Ford, GM, Chrysler to Take Another Run at Bailout

The House Financial Services Committee set a Dec. 5 hearing to review revised turnaround plans from Ford, GM and Chrysler.

Rep. Barney Frank, D-Mass., called the hearing, “Review of Industry Plans to Stabilize the Financial Condition of the American Automobile Industry.”

That at least narrows the scope of the hearing. Last week, the Detroit Big Three ran into severe criticism on a much broader front, ranging from long-term failure to develop alternatives to gas-guzzlers, to the symbolism that they showed up in corporate jets, asking for money.

In presenting to Frank, the automakers theoretically should have the advantage of preaching to the choir, because Frank wrote the House version of a proposed automotive bailout bill.

The bill would take $25 billion from the Treasury Department’s Troubled Asset Relief Program for “bridge loans” for the automakers, an approach that lame-duck Treasury Secretary Henry Paulson opposes.

In turn, the automakers on Dec. 5 will need to present both a short-term operating plan, and a long-term restructuring plan, according to the proposed bailout bill Frank wrote. House Speaker Nancy Pelosi earlier assigned Frank to write the proposal. The original deadline was Dec. 2.

Frank’s hearing schedule gives the car companies a few extra days to sweat the details.  But on short notice, it’s hard to imagine that the automakers will propose anything really new.

Both Ford and GM are pursuing a long-term strategy that Ford calls, “One Ford,” and which GM calls, “Go Global.” Both terms are shorthand for eliminating waste and duplication of effort.  Ford and GM both have a long tradition of more or less autonomous operations around the world, each developing fairly similar products independently. That means the companies are missing out on economies of scale.

Chrysler, which is almost entirely dependent on the U.S. market, is pursuing a strategy of limited partnerships with other automakers, including a deal with Nissan where Chrysler will produce a pickup for Nissan, and Nissan will build a small car for Chrysler.

It would be a real surprise if Ford, GM and Chrysler deviate from those general outlines, but this time around they will hopefully do a better job as advocates for change, rather than appearing as if they’re defending the status quo.