Chrysler said it has deal; GM on ropes

WASHINGTON, March 30 (UPI) -- President Barack Obama said Monday the government would not allow the U.S. auto industry to "simply vanish."

"We cannot, we must not, and we will not let our auto industry simply vanish," Obama said in remarks explaining the government's tentative response to General Motors Corp. and Chrysler LLC's request for additional loans.

The U.S. government gave General Motors Corp. and Chrysler LLC 60 days and 30 days, respectively, to make drastic changes or face bankruptcy.

Soon after, Chrysler Chief Executive Officer Bob Nardelli announced: "Chrysler, Fiat and (Chrysler's owner) Cerberus have reached agreement on the framework of a global alliance, supported by the U.S. Treasury."

The partnership, if successful, would secure a $6 billion loan from the government, he said.

The Finanicial Times reported the government had said it would supply working capital to the companies, but not beyond the deadlines imposed -- a deadline Chrysler has, apparently, met.

Nardelli's statement did not include details on the deal, but previous reports have said Fiat would own 35 percent of Chrysler, which would build Fiats in the United States.

Obama said, "What we are asking is difficult," explaining "unions and workers who have already made painful concessions" would have to make "even more."

GM was directed to reach further benchmarks in reducing debt and to obtain concessions from union workers, as the government's automotive task force said the company did not prove it was financially viable.

Obama said Sunday it would "mean a set of sacrifices from all parties involved."

"Everybody is going to have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road," he said, adding, "they're not there yet."

GM was directed to continue seeking new leadership. Chairman and Chief Executive Officer Rick Wagoner resigned.

The Detroit News reported Fritz Henderson, who ran GM's European and Chinese operations and who had been overseeing the company's restructuring on a day-to-day basis, would take over as CEO. Kent Kresa, chairman emeritus of Northrop Grumman, will serve as chairman.

In a statement, Henderson said, "the administration has made it clear that it expects GM to expand and accelerate its restructuring efforts. I want the American people to know that we understand and accept this guidance. The road is tough, but the ultimate goal -- a leaner, stronger, viable GM -- is one we share."