. Thank you, everybody.

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