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Not-So-Big Three Automakers Take Corporate Jets To Beg For Money From Congress
Detroit, 7:31 PM
Tue Dec 8
28 posts in the last 24 hours
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Not-So-Big Three Automakers Take Corporate Jets To Beg For Money From Congress |
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11/19/08
And I have to agree with Wert that the biggest problem is PR. The whole 'American cars are shite' albatross of decades past. The big 2.8 have perfectly acceptable answers to the car-as-appliance question, which means volume sales. As for enthusiasts: is a Camry somehow that much better than a Malibu? Really?
We are the minority. While my current DamnElantra rental has grabby brakes, limp steering, rolls like a manatee and has absolutely no sensation of acceleration, it is not a bad car. For most, it is a perfectly good car. This applies eqaully from the most boring Toyota to the most decried Sebring. Case in point: Detroit's still enormous sales volumes.
11/20/08
11/19/08
Sit. Relax. Let me get you a drink...
11/19/08
In fact, a bank we bought a few years ago had just been "forced" to sell its Hummer H2 with corporate vinyl wrap. Even though the vehicle was just used as the occasional rolling billboard (usually parked), it was an image issue...especially after the local paper started featuring anything "anti-green" in some of their editorials.
11/19/08
11/19/08
There seems little now to prevent government receivers from coming in and mucking their way to the eventual death of the entire outfit, Leyland-style. A lot of things have to go right for even a loan program to work.
11/19/08
11/19/08
1) Decision-makers need the entirety of their compensation tied to the consequences of their decisions. Stock or sales or profit metrics or something. You'd be amazed what that does to someone's decision making process.
2) GM should go in to bankruptcy. This is the only way they're going to be able to get out of some of the baggage that comes from being a big, old company.
11/19/08
11/19/08
11/19/08
I don't see any other option except letting the US auto industry die.
11/19/08
1) Picking and choosing products across multiple car lines eliminates all kinds of shared engineering/design economies of scale.
2) Combining 3 companies worth of parts/warranty/logistics infrastructure could never work
3) A non-bankruptcy version of this will require the conglomerate to honor 3 companies worth of legacy costs and dealer contracts, despite having 1.something worth of revenue.
I'd rather see 1, 2 or all 3 declare bankruptcy and deal with that process, and/or see what rises from the ashes, than have a government-meddled, concession-laden booger-welding together of 3 oversized companies into another oversized company.
11/19/08
You may be right. My other thought was simply letting GM die and rescuing Ford. That would probably be a manageable bailout, and most of the products I put on my list were Fords anyway. Then at least we'd still have a Domestic auto industry.
11/19/08
A crapload of jobs are going to be lost, one way or another. We've got too much capacity/supply to match the current market demand.
Until one side of that equation changes, the system is unsustainable.
11/19/08
The consolidated manufacturer I envisioned in my blog post would have been much smaller than the big three combined. You're right that we have way too much overcapacity. What we need is a lean, focused manufacturer, not bloated behemoths like GM.
11/19/08
I maintain that the only realistic option is a combined approach of the two sides of the argument. GM needs to declare bankruptcy, and receive DIP financing from the government. The primary issue with them declaring bankruptcy is that they wouldn't be able to get DIP financing, as of the 12-15 finance companies who would normally be willing to provide DIP loans, only 3 or 4 remain, and they are extremely conservative in who they will lend to.
11/19/08
11/19/08
11/19/08
You can't just whistle and pretend that Detroit's not going down the drain. Something radical has to be done or everyone in the US auto industry will be out of a job. My plan is to save what sells and do away with what doesn't instead of trying to hold on to everything and watching it all go up in smoke.
11/19/08
I don't think that's necessarily the case. I think many people buy American because they want to buy American. Why in the Hell else would they choose a Cobalt over a Civic? So if the choice is between a Civic, a Corolla, A Mazda3 and a Focus (with the Cobalt and the Dodge whatever dead and buried) I think you'll see a lot more Focus' being sold than now. There may be a slight overall decline in sales, but the US auto company would own them all and be a lot healthier.
11/19/08
I do agree that the government is probably goig to have to assume the automakers' legacy costs, and probably restructure them in the process. And the consolidation I described could never take place without pretty much stripping the unions of any real power in the interim.
