LANSING, MICH. - The governors of six states have asked the treasury secretary and Federal Reserve chairman to take "immediate action" to help the troubled domestic automakers.
General Motors Corp. and Chrysler are in talks to combine in order to survive, but financing is one of the biggest obstacles.
GM is lobbying the Bush administration and some members of Congress for $10 billion to $15 billion in aid to help keep the company going and possibly to make the Chrysler deal work. GM could use some of the money to shut down redundant Chrysler operations.
In their letter, the governors of Michigan, Delaware, Kentucky, New York, Ohio and South Dakota reminded Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke that the domestic automakers are "particularly challenged" in the down economy and warn that, "as a result, the financial well-being of other major industries and millions of American citizens are at risk."
"The auto industry; their network of suppliers, vendors, dealers and other businesses; and the communities that rely on those businesses face unimaginable challenges -- challenges we urge you to help address," the governors wrote. The letter, sent Wednesday, was released Thursday by Michigan Democratic Gov. Jennifer Granholm's office.
White House spokeswoman Dana Perino said Thursday that the secretaries of the Treasury, Commerce and Energy departments are talking with the automakers.
"We understand that they've been facing tough times for a while. They've made business decisions that unfortunately have put them in this position. But we also recognize how big the companies are, how many families rely on these companies, and what it would mean for the overall economy," she said.
Some industry analysts have said a GM acquisition of Chrysler could cost as many as 35,000 jobs nationally and as many as 25,000 in Michigan.
A separate analysis released Thursday by Grant Thornton LLP predicted a GM-Chrysler combination would likely lead to the closure of seven of Chrysler's 14 manufacturing plants, plus the loss of 12,000 factory jobs and 12,000 administrative ones, some of which already have been announced. An additional 50,000 auto supplier jobs could be lost, it added.
A much bigger calamity
Still, it sees GM's acquisition of Chrysler as the least painful option, since "if one or the other company were to fail, we would face a much bigger calamity -- the collapse of the North American supply base and the potential endangerment of all three Detroit automakers and businesses that depend on them."
On Thursday Sen. Carl Levin, D-Mich., said job losses from a merger would hurt the area but would be far worse if Chrysler is auctioned off in pieces or allowed to go bankrupt.