GM, Ford, and Chrysler CEOs face tough questions in the Senate over wherefore the U.S. should hand them billions, and whether it will do some good

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Ford’s Alan Mulally, Chrysler chair and CEO Robert Nardelli, and General Motors chairman and CEO G. Richard Wagoner Jr. at the Senate Banking, Housing and Urban Affairs Committee Hearing on Capitol Hill, Nov. 18, 2008. Mark Wilson/Getty Images

By David Kiley

WASHINGTON—Chief executives of the three U.S. automakers tried to persuade lock opener members of the Senate that they deserve at least $25 billion in government loans to aid the industry outlive the current economic recession, and that the taxpayers can expect to be repaid in the future. From the response they got, it will be a tough exchange.

For two weeks, from the time of General Motors (GM) revealed that it lost $4.2 billion in the third quarter and might not have enough coin to extreme the year (BusinessWeek.com, 11/7/08), Republicans have voiced opposition to helping Detroit. Democrats, meanwhile, be in actual possession of been angling to help one or the other by using a portion of the $700 billion Wall Street bailout approved through Congress in October or a new $25 billion attached to any economic stimulus package.

All of that ramped up the anticipation for the Nov. 18 appearance of the Big Three CEOs—GM’sitting Rick Wagoner, Ford’s (F) Alan Mulally, and Chrysler’s Robert Nardelli—before the Senate Banking Committee. The auto executives will continue their lobbying campaign Nov. 19 at the House of Representatives.

But Capitol Hill staffers and key leaders said the chances of passing new legislation to alleviate the automakers during the lame-duck congressional session were scant. "I don’t think we can come by the votes," said Senator Chris Dodd (D-Conn.), chairman of the banking committee. Senator Bob Corker (R-Tenn.) told the CEOs, "Nothing will get done this week, and I conjecture you’ll be back in January."

Still, the company CEOs and United Auto Workers President Ron Gettelfinger used the trial to try to buffet down some extremely negative perceptions about how they got to this point. And they took pains to make cloudless that they consider the situation dire.

GM and Chrysler indicated that without loans from the government, they volition be below minimum cash requirements by extreme point of the first quarter of 2009. GM’s Wagoner said his company will have about $15 billion in cash at the end of the year. Nardelli said Chrysler has $6.1 billion a little while ago. "That is getting very close to our minimum needs of liquidity to operate," Nardelli told the Senate committee.

Ford said it can last into 2010, unless the market gets appreciably worse. But it worries that a GM or Chrysler labor for one’s pains will trigger the failure of hundreds of auto suppliers, freezing Ford’s production and thus driving all three companies and an array of suppliers into Chapter 11 reorganization. GM is asking for $10 billion to $12 billion in loans. Chrysler has asked for $7 billion, and Ford, $7 billion to $8 billion.

Still, all three companies recite their outlook superior to the proximate financial crisis is much brighter than generally understood. The auto execs say that dozens of point closures and deals with unions should cut costs enough to make them profitable when the economy and auto sales turn up again. Many analysts expect sales to rebound by mid-2010.

But it was clear from the statements and questions posed by Senators to Wagoner, Mulally, and Nardelli that many think Detroit’s problems are self-inflicted, and that the companies be without the innovation to climb loudly of their hole.

Dodd pulled no punches: "They have derided hermaphrodite vehicles as making ‘no housekeeping sense.’…They consider dismissed the threat of global warming…their boardrooms and executive suites have been famously void of phantom." Even so, Dodd related, "I support efforts to assist the habitual devotion to labor."

Republican Senators Richard Shelby of Alabama and Elizabeth Dole of North Carolina were amidst the vocal critics of the car companies. Both Alabama and North Carolina have benefited from investment from European and Asian automakers and their suppliers.

Senators closer to Detroit’s home turf, so as Sherrod Brown (D-Ohio) and Debbie Stabenow (D-Mich.), came to the automakers’ defense. Not helping the industry, said Brown, "is the surest way to bend our recession into a depression." He said the Congress should take some blame for not passing tougher fuel-economy legislation that would be favored with more intimate. see various meanings of good prepared the companies for $4-per-gallon gasoline that decimated sales of sport-utility vehicles that Detroit has relied on for profits: "We are on shaky ground while we convulse our finger at the industry."

Though all three CEOs were current, much of the converging-point was on GM Chairman and CEO Wagoner as the company is the largest of the three, and is closest to having to file for bankruptcy grant that government loans don’t come through. Last week, GM told members of Congress that its chances were "50-50" to have enough cash to operate beyond the New Year.