Automakers have 1 week to prove viability

A crucial deadline faced by Detroit automakers to present the federal government with plans showing they’re viable has taken a backseat to the more than $800 billion proposed federal stimulus packages, two MSU professors who follow the industry said.

The Feb. 17 deadline for General Motors Corp. and Chrysler LLC to submit long-term viability plans was set in December when Congress approved loan packages totaling $13.4 billion that would help keep the automakers from going under.

Labor and industrial relations professor Richard Block said Congress and the Obama administration will be able to focus on working with the automakers once the verdict on the stimulus is reached.

“The administration is so focused on stimulus, and once that is passed they can turn to the automakers,” he said. “The amount they’re asking for isn’t nearly as much as the banks and these would be loans, not gifts or bailouts.”

GM has received $9.4 billion and expects to get $4 billion more, while Chrysler has received $4 billion and is hoping to get another $3 billion.

The two automakers have taken steps since receiving the first round of funding to prove they’re worthy of going back for more. Chrysler last month agreed to partner with Italian automaker Fiat SpA, although the two companies still await government approval.

A partnership with Fiat would give Chrysler access to small car technology and markets outside the U.S., a key component to success in the current financial situation, said John Revitte, a labor and industrial relations professor.

“Without something like this, we couldn’t get away without going through more layoffs and factory closings,” Revitte said. “But this should start the process going the other way.”

Psychology sophomore Ryan Duffy, whose father works for Chrysler, said he is confident the Fiat partnership is a step in the right direction.

“This partnership means the jobs will be more secure for at least the next year,” Duffy said. “Definitely, the financial risk in the company isn’t as steep.”

GM, meanwhile, is looking to drastic product line cuts and layoffs to stabilize. The company recently announced plans to cut the salaried work force by double-digit percentages and eliminate four of its eight U.S. brands.

“GM had some guarantees and targets they want to reach, and in some aspects have already been clearly delivered,” Revitte said.

Ford Motor Co. is the only Big Three automaker that is not seeking loans from the government. Block said Ford isn’t any better-off than Chrysler and GM, but took measures last year to secure loans on their own.

“They arranged for $30 billion in lines of credit last year, somewhat quietly,” he said.

Despite the indications pointing toward federal approval for additional auto maker bailout funds, students who have connections to the industry are worried the companies won’t be able to make it out of the troubled times.

“GM has been a big part of the auto industry for a long time,” said Brian Lovett, a no-preference freshman whose parents work in the industry. “But I know people who work there are really worried they won’t pull out of this.”

The Associated Press contributed to this story.