CNN
(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.
"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."
Rep. Brad Sherman, D-California, asked the three CEOs to "raise their hand if they flew here commercial. Let the record show, no hands went up. 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 -- Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM -- did not specifically respond to those remarks. In their testimony, they said they are streamlining business operations in general.
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 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.
Analyst Richard Aboulafia of the Teal Group said that $20,000 is a legitimate ballpark figure for a round trip corporate jet flight between Detroit, Michigan, and Washington.
When asked whether they plan to change their travel policies as part of the restructuring needed to shore up their finances, none of the companies answered directly. But they said they have cut back on travel in general as revenues have fallen.
3 comments:
Beck, I share your outrage. The CEOs of the auto companies deserve nothing. They can fuck themselves. I don't share your condemnation of the the UAW. The salaries autoworkers receive are hardly ridiculous. A quick look around the interweb gives a vast range of salaries: about $30-73 per hour. The UAW quotes the lower end, and as a comparison points out that the top execs at the big three have salaries of over $1.5 million, not including stock options.
I am not sure which figures include execs and managers and which differentiate along union-non union jobs. I also don't know which ones consider benefits as part of the figure. That last one is important. My salary is about $14500 a year, but if I figure in the health insurance and the tuition reimbursement it would be much higher.
No doubt that union workers are paid pretty well, and maybe it is bit high. However, what I have seen suggests it is on par with autoworkers in other developed nations. So I am not sure it is off the map as you suggest. The auto industry generates a huge amount of revenue. The question is where does it go? I don't see a ton of money going to real R&D. And it really can't be that UAW workers are burdening the industry that much. Take a look at trend over time. According to the UAW website, the average UAW wage has grown about 1.28% per year while the average exec wage has grown by 22%. You might want to add on top of this all the "corporate" money that execs get to spend on vacations, parties, company car leases, and all sort of other freebies that aren't available to the hourly workers.
Trust me, the fact that UAW workers with a high school diploma can earn twice what a college prof earns burns me a bit. But what burns me even more is that some douche who got a 2.5 at Harvard Business School (about the equivalent of a D- anywhere else) and probably only got in because they knew people and had wealth already makes 1.5 million/year.
If it weren't for either unions or strong pro-labor regulations by the government autoworkers would be making shit. Just look at the average salaries of hourly workers in places with neither--like North and South Carolina. Piss poor wages.
How about the govt bails out the auto industry and as a trade off fires the top couple of dozens execs. Is that a good plan.
Just a few things.
1. The bank bailout was a terrible idea that has too many avenues for abuse that I am certain will be exploited. Plus there is no way to force banks to provide the badly needed liquidity to the markets in the "bailout"/"handout". It was a terrible idea that was rushed through without enough thought or debate. It should have never happened the way it did, and I am afraid we will pay for it in the long run.
2. I agree that the Big Three should not get a "bailout" either. The government can't go around saving every industry, especially ones that won't change. On the flipside, at least car manufacturers make something, banks make their profit from usury - a practice that was held as evil and base by basically every civilization until about 500 years ago. Having said that, I want to reiterate, the Big Three deserve no "bailout".
3. Unions on the whole are a positive thing. I am with Reed on everything he stated about them. The lack of innovation and forward thinking of the car industry is a failure that should be dropped on the back of management, not the UAW.
4. The only industries we should be helping out are those involved in alternative energy (except ethanol).
5. Much of the current crisis is the fault of the oil companies. I am being serious. Record profits draining all the other industries via fuel costs and hurting the consumer the same way. Plus the pressure they put on auto makers to continue to make gas burning cars rather than alternative sources. Oil = death of the future.
Now, now, fellas, I never said "unions bad!!!! WRARRRR!", so don't make any assumptions based on my distaste for the UAW. The very fact that unions exist in a way implies their necessity. If big industry executives didn't have a tendency to fuck over their labor to maximize profits, we wouldn't need labor unions at all. That much I will acknowledge, and to a degree, agree with both of you.
But a noble enterprise doesn't a saint make. The labor unions are just as prone to being as crooked, greedy, and shortsighted, as any corporate executive, and cannot go absolutely blameless for their participation in the failures of their parent companies.
Now, from what I understand, the big difference between GM, Ford, et al and their peers in other countries is not necessarily the direct salaries they pay to their workers (though still on the high side), but the cost of the benefits, especially for their retirees. The latter being the biggest millstone around the neck of the big three, especially GM, who has over twice as many retirees on the "payroll" as they do active workers.
The bottom line is, the UAW negotiated for benefits that simply weren't sustainable, especially by companies that were already struggling to compete with foreign rivals. A bad economy is simply the cliff the buffalo herd was heading for.
And what could GM or Ford really say? No, you can't have these benefits or this kind of retirement pay? The UAW have had those three companies by the balls for a long, long time, and they know it.
Which in itself isn't inherently bad, mind you; But it becomes bad when that bargaining power is abused to achieve short-sighted ends.
So, great, a line worker and his peers make $50/hr, including salary, benefits, free health care, etc... That sounds great at first glance. But how does that really help him if the company goes under in 2 years?
I know the liberal Democrat playbook says under Chapter Five, paragraph 4: "Unions Good! WRAAAR!" :) But let's not pretend that union leaders aren't capable of the same short sighted greed and dumbassity that corporate executives are.
After all, how much do you want to bet that most of the awesome retirement benefits are usually negotiated by seasoned, veteran union leaders who are on the verge of retirement. ;)
In any case, we all agree on the case issue: Bailout for Big Three = bad. That really says something.
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