"Just a traveller, on an endless flight"

[claidheamhmor]

There's blood on the floor, and I'm wondering if General Motors, Chrysler and Ford are going to survive their financial crises.

Of course, when the top executives of those companies arrive in Washington to beg the taxpayer for a handout, and they came via private jet, one can understand part of the reason their companies are in trouble.

Senators Mock Auto Execs Use of Private Jets; Bailout Stalled in Senate

Jason Mick (Blog) - November 20, 2008 8:50 AM

As DailyTech previously reported, both GM and Ford are almost out of cash. GM will likely run out of cash by the end of the quarter and have to file for bankruptcy or break up its business if the government will provide a financial lifeline. While it’s obvious that America's big auto companies lost touch in the 90s and early 2000s, producing a slew of inefficient big trucks and SUVs while foreign competitors stole away sales with more compact efficient cars, they are an integral part of America's economy.

With the fate of many major tech initiatives, such as GM's Chevy Volt and Ford's new Fusion hybrid hanging in the balance, the country's economic future also is at peril as if even one of the big three fall, it could plunge the deeper into recession -- or worse -- according to financial experts.

It’s hard not to draw comparisons to another industry troubled by mismanagement and economic misfortune -- the U.S. banking industry. And while the federal government was quick to bailout banking, finance, and housing firms to the tune of $750B USD in taxpayer burden, the government appears to be unwilling to offer the automakers a $25B USD bailout.

Flying to Washington, Alan Mulally CEO of Ford, Robert Nardelli CEO of Chrysler and Richard Wagoner CEO of GM met with members of Congress in special hearings, begging them for a share of the bailout money. Many in the Senate, led by Republican opposition were unimpressed. Some Senators went as far as to mock the CEOs use of private jets as they came asking for financial relief.

"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," stated Rep. Gary Ackerman, D-New York.

He added, "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."

He continued to mock the auto executives, remarking, "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."

Senate Majority Leader Harry Reid has declined to move the bailout measure towards a vote as the measure appears far short of the 60 vote majority needed.

The automakers were grilled at the hearing from all sides. Rep. Brad Sherman, D-California, asked the automakers to raise their hands if they flew commercial. No hands went up. He then chided, "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 refused to respond to the sarcastic remarks on the Senate floor, instead trying to shift the focus to how they're restructuring their business. Later, spokespeople for the companies defended the use of jets, saying CEOs need them for safety and most major American companies use them. GM spokesman Tom Wilkinson stated, "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."

Chrysler's spokeswoman Lori McTavish said in a press statement, "While always being mindful of company costs, all business travel requires the highest standard of safety for all employees."

Some political analysts are supporting the harsh Congressional criticism. Says Thomas Schatz, president of the watchdog group Citizens Against Government Waste, "If it is simply the company's money at stake, then only the shareholders can be upset or feel as it might be excessive. [But in this case] 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."

Source: Dailytech

Comments

[filialucis]

Yeah, the private jet is just a teensy bit blatant.

On yesterday's news we heard that a local corporation was suggesting that their workforce should voluntarily waive 25% of their pay for a while so that the company could weather the crisis without layoffs. Needless to say, the trade unions were livid.

Nowhere did we hear that the executives making the suggestion had any intention of waiving any percentage of their own salaries, of course. Any more than those automobile executives would have considered travelling to Washington in cattle class... let alone maybe taking a train.

[claidheamhmor]

Yeah, it's typical. Execs always seem to value themselves higher than anyone else, even when they're the cause of the problem.

[mynameisnotreal.livejournal.com]

I'll probably be held as being biased since I was a UAW member for 14 years, but the figures tell a different story than what is being tossed around these days. The industry average for cost of a car compared to the wages of the worker who built range between 6% to 16% of the cost of the car. Ford averages about 10%.

Replace every human being with a robot and that $20,000 USD car would still be $18,000 USD. Don't blame the worker for getting paid to throw their bodies into the meat grinder.

[claidheamhmor]

Interesting figures, thanks - I didn't now that about the cars.

[openmindedmale.livejournal.com]

I expect one or more of them to collapse... what the end result will be (including people who already own their cars), who can say? Interesting times!

Might be a good time to buy Toyota or Honda stock though..

[claidheamhmor]

Heh. I'm the type who'd been wondering about buying Hyundai, Tata, and Chinese car manufacturer stock. Those guys are starting the climb up. (OK, not Hyundai so much, but compared to Japanese brands, yes).

[deepti-arrora.livejournal.com]

tata cars india (http://www.infibeam.com/cars/make/tata.html) now a days rocking. they are going to produced small car.

Of course...

[seawasp]

... whenever I see comments like that my instant reaction is, "Well, they already BOUGHT the jet. They paid for it. Wouldn't it be just as pointless a waste to leave it UNUSED? Unless you expected them to walk or take the train from their state to your hearings, they were gonna be burning SOMEONE'S jet fuel to get there. Plus, of course, the proportionate costs are so trivially miniscule as not to matter. When I was thousands of dollars in debt and trying to figure out how to pay for it, I still didn't feel guilty about occasionally having an ice-cream cone because the cost of the cone, while technically contributing to my indebtedness, was simply irrelevant."

Re: Of course...

[claidheamhmor]

I agree on the jet already being owned, but the marginal cost of running it is pretty enormous compared to the cost of a ticket on a typical airliner.

More than that, though, is the message it sends, and in politics, I think that's pretty important.