US president George Bush has announced a government bail-out equalling 12.5 billion euros in loans to the country’s ailing car makers. About 9.6 billion euros will be made available in December and January. The package is mainly for General Motors and Chrysler as both companies need help immediately. The Ford Motor Company is not in such urgent need of assistance.
Bush said: “These loans will provide help in two ways. First, they will give automakers three months to put in place plans to restructure into viable companies, which we believe they are capable of doing. “Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success.”
The loans are coming from a 500 billion euro fund, originally set up to help struggling financial institutions. Bush is trying to prevent a collapse of the car industry, which would deal a further blow to the US economy. The companies have to have their restructuring plans in place by the end of March, or the loans will be called in.