Auto Execs and their private jets

What a great expose by The Washington Post....paints a different light on the Auto Execs and how they act.

I think this is hilarious.....and I hope these mutts don't get a dime of taxpayer dollars.

-Duane

Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand

By Dana Milbank
Thursday, November 20, 2008; A03

There are 24 daily nonstop flights from Detroit to the Washington area. Richard Wagoner, Alan Mulally and Robert Nardelli probably should have taken one of them.

Instead, the chief executives of the Big Three automakers opted to fly their company jets to the capital for their hearings this week before the Senate and House -- an ill-timed display of corporate excess for a trio of executives begging for an additional $25 billion from the public trough this week.

"There's a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands," Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. "It's almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn't you all have downgraded to first class or jet-pooled or something to get here?"

The Big Three said nothing, which prompted Rep. Brad Sherman (D-Calif.) to rub it in. "I'm going to ask the three executives here to raise their hand if they flew here commercial," he said. All still at the witness table. "Second," he continued, "I'm going ask you to raise your hand if you're planning to sell your jet . . . and fly back commercial." More stillness. "Let the record show no hands went up," Sherman grandstanded.

By now, the men were probably wishing they had driven -- and other members of the House Financial Services Committee weren't done riding the CEOs over their jets. "You traveled in a private jet?" Rep. Nydia M. Velázquez (D-N.Y.) contributed. Rep. Patrick T. McHenry (R-N.C.) felt the need to say that "I'm not an opponent of private flights by any means, but the fact that you flew in on your own private jet at tens of thousands itself dollars of cost just for you to make your way to Washington is a bit arrogant before you ask the taxpayers for money."

It was a display of stone-cold tone-deafness by the automaker chiefs. In their telling, they have no responsibility for the auto industry's current mess. Threatening the nation with economic Armageddon if they are not given government aid, they spent much of the session declaring what a fine job they've been doing in Detroit.

"Chrysler really is the quintessential American car company!" Chrysler's Nardelli boasted.

"We have products that are winning car and truck of the year regularly," General Motors's Wagoner proclaimed.

"We are equal to or better than Honda and Toyota," Ford's Mulally added. "Every new vehicle that we make, whether it's small, medium or large, is best in fuel efficiency. The given is safety. And we have more, at Ford, more five-star quality and safety ratings than any other automobile."

Committee Chairman Barney Frank (D-Mass.) cut him off. "Thank you, Mr. --"

"And the best value!" Mulally blurted out.

"Commercials can go later," the chairman proposed.

They would have to go later, because members of the committee wanted to turn the session into a special edition of "Car Talk." Rep. Mike Castle (R-Del.) spoke of his '99 Jeep: "It probably has about 150,000 miles on it, and it's still running doggone well." Rep. Jeb Hensarling (R-Tex.) invoked his '98 Jeep Cherokee: "Small problem with the back hatch staying open; we can talk about that afterwards." Rep. Michele Bachmann (R-Minn.) praised her Chrysler minivan. Rep. Judy Biggert (R-Ill.) had good words for her Jeep but complained that it didn't come in a hybrid version.

"I drive the same '66 Plymouth Valiant that I've always had," Ackerman proffered. He went on to discuss a problem with the GPS system in his Cadillac. "I wanted a loaded car in blue; I had to reach out to five states to find one in blue," he complained.

It seemed everybody had a car story to tell. Rep. John Campbell (R-Calif.) let it be known that he was a car dealer for 25 years. Rep. Stephen Lynch (D-Mass.) disclosed that he worked at the GM plant in Framingham. Rep. Donald Manzullo (R-Ill.) wanted to see more ads for the car made in his district, while Rep. Michael Capuano (D-Mass.) said the Edsel was once made in his home town. Rep. Walter Jones (R-N.C.) read from Cicero and held up photos of cars. And Rep. David Scott (D-Ga.) had no car stories to tell but delivered the surprising news that the problem with the Titanic was not its collision with an iceberg.

Detroit area lawmakers made passionate arguments that the carmakers had already done what "they possibly can to restructure and become globally competitive," as Rep. Thaddeus McCotter (R-Mich.) put it.

But the executives were not helping their own case. When Rep. Paul Kanjorski (D-Pa.) tried to find out when GM would run out of cash, Wagoner hemmed and hawed until the lawmaker protested that "I don't quite understand what the hell you just told me." When Rep. Ed Perlmutter (D-Colo.) asked about GM's outlook for the quarter, Wagoner informed him that "we don't provide financial guidance in earnings."

So it was hard to feel sorry for the executives when Rep. Peter Roskam (R-Ill.), late in the hearing, reminded them again that "the symbolism of the private jet is difficult," and mischievously asked the witnesses whether, in another symbolic gesture, they would be willing to work for $1 a year.

"I don't have a position on that today," demurred Wagoner (2007 total compensation: $15.7 million).

"I understand the intent, but I think where we are is okay," said Mulally ($21.7 million).

"I'm asking about you," Roskam pressed.

"I think I'm okay where I am," Mulally said.

And don't even think about asking him to fly commercial.

The big 3 are indeed out of touch. Top executives, and all their advisers, could not figure out that flying a private jet would unleash such anger. That's unbelieveable. I was a very loyal buyer of American cars until we decided to buy a minivan 10 years ago. The Toyota was way ahead of the domestic brands. It has 172,000 miles on it and is still going strong. And it was made here in the US.

