Detroit’s Big Three CEOs return to Washington for a second bite at the apple

Articles — By forcechange on December 2, 2008 12:38 pm

  

On Tuesday, the CEOs of GM, Ford, and Chrysler returned to Washington to continue their attempts to get a taxpayer bailout of their beleaguered companies.  Congress punted their requests for assistance last month after an embarrassing performance by the CEOs and a lack of Congressional consensus to help.

As Speaker Pelosi so eloquently stated last month, “Until they show us the plan, we cannot show them the money.”  Well, the CEOs are returning to Washington ostensibly with a “plan” to turn their companies around and are now hoping to be shown the money.

Ford says that it hopes to conduct a transformation without tapping into government loans but said a cash infusion may be necessary if the economy continues to decline or one of the other automakers files for bankruptcy.  Ford says it should have enough cash on hand to survive through 2009 though.

Ford’s plan calls for an investment of about $14 billion in technologies to improve fuel efficiency in its vehicles.  The company also hopes to launch an electric van-type vehicle (whatever that is) for commercial fleet use in 2010 and an electric sedan by 2011.

As for GM, it is expected to lighten its debt load and to eliminate at least one of its eight bloated car brands, most likely this will include Saab.

Chrysler, which has some very interesting conflicts to say the least, hopes to acquire fuel-efficiency technologies through an alliance with other automakers.  They too are in need of cash to heed off bankruptcy.

It is unclear yet whether the automakers will have the necessary votes in Congress to pass the bailout.  Unfortunately, the deciding factor may be how effective the Big Three are at presenting their cases, instead of the merits of their arguments.  As we’ve noted before, in our opinion, the only justification for a bailout would be to prevent a systemic failure of our economy or a deep recession.  It is unclear to us (since we’re unqualified to make the determination) whether that would be the consequence of inaction by Congress.