Are private jets the real problem with Detroit?
A great deal of fuss has been made over the last week or so about the travel arrangements of the leaders of the Detroit 3 automakers. By now, you're surely aware that Rick Wagoner of General Motors, Alan Mulally at Ford and Bob Nardelli at Chrysler traveled to our nation's capital to discuss Federal loans for their prospective companies in private jets. Yeah, not the smartest way to travel when you are begging for money. So, have you really explored all of your cash-saving options? Perhaps not.
After that very public debacle, General Motors announced that it had already returned two of its private jets a few months back and has plans to end the leases on two more this month. Ford is now reportedly following suit, but it sounds as if the move is just as much for public relations as anything else. Will Chrysler follow suit?
Ignoring the plain-as-day ungreenliness of private jet travel for a moment, is this really what we should all be focusing on? While it may have been a boneheaded decision, isn't it about time to move along already? Each of the Detroit automakers have CEOs that had better be pretty busy trying to save their companies, and to make that a reality, they need to get around somehow. As a PR issue, the three CEOs should obviously have laid a bit lower for their trips to DC, but lets not allow private jets to obscure the real issue at hand, which is whether or not the American automakers should get Federal aid and how best to get fuel efficient and alternative energy vehicles in consumer's hands as quickly as possible.
[Source: Detroit Free Press]
Reader Comments (Page 1 of 2)
Mike!!ekiM 6:06PM (11/25/2008)
A company with this much Red Ink should be doing a Line-Item Review of it's budget. Management Perks should be the first to go, not shareholder equity.
Reply
realistic_idealist 6:36PM (11/25/2008)
why don't you go help them? just use your nose, i bet you're good at clearing out crap. GM-LOVER!!!!!!
lol...
Luke 6:19PM (11/25/2008)
If only Al Gore would get rid of his.
Reply
state 6:21PM (11/25/2008)
"If only Al Gore would get rid of his." And only if Nancy Pelosi would not use the Air Force to fly one way back home.
But, they are Democrats, rules don't apply to them ;_)
John Metcalf 8:42PM (11/25/2008)
Pounding on Democrats hardly seems like a worthwhile use of anyone's time at the moment. Just like pouncing on the private jet thing, it shows a lack of imagination or a desire to get to the real issues.
Get back to us when you have something to contribute.
Serge 6:44PM (11/26/2008)
You seem to have a thing for Al Gore, Luke. Are you jealous of his big house and jet-setting lifestyle?
At least he finances his activities privately and is not asking for public handouts. That should count for something in your book, no?
paulwesterberg 6:28PM (11/25/2008)
After jets go limit exec salaries to 10x of an average line workers.
There is no reason why a business major who doesn't understand science, engineering or accounting and sits around in marketing meetings all day deserves to make 100x or 1000x what the guys working the plant are making.
Reply
state 7:23PM (11/25/2008)
"After jets go limit exec salaries to 10x of an average line workers."
Why not the same? Or less?
Mikeeee 8:36AM (11/26/2008)
Wil Smith made $80 mill last year acting.
Wonder what he pays his housekeeper?
I would think she/he deserves ( or is entitled to ) at least $10 mill.
Do you realize everyone that makes less money than you do thinks you make toooo much!!!!!!!
Or hasn't that crossed your pin head brain.
Jo 11:01AM (11/26/2008)
New rule: if you're going to tell people they have "pin head" brains, try to use proper grammar.
Next post: is our childern learning?
ronnie schreiber 1:28PM (11/26/2008)
Jo, it's a bit picayune to call an omission of a question mark a grammar mistake. The pinhead remark was uncalled for but his syntax is fine.
ronnie schreiber 1:39PM (11/26/2008)
Paul,
While they're not accountants, MBAs generally know a thing or two about accounting. Wagoner has a degree in economics and was GM's CFO before becoming CEO. I'm pretty sure he knows how to read a balance sheet.
