Car woes get scarier

Ford CEO Alan Mulally tells the WSJ today that he's become more concerned about the viability of GM and Chrysler. GM's proposed restructuring plan, Mulally says, indicate the company is weaker than previously thought.

He added that a failure of GM or Chrysler would have far-reaching effects on the automotive industry and threaten to bring down Ford and a large network of parts suppliers and auto dealers. Mr. Mulally said that Ford could survive the economic downturn barring any unexpected events or further deterioration of the economy beyond current projections. He is requesting that the government provide a $9 billion line of credit as a "backstop" in case the company needs it.

Meanwhile, Chrysler Vice Chairman Jim Press tells AP a carmaker collapse could send the economy spiraling into a depression.

"We're on the brink with the U.S. auto manufacturing industry," Press told The Associated Press in an interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."

Meanwhile, the United Automobile Workers says it would consider changes to its labor contracts as a way to help the Detroit companies avoid a collapse. From the NYT:

Congressional leaders are reviewing the plans from the automakers ahead of hearings on Thursday and Friday. “I think it is plain that Chrysler and General Motors cannot survive without government help,” Senator Arlen Specter of Pennsylvania, the ranking Republican on the Judiciary Committee, said in an interview on Fox. “The need now is to take a detailed look at their plan to see if they have a realistic opportunity to survive. The public mood, which I saw when I traveled the state recently, is very much against bailouts.”

The problem, of course, is that lawmakers are no more expert on the financial tribulations of the automakers than they were about the Wall Street banks. Specter is in some serious denial if he really thinks anyone will be able to take a detailed look at the restructuring plans.