GM Chief Executive Rick Wagoner recently told Automotive News that in return for federal aid he was willing to accept limits on executive pay, offer the government preferred stock in the company and speed up the introduction of fuel-efficient vehicles.
Detroit has made a slew of mistakes over the years, analysts say, among them falling behind Japanese automakers in hybrid technology and not developing flexible assembly plants that could, when gas prices rose, quickly shift from producing gas-guzzling sport utility vehicles to smaller, fuel-efficient cars.
But now is not the time to punish the Big Three for past sins, said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Mich.
"I'm upset with the thought of the taxpayers having to pony up to save an industry that has made mistake after mistake," he said. "But then I look at the dire consequences of the collapse of an entire industry and I need to swallow hard and say, 'Let's get it done.' "
Energy legislation passed last year already mandates the most significant changes in vehicle fuel-economy standards in decades -- a 40% increase by 2020, for a fleet-wide average of 35 miles per gallon. Rep. Fred Upton (R-Mich.) said U.S. automakers were starting to produce more fuel-efficient cars, so adding such conditions to aid was unnecessary.
"They built the cars that consumers wanted," he said of the demand in the 1990s and early 2000s for SUVs and pickups. "They have to have this access to capital to continue to build the cars that consumers want, which are not the cars of yesteryear."
But aside from lawmakers from the Midwest, which is home to many auto factories and suppliers, a significant faction on Capitol Hill is skeptical Detroit can change on its own.
"I think there have to be some conditions attached to it," Sen. Charles E. Schumer (D-N.Y.) said of automaker assistance. "One is so that we have an assurance they're not going to come back and ask for more money six months from now, that it will actually improve their conditions in the long run."
Former Michigan Gov. James Blanchard helped negotiate the 1980 federal bailout of Chrysler while serving in Congress. He said he expected lawmakers to include conditions similar to those that were part of that $1.2-billion deal. The federal government eventually made a profit of about $311 million from the stock options it received from Chrysler.
"The worst you could say is we bought them 29 years of life," Blanchard said of the Chrysler bailout. "The best you could say was it was a wildly successful piece of legislation that saved thousands and thousands of jobs."
But some lawmakers are wary of extending government aid to automakers at all.
"I am at a loss to see how bailing out the auto industry at all relates to the crisis in our capital and credit markets," Rep. Eric Cantor (R-Va.) said. "I don't know if it's the best idea to have Congress try to choose what kind of cars Detroit should make."
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