Ronnie Schreiber
www.motorobilia.com
Matt 7:06PM (11/25/2008)
It's not that the jets are the focus of the press, but the fact that the jets perfectly highlight the excesses going on inside these companies. Instead of asking for bailouts so you can go about business as usual, these companies must demonstrate they mean business and start right at the top--executive perks & salaries. Excesses must go.
Reply
Snowdog 7:35PM (11/25/2008)
Bingo. We have a winner.
With the excess layers of management, there is so much going to paper pushers it is ridiculous. Why so many layers, to limit the envy to layer above you so it doesn't seem so insane. Every layers doubles the salaries, doubles the perks, doubles the excesses.
I could see having a small corporate jet for the CEO.
GM had a fleet of 7 corporate jets. Apparently during these hardship times, they are down to 5.
The real cleanup isn't needed for the $28/hour line worker, it is with the $5000/hour executives...
ronnie schreiber 1:34PM (11/26/2008)
With about 80,000 UAW members currently active at GM, raising their wages or benefit costs by 10 cents an hour costs GM more than what a "$5,000/hr" executive costs.
Ronnie Schreiber
www.motorobilia.com
the vegas style guy 7:29PM (11/25/2008)
Personally, the first place to cut the budget is the PR firm that didn't think ahead and warn them not to go in the jets. Then, aim at the second level of assistants who were too afraid to tell the boss it was a bad idea.
Reply
Rob 8:45PM (11/25/2008)
Finally somewhat has written what I was thinking.
When you factor in time and the support people that came along for the trip, the cost for using a jet (that they already have on lease) compared to flying commercial for a group of people is negligible.
Everyone should be focussing on how to get out of this mess, not pissing about on stupid topics.
Reply
fnc 8:59PM (11/25/2008)
For some instances, I wouldn't really consider using a company jet a perk. I see it as much about getting your money's worth out of their time as about the pure dollar value of the airplane (which as mentioned can be leased instead of owned).
If my company were paying a (supposedly) competent executive thousands of dollars an hour to run my company, I wouldn't consider paying him to sit in an airport terminal and put up with all of the time delays involved in commercial air travel to be the best use of their time. Every hour spent waiting on Delta to arrive behind schedule is an hour he could have spent doing his job instead. That's not to say I don't think American executives are overcompensated and not held accountable enough, nor that they abuse things like having a company jet, but in this case I failed to see what the big deal is.
Reply
frankbank 9:14PM (11/25/2008)
Finally a blog from Jeremy that isn't nonsense. The jets as an issue are an embarassment to me over the pathetic senators who failed to want to take responsibility for the real issue. The banking system the senators were entrusted to supervise abjectively has failed the actual, real, US economy. 30% of cars sales are now gone, because credit has dried up! Obviously this affects real economic activity, not some bank balance sheet of mortgage hedges for bundles of "toxic assets or some nonsense.
But is is easier for the senators to stage a kangaroo court ambush and the media are lazy dupes to play to old and wrong stereotypes of the US companies. See http://www.autoextremist.com/ for an accurate take on all this.
Wagnoner and Mullaly are probably going to take their jets to Beijing to mortgage GM's and Fords Chinese assets to the ChInese government for a line of credit. The CHinese surely value a domestic US auto industry more that the US government. Who could blame them?
The US government can continue to give the money to banks and watch it evaporate in weeks, and actually stimulate exactly zero activity in the real economy.
It is sad that the Chinese communists understand the benefits of real economic actiivty more than the US elected officials.
Reply
Mike!!ekiM 7:39AM (11/26/2008)
You have a good point, this is now the BANKERS RECESSION.
First it was the oil shock of $140 a barrel that started this depression, then the CDO and banking collapse, and the housing mortgage foreclosures that was driving the recession.
Now, Banks won't lend money Equals a Bankers Recession.
GM sales are off 30% but so are Harley's. Either 30% of the population couldn't ever really afford a car or motorcycle OR the banks have tightened credit requirements to unreasonable levels. Which is it?