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

[preciousjeni]

Originally Posted by madmax

Does that mean your mom is overpaid and unskilled?

I see you missed the entire conversation. Let me get you up to speed. We're talking about UAW members working at the Big Three automakers. Hope that helps.

[epchick]

Don't know if this was posted yet, but I just saw this:

Ford CEO will work for $1 a year if the gov't bails him out

I know the media skews things, but in this article you could see the differences between the 3 CEOs. Although I don't know if his approach is the best---like how about he gets rid of some of his money instead of taking it out on all the Ford employees around the country--but at least he has a plan. It doesn't seem like GM & Chrysler have one.

I'm still holding out that I can get my Ford Edge for dirt cheap, but I think i'll be waiting a long time for that! lol.

[AGDee]

They all have plans. They are all driving hybrids to Washington this time. They have each agreed to being paid $1 a year. The higher ups with the UAW met today to discuss concessions including getting rid of the job bank (where essentially guys get laid off, are in the "job bank" and get 95% of their pay while in the job bank.. some have been in the job bank for over a year). GM's plan is to ditch Saturn and Pontiac (which kills me because they are my two favorites and I'm about to buy a Saturn Vue so I have no idea who will service it, honor the warranty, etc.). Chrysler just offered buy out packages to every white collar worker. They had to decide by last Wednesday whether to take it and many took it. Wednesday was their last day. Monday, almost every employee had a different job. I haven't heard final figures, but I've talked to people whose departments were cut by 75% through this buy out. Congress has all the plans now and the execs will be there later this week.

Details can be found here: http://www.clickondetroit.com/news/18191115/detail.html

Mulally and Wagoner both said they'd work for $1 per year -- something Chrysler's plan said Nardelli already does -- if their firms took any government loan money, while Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.

The unions were preparing to make sacrifices as well. United Auto Workers leaders summoned local union leaders from across the country to an emergency meeting Wednesday in Detroit to discuss possible concessions. Up for discussion were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers' payments into a multibillion-dollar union-administered health care fund.

GM said it would make huge cuts in its numbers of workers as well as reductions in its vehicle brands and plants by 2012. The auto giant is seeking a $12 billion loan to keep it running, plus a $6 billion line of credit in case market conditions worsen.

GM would focus on four brands -- Chevrolet, GMC, Buick and Cadillac. By 2012, the plan calls for 20,000 to 30,000 fewer workers, a reduction of nine facilities and 1,750 fewer dealers.

The company also outlined efforts to negotiate swapping some of the company's debt for equity stakes in the automaker.

Chrysler said it would cut costs by slashing employee benefits -- including suspending its match portion of the 401(k) retirement plan and reducing its health care contribution for salaried workers -- and terminating its lease car program. It said it would also ask more productivity of each employee.

Chrysler's product plan includes the first full-function electric-drive model in 2010 and expansion to additional models by 2013. The company's market penetration of electric-drive vehicles will further increase with over 500,000 produced by 2013, the blueprint said.

[preciousjeni]

AGDee, thanks for posting! I'm really impressed with what they're doing.

[epchick]

Yeah a lot of that was in the link I posted.

And again they seem to be making all these good ideas, but it's all about cutting funds from their employees. Yeah they'll sell their jets but what about their salaries? So they get paid $1 for the next year, they still have millions. How about giving some of their money back to companies.

[KSig RC]

Originally Posted by preciousjeni

AGDee, thanks for posting! I'm really impressed with what they're doing.

I can appreciate what they're doing and definitely think it's a step in the right direction, but two things bother me:

1 - Much of this appears to be post hoc (especially after the PR backlash), which makes me wonder if the mentality of crowds is overriding the 'correct' decisions

2 - If this bailout were such a great idea/investment for the US Government, why aren't banks lining up to offer it?

Originally Posted by epchick

Yeah they'll sell their jets but what about their salaries? So they get paid $1 for the next year, they still have millions. How about giving some of their money back to companies.

This seems really . . . severe. Regardless of how poorly the guys did their jobs (and there's plenty of evidence they sucked), they earned the money, and that sort of "refund" from the past is a rounding error in the grand scheme of things. This really should be about moving forward, and if the companies are profitable, then the CEOs can justify their salaries again (most of whom had been successful elsewhere prior). The CEO salary issue is a talking point for the public, but it's simply a minor factor in the grand scheme of things.

