Todd Spangler of the Detroit Free Press reported on Thursday that President Obama is prepared “to offer serious help” to Detroit’s auto industry, but only if its executives, workers and suppliers are willing to make the difficult changes needed and prove they will be able to sustain themselves in the future.
Reuters reporter JoAnne Allen added that President Obama told automakers to develop a realistic plan if they wish to receive additional aid. “My goal, consistently has been to offer serious help once a plan is in place that ensures long-term viability and that we’re not just kicking the can down the road,” said President Obama.
In addition to creating a viable plan, President Obama made it clear that all stakeholders, presumably including bondholders, dealers and the United Auto Workers, will need to make concessions, so as to have “skin in the game,” as a condition to continued government support. Those concessions will play an important role in determining what the auto market is going to look like over the next several years. Tim Higgins reports today that “a person familiar with the committee representing bondholders said Thursday that bankruptcy remains a ‘very real risk’ for” GM.
It will be interesting to see who got the message. First indications should come next week as automakers are required to submit their plans to the Treasury Department on Tuesday.