Chrysler VP: Gov’t loan program to automakers ‘not a blank check’
At both the Democratic National Convention and next week’s Republican gathering, Chrysler LLC officials will be lobbying legislators for billions of dollars in low-interest government loans, according to a post today on the automaker’s blog for the media.
John Bozzella, Chrysler’s vice president of external affairs and public policy, will be at both conventions to gather support for a loan program signed into law last year that helps automakers and suppliers develop vehicles and parts with higher fuel economy.
On the Chrysler media blog, which is only for journalists, Bozzella said he hopes the “technology partnership between the auto industry and government” will be funded before next year.
Congress authorized $25 billion as part of a 2007 energy bill, but the program’s funding has not been appropriated. The final rules on how automakers and suppliers could apply for the loans have not been written, either. Several media reports say Chrysler, General Motors Corp., Ford Motor Co. and their supporters will ask for double that amount, but none of the Detroit Three automakers confirmed the reported request.
In a question-and-answer interview on the Chrysler blog, Bozzella said developing advanced technology vehicles and parts in the United States will be valuable to the economy.
“A home grown solution for batteries and other advanced technologies will impact far more than automotive manufacturers,” he said in today’s post. “It could also provide a much needed financial shot in the arm to the millions of others who are involved in the development and marketing of the technologies.”
Critics have labeled these government loans as bailouts for the U.S. auto industry, which has been battered by rising fuel prices and a sharp turn in consumer demand towards cars and away from pickups and sport-utility vehicles. Bozzella said in the blog post that the program is not a bailout.
“What we’re talking about is this is a partnership for technology transformation,” he said. “By partnership, what the government is doing is providing loan support. This is not a blank check. This is not a Freddie Mac and Fannie Mae exercise.”
According to current rules outlined in the 2007 energy bill, the loans could cover only up to 30 percent of the cost to retool a plant to make the vehicles and parts that have greater fuel efficiency. The automakers and suppliers would have to cover the remaining 70 percent of costs through other financing, which likely would have interest rates higher than those of the government loans.
For more on what this loan program could mean for Chrysler’s Fenton operations, read this story from today’s Post-Dispatch: http://www.stltoday.com/stltoday/business/stories.nsf/manufacturingtechnology/story/F8D6A301E18BEF27862574B300099CC2?OpenDocument
