The Big Three auto manufacturer in Detroit — or, rather, their execs — have no clue how much anger and resentment there is roiling around out there toward them. People have been railing at them for years to produce gas-efficient vehicles, to produce quality vehicles, to show that they can be real contenders. Instead, they continued to crank out shoddily-manufactured gas guzzlers, fight attempts at fuel efficiency standards, and pretended like nothing would ever change, even as they steadily lost market share to overseas competitors.
And now, when times are tough and credit is lean and the Big Three are hemorrhaging money in an alarming fashion, their CEOs come before Congress begging for hand-outs …
… flying on their private jets to do so. (emphasis mine)
The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough. All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.
[…] While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits. […] Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.
[…] Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
Mulally made his case Tuesday before the committee saying he’s cut expenses, laid-off workers and closed 17 plants. “We have also reduced our work force by 51,000 employees in the past three years,” Mulally said. Yet Ford continues to operate a fleet of eight private jets for its executives. Just Tuesday, one jet was taking Ford brass to Los Angeles, another on a trip to Nebraska, and of course Mulally needed to fly to Washington to testify. He did not address questions following the hearing.
GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash. Private jet travel is perhaps the greatest perk of all for CEOs, who say it allows them to travel more efficiently and safely, even in a recession.
And even when prodded with a clue stick as to how this might seem to be, ah, at the very least pretty crappy PR, they remained either clueless or arrogant (or both).
Auto industry CEOs appeared on Capitol Hill today to ask for a $25 billion bailout. At least one lawmaker believes that the CEOs should change their luxury travel habits before getting access to taxpayer funds. Rep. Brad Sherman (D-CA) asked the top execs if they would be willing sell their corporate jets and travel home on commercial flights.
Sherman asked the CEOs, “I’m going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial.”
“Let the record show, no hands went up,” noted Sherman
They have no clue. No clue. If this were 18th Century France, they would be the aristos, blithely going along without any concern that their exalted position might be in danger, let alone their lives. With their massive salaries (even beyond their plummeting stock options, it’s not like these guys are hurting) and golden parachutes, the most they are worried about the loss of prestige and how presiding over the collapse of a GM or Ford might look on their resumes, or in conversation at the country club.
The problem is, as much as I’d love to send them to the guillotine see them all out of jobs as their empires collapse around them, the folks who would actually bear the brunt of it wouldn’t be these CEOs, but their workers, and their workers’ families, and the communities (and states) in which they operate, and the suppliers, and the folks at dealerships, etc. They are the ones who would suffer for the incompetence and arrogance of these individuals — and it is only because of them, and the overall impact that it would have on the national economy, that I’d be willing to see a Auto Bail-out …
… but unlike the Bank Bail-outs, I’d very much like to see some serious conditions / restrictions applied. Yeah, corporate jets are a drop in the bucket compared to $25bn, but it’s a huge symbolic issue (“non-negotiable” be damned). Ditto for major severance pay for execs — if that requires a contract change, so be it. And if those CEOs decide to quit rather than be so mistreated, I’ll betcha there are others ready to step in, even in difficult times.
I’m not big into the government micromanaging businesses — but if those businesses need to come hat-in-hand to Congress for money, I think that’s plenty of justification.
Bring on the guillotines!
If America is pre-revolutionary France, Paris Hilton is Marie Antoinette. Only her line would be “let them eat coke”.
It was only a split-second after hitting Save that I realized the headline should have been “Let them *fly* cake!”
Dear Mr Mulally
I note that despite your company going down hill your pay is $28 million – approx £19,000,000. Please donate to me 3 days pay- about £160,000. This would calm my rather worried family finances, and I could do my bit to stimulate the economy for your UK network.
In the past I have been on strike for pay rises to protest at pay offers below the rate of inflation (so I would be making a real term loss), so I know the pain the loss of a day’s pay can be, especially in the run up to Christmas, so if it would help I would accept 1/2 a day’s pay a month for 6 months, starting January.