[AGDee]

I got really ticked off when Congress was asking the questions about whether these guys would be willing to work for $1 and why they flew their corporate jets there. Our national debt is escalating at record levels and our Congress aren't working for $1 a year nor or they giving up any of their perks. It's not like the auto makers CEOs are making what the CEOs in the oil industry are making, yet they are similar in size, per the Fortune 500 article I quoted earlier in this thread. The difference? We HAVE to pay $4 for a gallon of gas because we have to get to work. If cars doubled in price, nobody would buy one, they would do whatever they could to get their current one running.
http://www.msnbc.msn.com/id/12519975/

Chevron's CEO received $37 million in total compensation last year. Conoco Phillips' CEO got $17 million. Those are big numbers, but experts say they are in line with Wall Street's inflated standards.

Then there's Exxon's CEO and his stunning $400 million pay and retirement package — which an industry spokesman still defends.


http://www.leftlanenews.com/gm-chief...ll-salary.html

GM has raised the salary of its Chief Executive, Rick Wagoner, ending his self-imposed pay-cut dating back to 2006. As previously reported, Bill Ford is fighting a similar move from the management over at Ford. Wagoner’s salary has been raised back to $2.2 million, a 33 percent increase, for 2008, which is the same it was back in 2005, the year before Wagoner’s salary cut went into effect, GM said Thursday.

The 55-year-old executive cut his base salary by 50 percent in 2006, then made a smaller, 25 percent cut in 2007 after GM posted a $10 billion loss in an attempt to help the company in its turnaround efforts, according to The Detroit News. In 2006, Wagoner’s base salary amounted to $1.3 million. Since then, he has managed to save GM $9 billion, negotiate a money-saving deal with the UAW and oversee a product revival.

Earlier, someone was asking why the foreign auto companies aren't in trouble if much of this is due to the credit market freezing up and the numbers tell the story. Their numbers are down also:

http://online.wsj.com/article/SB1228...googlenews_wsj

U.S. auto makers continued to post sharp sales declines in November as General Motors Corp. reported a 41% plunge and lowered its fourth-quarter production forecast, underscoring why the struggling auto maker and its Detroit rivals are seeking federal assistance to help them through the current environment.

"Every manufacturer is posting awful numbers and we are no exception," said GM North American sales chief Mark LaNeve.

The dour numbers, coming on the back of October's moribund results, also saw Ford Motor Co. post a 31% decline and Toyota Motor Corp. report a 34% decrease. Chrysler LLC, a private company controlled by private-equity group Cerberus Capital Management LP, saw its sales skid 47%.

I like this Time article, personally, about the corporate planes. http://www.time.com/time/business/ar...3640-1,00.html

And this one, about the effect of a GM bankruptcy on the economy. http://www.time.com/time/business/ar...862737,00.html

[awkward1]

Thanks AGDEE! Those links were very useful and did give me a new perspective on the issue of the use of corporate jets. One thing that I believe was not addressed in the article is that every person should always strive to not only obey the rules, but to avoid the appearance of impropriety. So, while there may have been good reason for the execs. to take those jets to D.C., it just looked bad and that overshadows the whole episode. It's just a matter of looking at the big picture, will my actions reflect my actual intentions or will my actions make me appear to be less than forthright. If the CEO's couldn't see that flying to D.C. to ask for a bailout in private jets could reflect poorly on them, it makes me question their judgment on all other matters. And as stated earlier, most of these moves that they are now willing to make are in reaction to the outrage from their first visit to D.C. It was at the first hearings where only one CEO said that he would be willing to work for a dollar if he received a bailout, the other two stated that they would not. In fact, one CEO stated that he was quite comfortable where he was at and that he would not be willing to work for a dollar. So my question becomes: Are these the people that can lead the Big 3 to be profitable again, can they think outside of the box? I think that their cheese has been moved and they have no idea how to find it.

