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Posted: December 17, 2008 5:00 a.m.

Ford makes case for bailout

Big Three failure would affect local jobs, says regional Ford manager

As part of a larger effort to drum up public support for emergency loans to Detroit’s automakers, Ford representatives in Covington made the case for keeping the Big Three going by tying them to local suppliers like Guardian Automotive.

At a Friday press conference at the Guardian Automotive plant on Industrial Boulevard, Ray Parrish, regional sales manager for Ford Motor Company said if any of the Big Three (General Motors, Ford and Chrysler) go under, it would have a ripple effect, causing the closure of many factories that supply parts to the automakers such as Guardian Automotive, which manufactures automotive trim for Ford trucks and other car companies.

In light of Friday’s news that 533,000 jobs were eliminated nationally in November, President George Bush and congressional Democrats agreed to negotiate a deal to provide about $15 billion in loans to the Detroit automakers.

While Ford has enough cash on hand to make it through 2009, the automaker is greatly concerned that a bankruptcy filing from G.M. or Chrysler would cause parts suppliers that provide parts for all three Detroit makers to shutter their factories, jeopardizing Ford’s ability to build its own cars and trucks.

Ford has asked for access to a line of credit of up to $9 billion while G.M. and Chrysler have said they need a combined $15 billion to help maintain their operations through early 2009.

"It is important to have it available to us so we can maintain the work that we’ve already done," Parrish said of the requested auto bailout or bridge loan as the proponents are calling it.

Sen. John Douglas (R-Social Circle) also spoke on behalf of the auto loans saying that jobs like the 322 jobs at the Covington Guardian Automotive plant were at stake.

"I’m convinced that we’re teetering on the edge between a very serious recession and actual depression right now," Douglas said, adding that Newton County’s labor market had already been badly hurt by the housing market slump. "We can’t afford to lose more jobs in Georgia."

While still repeating the long-standing Republican Party belief that "the market will take care of itself if we let it and get the government out of the business of trying to regulate it," Douglas also said he felt that the auto bailout was a special circumstance that demanded government intervention.

"Traditionally the market has taken care of itself and I think that the market will this time too, but the stakes are so high with the Big Three automakers and we’re talking about so many jobs and so much riding on this that we may have to take a different approach to this particular problem," Douglas said.

Two years ago Parrish said Ford began an aggressive campaign to restructure the company, which included shuttering a number of domestic plants, renegotiating labor contracts and developing a new line of fuel-efficient vehicles.

However the summer oil price spike that lead to gasoline prices of more than $4 a gallon, which greatly hurt the sale of SUVs and pickup trucks, and the autumn collapse of the financial markets has halted Ford’s progress. Auto sales have not been this low for the industry in 25 years, he said.

Parrish said he could not predict whether the $34 billion in auto loans would be enough to sustain the Big Three through the economic recession.

"It all depends on the length and the downturn," Parrish said.

He attributed the financially weak position of the domestic automakers compared to the financial position of their foreign competitors as the result of lower labor costs for Toyota, Honda and Nissan but also to the growing price of oil, an area that advantages more fuel-efficient foreign cars such as the Toyota Corolla and the Honda Accord over the SUVs and pickups that are the specialty of domestic automakers.

"Earlier this year when fuel pries spiked, those segments where the imports are strong grew and the business migrated to imports just all by itself due to fuel prices," Parrish said.

While the low gasoline prices of recent months have resulted in some increase in the sale of SUVs and pickups, Parrish said that Ford is not taking the current low prices for granted and predicts that prices will ultimately rise in the future.

"We believe that this is a short-term situation and we have made the long-term decision to build more fuel-efficient and small vehicles," Parrish said.

Parrish rattled off several examples of Ford’s efforts to improve the fuel efficiency of its fleet naming the 2009 Ford Escape, which was named best-in-class for fuel economy over Honda and Toyota models, the F-150, which also received a best-in-class rating and the 2010 Fusion that will be launched in several months and beats Toyota Camry’s hybrid by six miles per gallon.

"We have made substantial investment not only in fuel-efficient vehicles, but also in electric vehicles," he said.

The Guardian Automotive plant was opened in Covington in 1969. The plant ahs gross sales of more than $50 million per year and its annual sales’ with Ford exceed $19 million.

Ford has 128 suppliers across the state with $288 million in annual production purchases. There are 127 Ford dealerships in Georgia employing 5,280 people.

 

Loan program in the works

Bailout legislation for the Big Three automakers is expected to come to a vote this week, after House and Senate aides spent the weekend drafting the legislation.

A breakthrough on the long-stalled rescue came Friday when House Speaker Nancy Pelosi, D-Calif, yielded to President Bush on a key point: allowing the aid to be drawn from a fund set aside for the production of environmentally friendlier cars.

Pelosi said the House would consider legislation in the upcoming week to provide "short-term and limited assistance" to the U.S. auto industry while it undergoes "major restructuring."

Pelosi said Congress would insist that any legislation include "rigorous and ongoing oversight" to guarantee that taxpayer funds are protected and that resources "are directed to ensure the long-term viability and competitiveness" of the auto industry.

The speaker, a close ally of environmentalists, had steadfastly refused to tap an existing $25 billion auto loan program — meant to finance the production of more fuel-efficient vehicles — for emergency aid to the carmakers.

But Bush refused to use money from the $700 billion Wall Street bailout to help the Big Three. With time running out on the current Congress and the automakers' situation increasingly dire, the window for an agreement was quickly closing.

Pelosi said the billions of dollars set aside to modernize plants and develop green cars would be repaid "within a matter of weeks." Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama shortly after he takes office Jan. 20.

The Associated Press contributed to the writing of this report

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