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US carmakers put all out efforts to survive global downturn

It is reported that US steel companies learned that surviving a financial downturn involves making painful, hard choices. Carmakers may be forced to do the same. Among its victims, the once mighty Bethlehem Steel Corporation, which rolled its last beam on the city's South Side in 1995, went bankrupt in 2001 and had its remaining parts sold off in 2003. Now, steel's revival may provide a road map for a government team trying to save Chrysler LLC and General Motors Corporation. Like steel before the shakeout, Detroit automakers are beset by foreign competition, high labor costs, a huge number of retirees and union work rules that place them at a competitive disadvantage to the Japanese.

The United Auto Workers, GM, Chrysler and Ford Motor Co have been taking steps to restructure, but they haven't done enough to erase the Japanese advantage. Labor costs alone made GM cars around USD 1,400 more expensive to build than Toyotas in 2006. Chrysler and GM, which have received a combined USD 17.4 billion in government loans, were told to cut further by the Bush administration, which set goals of reducing total labor costs to equal those of Japanese automakers with US factories. Although US Steel avoided bankruptcy, other steelmakers did not, and judges decided their fates. The Steelworkers' union was left to negotiate with investors who saw opportunity in the companies' remains, and both sides said they worked out a fair deal.

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