11/19/08
Further to that, there would be no motivation for Ford to join in. Ford has said they have the resources to weather the storm. Mullaly has said that the reason he's on Capitol Hill is to show support for his crosstown rivals. They don't need the bailout, but he fears that his economies-of-scale involved with his suppliers would collapse if his rivals went under.
11/19/08
11/19/08
In the court of public perception, which is where this bailout argument is being waged, private jets entered into evidence are a crushing blow against the defendant (yes, the Big3 are on defense here)
All the defense witnesses to date (especially here on jalop) have gone on about how much better behaved management has been recently, and how the business has really turned around, if we, the jury would just take the time to look.
Well, we're looking. Your case is weak. You may get your settlement. You may get the big money you need to keep America from entering the worst recession since that one they call "Great".
Don't dare expect it without concessions, and have no doubt at all the the most lenient sentence available will be a lengthy and highly restrictive probation.
11/19/08
The only reason this has any sway in the court of public opinion is that the media chooses sensationalist bullshit like this and plays it out there for the lowest common denominator, like that woman who said she couldn't vote for Obama because he's an "Ay-rab."
And I'm one of the people yelling to let GM go bankrupt.
11/19/08
11/19/08
11/19/08
I'd be curious to see this as well, but he also probably makes more than GM's board, or most any.
You realize a board of directors are PART TIME "overseers" there on behalf of equity owners. They fly in once or twice a quarter for a meeting, create a ton of busy work to answer their asenine questions, and fly out. So, they get paid well for a tiny bit of time, but it doesn't compare with a CEO of a Fortune 5 (or whatever it is) company.
They generally all have day jobs that pay them Wagoner style money.
11/19/08
11/19/08
11/19/08
But really, isn't that who buys the most cars?
11/19/08
11/19/08
This is an assinine "story"
The public/media are stupid and sensationalistic... it hurts me to say it, but I guess I now have to include jalopnik in that camp.
11/19/08
I guess you really don't pity the fools.
11/19/08
11/19/08
...
11/19/08
If these guys are so grossly overpaid, would you rather they spend 4 hours commuting (with airport transfers, connections, etc) or 2 hours going direct?
Ironically, the better use of executive time is often the jet.
11/19/08
11/19/08
There are too few details, but I suspect they already owned these planes, got plenty of use out of them, and the asset was already heavily depreciated.
Sort of like "Hey, I own a 7-series, so should I pay for a cab instead?" Apart from the image management, you'd probably drive yourself.
11/19/08
This is sensationalism at its finest, and Jalopnik would be well-served to just delete this article before they make complete fools of themselves.
I've been one of the loudest voices here about letting them fail, and I still stand by my position, but this is positively ridiculous. Do I need to do a full writeup explaining why this is an idiotic point?
11/19/08
The audience to whom the CEOs are playing include members of Congress, many of whom are hostile to bailing them out, and the constituents of the Senators and members of the House, many of whom HATE the the formerly Big 3.
This isn't about what makes sense--this is Washington, D.C. theater where illusion trumps reality (or is reality if you want to get all ontological) no matter who is in power.
The economics of CEO travel are not the issue here. Like it or not it is the impression that they make and the spin that the car companies and their enemies are able to produce.
11/19/08
Similarly, the implication that they simply shouldn't use it because of the theatrics of Washington is assinine. For the record, I mean this not as a shot at you, nor is it intended as a shot at Ray; I should have made my response longer to properly elucidate the point. I think it's ridiculous that a point like this would get brought up at all. Basically, your point summarizes it: This isn't about what makes sense--this is Washington, D.C. theater where illusion trumps reality . EXACTLY. Should the CEOs have come to Washingon in sackcloth and hair shirts? Should there have been self-flagellation? Should they have offered to drain some blood in ritual sacrifice? Saying they should have chosen another means for the perception of pauperism is such a stupid concept it defies logic; and yet, as you point out, it is the dynamics of politics.
11/19/08
If the "not so big 3" are spamming their clients, publishing youtube videos, interviews etc. in order to get the money they need, they cannot afford to overlook public relations details like this.
If a saturn owner got his "begging" email yesterday, and now reads that the bosses are flying their private jets... not good PR, not very clever.
Again, another reason to get rid of these CEO's asap.