Why I think GM is worth bailing out.

General Motors has warned that without a government bailout, they'll run out of cash by the end of the year. The idea of government intervention has been controversial because, frankly, lot of people would like to see GM die. The conventional wisdom is that the company is poorly managed, builds poor-quality cars, and bet its future too heavily on gas-guzzling SUVs. There is (or at least was) an element of truth to all of these criticisms, but I think GM is worth saving. When I look at GM, I see a company that's on the verge of a major turn-around.

First, let me say that I'm not a natural fan of GM. My own cars tend to be strange little things made in places with hard-to-pronounce names, like Osnabrück or Trollhättan. I grew up in a loyal Ford family. (Those of you from Michigan will know what I mean by that.) But there's some pretty interesting stuff going on at GM.

First, let's talk about quality. While people still often associate the brand with the frankly awful cars they built in the 1970s and 1980s, their quality is much improved. In the J.D. Power 3-year dependability ratings, Cadillac beats both Toyota and Honda, and the award for most dependable mid-size car went to the 2005 Buick Century. The J.D. Power initial quality study awarded two GM cars, the Chevrolet Malibu and the Pontiac Grand Prix, top honors in their categories. The Cadillac CTS has been getting rave reviews from the automotive press; it was Motor Trend's Car of the Year for 2008.

Then there's all those SUVs. While GM deserves some criticism for pinning too many of its hopes on this segment, it wasn't quite as short-sighted as it might first appear. The leadtime for GM to develop a new car, from concept to production, is three years. Three years ago gasoline prices were only beginning their steep runup, and small cars weren't selling; cash-strapped GM could ill afford to do what Toyota was doing — selling hybrids at a loss — so it's not surprising they've had to play catch-up in that segment.

Most importantly, though, GM has been doing some amazing R&D work, which may have them poised to leapfrog ahead of the competition if they survive the next year. The Chevrolet Volt plug-in hybrid, for example — which I had initially dismissed as a PR exercise — looks to be close to production. Their experimental Equinox fuel-cell vehicle is, by all accounts, a polished and drivable vehicle that would be practical for day-to-day use if there were the refueling infrastructure to support it.

There's also the issue of what the failure of GM would do to our economy. In the short term, it would be a huge blow in terms of lost jobs, as well as lost pensions and health care benefits for retirees. In the long term, the loss of GM would probably be the beginning of the end for the U.S. auto industry, and that would be a major blow to our economic security. The recent financial collapse has shown the folly of basing an economy entirely on moving money around; countries are suffering in direct proportion to how much of their GDP comes from the financial industry. We need to remain a country that can make things. Cars are the most complicated mass-produced consumer products in existence, and a country that can build cars can build anything. The auto industry represents know-how we need to retain; the loss of it would inevitably lead to an engineering brain drain.

GM is an important part of the U.S. economy, and appears to be on the verge of turning itself around. They've made major changes already, but it takes a long time to turn around such a big company, and the one-two punch of high oil prices and an economic downturn will do them in before those changes can bear fruit unless the government gives them some short-term help. I think that's worth pursuing.