Observers believed that if the two automakers could not make changes that satisfy the government, then they will have to go bankrupt. If that happens, it would put an estimated 1 million people out of work and further deepen the contraction in real economic output of the country.

Bankruptcy "could work, but it might not work," Wagoner said recently. He reiterated that GM is trying to restructure outside of bankruptcy protection.

GM said in a statement on Monday that during the next 60 days, the company will address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders.

It did not ruled out the possibility of bankruptcy. The statement says "Our strong preference is to complete this restructuring out of court. However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."

Auto experts here said the US automakers have parity on supply costs, materials, and energy with Japanese Honda and Toyota. So why can't they compete? It is clearly the cost of labor. However, it is not an easy job for GM authorities to solve the problem of labor cost.

GM is asking the United Auto Workers (UAW) to cut US$20.4 billion in future retiree health-care obligations to US$10.2 billion in exchange for equity as part of an agreement to keep US$13.4 billion in US loans and as it requests as much as 16 billion more.

GM also want to convince its bondholders to agree to swap debt valued at US$27.5 billion for US$9.2 billion and equity in the automaker. But GM's bondholders are concerned about GM's stalled debt restructuring plan. They said that the automaker's proposed restructuring would leave it too heavily indebted facing an uncertain economy.

Observers here believe that automakers' further restructuring may also result in more labor problems and resistance from their bondholders.

The reality is just as what John Dingell, Democratic House Representative from Michigan State described -- the road ahead is going to be very difficult and painful, although as President Obama said there is potential for both companies to emerge from restructuring as stronger, more competitive companies.

(Xinhua News Agency March 31, 2009)