Bush said to meet with car chiefs
Industry officials say that the President will discuss pension and energy issues with heads of U.S. auto makers.
NEW YORK (CNNMoney.com) - Top executives from the nation's Big Three automakers will meet with President Bush next month to discuss energy and pension issues, according to officials with the automakers familiar with the plans.
Ford spokesman Josh Gottheimer told Reuters that plans for the meeting were the result of "an ongoing, constructive dialogue with the White House," adding: "We are meeting in the near future."
A source with one of the automakers, speaking on the condition his name not be used, told CNNMoney.com that a May 18 target date for the meeting has been set, though not yet confirmed, for the president to meet at the White House with General Motors (Research) Chairman and CEO Rick Wagoner, Ford Motor Co. (Research) Chairman Bill Ford and Tom LaSorda, the chief of the Chrysler Group, the North American unit of German automaker DaimlerChrysler (Research).
A spokesmen for the White House did not confirm the meeting plans, though.
All three companies have had their top executives meet with Bush individually. LaSorda, shared the stage earlier this week with Bush at a renewable fuels conference as the president laid out his energy plans. This would be the first meeting of these three executives together with the president.
The meeting comes at a time when the Bush administration is giving more attention to energy issues due to rising consumer anger over gasoline prices. Also it comes at a time many auto industry observers question whether GM and Ford will be able to avoid bankruptcy without some kind of federal assistance.
In January, Bush in an interview dismissed such help, saying that the key to solving problems at U.S. automakers was for them to make "a product that's relevant." When asked about a possible government bailout of GM or Ford at that time, the president responded, "I would hope I wouldn't be asked to make that decision."
The company source said the three topics to be discussed are energy, specifically the increased use of ethanol by vehicles, retiree health and pension costs and currency exchange rate issues regarding the yen.
"The industry is not looking for any kind of bailout-slash-government help," said the source. "But these are the issues that put a lot of head winds out there for us vis-a-vis the (Asian) manufacturers."
The traditional big three face severe competitive problems with Asian automakers due to their retiree health care costs, which add an estimated $1,500 to the cost of a vehicle, costs Japanese automakers do not face. General Motors and Ford Motors are seeing losses in their core North American auto operations due greatly to those costs.
But getting help on that issue will be difficult, the company source acknowledged. The retiree issue of more promise is pension fund reform, which is now before Congress. While the automakers' pension plans are fully funded under current regulations, there is concern that new regulations could change their pension obligations going forward.
"We need a good pension bill. Right now it's somewhat stalled," said the source.
All of the Big Three also depend much more than their Japanese competitors on sales of less fuel efficient light trucks such as SUV's and large pickups, some of which have seen their sales hurt due to rising fuel prices.
President Bush laid out his plans to address rising gasoline prices Tuesday, including voicing support for greater use of ethanol, which is made from corn or plants rather than oil.
Ford and GM have sold millions of cars that can run on a fuel mixture that is 85 percent ethanol or traditional gasoline, and Wednesday Chrysler announced plans to up production of such vehicles. But the ethanol-rich fuel, known as E85, is not widely available at U.S. gas stations and it is not price competitive, given that it provides less mileage than traditional gasoline.
"If I had to guess, I think the E85 will be the majority focus of this meeting," said the auto industry source Thursday. "The problem is finding cost-effective production and getting enough supply into the market place."
While much has been made about the dollar's relatively fixed exchange rate with China's yuan, the Big Three are more concerned about what they see as intervention by the Japanese to keep the yen relatively low compared to the dollar. That gives Japanese manufacturers a price advantage when selling to the U.S. consumers. Wagoner and LaSorda have both spoken out on the issue in recent months.
"Currency manipulation is adding billions to the bottom line of the Asian manufacturers," said the auto industry source discussing the upcoming White House meeting.
For a look at Bush's latest energy proposals, click here.