March 10, 2009 at 12:32 pm

Chrysler, GM play host to task force

Auto team tours plants, takes spin in cars as part of review of aid request.

WARREN -- Key presidential advisers who are overseeing the restructurings of General Motors Corp. and Chrysler LLC visited the cash-strapped companies Monday, test-driving vehicles, touring plants and gathering information that could help President Barack Obama decide whether to grant additional federal aid.

The visit by Obama's auto task force featured stops in Detroit and Warren. The trip followed a two-week cram session, when these industry outsiders met privately in Washington, D.C., with GM and Chrysler executives, union leaders and industry experts. The Detroit visit gave task force members a firsthand look at facilities, alternative technologies and, between stops, the shuttered shops, vacant homes and blight the auto industry's breakdown has brought on.

"It's extremely important that they come to Detroit and actually see where the front line of this economic crisis is," said Aaron Bragman, analyst with IHS Global Insight in Troy. "You can question people, but there is a value in seeing things firsthand, seeing the technology in a studio and touring an assembly line that is cranking out the product you are trying to rescue."

The visit comes almost three weeks before a March 31 deadline by which GM and Chrysler, which have received $17.4 billion in aid, must show progress toward viability plans submitted to the U.S. Treasury Department that prescribe sweeping cuts at each company. They also must show progress toward extracting money-saving concessions from the United Auto Workers and bondholders or the Treasury Department could recall the loans, forcing bankruptcy.

"There's no question we recognize the urgency of the situation," an administration official, who was not authorized to speak publicly, told The Detroit News.

The group, which flew commercial, included Steve Rattner and Ronald Bloom, two top advisers to the cabinet-level task force Obama appointed last month. The group toured GM's Technical Center in Warren, where members were able to test-drive technology going into the Chevrolet Volt. They also visited Chrysler's Warren Truck Assembly plant, where they saw the company's hybrid and electric-vehicle technology, and stopped at UAW headquarters in Detroit.

"It was obviously very important for members of the auto team to get out of Washington and get an opportunity to see these companies up close, and we had that chance today," the administration official said.

The official wouldn't comment on when the administration might decide if the companies' restructuring plans are sufficient or act on their requests for up to $21.6 billion in new aid.

The discussions also touched on the struggles among parts suppliers, which have asked for $18.5 billion in federal aid.

"We have been and will continue to work as hard and tirelessly as we can," the official said. "This is obviously a very substantial undertaking and we want to move with all deliberate haste."

Coming to Detroit was "absolutely mandatory," if task force members are to get an accurate perception of the complexity of the industry, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

"People who look from afar tend to trivialize it," he said, and they cannot analyze it. As a result, "most people in Washington haven't a clue."

Chrysler Chairman and CEO Robert Nardelli, Vice Chairman and President Tom LaSorda, Vice Chairman and President Jim Press, and Chief Financial Officer Ron Kolka attended the Warren Truck plant tour and the group reviewed Chrysler's current and future products, which include electric and hybrid vehicles.

"We're fully engaged with the Presidential Task Force on the Auto Industry, the U.S. Treasury and the White House during this process of ensuring the industry's viability going forward. We look forward to continuing our dialogue," Chrysler spokesman Stuart Schorr said in a statement.

GM's visit included a test drive of the Volt, an extended-range electric vehicle scheduled for production late next year. A source familiar with the discussions said GM executives, including CEO Rick Wagoner, President Fritz Henderson and Chief Financial Officer Ray Young, were to meet with the delegation.

"We believe today's visit provided a constructive glimpse of GM people, their passion for their work, and the technology solutions that are behind the pages of our viability plan," GM spokesman Greg Martin said in a statement.

GM's viability plan includes eliminating 47,000 jobs this year, shuttering 14 plants in the next three years and selling, shrinking or killing its Saturn, Saab, Hummer and Pontiac brands. GM also is forcing most of its U.S. salaried workers to accept temporary pay cuts.

GM has been negotiating with bondholders on a complicated debt exchange that would cut the automaker's unsecured debt by two-thirds, to $9.2 billion, and is negotiating separately to restructure payments into a UAW-run retiree health care trust.

Both GM and Chrysler are pushing for up to $21.6 billion in additional aid, and GM has warned it could run out of cash this month, despite already receiving $13.4 billion in loans since December.

Even with Monday's visit, the task force needs more time and the March 31 deadline will be extended, Cole said. That might require additional short-term lending from a $700 billion Wall Street rescue fund if GM and Chrysler can't make it past the end of the month.

But Cole thinks the government recognizes a GM bankruptcy would be worse for the country.

Chrysler could survive, but only with a partner.

And if the smaller automaker were to collapse, it wouldn't take the rest of the industry down with it.

"You could argue a Chrysler failure could make the rest of the industry healthier, faster," Cole said.

You can reach Robert Snell at (313) 222-2028 or rsnell@detnews.com">rsnell@detnews.com.