Big Three auto CEOs flew private jets to ask for taxpayer money
Story Highlights

Lawmaker: Flying jet to hearing like going to "soup kitchen in high hat and tuxedo"

Rep. Brad Sherman asked CEOs whether they would fly back commercial

Company representatives pointed to safety, travel policies as reasons for flying jets

By Josh Levs
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. Watch Nardelli ask for help »

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.

CNN's Emily Anderson and Virginia Nicolaidis contributed to this report.

quote:

"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."

Red herring
Political posturing
grandstanding
political talking points

Not the issue.

The big 3 need to stay in business.

It is the countries best interest to do so.

Give them loans, not free money and correct laws and regulation that keep them from being able to compete thanks to libs.

quote:

Originally posted by boom stick:
Red herring
Political posturing
grandstanding
political talking points

Not the issue.

The big 3 need to stay in business.

It is the countriesy's best interest to do so.

Spelling, actually.

quote:

Give them loans, not free money and correct laws and regulation that keep them from being able to compete thanks to libs.

After all is said and done they still have to "get it". If $20,000 was a fair estimate per head they wasted $60,000. But tell me. How do you blame Big 3 CEO spending habits on "libs"?

aaah yes... I rarely proof read my posts.
I brainfarted the plural with the singular

Thank you grammar police

quote:

Give them loans, not free money and correct laws and regulation that keep them from being able to compete thanks to libs.

Sorry....I disagree....let the bastards go under!

If your not smart enough to loan money to people who can pay it back you deserve to get fucked.

If your stupid enough to borrow money you can not payback you deserve to be homeless.

Let the big three and the UAW live in the shit house they built..

Bailing people out teaches them to be dependent not independent.

Negotiation:

Union: Ok, here is the deal. We go out for 5 weeks, then you give us our $78/hr and all the other stuff we are asking for.

Bosses: Yeh ok, and we get to keep our Gulf Streams, Executive Dining rooms, and $20 million dollar bonus.

Union: We will have to charge the public $50,000 for a $12,000 pick up, right. That way by the time we are ready to retire the company will be broke.

Bosses: Who cares as long as our pensions are funded.

All: Ok, lets do it!

The Big 3 are not competitive because of legacy costs associated with years of mismanagement and crushing labor agreements. Chapter 11 is the only mechanism that will allow the companies to get their costs under control and to have any hope at future profitability.

Throwing $25 billion at a $500 billion problem will not do any good.

boom stick, we need the factories humming and we need jobs. In their current condition (management, labor, debt load and legacy costs) these companies are bad for American competitiveness. Put the assets in the hands of deep pocketed owners and capable managers.

quote:

The Big 3 are not competitive because of legacy costs associated with years of mismanagement and crushing labor agreements.

Forrest, as much fun as it is to throw rocks at labor and management the root problem is that consumers ain't buying enough product.

Toyota makes better vehicles, consumers know that and buy them as a result.

Skinner,
then you have to ask why Toyota is doing so much better?
There are many plausible answers but the main ones sticking out are antiquated manufacturing facilities, unions and pension funds.

quote:

but the main ones sticking out are antiquated manufacturing facilities, unions and pension funds.

Nope, just better designs for the products. Toyotas are usually trouble free and very long lived.

Consumers notice shit like that and tell other consumers. Hence more people buy them.

These exec's are showing their elitist
opinions of themselves, no surprise. Let
these companys, big or small, who make
such terrible bugetary decisions use the
bankruptcy procedure.

quote:

Originally posted by Skinner.:

Forrest, as much fun as it is to throw rocks at labor and management the root problem is that consumers ain't buying enough product.

Toyota makes better vehicles, consumers know that and buy them as a result.

It's true that Toyota makes better vehicles and consumers aren't buying enough of the Big Three's products.

But even if the Big Three could sell their product, that wouldn't solve the problem. GM currently loses somewhere between about $500 and $1800 on each vehicle it sells, whereas Toyota, Honda, and Nissan make a profit of about that much per vehicle.

You can't make up for a loss on each unit you sell by selling a lot of those units.

quote:

Originally posted by Skinner.:
Nope, just better designs for the products. Toyotas are usually trouble free and very long lived.

Consumers notice shit like that and tell other consumers. Hence more people buy them.

Falling market share is EXACTLY why G.M. has so much excess production capacity. It costs money to have those cars sitting around for months before sale, so if G.M. sells at a loss it's on them. Add a small problem like the credit crunch and it can easily be seen why their headache has grown so large. Legacy expenses exacerbate this, but are not the root cause of it.

