Big Three in D.C.: Good, Bad, Ugly

Automakers' pitch to Congress to include full range of industry virtues and ills

November 30, 2008, 1:44 PM

Nov. 30, 2008 -- The heads of the Big Three automakers are expected back on Capitol Hill this week to make their case for billions in additional government loans, and the plan they will likely share with Congress could be described as "the good, the bad, and the ugly."

"The plan is going to have a lot more texture and substance to it than it had [last time] when they just simply said 'give me money,'" said auto industry analyst and author Maryann Keller.

Watch Eric Horng's report on the Big Three tonight on "World News." Check your local listings for air time.

First, the good: Detroit's next-generation hybrids and plug-ins.

These vehicles are key to future profitability, and the Big Three are expected to share top-secret information about them in order to convince Washington that there's a light at the end of the tunnel.

"They're not going to get a nickel unless I know exactly what's going on, and I suspect every Democrat and every Republican feels just as strongly as I do," said Sen. Christopher Dodd, who chairs the Senate committee holding one of two congressional hearings with automakers this week.

Then, there's the bad: The Big Three's big debt.

Besides the usual cost-cutting and debt restructuring measures, Ford could propose the sale of Volvo in order to raise cash. Chrysler could put Jeep on the block. And General Motors is reportedly considering eliminating some of its brands, including Pontiac, Saab, Hummer and Saturn.

GM could also propose selling more assets, including its AC Delco parts operation.

"This is not rocket science," said Keller. "I'm sort of taken aback because these are obvious things that they should have done already."

Finally, the ugly: those bloated CEO salaries and union contracts.

In addition to skipping the private jet this time, GM head Rick Wagoner has reportedly agreed to further shave his salary. In 2005, the GM board cut Wagoner's annual base salary in half to $1.1 million before restoring his salary to its full $2.2 million last March.

Expect the union to make concessions as well on health and pension, and on its controversial jobs bank, which pays laid-off workers to do nothing.

All of these tough choices are meant to stave off Chapter 11 bankruptcy protection, which would help Detroit restructure but could make its cars unsellable.

"Warranties will all be at risk in that situation," said auto industry analyst Laurie Harbour-Felax. "Will the dealers be there to support the fixing of these vehicles in the future? All of that is at risk."

Detroit is finally putting the good, the bad, and the ugly on the table. And the stakes couldn't be higher.

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