Embattled car chiefs in appeal to Bush

Embattled car chiefs in appeal to Bush
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2006
Published: November 13 2006 20:28 | Last updated: November 14 2006 01:58



The chief executives of the three US carmakers will tell President George W. Bush on Wednesday that US energy, healthcare and trade policies are blunting their competitive edge against fast-growing Asian rivals.

Mr Bush is to meet Rick Wagoner of General Motors, Alan Mulally of Ford and Tom LaSorda of Chrysler, a division of Germany’s DaimlerChrysler. The get-together, initially set for last spring, will be the president’s first with all three executives.

The companies reported third-quarter losses in their North American operations. Toyota has overtaken Chrysler in US light vehicle sales and is expected to dislodge Ford from second place within the next year.

A GM official said that, while the Detroit companies had taken tough measures to revive North American operations, “there are some critical issues that affect the competitive landscape”. The meeting “is a chance to raise the issues to the forefront, to speak directly to the president and to describe how these issues affect our bottom line”.

Mr Bush is likely to adopt a more conciliatory tone than earlier in the year when he said the Detroit companies needed to build “relevant” cars.

Tony Snow, the White House spokesman, said last week the president wanted to reaffirm his support for the US car industry’s “growth and success”.

The executives’ agenda will include a plea for wider distribution of ethanol as a substitute for petrol.

The three Detroit carmakers have already sold more than a million vehicles that can run on E85, a fuel comprising 85 per cent ethanol. They have pledged to double the number by 2010.

However, their efforts to promote E85 are hampered by the fact that it is available at fewer than 1,000 of the US’s 165,000 filling stations.

The vehicle manufacturers have launched vigorous campaigns to increase public awareness of ethanol.

Al Hubbard, director of the National Economic Council, told the Financial Times last week that Mr Bush wanted to ensure there were the right “incentives to invest” in alternative fuels.

While foreign carmakers provide healthcare benefits for their US workers, they are not burdened, as the Detroit companies are, by heavy obligations to a large group of pensioners. GM, Ford and Chrysler have urged a bigger public sector role in healthcare funding.

Toyota’s report last week of record first half profits has fuelled the Detroit carmakers’ accusations that Japanese and South Korean exporters are benefiting from currency manipulation by their governments. The three companies’ chief economists met senior US Treasury officials recently to underline their concern.