Federal loans buy more time for Big Three and Kokomo

Local officials breathed a collective sigh of relief when President George W. Bush announced Friday he was providing Chrysler and General Motors with $13.4 billion in loans.

The fate of Chrysler and GM was unknown after the U.S. Senate failed to approve an emergency loan package for America's automakers. Had either company filed for bankruptcy protection, it could have meant the loss of thousands of jobs in Kokomo.

"I feel a little better today than I did yesterday," Kokomo Mayor Greg Goodnight said after the announcement of the loans. "I hope it buys us some time to move toward diversifying the local economy."

Goodnight said the loan package provides immediate relief as well as the opportunity for the automakers to make changes.

"The president has done his part," he said. "He handed it to the companies and unions to chart their own destiny."

Goodnight said he has heard of no plans to extend or cut short the already announced cut back in production by Chrysler through Jan. 19.

"I'm glad the president went with the loan and not the bankruptcy," he said. "A bankruptcy would have resulted in a lot of casualties in small businesses in the community."

Goodnight said if the U.S. companies had been allowed to fail, the cost would have been much higher than helping the companies succeed.

Jeb Conrad, president and CEO of the Greater Kokomo Economic Development Authority (GKEDA), said the loans allow the auto companies to take a snapshot of where they are and puts them into a position to retool.

Additionally, it allows the companies to begin the restructuring package and come back with a plan, Conrad said.

"It keeps the jobs going," he said. "From an economic development standpoint, it gives us a window of time to see what Kokomo can sell to the market to become a business destination.

"It was real important to have more time. It allows us to see what we need to be selling Kokomo."

With every challenge there comes opportunities, he said.

"The loans keep the economy flowing," Conrad said.

GKEDA is a new alliance trying to determine how the community can do things differently without cutting things Kokomo is proficient at or the local history, he said.

"For the short term, it gets us through the holidays," Conrad said.

Peru Mayor Jim Walker said loaning the money to the companies was better than just a bailout by the federal government. He added the president had to do something.

"Because its a loan the companies know they have to restructure," he said. "This was a big plus to get the economy going and stimulate the economy so the loans can be paid back."

Walker said 3,000 Miami County residents work in Howard County.

Rep. Joe Donnelly said he was grateful for President Bush's action, and the loan makes the most sense to make the companies viable.

Donnelly said he feels the targets established for the U.S. companies to implement work rules and wage schedules competitive with foreign companies "can be achieved."

"It is important to Kokomo, our state and nation that GM, Chrysler and Ford succeed," he said. "Sacrifices will have to be made on the part of the companies, executives, bondholders, suppliers and employees. I believe there will be a good-faith effort because they're all in the same situation."

Donnelly said President Bush knew that bankruptcy would not work. He said President-elect Barack Obama is committed to the companies' success.

Donnelly said he hopes this puts the companies on the right road for decades to come.

"This was the first step and brings us to March," he said. "The Big Three understand that business as usual doesn't work anymore."