$4 Billion Loan Given to Chrysler

After GM received the auto loan, it's Chrysler's turn. Chrysler LLC got $4 billion loan on Friday. The loan was given by federal government in order to rescue the automaker from collapse. The $4 bn loan is provided on low-interest to Chrysler. Though Chrysler had urged for at least $7 billion loan, it has been given just $4 bn of the total $ 17.4 auto loan that was approved by the Bush government. Chairman and Chief Executive of Chrysler, Robert Nardelli said,"This initial loan will allow the company to continue an orderly restructuring, while pursuing our vision to build the fuel-efficient, high-quality cars and trucks people want to buy,"

According to sources, there were few issues in Chrysler's application process that delayed the loan procedure for Chrysler. The recession in auto industry has affected the automaker badly. With the news of auto loan of Chrysler, it is hoped that Chrysler will get a little better.

$6bn More Auto Aid For U.S Auto Industry

It seems it is time for General Motors to rejoice. The US government has made the announcement for expanding the auto bailout of the auto industry. The government will provide an additional auto aid of $6bn. This auto aid will definitely make a huge difference to GMAC. $5bn out of this auto aid would be given to GMAC that is the finance arm of General motors. The remaining $1bn would be given to GM which would use the money to buy shares in GMAC. While funding the auto aid of $6bn, the government has also warned the automakers to use the money judiciously. It has also asked the companies to put forth restructuring plans as soon as possible. If not so, the automakers might have to face bankruptcy by the month of March.

These steps are being taken to bailout the auto industry from global economic recession and automatically suffering from heavy losses. In the first week of December, the US government had pumped in $17.4bn for the survival of U.S auto companies. The government had clearly stated that its can't afford to let the Big Three automakers die. $13.4bn of that auto aid was for the biggest automaker of the world General Motors, that was on verge of bankruptcy prior to bail out.

Deal with UAW Chief Before Seeking More Auto Aid

It seems that asking for more auto aid from the treasury department will be a difficult task for the U.S automakers - G.M and Chrysler. Ron Gettelfinger, president of United Automobile Workers Union is adamant on not letting concessions take effect. He had refused to cut down labor wages or benefits. Bush administration had earlier demanded a number of concessions from unions before any money is given to the automakers. Responding to the Bush administration's demand, UAW chief said, "We are disappointed that he (Bush) has added unfair conditions singling out workers." he also expressed his discontent with the present administration and said that he would go to the Obama Administration that projects itself as more labor-friendly.

Canada Follows The Footsteps of U.S Government, Provides $4bn Loan

After US Government announced to provide $17.4bn to the save the automakers from bankruptcy, different nations have also got up from their sleep. Canadian government's has also stepped forward to provide emergency loan to the auto industry. The $4 billion auto loan that has been promised by the government will definitely give a boost to the automakers. Though the amount is mere 20% of that provided by the U.S government, it would prevent the automakers from collapsing.

Prime Minister of Canada Stephen Harper indicated that besides the $4 billion emergency loan, the government would also extend additional insurance to auto parts makers. The government is also on the lookout to come up with a program to finance consumer loans for new car purchases. Mr. Harper said, “I will not fool you, There is obviously money at risk here and there may well be more money at risk going forward. There are literally across the country hundreds of thousands, if not millions, of potentially affected families by the distress of this industry, We don’t want a package that simply helps the Detroit Three,”

While the governments are providing loans, the status of labor agreements between the car companies and the Canadian Auto Workers Union is still undecided. Earlier, the Canadian Union had refused to agree to a wage system by the United Auto Workers according to which new employees would work on a lower wage scale.

Unemployment Is The Future If Automakers Collapse

Oh, yes, definitely, unemployment or job loss will be the future if auto bailout is not taken seriously. Its not only the auto industry that will be affected but also other related industries like media and advertising. Now its upon the Bush administration to decide whether to provide government assistance to Detroit's Big Three automakers or not. Reports and surveys clearly state that if automakers like Chrysler and GM collapse, more than 600, 000 employees would loose their jobs.

The failure of the automakers will be catastrophic and affect 323,000 Canadians who would be jobless. And if the situation remains the same, the toll is expected to exceed upto 582,000 in next five years. Even if the automakers cut down their production by 50%, more than 157,000 jobs would be lost. By 2014, this job loss percentage is considered to rise to 296, 000. If some analysts are to be believed, this situation is difficult to handle and banks will not be able to fund loans to the automakers.

Chrysler to Close Down For A Month

Chrysler is finding it hard to handle the emerging crisis in the auto industry. On Wednesday, Chrysler announced that it will close down all the production work for a minimum of one month. The 30 factories under this automaker will remain closed till 19th of January, 2009. Though its a normal practice for the Detroit's automakers to close the production plants for two weeks at the end of every year, this news is being seen as the consequence of recession in global auto economy. With 46,000 workers employed in Chrysler's factories, this auto news has stirred ripples amongst the auto industry employees.

While Chrysler will close down for one month, Ford has also made the announcement to remain closed for three weeks. The extension of holidays truly depict the deploring condition of the auto industry. Seeking immediate help, Chrysler and other automakers had asked the Bush administration to intervene for auto bailout. An immediate loan for this month of $7 billion and $4 billion was demanded by Chrysler and G.M respectively.

Closing down this week, Chrysler production will remain shut till January 19, 2009. It is also possible that some of the factories might remain closed for a little longer than that.

Should Big Three Automakers' CEO Go?

As the Congress decision on auto bailout is expected this week, the auto industry might have to go through major changes. Will GM be the same post bailout? Has GM's CEO Rick Wagoner's rein led to deploring condition of the company today? Has he failed as in leading the world's largest auto company? Will he be replaced soon?

Barack Obama, President-elect of USA has told the Big Three auto companies to look for a change of top executives if they fail to make fruitful usage of the loans. He also warned the auto industry and asked it to act immediately for optimum usage of the loan. Obama spoke at a press conference, “ We have to have an auto industry that understands they can't keep on doing things the same way. If this management team that is currently in place doesn't understand the urgency of the situation, and is not willing to make the tough choices and adapt to these new circumstances, then they should go." His statement has caused ripples in the auto industry. With such harsh words from the President-elect, is the Detroit's Big Three looking for a change in the top management?

Is the auto industry ready for the change? Its seems that bailout of auto industry would definitely throw out some top executives of auto companies.