You will pleased to know there would be an upside to this, as I would be able to by a brand new Ford Mondeo- my current one is a 2 series from ’97, and I’m not sure how much longer it will last. Depite what some people say about Ford, I would be happy to buy a Mondeo- though if you could see your wy to ‘greening’ them up I would be happier.
I still don’t see how a bailout is going to stop layoffs and cutbacks that are coming. Furthermore I still haven’t seen an explanation of how this bailout will be different than the other times we have dragged them along. Why keep pushing back the inevitable? If we invest the $100 billion something it will take to bailout all three, what’s to keep them from going down again?
With their corp jets we have seen the problem is behavior related more than cash flow. They can’t make a car the vast majority want to buy that gets decent gas mileage at a time when that is important to people. That is an issue not related to cash.
If we, the taxpayers, are going to bail out the automakers, I’d say let’s nationalise the Big Three. 😉
At the very least, a plan, regulation and SOMETHING that’s going to promise something fuel efficient RFN.
On the other hand, who has money to buy their private jets? And who would want to invite the PR disaster of doing so?
I’m sure there are some Saudi princelings or Indians or even just some folks who are still profiting at the margins who would have the cash and be willing to spend it, even anonymously.
Heck, if it’s so critical to these guys to have a private jet, let them pony up for it themselves!
The bailout might be the largest mistake the US has made in decades. The fact is, it will only delay the collapse of these companies (especially if the government gets or TAKES any control in these companies). What government program hasn’t ended up over budget and under funded? (ie. Social Security, Medicaid, Medicare: all failing programs). We, as a Country, need to look toward the future, and that future is allowing some of these large companies to fail. If a few of these companies fail, other large corporations will take note. Things will change! But, we have to act, by sitting back and allowing things to play out. After all this is a free-market society (at least I think it still is). And don’t fret, the auto manufacturers won’t go under (they really have more than one option), they will just be forced to restructure. I know this sounds harsh, and I know that some people will lose their jobs, but we need to change the mentality of CEO’s and business owners and we need to do it now. It really is in the best interest of our future. We can’t allow them to keep feeding off America.
If it were just the CEOs and business owners, I’d fully agree. But those aren’t the folks that will be seriously hurt by this. I mean, even if Rick Wagoner were to be tosse out on his butt with no severance, he’s been making $28MM/yr — is he really going to suffer? But if Joe Lineworker loses his job — or if his union contract and/or pension are wiped out of existence by bankruptcy court — then there will be some actual suffering.
I am not thrilled by losing any of the Big Three in the US, but I am not particularly against it, either. Manufacturing in this country makes only limited sense, and these companies have, in fact, been run into the ground by bad management decisions. I don’t care about the execs as much as the workers, or even the middle management, not to mention the dealers and suppliers and so forth that are tied into that network, as well as the towns that rely on that revenue. Abrupt change may be the “best” in an abstract sense, but not in an individual sense.
I don’t have an easy answer. But a Darwinian “let the fittest survive, and devil take the hindmost” is only good as long as you don’t have to look at the faces of the “extinct,” or can afford to look on it from the perspective of 50-100 years hence.
I thought what would happen if I typed in “Ford let them eat cake” no problem finding this website and many others. Despite all the talk about better efficent vehicles. Don’t forget the homes burned, lives lost, and vehicles burned connected with the Ford fires. “Consumeraffairs.com” I’ll bet if you ask anyone of those people if they’ve ever been compensated they would say no. And these are people who survive with less than thirty grand a year. I can say this because my truck caught on fire after the cruise control recall was fixed. We can. WE CAN DO BETTER WITHOUT FORD.
We can certainly do without Ford the Design Shop, or Ford the Company Administration. I’d rather not have all of Ford the Workers or Ford the Suppliers or Ford the Dealerships and Mechanics tossed out on their ear in the same breath.