Who Moved My Cheese

[RU OX Alum]

How is keeping both Buick and Cadilac going to help? Didn't they have to get rid of Oldsmobile because it was too much like Buick and Cadillac? They should keep pontiac but in a scaled back plant. Like, maybe only have the plant in Pontiac, MI make them, and then that brand is the sport car/muscle car brand, Chevrolet is Chevrolet cars and the top selling trucks (no new ones and no suvs) GMC would be for the other trucks and suvs (one name plate per plant. If demand for a bowtie on the thing is that great then fine, but don't make a seperate chevy and gmc suv plant.) Cadillac is luxury cars. That's it. Didn't they used to have like around 8 or 9 lines at one point? I really don't want the US auto industry to tank.

[agzg]

Aren't Saturns (on the whole) more fuel efficient than the other GM brands? Why would they ditch the more eco-friendly brands?

I totally could be making that up - it was just my assumption. And yes, I know what happens when one assumes.

[AGDee]

When Saturn was started, they were touted as the highest quality, practically hand made cars. Their dealerships are known for their excellent service. It was the "quality/service" division, basically. When you buy a Saturn, they treat you like a king/queen, give you roses, etc. While there are two hybrid Saturns, there are hybrids in their other divisions too.

Pontiac and Saturn are the two divisions that have repeatedly attracted me. This may end up being my last GM car and that bums me out, but if they're going to get rid of the ones I like, then I'm not going to be buying from them. (Besides, once my dad is gone, my big discount is gone too). I've been flip flopping here between the Saturn Vue and the Pontiac Vibe for months and I think the Vue is going to win. I first wanted a Vibe in 2003 and it's been so long now that it has lost it's appeal!

If I got to pick which GM brands to keep around, I'd say get rid of GMC because Chevy makes everything that GMC does (pick ups, SUVs) and Buick (because those are old people cars and they would buy a Cadillac too). Then you have Chevy's for your low end, entry level cars. Downsize Cadillac by a lot (do you ever see them on the road?? I sure don't!). Yeah, I'd keep Chevy, Saturn, Pontiac and Cadillac. They didn't ask me though.

[PeppyGPhiB]

Originally Posted by awkward1

Thanks AGDEE! Those links were very useful and did give me a new perspective on the issue of the use of corporate jets. One thing that I believe was not addressed in the article is that every person should always strive to not only obey the rules, but to avoid the appearance of impropriety. So, while there may have been good reason for the execs. to take those jets to D.C., it just looked bad and that overshadows the whole episode. It's just a matter of looking at the big picture, will my actions reflect my actual intentions or will my actions make me appear to be less than forthright. If the CEO's couldn't see that flying to D.C. to ask for a bailout in private jets could reflect poorly on them, it makes me question their judgment on all other matters. And as stated earlier, most of these moves that they are now willing to make are in reaction to the outrage from their first visit to D.C. It was at the first hearings where only one CEO said that he would be willing to work for a dollar if he received a bailout, the other two stated that they would not. In fact, one CEO stated that he was quite comfortable where he was at and that he would not be willing to work for a dollar. So my question becomes: Are these the people that can lead the Big 3 to be profitable again, can they think outside of the box? I think that their cheese has been moved and they have no idea how to find it.

Who Moved My Cheese

My thoughts exactly!

[madmax]

Originally Posted by AGDee

They all have plans..

Are the plans to get the bailout money or to improve the companies? At this point the execs have no credibility in my book. If they were sincere then they would have implemented the plans before it got to this point.


Hey look at us, we drove hybrids. Now can we have the 25 billion?

[AGDee]

They have been cutting and cutting and cutting. 400,000 jobs gone in Michigan already. This most recent crisis is due to the banking crisis which hit us in September. They weren't doing that badly until then. Please do your research.

[epchick]

Originally Posted by awkward1

It was at the first hearings where only one CEO said that he would be willing to work for a dollar if he received a bailout, the other two stated that they would not. In fact, one CEO stated that he was quite comfortable where he was at and that he would not be willing to work for a dollar.

Yes, that is what I was talking about when I first posted the link. I think it was the Chrysler CEO who said he was happy where he was. Really if you are going to the gov't to ask for money to help bailout your company, but you won't give any (and saying your happy where you are is not giving anything), then why should the gov't help you?



My thing is, why do all 3 have to get bailed out? The gov't should look at which ones would benefit more from the money. Chrysler has the worst crash test ratings out of all the cars. If Chrysler went away, what's the big deal? You still have plenty of cars left. Ford & GMC (namely Chevy, Saturn and Pontiac) are the better sellers, they have the better crash test ratings, etc.