I bought a couple of Pontiacs since then. One was a dream, but it was totalled two years after I bought it. I replaced it with the exact same model, and the difference was staggering. The new one was a terrible disappointment. I won't buy another GM. If I want to gamble with that kind of money I can go to Vegas.

Another perspective......Personnaly I find it ironic that the president of the UAW is in the position of having to defend the management and business model of the big Detroit based car makers, while his union is very much a major portion of the problem. Driving wages and benefits to levels that undermined the profitability of the US brands has to a great extent brought this US industry to it's knees. Yes Detroit has focused on making large cars, suvs and trucks, but mostly because the labor component (in manhours) of a large car is essentially the same as a small one, so the cost impact of the $85/hr (with benefits) UAW worker is easier to absorb and still make a profit with a fleet of large more expensive vehicles than small compact units. As such the small car market segment was of less interest to Detroit. The proof of this is the fact that Toyota, and Honda can make profitable small cars in the US or offshore only with non-union labor that cost 60% or less of the union labor costs that Detroit faces. Add to that the fact that they do not have 750000 retirees to support as do the Detroit 3 and you start to understand the difficulties of competition, especially with small cars. A final proof is the overwhelming advantage US manufacturers have in the truck/suv market over Honda and Toyota and other foreign manufacturers.

I don't disagree that there is excess in the compensation and perks of the senior executives at all US large corporations, but to focus on the use of business jets by Congressmen who until recently were first in line to accept travel perks on the very same jets they now spotlight is pure hypocrisy. Do we question the use of private jets by other groups such as the political candidates, the military or professional sports teams. No, we understand that security, efficiency of travel, and privacy can and does justify the use. Yes, the business model needs changing, and yes there are inequities in a free capitalistic society, but let's not regress to the French or Russan revolution to bring the necessary changes. Let's not throw the baby out with the bath water to satisfy a need to feel vindicated for all the social and economic injustices in our country. It might be justice to see the multimillion dollar salaries of the executives be eliminated, but it's a slippery slope. Where do you draw the line and how much government do we really want. For when we are done we will all have to live with the collaterial damage we create.

So now the CEO of Ford is going to drive to DC and his two clown buddies are going to fly commercial like the rest of us. Such a blundered opportunity, the boards of all three should fire these CEO for falling asleep at the wheel when they planned their first trip (no pun intended.)

Think about it... they could have made this into a convoy (or Caravan, in Chrysler's case :-) and turned it into a spectacular road trip, accompanied by a PR truck and auto carrier with the latest models and make high profile stops along the way, like a traveling auto show. Get some people behind the wheel of their very best products, and get a lot goodwill behind them.

Maybe I should get into the PR business ;-)

Exactly! I see on the news that GM's Rick Wagoner rolled into town in a prototype Chevy Volt, and they're not re-upping Tiger Woods $ 7 mil a year contract to drive Buicks (When is the last time you even heard of someone buying a new Buick?). No doubt the Auto Industry needs a bailout, but where does it stop? The trickle down effect is just starting from all this....the government can't save every industry category that depends on retail consumer spending.

Now that the US government is the largest owners of GM it seems to me that the Congressional leadership (that's a stretch) should use the GM private jets rather than buying themselves 8 new ones at close to 600 million dollars. Hypocrisy reins supreme in Washington, D.C.

In my view, the Big 3 have only themselves to blame. I certainly don't blame it on the unions. Those workers SHOULD be getting those wages and benefits--again, in my view. The writing has been on the wall for a long time: Make fuel-efficient cars or fail as as industry. Detroit decided to ignore that. And now they want to blame the workers? I don't agree.

And, to my knowledge, Congress has scrapped the idea of buying new planes. Probably in response to the criticism.

With the lessening of trade restrictions, exportation of technology and improved transportation capabilities that have evolved over the last 30-40 years the competition for the auto market has become fierce.
I take issue with the notion that union auto workers deserve the high wages and benefit packages they demand. If they could produce autos at an efficiency that made up for the non-competitive labor component of the USA Big 3 manufacturers then there would be no issue. However, when Honda and Toyota and even BMW can produce autos in the US at labor cost of 40-50% less then the Big 3 (and Korea and China at even lower labor costs) then it was only a matter of time before the Big 3 would go belly up. Fuel efficiency is really a relatively recent issue. If you go into any public parking facility I dare say more than half of all vehicles are SUVs or trucks. The Big 3 made what they could sell, what the public wanted over the last 20 years, not fuel efficient cars. The Japanese and Korean and to some extent the European manufacturers focused on their expertise, small vehicles. Go to these countries and try to find the SUVs and pickup trucks we have in the US. No way!!

The reality is this is a world market, with world manufacturing, and a disproportionate high standard of living in the US. Unless we find as a nation a way to deliver a disproportionate value to the world in some unique products or services then I suggest that the Big 3 auto manufacturers are a harbinger of our future as a nation.

As far as our Congressional Leadership canceling the planes I am sure you are right. They only did so because of a very loud public outcry, for no other reason. So as I previously stated hypocrisy is alive and well amongst our politicians.