Thinking the Unthinkable: "Death" for GM?

Detroit has started thinking the unthinkable: first, that General Motors really could go bankrupt; second, and maybe even more unthinkable, that the rest of the country really could stand by and let it happen.

Detroit-based Automotive News (where I used to work fulltime as a one-man bureau in New York City, and where I still work as a freelancer) on Nov. 14 posted an editorial called, “The Cost of GM’s Death,” which pointed out the dire consequences of allowing GM to fail.

The damage includes 100,000 GM jobs for starters, plus very widespread collateral damage throughout the North American manufacturing sector. The editorial (subscription required) calls on Congress to “do the right thing” and save GM.

But the eye-catching headline shows people are already contemplating the company’s quote-unquote “death.”

Meanwhile, advocates of saving GM, and by extension the rest of the domestic auto industry, continue to emphasize the tough-love nature of a proposed government bailout.

House Speaker Nancy Pelosi said in a Nov. 15 statement that a Democratic rescue plan to be reviewed this week would “restructure” the automobile companies, “to ensure their long-term economic viability.”

The plan would also compel the companies, “to meet standards for fuel efficiency that ensure the competitiveness of U.S. autos, including new fuel-efficiency standards.” The proposal would also have the Detroit 3, “deploy advanced vehicle technologies required to compete in the domestic and global market.”

That may sound good, but it’s increasingly doubtful that sort of language will sway Republicans in Congress or President George Bush.

Skeptics will waste no time pointing out the Detroit 3 already have to meet tougher fuel-efficiency standards. And they’re already getting $25 billion in low-interest government loans, tied to advanced vehicle technologies.

Of those three Pelosi bullet points, that leaves the automakers’ economic viability, which of course is the central question. The Detroit 3 better hope its supporters can come up with better arguments than Pelosi’s bullet points, in hearings in Congress this week regarding the would-be automotive bailout.