Bailout amounts to unfair advantage

"Some say we're looking for a bailout. Baloney. We at GM do not want a bailout. What we want is the chance to compete on a level playing field."- Rick Wagoner, GM CEO. Wow. You have to admire Rick Wagoner and his powerful proclamation. Unless of course you consider that he wrote this in an editorial to The Wall Street Journal on Dec. 6, 2005. Fast forward to 2008 and there is Rick Wagoner, hat in hand with the other Detroit automakers sporting big toothy smiles, attempting to coax tens of billions of dollars from the democratic leaders in Congress to bailout their incompetence. Rick Wagoner's encore editorial published this week is a dramatic departure in intent from three years ago. Underlying all of the excuses he lays out are three inabilities: the inability to produce cars that customers value over competitive offerings; the inability to effectively negotiate with the UAW; and the inability to adapt to the changing context of the industry.

Bottom line, Detroit's Big Three are no longer able to compete. Not only does a government bailout of the Big Three pour good money after bad, it penalizes the other automakers that have developed good strategy and ferociously executed that strategy year after year.

If during his college basketball playing days at Duke, an outmatched opponent played ten players versus Duke's five, Mr. Wagoner and his teammates would have cried foul. But this is exactly the scenario that GM, Ford and Chrysler are scheming to employ. The fact that GM has dismissed the notion of filing for bankruptcy protection as beneath them is a fitting representation of the arrogance that has put them in this position in the first place. The market has spoken. Is anyone listening?

Rich Horwath

Strategic Thinking Institute

Barrington Hills