|
|
|
|
|
|
| Voinovich: We must help automakers |
|
|
|
U.S. Sen. George V. Voinovich (R-Ohio), Co-chairman of the Senate Auto Caucus, sent the following letter recently to Majority Leader Harry Reid and Speaker Nancy Pelosi urging them to move quickly to provide financial assistance to the U.S. auto industry.
Dear Senator Reid and Speaker Pelosi:
I write to express strong support for congressional action before the end of the 110th Congress to provide financial assistance to the U.S. automotive industry in these very difficult economic times.
Assistance from the U.S. Government is critical to protecting the hundreds of thousands of jobs supported by the U.S. automotive industry, as well as the U.S. economy, which is suffering from a widespread liquidity crisis that extends well beyond the vital automotive sector. The time for Congress to act is now. Although I was disappointed that the Senate failed to take up legislation before the Thanksgiving recess, based on your letter to the leaders of the domestic auto industry, which indicated that your are committed to working to ensure its viability, I am hopeful that we still have time to complete legislation to provide such assistance.
I believe we must work swiftly to allow the domestic automotive industry to gain access to emergency assistance. The risk in doing nothing is too great. The Center for Automotive Research has estimated that if even one of the domestic automakers were to fail roughly 2.5 million U.S. jobs could be lost as a result of the cascading impact that such a failure would have on auto parts suppliers and related industries such as dealers. Moreover, such a significant loss of jobs would have a devastating impact on many of the local communities and states in which these companies operate.
I have already heard from a number of smaller Ohio companies that rely on sales to the automotive industry about this crisis. These companies are already feeling the squeeze resulting from the automotive industry’s challenges. Banks are further tightening already tight credit standards for these companies because they interpreted Congress’s failure to act before the Thanksgiving recess as a signal that Congress lacks the political will to provide solutions to such a significant problem.
This is just the sort of cascading effect that worries me and so many others who understand that it is not just the future of the U.S. automakers at stake, but also the thousands of companies and workers who support the U.S. automakers.
The domestic automotive industry represents almost four percent of U.S. gross domestic product and represents ten percent of U.S. industrial production by value. One out of every 10 U.S. jobs is impacted by the U.S. automotive industry and GM, Ford and Chrysler account for roughly 70 percent of U.S. auto production and these companies support roughly five million jobs across all 50 states.
The consequence to communities across this country would be devastating.
As you know, I, along with Senators Bond and Specter, worked with Senators Levin, Stabenow, and Brown to craft bipartisan compromise legislation that would permit the U.S. automotive industry access to funds previously appropriated for carrying out section 136 of the Energy Independence and Security Act of 2007 (P.L. 110-140). This bipartisan group of Senators took ideas from many different points of view, including from Chairman Frank’s Auto Bridge Loan legislation. It remains the only bipartisan proposal to help the auto industry. Needless to say, I was disappointed that Congress did not remain in Washington longer to consider this compromise legislation. Many Ohio families must have been wondering over Thanksgiving dinner whether, by the time Congress takes up legislation in December, they will still have jobs and still be able to pay their mortgages. The price of delay could be catastrophic for millions of workers, their families, Ohio’s economy, and the U.S. manufacturing sector. It is my sincerest hope that these families who are teetering on the brink will feel more secure on Christmas than they do on Thanksgiving.
I do welcome your decision to engage on this issue and I agree with your belief that the affected companies first must prove that taxpayer money will enable them to achieve financial viability before the U.S. Government agrees to release any funds. That is why the bipartisan legislation we crafted requires a prospective borrower to submit a financial viability plan to the Commerce Secretary, and further requires the Commerce Secretary to make an independent judgment that implementation of the plan, combined with a federal loan, would create a reasonable prospect that the applicant would be able to repay the loan and would create a commercial entity with positive value over the long run. While I applaud your insistence that the potential borrowers prove their case, however, I am concerned about the method you have constructed for doing so. Specifically, I question your decision that congressional leadership and committees of jurisdiction are best positioned to make determinations about a multinational corporation’s future financial prospects. I would appreciate you informing the companies, the public, and me who exactly will be making these decisions. Do you intend to rely on the expertise of executive branch officials or outside experts, or do you feel that Congress is qualified to draw such conclusions?
I also am concerned about how Congress will handle financial information that cannot be disclosed under federal law. Any financial viability plan necessarily must include information that cannot be disclosed to the public due to the fiduciary obligations that management has to shareholders. Will you impose adequate safeguards to ensure that such information is not inappropriately distributed and that it does not fall into the hands of those who might use it for their own profit? We must work together to ensure that whatever legislation we consider includes adequate protections so that no one can inappropriately profit off the misfortunes of others.
While many hours went into crafting our bipartisan legislation, all of the senators involved are open to ideas that would strengthen the principles contained in the legislation. In fact, I believe many of the principles discussed in your letter to the leaders of GM, Ford and Chrysler are included in our bipartisan legislation. In particular, our legislation contains strong taxpayer protections including: (1) the submission of a detailed strategic business plan that would be independently reviewed and analyzed by the Secretary of Commerce; (2) a mechanism to replenish the dollars back into the Department of Energy section 136 program so the companies can begin the important task of retooling to meet new fuel-efficiency standards; (3) prohibitions on the payment of dividends; (4) the provision of warrants; (5) limits on executive compensation; (6) a prohibition on golden parachute payments; and (7) and the creation of an oversight board. I believe our bipartisan legislation represents an excellent template for crafting a package that can pass both Houses of Congress and be signed into law by President Bush.
As you no doubt appreciate, the U.S. automotive industry and its labor partners are transforming this industry to produce the vehicles of the future in a competitive manner. In the midst of this restructuring, the industry, along with the rest of our nation’s businesses, has been hit with a credit crisis. The combination of rapid technological advancement, the overall state of the economy, and the ongoing credit crunch has put the U.S. automotive industry in an untenable position. |
| 12/3/2008 |
|
|
