Page last updated at 15:57 GMT, Thursday, 18 December 2008

No 'disorderly' US car collapse

Chrysler Dodge Ram
Chrysler factories will not resume production before 19 January

President Bush will not allow a "disorderly collapse" of the US car industry, the White House has said.

Spokeswoman Dana Perino said the president was nearing a conclusion on how to provide the carmakers with financial assistance.

She said a disorderly collapse of the Big Three was "not an option", though she ruled out any bail-out on Thursday.

A $14bn (9.4bn) rescue failed in the Senate last week, raising fears of job cuts and a possible industry collapse.

In a statement to reporters, Ms Perino said: "We're nearing a conclusion, we're narrowing options, I just don't have anything for you today."

The Big Three US carmakers are waiting for the US government to find a way to help the struggling car industry.

Factory shutdowns

President Bush 'a difficult time for a free market person'

All car firms have announced production cuts as the economic slowdown has slashed car sales.

Chrysler is to halt production at all 30 of its factories for one month.

In announcing its plant closures, Chrysler also left open the possibility that the factories would be closed for more than a month.

Employees would not return to work any sooner than Monday 19 January, it said.

GM has suspended major work on its $370m engine factory in Michigan, where it plans to build a new small car engine which is key to its efforts to reinvent itself as a maker of fuel-efficient and all-electric cars.

The new plant is scheduled to build a turbocharged 1.4-litre engine for the Chevrolet Cruze small car and another version of the engine to provide backup power to its electric car, the Chevrolet Volt.

A GM Chevrolet Volt at the Los Angeles car show
GM is suspending work on an engine plant for its Volt electric car

Last week, GM said it was shutting down 30% of its North American production.

Also on Wednesday, Ford announced it was to extend the normal two-week Christmas shut-down at 10 of its North American plants for an extra week.

Meanwhile, GM has denied reports it had restarted merger negotiations with Chrysler - following the suspension of their talks earlier this year.

Earlier this year, both Chrysler and General Motors held talks on a possible merger.

Chrysler workers react to the plants closures

However, GM spokesman Tony Cervone denied that talks had re-opened.

"We have had no talks with them since we announced during our third quarter earnings call that the talks had been suspended," he said.

Chrysler, Ford and GM have repeatedly warned that millions of jobs could be lost if the government does not agree to a package of loans to support the industry.

While 46,000 Chrysler employees will be directly affected by the plants closure, many more Americans whose jobs depend on the big car makers will be watching with great concern, says the BBC's North America editor, Justin Webb.

The Bush administration has said it will act to prevent a disorderly collapse of the car industry, and loans to keep the big three companies in business could be arranged within days, our correspondent adds.

The White House warned on Tuesday that the carmakers would have to make "concessions" to secure the bail-out.

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