Bush meets with automakers, says he knows they have tough choices

Tuesday, November 14th 2006, 4:51 pm
By: News On 6

WASHINGTON (AP) President Bush told Detroit's auto industry leaders on Tuesday he knows they are making ``tough choices'' to shore up their companies in foreign competition and promised continuing dialogue as they seek help on trade and health care issues.

``The president clearly understands the importance of the business to the United States and the global economy,'' Ford Motor Co. Chief Executive Alan Mulally said later.

Bush said, ``We found a lot in common.''

Bush, Vice President Dick Cheney and other administration officials met in the Oval Office for just over an hour with top executives of Ford, General Motors and DaimlerChrysler AG's Chrysler Group.

The automakers later told reporters the meeting was productive, hopeful that it would lead to more discussions with the administration.

``That's a door that we've been waiting to open,'' said Tom LaSorda, president and chief executive officer of DaimlerChrysler AG's Chrysler Group.

On Capitol Hill, lawmakers representing large numbers of auto workers said they hoped Congress would address reducing the cost of the health care on manufacturers, foster the research and development of alternative fuel vehicles and promote fair trade practices.

``The industry's ability to compete in the global marketplace will determine its future. Rising health care and retirement costs as well as America's dependence on foreign sources of energy are negatively affecting industry strength,'' said Sen. George Voinovich, R-Ohio.

Sen. Debbie Stabenow, D-Mich., who criticized Bush during her re-election campaign for not meeting with the executives earlier, said she hoped the meeting would be ``an important first step toward a comprehensive American manufacturing strategy.''

The auto executives said they pressed Bush about their concerns on health care, energy and trade issues, while making clear that the troubled industry does not want a federal bailout. The meeting had been delayed since last spring and had been widely anticipated in the auto industry.

Bush met with the leaders just hours before he was traveling to Asia to meet in Vietnam with Asia-Pacific economic partners. He said he would tell those partners, ``Just treat us like we treat you. ... Our markets are open for your products and we expect your markets to be open for ours, including our automobiles.''

He said of the U.S. executives, ``These leaders are making difficult decisions, tough choices to make sure that their companies are competitive in a global economy. And I'm confident that they're making the right decisions.''

General Motors Corp. and Ford are both undergoing significant turnaround plans after posting large losses last year. GM has persuaded about 35,000 hourly workers to leave the company under early retirement or buyout plans while Ford has offered buyouts and early retirement packages to all 75,000 U.S. production workers in hopes of reducing its hourly work force by up to 30,000.

The companies have faced hardships while Japan-based Toyota Motor Corp. is enjoying soaring profits and outlining plans to unseat GM as the world's largest automaker.

GM chairman and CEO Rick Wagoner said the automakers made the case that Japan's weakened yen makes imported goods from Japan cheaper and enhances profits Japanese automakers make in the U.S. He said they discussed the automakers' ``strong conviction that the Japanese yen is systematically undervalued, which helps them to maintain significant trade balance surpluses in our industry.''

``I can't honestly say it appears the president 100 percent saw it that way, but we had a good dialogue,'' Wagoner said.

On health care, Wagoner said they discussed the role of information technology in improving quality and reducing costs. He said they would study high-cost, catastrophic cases that often drive up health care costs.

LaSorda said the automakers stressed that ``specific issues like health care'' aren't limited to the automobile industry.

All three automakers spend more on health care per vehicle than steel, which adds about $1,000 to the cost of a car built by the manufacturers. GM, the nation's largest private provider of health care, spent $5.3 billion on health care last year for 1.1 million people.

David Healy, an auto industry analyst for Burnham Securities, said he expected the meeting would have little impact on trade and health care, two areas where the Bush administration and the auto industry have disagreed.

``I think what you saw was a nice piece of political theater,'' Healy said.

But David Cole, chairman of the Ann Arbor, Mich.-based Center for Automotive Research, said the meeting could have long-term potential because the executives were able to ``convey an impression that what the auto industry is dealing with is much larger than the auto industry.''

One area on which Bush and the industry agree is on pursuing alternative energy sources. GM's Wagoner said that by 2012, up to half of their vehicles could run on ethanol blends of up to 85 percent, known as E85.

Wagoner said automakers would need assurances that the alternative fuel would be adequately available. Currently, only about 700 of the 170,000 gasoline stations nationally offer E85; most are in the Midwest. The three automakers said earlier this year they would double their production of flexible-fuel vehicles by 2010.

Bush cited a ``mutual desire to reduce our dependence on imported oil.''

The executives said they were not interested in a bailout similar to the 1979 measure approved by Congress that helped preserve Chrysler Corp. Asked of any interest in a bailout, Mulally said, ``Absolutely not. Because we really believe that the actions start with us, taking the actions that create a more competitive business going forward.''