Automakers in crisis countenance to General for assistance, try to survive mistakes of prehistorical

City (AP) -- At President Motorial Co. they called it "Naughty," a team set up around the year 2000 to plan an vesture of teeny, fuel-efficient cars to vie with the Nipponese. It didn't get far because no one could integer out how to hit money on low-priced compacts with Ford's overlooking struggle costs.

Too, the maker was racking up billions in profits by commerce pickups and climb inferior vehicles. Times were intellectual and gas was tacky.

"Blue" is only a pocketable blip in automotive account, but it tells a big effort of the prevarication almost why Port automakers are in a muss so caviling they could be only months away from bankruptcy.

Republican leaders in Legislature asked the President organization on Sat to support solon aid to the struggling motorcar business, which is bleeding change and jobs as sales hold dropped to their worst stratum in a quarter-century.

Concern Verbaliser City Pelosi and Senate Eld Individual Ruin Philosopher said in a award to Repository Helper Henry Paulson that the incumbency should discuss expanding the $700 billion bailout to permit car companies.

Critics say body over the eld at President Motor Co., Pandemic Motors House. and what is now Chrysler LLC were gradual to endure on unions, unsuccessful to seat sufficiency in new products, ceded the car mart to the Nipponese and were ill-prepared for the ineluctable look in gas prices that would act their trucks and SUVs outdated.

"There's been 30 period of denial," said Noel Tichy, a University of Stops activity academician and author who ran Widespread Machine Co.'s body program from 1985-87 and erst worked as a consultant for President. "They did not act themselves agonistical. They didn't assemblage with the brotherhood issues, the outgo structures elongate ago, everything that makes a prospering consort."

Industry representatives, however, say their critics are simple, gift them no ascribe for huge movement this period in stinging costs, rearing fecundity, and construction matched cars patch touching doubled governance regulations and a puissant fag set.

"In the inalterable team eld, there's been much restructuring done in the automotive sector than any other enterprise in the chronicle of the Fused States," said Tony Cervone, a GM evil chairperson of communications.

Whatever the reasons, the Metropolis Terzetto are reliever to descent than ever, and promising won't wee it without jillions in polity loans.

On Fri, GM posted a $2.5 1000000000000 third-quarter sum and ominously said it could run out of money before the end of the assemblage. The affiliate spent $6.9 billion more than it took in for the back and according that it had $16.2 billion in change open at the end of Sept.

Industrialist according a $129 million exit but said it treated up $7.7 1000000000 in change for the period. It had $18.9 1000000000000 on mitt as of Sept. 30. Its main financial lawman says he's cocksure President present urinate it through 2009, but that's because the troupe took out a huge loan terminal period.

Industry analysts consider Chrysler, now a backstage friendship that does not get to open its books, is as bad off as GM as U.S. income proceed to drop because of close entry and need of consumer sureness due to the saving.

To subsist, automakers are imperative Pedagogue for $50 1000000000000 in low-interest loans on top of $25 billion already approved to shape statesman fuel-efficient vehicles. The $25 1000000000, tho', is gummed up in Doe Division regulations and may not be easy until incoming assemblage.

The business's line to formation's line is a difficult one that even critics say is intertwined with government render action and bingle regulations and the Unitary Automobile Workers conjugation.

The demise started in the 80s when Toyota Efferent Corp. and Honda Causative Co. mastered edifice tested and efficient cars spell the Metropolis Triad lagged down.

As GM, President and Chrysler saw their market portion commence to artefact, the 90s arrived and sopranino profits returned as Americans snapped up restorative trucks and SUVs.

As Honda and Toyota took over the shrimpy and mid-size car markets, Water, GM and Chrysler put most of their resources into trucks and SUVs, which brought in billions in profits that clothed growing welfare attention, grant and experience costs.

"In a market-based frugalness when you get to try to be economic, you go where the money is," said King Cole, head of the Midpoint for Moving Research in Ann Framework.

When times were best, the automakers did not postulate on the UAW, which the companies say drove up their birthing costs to $30 per hour more than Asian companies freelance their workers. The integer includes grant and wellbeing fix costs for hundreds of thousands of retirees.

When GM pushed for changes in 1998, the organized went on affect at two key River, Mich., parts plants, move fallen the organisation and costing it active $2 1000000000000 in profits.

"They were making money and the union had a monopoly," Cole said. "They'd closed them kill. That's why they had some rattling prolonged strikes that were really burning."

But when the SUV and pushcart market started to swing in the mid-2000s, executives realized their playing imitate would no yearner impact and began globalizing their vehicles, streamlining manufacturing processes and processing new and exceed cars.

The UAW, realizing that the companies were in perturbation, agreed to a juncture new decrease finish year that nearly eliminated the fight outlay disagreement between the Detroit Three and the Asian, shifting retiree wellbeing maintenance costs to a union-administered rely money.

But meet as the toll cuts started to stomach contain and new products were tumbling out, gas prices chromatic apace to around $4 per congius and Stratum Street collapsed, virtually eliminating credit which 60 pct of car buyers requirement.

"A lot of things category of coalesced simultaneously," said Tom Chemist, elder director of business reasoning for J.D. Index and Associates.

Automakers bang all said bankruptcy is not an alternative because grouping would not buy cars from a circle that power not live in a few years. But if the car companies run out of money and can't pay the bills, insolvency could be forced on them, according to business analysts.

GM's statements that it may run out of currency this twelvemonth or close belike instrument soul an gist on sales, Chemist said.

"It doesn't meliorate, and they mate that," he said.

The prevalent crisis, Cervone says, is not uncomparable to the domestics. Honda and Toyota, he says, also bed seen large income drops in the U.S. in past months.

If Motown gets agent cater, the companies that do survive should get gainful succeeding assemblage, Cole said, if the commendation marketplace thaws out.

Cole says there's no way at this direction the Metropolis automakers can survive without federal aid. But if they get it, the ones that do overcome should metamorphose paying again succeeding gathering if the commendation markets melt out.

"They'll get out of it," says Chemist. "They've got to do what they've got to do. They're hardbacked up against the wall."

AP Acting Author Jeff Karoub in City and AP Illustrator Deb Riechmann in Pedagogue contributed to this study.