What would people say if a homeless man drove up to a soup kitchen in a limousine claiming that he was starving and asking for food? Similarly, the major auto company leaders showed up in Washington DC today in corporate jets, begging for a 25 million dollar bailout. It is ironic that the same men who are claiming that they are going to modify their business models to make them more effective, are still living so lavishly. Ultimately, I do not know if the auto bailout should happen or not, but what I do know is that selling their corporate jets would be a good start both in lowering auto industry costs and showing a commitment to not doing “business as usual”.
(CNN) -- Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.
Chrysler CEO Robert Nardelli, left, and Ford CEO Alan Mulally testify on Capitol Hill on Wednesday.
"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."
The executives -- Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM -- were seeking support for a $25 billion loan package. Later Wednesday, Senate Majority Leader Harry Reid reversed plans to hold a test vote on the measure.
An aide told CNN that Reid decided to cancel the test vote when it became clear the measure would fall well short of the 60 votes needed. Reid did, however, make a procedural move that could allow a vote on a compromise, which several senators from auto-producing states were feverishly trying to craft.
At Wednesday's hearing, Rep. Brad Sherman, D-California, pressed the private-jet issue, asking the three CEOs to "raise their hand if they flew here commercial."
"Let the record show, no hands went up," Sherman said. "Second, 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."
The executives did not specifically respond to those remarks. In their testimony, they said they are streamlining business operations in general. Watch Nardelli ask for help »
When contacted by CNN, the three auto companies defended the CEOs' travel as standard procedure.
Like many other major corporations, all three have policies requiring their CEOs to travel in private jets for safety reasons.
"Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," GM spokesman Tom Wilkinson said in a statement.
Chrysler spokeswoman Lori McTavish said in a statement, "while always being mindful of company costs, all business travel requires the highest standard of safety for all employees."
Ford spokeswoman Kelli Felker pointed to the company's travel policy and did not provide a statement elaborating.
But those statements did little to mollify the critics.
"If it is simply the company's money at stake, then only the shareholders can be upset or feel as it might be excessive," said Thomas Schatz, president of the watchdog group Citizens Against Government Waste.
But in this case, he said, "it's outrageous."
"They're coming to Washington to beg the taxpayers to help them. It's unseemly to be running around on a $20,000 flight versus a $500 round trip," Schatz added.
The companies did not disclose how much the flights cost.
Analysts contacted by CNN noted that the prices vary with the size of the plane and the crew, and whether the aircraft is leased or owned by the company.
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4 comments:
I think that the ultimate bankruptcy of GM, Ford and Chrysler is inevitable; their demands for money will just slow down the process and waste taxpayers' money. However, I think that the government will still pay the money; the government will be accused of destroying jobs if they do not bail out the automobile manufacturers. This, to me, is ridiculous. The companies are promising to create better cars in the next three years, yet they were unable to do so in the previous thirty years. Furthermore, they were unable to create cars that the consumers want; instead of creating eco-friendly and safe cars, these companies focused on mass-producing gas-guzzling SUVs. I do not have much respect for the planning and management of these companies, and therefore, I find a bailout simply ridiculous.
yea definately not a smart move by the auto companies, and the fact that I think they each came in their own personal jets. Hopefully under Obama's new tax plan they can donate some of their own money for their companies, instead of trying to take other's tax money.
Congress is right in hesitating to give the big three handouts. All any cash package would do is sustain the unsustainable. The big three have pursued absurd strategies over the past decade. This is one example of the free market working properly! European and Japanese automakers are on the leading edge of technology, engineering, and design. Of course they're going to gain market share. The big three need to replace all of their management with fresh thinkers. To forestall the inevitable at the expense of taxpayers is ridiculous.
Good column to read: http://www.nytimes.com/2008/11/19/opinion/19romney.html?scp=8&sq=automakers%20ford&st=cse
An interesting comment-maker suggested the following: The government should buy as many fuel-efficient/electric cars as it can from the big three and then trade them for clunkers currently on the roads. This would not only reduce pollution and gasoline consumption, but it would also stimulate the auto industry in the sector it most needs stimulating in.
I must agree with the poster, the three aforementioned commenters, and Mitt Romney, whose op-ed was linked in Jason's comment. It was one thing to bail out the financial industry especially considering that credit drives the American economy. But, cars do not. Quite frankly, if I were buying a car today, I would not consider any American-made ones. The Japanese cars are more efficient; the European ones are more luxurious. Both have superior engineering. The American cars are ugly, inefficient, and lack overall quality. It is no wonder that the Big 3 are going under. Car companies have not invested in new technologies, have been arrogant in their manufacturing of SUVs, and have been slow in adjusting to market demand. They don't even have excuse of hidden securities to blame as auto executives have been overt in their incompetence. I echo Jason; capitalism dictates that companies that are poorly managed, make bad strategic decisions, and don't meet demand should go under. This fits the Big 3 exactly. Let the chips fall as they may. And maybe as they recover, American cars might be worth purchasing again.
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