US President Barack Obama has told the American automotive giants General Motors and Chrysler the companies have two months to come up with viability plans or face bankruptcy.
Kept afloat by government loans, Obama is threatening to withdraw financial support for the two companies saying the car makers and the industry in general ultimately needs to be self-sufficient and not “wards of the state”.
In remarks to the Whitehouse on Monday, Obama stated that failure of the industry is not an option, and though it is a pillar of the economy, poor decisions can no longer be excused.
“We cannot, we must not, and we will not let our auto industry simply vanish,” he said.
Chrysler could face bankruptcy if it does not seal a proposed merger with Italian car-maker Fiat within the next 30 days.
The Government has already forced the removal of GM’s chief executive Rick Wagoner – who is replaced by Fritz Henderson, the company’s current president – and is overhauling the company’s board.
The Treasury Department says it is backing the warranties of the two firms, a move aimed at shoring up confidence in consumers considering buying from the automakers.
Despite the turmoil of the US car industry, Australian automotive unions believe Holden can survive even if its parent company in the US goes bankrupt.
John Camillo from The Australian Manufacturing Workers Union says an end to General Motors might not mean an end to Holden.
“The simple reason is that the small vehicle, which will be coming down the production line at Elizabeth in around about September next year, is being supported by the new Green Fund from the Federal Government to the tune of $148 million, also the support from the State Government of $30 million,” he said.
“They can produce a small vehicle; they don’t rely on the United States parent company for any funding so therefore if things don’t go according to plan at GM in America and they go into bankruptcy, I think Holden’s at Elizabeth can stand on its own two feet.”