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Hearings for Big Three continue
(Left to Right) Ford Motor Company CEO Alan Mulally, Chrysler CEO Robert Nardelli and GM CEO G. Richard Wagoner, Jr. testify during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill -- November 18, 2008
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Scott Jagow: Today is day two of the carmaker bailout hearings on Capitol Hill. Alisa Roth tells us what we've heard so far, and what we can expect.
Alisa Roth: All three CEOs will show up in the House of Representatives today. And they'll probably give spiels much like those they gave the Senate Banking Committee yesterday: They'll work for better fuel efficiency and lower production costs, and they'd be happy to be supervised by a federal oversight board.
Robert Schulz follows the auto industry for Standard and Poor's. He expects the government will eventually come through with some money for Detroit.
Robert Schulz: At the same time that could probably only just buy them time, because the big challenge being the economy and their turnaround plans, you know, will continue on in '09 and 2010.
No matter what they get from the government, the companies will still be in trouble if people don't start buying their cars again.
Meanwhile, the amount Detroit wants keeps getting bigger -- two weeks ago, they said
$25 billion would cover it. Now, it's more like $34 [billion].
Chris Dodd, the senator from Connecticut, said yesterday the government has to do something. But not everybody's convinced: Richard Shelby, from Alabama, says he will not support a bailout.
In New York, I'm Alisa Roth for Marketplace.
If the global financial crisis wasn't happening & this was simply the Big Three in trouble, I doubt much of an audience would gather on Capital Hill. We all know the requested $34B is far from enough, & no one is predicting encouraging sales for 2009. Rest assured by late '09 or early 2010 Wagoner & Co. will be off to Washington with hat in hand once again.
Bailouts of failing organizations is akin to investing in old ideas, and the old idea in this scenario is the U.S. auto industry. A bailout will do nothing but hinder the next wave of change from happening. Simply put, the handout will be interpreted as a reaffirmation that their old ways and skills are still viable, instead of motivating them to seek innovations that will help them in the coming decade.
When you’ve been successful with an idea for a century, its hard to recognize it’s time to call it a day. Odds are good it will be someone else calling it a day for you.
