Wednesday, November 19, 2008

Big 3 in Big Trouble

We all have to make sacrifices and tighten our belts in today’s economy and it is not a far stretch to expect that companies will have to do the same.

Demonstration of willing to make sacrifices fell short today when they appeared before the senate to ask for $25 Billion dollars. CEO’s Rick Wagoner (GM), Alan Mulally (Ford) and Robert Nardelli (Chrysler) were asked by Democratic California Representative Brad Sherman if they flew in via private jet. Their response was yes. Sherman continued to ask if the CEO’s had any plans to sell their gas guzzling private jets and down grade to first class. The CEOs answered, "no."

In all fairness Reuters reports, “GM CEO Rick Wagoner and Ford CEO Alan Mulally are required by their companies to fly by private aircraft for security reasons, according to company documents filed with the U.S. Securities and Exchange Commission. The policy for Chrysler CEO Robert Nardelli is not required to be disclosed because the company is not publicly traded.”

The Multi-million dollar CEOs were also grilled on their pay and asked to examine where cutbacks would be made out of their own pockets. Question was raised in remembrance of former Chrysler CEO Iacocca famously cut his salary to $1 when Chrysler was on the brink of bankruptcy in 1979 but eventually had to ask Congress for a loan guarantee program.

The issue was left without a vote by lawmakers today.


John Beagle said...

I have to say those auto execs looked bad. Why didn't they drive their product to congress?

This was an opportunity for the execs to prove they were going to change from an attitude of entitlement to one of conservation of capital.

Etha W said...

It made me question how much trouble they are actually in. To me this was the equivalant of borrowing $100.00 for groceries when you eat at Red Lobster 3 times a week. Just foolish.

I am not in favor of Government getting so involved with company activities but I think the Bail out sould require an audit and a government accountant to consult with plans to get back on track. Maybe that is a lot of hand hlding but with that kind of need and that kind of money I would be looking for some kind of insurance.

Jason said...

How much time is lost by the GM representatives when they have to check in for a flight two hours early, or when the GM representatives are not to talk about business during the flight due to insider trading concerns?

The question is what is lost? When 12 people fly on a private jet it costs about $20,000. When 12 fly commercially to DC it costs about $12,000. Is a $8,000 savings worth the time lost?

Isn't it really worth it in the long run?

tony said...

They have mismanaged this industry for years. Terrible union contracts, poor products and quality and slow market reaction to customer demand I think doomed them and to some extend our economy.

DarcyR said...

Makes you would if they are granted the money who will have the better party, them or AIG? Meanwhile the rest of us will continue to feel the pinch and tighten our budgets as costs increase so CEO’s can maintain their standards of living.

JanineFoster said...

Having lived in Detroit for most of my youth I can remember going on a tour of the Ford Motor Company and asking what the people on the line made. Our tour guide pointed to a gentleman taking hubcaps out of a box (pre wrapped) and putting them in the trunk of each car that passed and said "He probably makes $16-$20 an hour" I was shocked even then. This was in 1977. Have never had respect for unions since then. They are why the "Big 3" are in "Big Trouble"

Sheron said...

I have a hard time feeling sorry for them when they are not willing to cut back on personal cost. If the goverment bails out the auto industry what is going to be next? Will department stores or restaurants need bail out money also? I know if the company I work for was in trouble the goverment would not step in. I feel they restructure before they start asking for help.

Andy Wendt said...

It’s just not right to pick certain industries and provide such government assistance.
While in the short run this may help out the average working guy making a living it does so at the expense of taxpayers footing the bill for golden parachutes and lavish salaries of those whose own management decisions have lead to the very problems that now need solved.

Etha W said...

The sad part is the Millions of families that will suffer when big companies like these go under.

However Uncle Sam passes a hat around of bail out money I last expected the biggest industries with long histories to be first in line. I would be ashamed.