Big Three Go to Washington

The auto leaders will finally air their concerns to President Bush.
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After getting blown off six months ago, Detroit's Big Three auto executives will finally meet with President Bush on Tuesday to discuss the issues that are weighing on their business.

Last May, the President backed out of an unconfirmed engagement with the leaders of

General Motors

(GM) - Get Report

,

Ford

(F) - Get Report

and

Chrysler

(DCX)

in order to give a last-minute speech on border security in Texas. Since then, busy schedules and a heated midterm election in Michigan prevented him from cashing in his rain check with the automakers.

Bush has made it clear that using government to fix the problems in Detroit isn't on his agenda, but now that Democrats have plundered his political capital in a stunning electoral victory, observers are wondering if GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Tom LaSorda will find him more accommodating at their meet-and-greet at the White House.

"They'll be talking about issues that are important to us and other U.S. manufacturers," says Shawn Morgan, a Chrysler spokeswoman. She declined to provide details on LaSorda's talking points, but she did say they would address energy, health care and trade issues.

The U.S. automakers have posted massive losses in recent years while foreign-based competitors with lower cost structures and smaller, more fuel-efficient products have stolen market share. In 2006, shares of the so-called Big Three have rebounded as they've taken steps to restructure, but the long-term threats to their financial stability posed by legacy costs remain.

"The industry as a whole is doing well, and it's becoming less and less dependent on these manufacturers," says Kevin Tynan, an analyst with Argus Research. "They're hurting because of their legacy costs. Health care costs are still going up, but short of a national health care policy or something like that, I don't see what Washington can do for them."

In addition to health care issues, auto executives are expected to raise the issue of alleged currency manipulation on the part of foreign governments like Japan that enhance the profitability of companies like

Toyota

(TM) - Get Report

.

Tynan says the meeting will give auto executives little more than a chance to meet the president and air their concerns to him.

"As far as investors are concerned, I don't think anybody's waiting around expecting anything important to come out of this meeting," he says.

The White House didn't return a phone call seeking comments for this story. White House spokesman Tony Snow said Friday that Bush plans to use the meeting to "reaffirm his support for the American auto industry."

Analysts say that not just President Bush, but Washington as a whole, has become less amenable to offering bailouts to the auto manufacturers.

"President Bush is of the view that these guys need to compete," says Joseph Amaturo, analyst with Calyon Securities. "Also, there are people in Washington that think whenever GM and Ford lose, the economy gains on the flip-side because

foreign-based manufacturers

Nissan

and

Honda

(HMC) - Get Report

will increase production in North America."

Those sentiments mark a sea change in ideology from recent decades when lawmakers adopted the view that what is good for Detroit is good for America.

"The days of retaliatory tariffs, quotas and tax bailouts are gone," says George Magliano, director of automotive industry with Global Insight. "They'll talk about their legacy costs, the need for a national health care system, tax relief and fuel economies hybrids, but the most that will come out of it is probably some sort of symbolic agreement on fuel alternatives or something like that."