We'll work for $1 a year, say car bosses

MILLIONAIRE car bosses offered to cut their salaries to a $1 (68p) a year as they tried to persuade the US government to loan their firms more than £23 billion to stave off bankruptcy.

The chief executives of the "Big Three" carmakers, Chrysler, Ford and General Motors (GM), stood cap in hand before the Senate banking committee (SBC) yesterday to plead for $34 billion in federal aid.

GM wants $4 billion and Chrysler $7 billion by year's end. GM also wants another $8 billion in early 2009 and a $6 billion line of credit if its cash position deteriorates further. Ford says it has sufficient funds but would like a $9 billion credit facility.

The trio of bosses attracted heavy criticism last month when they travelled to Washington on their private jets to plead for a government bailout. This time, they made the 520-mile trip to the capital in hybrid cars in a show of contrition. GM chief executive officer Rick Wagoner even ate lunch at a sandwich shop. But yesterday, along with Chrysler chief Bob Nardelli and Ford chief executive officer Alan Mulally, he had to eat humble pie at Capitol Hill as the Democrat-controlled Congress made it clear radical changes will be needed in return for a bailout.

"We're sorry to be asking for this support," he said. "I think it's very important for the US to have a home team in this global auto industry."

Mr Wagoner said without an immediate cash injection of $4 billion, the company would go bankrupt by Christmas, and conditions are little better with the other two giants.

However, neither Mr Wagoner nor his fellow executives are likely to starve on their planned new salaries. Last year, he was paid $14.4 million while Mr Mulally at Ford got $21 million. Mr Nardelli already works for $1 a year.

The Big Three have warned that bankruptcy could cost millions of jobs and insisted their recoveries, which involve a shift to more fuel-efficient vehicles, had been well under way before the global financial crisis. Supporters argue the US auto industry is too important to fail: more than three million Americans are employed directly or indirectly by the Big Three.

SBC chairman Chris Dodd said: "We need to act not for the purpose of protecting a handful of companies; if that were the extent of the issue I would let them fail. (But) it plays Russian roulette with the entire economy of the United States."

The executives told Congress their plan included massive restructuring, cutting brands and showrooms, and investment in more fuel-efficient cars.

And the companies said they would agree to federal oversight to ensure the money was well spent. "These and other tough but necessary actions will position our company for long-term success," Mr Wagoner told the hearing, which is due to continue today.

No resolution is expected until next week at the earliest, when full Congress reconvenes.

A bailout is unpopular with Americans, with a CNN poll showing 61 per cent opposed. Senate majority leader Harry Reid warned many members felt the same: "I just don't think we have the votes to do it now."

Industry observers say decades of industrial strife and conservative design and manufacture are responsible for the problems rather than the recession, which foreign carmakers have weathered better. GM's November sales were down 41 per cent and Ford's fell a third.

The key sticking point to the bailout is union-negotiated "legacy" arrangements whereby workers can retire after 30 years of service with a pension and private health benefits.

For every car worker, more than three retirees are supported by these "legacy" payments, putting $1,500 on the cost of every car sold and limiting the Big Three's ability to compete.

"Unless they can deal with the benefits the retirees are getting, they are going to be bankrupt," said one observer.