It’s been all over the news that the CEOs of the 3 automakers traveled to Washington again, hubcap in one hand while looking for a handout with the other.
Minyanville had this story:
If you’re planning to beg Uncle Sam for $25 billion, it might be smart to brush up on your poor-boy act first.
The CEOs of General Motors (GM), Ford (F) and Chrysler overlooked this basic fact when they flew to Washington in private jets to testify before Congress.
“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” GM’s CEO Rick Wagoner told the Senate Banking Committee.
Tom Schatz, president of a watchdog group called Citizens Against Government Waste, huffed: “This is a slap in the face of taxpayers. To come to Washington on a corporate jet and asking for a handout is outrageous.”
You’d think that insight would rate a “Well, duh” – but apparently not from the auto industry’s top dogs.
Wagoner’s trip to Washington in a G4 private jet cost his struggling company an estimated $20,000 roundtrip. A commercial flight booked online would have cost about $576 for coach and $1,674 first class round trip.
Sure, sure – a CEO’s time is more valuable than gold, but there are cell phones and e-mail to keep in touch with the galley slaves back in Detroit – and electronic gizmos work on commercial flights and even in airport terminals or taxis.
Ford CEO Alan Mulally’s $28 million pay package includes the use of a private jet. He lives in Seattle and the company jet zips him home on weekends, ABC News reports.
You’d think avoiding the “let ’em eat cake” trap would be Public Relations 101. But maybe the auto industry CEOs are so accustomed to their perk-filled nether world that they simply don’t understand how a little thing like flying on a private jet to ask for a handout looks to the working stiffs of America.
Anyone being (or pretending to be) in dire straits financially should know to put on a complete act to support that view before looking for a handout; especially in Washington. Oh well; not having your priorities in order seems to be a sign of our times…
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The US auto industry is orchestrating their own bankruptcy. How else could they possibly get out of their UAW pension and healthcare liabilities? When you amortize these over auto production–US companies pay more for pensions and healthcare per auto than Toyota pays for steel per car.
Hi Ulli: I just love your blogs! Having trouble getting out of buy and hold mentality which has been pounded into our heads but thanks to you I still have some capitol.
Would like to share from one newsletter I read and follow. Buy “C” it is a steal at $45 and pays almost 12 percent! Drops to $30 double up, yield now 6 percent as dividend gets axed in half. Stock falls to 15 at a 67 percent loss in my portfolio. Double up again and hold for the long haul. Well I could no longer afford to hold as peanut butter sandwiches and dog food for me and the dog were costing too much! Today “C” at 5 something Give me a break. And then you blog about corporate jets costing $20,000 and a pay package for 28 million. Yes I worked for the place but long ago they told me who my boss was and I never met the guy and in the old days I could talk to him and share my problems and he could fix them. Today all our CEO’s and politicians do not have any idea what the average Joe is struggling with and just trying to keep his head above water and sinking fast.
Our leaders just want to spend more and raise those taxes to pay for it?!
When I see used car dealers show up in Washington asking for a bailout because they have too much inventory, then I’ll KNOW the end is near.
Where is MY bailout????
NO WAY should our Congress give out bailout packages to industries without MAJOR concessions and operational changes in exchange.
The deal is changing for everyone. The “deal” is the promise of a fat pension and unlimited health care for life, in exchange for years of working for a paycheck. That deal needs to “go away” for the domestic auto companies to survive. It was always based on fundamental flaws in the math (ie. a ponzi scheme). Naturally, this implies the UAW goes away too…
Painful times ahead, but think about how possible it might be for smaller auto companies, with newer technologies to prosper now…
Mitt Romney suggested that bankruptcy would be the best solution. He also suggested that it might be possible for the top dogs to get along without those private jets. He said that when George Romney took over American Motors, he got rid of the corporate jet and did some belt tightening.
I don’t know what ever happened to American Motors, but there was no bailout for American Motors, Studebaker, Packard or a lot of other car manufacturers that couldn’t cut the mustard.
Who gets the next bailout? Starbucks?
During the great depression numerous US Auto companies went bankrupt. Such great ideas as the Stanley Steamer, Franklin, and Jack Benny’s beloved Maxwell all ceased to exist. None deserved or received government bailouts. A bankruptcy court needs to assist in making the Big 3 leaner and more flexible while shaving the executive salaries along with the auto workers benefit package. Just as we have seen a 50% reduction in the stock market, there needs to be a similar reduction in Auto companies cost profile.
All the above is true … and yet, Washington will indeed probably bail out the auto industry.
Weak minds, weak hearts.
I think it is disgusting that the 3 stooges are actually asking us for money so they can get out of there mess they have created. If our chosen ones in Washington gives them there wish list we can bet they will be back in less than a year. I will bet anyone willing to wager a small bet that these creeps are only out to get out of there union contracts and once that is done it will be business as usual with a new round of bonuses. If our leaders think this is going to fix anything they need some serious brain surgery preformed. I feel bad for the workers as they are probably loosing most of both there pensions, K-plans, and what ever other benefits they have bargained for in good faith. SHAME ON THESE 3 PRICKS!!!!!!!!! union and proud of it…..Snoobers
Your blog is always most instructive.Especially this week.
Question? I believe the claim that employee benefits at GM is a main cause of their problems is true but overstated in terms of the affect on car cost.Do you know any source that discusses this subject in quantitative detail?
Anon,
I sure don’t since I don’t follow stocks. When I comment on them, it is more general in nature.
Ulli…