G.M. has had a spotty build quality over the years, and this too has caused them problems. How about the LB7 engine that eats injectors? Nice of them to extend a hard to obtain warranty to 200,000 miles. Don't you think a simple design change and recall would have been a better choice? This is just one example of how not to take care of your formerly loyal customers.

Let's beat on Ford for a second. Nothing like the 2004 model "Power Stroke", was there? In the end even Ford couldn't afford to fix them. More importantly, why would one rush a short lived engine to market when tier II emissions already made it a dinosaur? My point? You can't blame labor for such lunacy...

quote:

Originally posted by Skinner.:

quote:

The Big 3 are not competitive because of legacy costs associated with years of mismanagement and crushing labor agreements.

Forrest, as much fun as it is to throw rocks at labor and management the root problem is that consumers ain't buying enough product.

Toyota makes better vehicles, consumers know that and buy them as a result.

And who's fault is that Einstein?

Japanese workers are the better paid workers in the world, japanese cars sell like hot buns.
Well paid workers are not the problem.

quote:

And who's fault is that Einstein?

Obviously Toyota's since they built vehicles that run for years with minimal problems that raised the standard consumers expected. The Big 3 had consumers conditioned to expect much less after decades of controlling the market.

Good points buckshot.

A good example of how it's done properly would be the engineering and test efforts that went into building the GM "Quad Four" in the late 80s and early 90s. They tested this 2.5 liter four banger all the way out to 1100 + HP and ran it hard. They ended up with an engine that was just about bullet proof. Foreign manufacturers test their products in this way but the Big 3, except for the Quad Four, don't in general. Test it until it breaks, you'll learn alot. Don't "test it on the public" all you'll get is people looking at other brands.

A good point is the 2003 and 2004 Powerstroke. It took them two years to solve some fairly simple issues. The engines were fine from 2005 to 2007 except that you couldn't "chip em up" reliably because THEY ARE ALREADY CHIPPED UP. Duramax had it's own growing pains with injectors compliments of aluminum heads. They now sport cast heads. Their head bolts are more stout but you can still chip them past failure. I don't understand a diesel without head studs anyway.

Anyway, enough ranting about their testing shortfalls. That's the real issue as well as the product line in general. Ford Europe has some very interesting vehicles and most are avialable with small diesels with outstanding fueil economy and the "get up and go" torque you get from these engines. The Europeans have understood this for decades but the US buyer doesn't. Yep, it's time the Big 3 reorganize.

Ken....

Heard a talking head say that the Big Three are pension funds masquerading as auto manufactures. Smiled at that one.

The only way out of that is chapter 11. Let them come up with a restructuring plan before they come begging for money.

quote:

Originally posted by Heat:
Ford Europe has some very interesting vehicles and most are avialable with small diesels with outstanding fueil economy and the "get up and go" torque you get from these engines. The Europeans have understood this for decades but the US buyer doesn't. Yep, it's time the Big 3 reorganize.

Ken....

Glad you mentioned this. Testing on domestic diesels was done with fuel imported from Europe. Why? We simply don't have clean fuel for modern diesel engines.
Nothin' like having the cart before the horse, is there?

quote:

Originally posted by Edmond:

Well paid workers are not the problem.

Sorry, but that's just not true. Your saying that shows you haven't been paying attention.

Workers at the Big Three receive a total of approximately $75/hour, while workers at the Japanese carmakers' factories in America receive about $55/hour.

The difference works out to something like $1500 to $2000 per vehicle. So either the Big Three have to cut the quality of their vehicles by $1500 to $2000 each, or price them higher by that amount.

Consumers aren't stupid. They buy the Japanese cars because they are better and/or cheaper.

The difference in labor cost is the reason for much of this difference.

quote:

Originally posted by LE270:
Consumers aren't stupid. They buy the Japanese cars because they are better and/or cheaper.

The difference in labor cost is the reason for much of this difference.

Legacy expenses are not unique to labor, and placing blame squarely on the UAW is a cop out. The Big 3 are hurting for a multitude of reasons, some of which you've witnessed on t.v. yesterday.
Fact is the Big 3 are moribund because management has been bungling for almost 30 years, and labor is only a part of that equation. Good performance might begin in the board room, but it ends with the customer. G.M. management has forgotten this lesson and the shareholder will pay for it