The CEO’s of the US automaker companies have announced plans to return to Capitol Hill to again plead their case for a federal handout to save the ailing manufacturing enterprises. This time, the parade will not arrive in separate corporate jets. Instead the executives plan to arrive by car, supposedly as a public relations move to counter the terrible press they received because of the mode of transportation chosen previously. At the risk of creating an impossible choice – damned if you do, damned if you don’t – the current decision highlights the cluelessness of the executives and their marketing strategists. No one is expecting busy executives [and they ought to be VERY busy] to wear a hair shirt and self flagellate in order to justify aid. The time required to travel by car could be seen as a wasteful publicity stunt unless the cars are equipped with communications devices that make the executives available during the travel. Why not simply take a commercial airline flight from Detroit [an airline hub] that would require far less time and be more efficient? Millions of business travelers get to and from meetings each week via air travel. Many no longer indulge in first class travel at the expense of their company or client, but they get where they need to go and back within a day.
The answer is probably that it never occurred to these folks. And therein lies the problem. They lack the ability to make simple common sense decisions that are fiscally sound and grounded in the real world. Similar critique could be applied to the expected bailout plans. Ford plans on requesting a huge “stand by” line of credit that it now says that it does not expect to need to tap. Why request it if it is unnecessary? Is the request being made because the company does not want to look like it is not a “team player” when its peers are kneeling at the public trough? “We don’t need the aid, but since GM & Chrysler are there begging, what the hell…why shouldn’t we get some free money too?” GM states that it will need from $ Billion to $12 Billion to survive. The demand is based upon plans for changes that it will make in the future, including the conversion to more eco-friendly and fuel efficient cars. Kick me if I haven’t heard that one before! The problem with such promises or deals – give me money now and we’ll make changes later – is that once the company gets past the immediate crisis, a thousand excuses arise for not making the changes.
The truth, I believe, is that the companies actually need some measure of aid in order to get past the immediate economic downturn. Vehicle sales have plummeted because people don’t have the money or credit to buy them AND because the vehicles needed are not being produced. A bailout plan based upon keeping Cadillac and Buick lines, the luxury vehicles of the fleet, does not sound like the executives have gotten religion or even thought the matter through.
This is PUBLIC charity we are talking about, not a public offering. And while the request for aid is justified by need to pay money for the shift of worker pension trusts, it is clearly expected that the companies will seek to delay such payments. So the pattern of dishonesty and deception, as well as doubtful executive competence, remains a problem.
The watchword should be caution. If money is sought, but not immediately needed, the government should maintain control and release funds only upon satisfactory certification of actual use. Putting discretionary funds in the hands of the same executives that have run the companies into multi-billion dollar debt seems senseless. Any promises made regarding future plans should be written explicitly into any legislation authorizing any bailout relief. The proposal for executives and management to take pay cuts is unpersuasive. These same executives have been drawing multi-million dollar compensation while the companies were diving into almost unbelievable debt. The question is not whether they should work for “one dollar” as the CEO’s propose. The real question is why they should keep their jobs at all, if the public is to risk billions of taxpayer dollars. Enough games, enough smoke and mirrors. The US government should do exactly what is truly necessary to help the automakers through the painful crisis. But the pain must be shared.
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