DETROIT, Nov 5 (Reuters) - The U.S. auto industry faces a critical 100-day period in which it needs to step up its efforts to secure U.S. government support in consultation with the incoming administration of President-elect Barack Obama, a senior General Motors Corp executive said on Wednesday.
GM North America President Troy Clarke, who was speaking to U.S. auto parts suppliers in Detroit, also said the struggling automaker was being driven to cut costs further in response to a "near collapse" in U.S. auto demand.
"The harsh new reality is that we are never finished," Clarke said in a speech to the Original Equipment Suppliers Association. "The era of executing a plan and being finished is over." The OESA meeting was closed to reporters. A text of Clarke's remarks was released by GM.
GM is expected to announce further cost-cutting when it announces third-quarter results on Friday. Earlier GM told its employees that it would be announcing "important changes" to its operations in a briefing for staff on Friday. Clarke's remarks were the first by a GM executive since the election of Obama on Tuesday and come as the embattled U.S. auto industry steps up its lobbying for a federal rescue plan that would go beyond the $25-billion in already approved low-cost loans.
The Ann Arbor, Michigan-based Center for Automotive Research, which is closely allied with the auto industry, released a study on Wednesday estimating that the failure of one or more of the three Detroit-based automakers would result in up to 2.5 million lost jobs.
Separately, former Michigan governor John Engler, who heads the National Association of Manufacturers, said on Wednesday that the auto industry might not be able to wait until Obama takes office in January before clinching new aid.
"The plunge in consumer confidence coupled with the difficulty in obtaining credit has caused the near collapse of the auto market in recent months," Clarke said. "This is an extraordinarily difficult market ... and there's plenty of talk these days about what the future holds for GM and the domestic industry." Clarke urged auto executives to work together to underscore the economic importance of the industry, citing claims that one out of 10 American jobs depends on the auto industry.
"When you see stories saying that the U.S. auto industry's issues are a Detroit problem or a problem for few Rust Belt states, that's just plain wrong," Clarke said. "Our industry's issues impact the nation and are of importance to the entire country." He added: "We must all be adaptable and ready to make needed changes quickly, particularly over the next 100 days."
The press for an industrywide rescue package represents a sharp change in tactics for GM, which has faced increasing scrutiny from investors and creditors about its ability to weather the deepening slump in auto sales.
GM approached the Bush administration about some $10 billion in aid to support an acquisition of Chrysler LLC but abandoned that bid in the face of opposition from the Treasury Department and concern about the tens of thousands of jobs that would have been cut in a merger of the two loss-making automakers, people familiar with those talks have said.
While GM remains interested in pursuing a deal for Chrysler, any deal will depend on the scope and terms of government aid that is made available, sources have said. GM burned through more than $1 billion per month in the second quarter and that cash burn rate is expected to have increased in the third quarter, according to analysts.
Absent actions such as new borrowing, GM is seen as in danger of running its cash levels below the $11 billion it has said it needs to run its far-flung business at some point in 2009,analysts have said. The Bush administration has said its focus is on expediting the payout of loans from the $25-billion loan package approved in September to help automakers and suppliers retool older factories to make more fuel efficient vehicles.
But Clarke said it was not likely that rules governing those loans would be ready before 2009 and suggested that could be too late. "I wish the timeline was within our 100-day window, but we have no assurances to date," he said