GM and Chrysler, which are under a severe strain of cash, have warned that they could be just weeks away from collapse if there is no external assistance. Ford, which said it currently has sufficient money on hand, also hopes to get a line of credit in case its finances worsen.
The three companies employ nearly 250,000 people directly, and 100,000 more jobs at parts suppliers could hang on their survival. The companies also claim that one in every 10 US jobs are related to the auto industry.
"A bankruptcy filing by a major automaker would be catastrophic, " commented Craig Cather, president and CEO of CSM Worldwide, an automotive forecasting and advisory service. "It won't be just a Detroit problem or a Michigan problem."
"Many suppliers can't afford another major hit to their production and cash flow. If they are forced to reorganize or possibly even liquidate, that would start a ripple effect that would undermine the health and stability of every automaker in North America," Cather told Xinhua.
And data showed that 58 percent of GM's North American suppliers also supply Asian automakers. The proportions among Chrysler and Ford suppliers are 59 percent and 65 percent, respectively.
"I think some senators have underestimated the backbone role of the auto industry in the US economy," said Kevin Yan, a senior engineer with GM in Detroit, when reached by Xinhua on the phone.
The auto industry helped the US to create numerous middle class members in history, and its collapse will be "disastrous", the 42-year-old added.
The White House, which co-worked with the Congressional Democrats to produce the draft bailout package and was actively engaged in Senate lobbying throughout Thursday, immediately expressed regret over the bill's failure.
"It's disappointing that Congress failed to act tonight," said White House spokesman Tony Fratto.
Earlier in the day, White House spokeswoman Dana Perino warned that the failure of this legislation would be "just something our economy can't withstand at the moment."
According to Kevin Yan, the GM engineer, many of his colleagues are hoping that Congress will work out a fresh bill that is acceptable to both the House and the Senate.
On the unyielding attitude of the union on the proposed wage cut, Yan said the union has its grounds because it had made many compromises in the past. "But I think eventually they will agree to cooperate. Because if there is no more auto industry, there will be no more UAW (United Auto Workers union)."
But the Thursday Senate failure has effectively killed any chance of Congressional action to save the automakers within this year, as the lawmakers are going home for the holiday recesses.
Analysts say that an expedient option now is for the Treasury Department to use part of its 700-billion-dollar financial rescue fund to help the auto sector. However, the Bush administration has insisted that the 700 billion is for the financial industry only and exclusively.
(Xinhua News Agency December 12, 2008)
