The Detroit Bailout: Automaker CEOs Talking Out of Both Sides of Their Mouths

I was perusing the testimonies that the CEOs of Ford, GM and Chrysler gave before the Senate Banking Committee yesterday, and I can't help but be slightly amused. The nature of this proposed bailout has put the heads of the Big Three in an uncomfortable situation.

On one hand, they must show that money given to them is an actual investment, and not just a drop down a bottomless well.  That means they need to argue that they have reformed themselves into mean moneymaking machines with one foot ahead of the competition, ready to face the changing trends of the industry.

On the other hand, they need to show that they need the money, and that the federal government needs to give it to them right now.  That means they need to argue that they are in complete dire straits, on the verge of collapse, and ready to take everyone down with them.

 So rhetorically, this strategy works out to statements like this from Ford CEO Alan Mulally:

The bottom line of all of our efforts is that we are now competitive with the best in the world – and it has shown in our financial results. In each quarter of 2007, we delivered year-over-year improvements, excluding special items, and on the same basis posted a $100 million profit globally in the first quarter of this year. We appeared to be well on our way to returning to sustainable profitability next year.

But then, just pages later, he has to portray these gains as cardboard-thin:

Should one of the other domestic companies declare bankruptcy, the effect on Ford’s production operations would be felt within days -- if not hours. Suppliers could not get financing and would stop shipments to customers. Without parts for the just-in-time inventory system, Ford plants would not be able to produce vehicles.

I realize that there is some logic behind this line of argument.  In fact, GM CEO Rick Wagoner lays it out in his testimony:

What exposes us to failure now is not our product lineup, or our business plan, or our long-term strategy. What exposes us to failure now is the global financial crisis, which has severely restricted credit availability, and reduced industry sales to the lowest per-capita level since World War II.

Sure, it's true. Everyone knows that broader economic problems are putting huge strains on the automotive industry. The problem with this argument, however, is that many  industries--many of which are just as important to economic growth and employment, if not more--are facing the same strains.

Entrepreneurs in this country should consider: if the Detroit bailout passes, should every businessperson get a bailout? Is that a mentality they want?