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Wednesday, November 19, 2008

Bailout hypocrisy: Detroit's jets 

ABC News is running a segment savaging the CEOs of Ford and General Motors for flying on corporate jets to Washington to plead for bailout funds. Commentary below.



Commentary

Regular readers know that I stand up for corporate executives more than virtually any other blogger of the left or right, so I hope I have some credibility when I say that there is no reason why the CEO of any money-losing public company, no matter how huge, should fly on private jets for routine travel between major cities (such as from Detroit to Washington). These guys ought to be ashamed of themselves, asking for bailout money without first having sold off these planes.

I know what I'm talking about. I flew to Europe on Monday night and back this morning, coach both ways. When executives in our (profitable) public company fly to Japan or Australia, we go coach or pay for the upgrade out of own pocket. Yes, flying by private jet is absolutely wonderful, but unless you have to hit a lot of places very quickly -- say, for instance, if you were trying to visit ten factories in eight states in three days -- there is no excuse for it. The claim that it is more "efficient" is essentially hogwash -- yes, when you fly private you do not have to spend nearly as much time in airports, but you can put your airport time to good use if you always have your laptop and a phone.

Beyond the massive expense, executives who fly on corporate jets set a terrible example for other constituencies from whom they are demanding concessions. Why would any autoworker give up a plug nickel when the management has a whole fleet of private jets? Why would any supplier or customer want to concede a red cent to such a company? Why should the government bail out these mismanaged companies if they are led by people who do not understand the first thing about leadership? You cannot credibly demand sacrifices from your workers, suppliers, and dealers -- much less the taxpayers -- when your rump is nestled in the comfort of a private jet. In this one gesture, these guys are proving that they are -- at best -- managers. They are certainly not leaders, which is what the automobile industry so desperately needs right now.

MORE: I channel Mitt Romney! Well, he wrote it first, but I had not seen his must-read op-ed:

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Smart guy, Romney. Whether or not he would make a good president, he knows a thing or two about leadership.

16 Comments:

By Blogger D.E. Cloutier, at Wed Nov 19, 06:15:00 PM:

They should have drove a V8.  

By Blogger Georg Felis, at Wed Nov 19, 06:17:00 PM:

Hm, wonder if ABC happens to own/rent a private jet for certain occasions....

From what little I understand, it seems that high-end Execs have such a lock on their job they have to be bribed to quit. This leads to the rather backwards state of an Exec playing "chicken" with the company in order to get the best parachute.  

By Blogger Escort81, at Wed Nov 19, 06:25:00 PM:

It reminds me of the scene in the Steve Martin movie "The Jerk" -- after Martin's character becomes wealthy by inventing the "opti-grab," all kinds of people call on him to play him for a sucker and ask him for money. One Texan shows up and, pretending to cry, says that the leather on the seats in his private plane is cracked and he needs money to repair it.

Life imitates art.

At the very least, the Big 3 CEOs needed to be smart enough or savvy enough to undertand how the theatrics would play out. The theater would have worked out much better for them if they had flown coach and given a heads up to local news on both ends, so that they could be videotaped walking (hat-in-hand) through the airports and then taken the Metro up to the Hill.

As someone who has flown in private planes and a fair amount in first class, I'll say that it is easy to become addicted to perks. Perks are easy to rationalize when everything is going well. Heck, in the late 1990s, 26 year old investment bankers two years out of B-school would be upset if first class was sold out on a flight they needed to be on. Here's a nice compromise: use your own upgrade coupons to fly first class on a space available basis.  

By Blogger D.E. Cloutier, at Wed Nov 19, 07:00:00 PM:

"should have drove"

Somebody sent me an email, saying it should read "have driven."

From a Bon Jovi song ("Misunderstood"):

"I should have drove all night, I would have run all the lights. I was misunderstood."  

By Blogger Stu in York, at Wed Nov 19, 07:36:00 PM:

Hi:

I agree that these shameless CEOs should not be flying private jets while their businesses are floundering.

But why should they give them up? They are about to be bailed out by our shameless government, who, I think, can't wait to bail them out because they can't wait to control a (big) piece of the Auto Industry.

The CEO's know nothing will happen to them. They can sit in front of a few senators and take a "how dare you fly a private jet under these circumstances..." lecture, etc. I'll bet some of those senators are secretly admiring these guys for shoving it in our faces.

I find it disgusting of course. But I also find it to be business as usual...and I don't see it ending any time soon. But I hope I'm wrong!

Stu  

By Anonymous Anonymous, at Wed Nov 19, 10:14:00 PM:

The final nail in the Big 3's coffin. It's unfortunate that American Big Auto is going to die of UAW cancer. But it's their fault for smoking those union contracts for so many years.  

By Anonymous Anonymous, at Wed Nov 19, 11:30:00 PM:

DEC is on the right course.

These guys sell a form of transportation. Yet they seem to view it as being entirely inferior.

My advice to them: it's a 525 mile trip. Drive the damn thing and smile as you recount the joys of the open road.  

By Anonymous Anonymous, at Thu Nov 20, 12:28:00 AM:

TH, you are way wrong on this one! You mistakenly view the corporate jet as an issue of transportation. It is not!
The corporate jet is a tool that allows fat cats, including some ultra left wing fat cats, to isolate policy makers, politicians, their key constituents and family members for several hours and present their point of view.
Go back and check the logs of the aircraft of these three auto companies. My bet is that they've flown Congressmen and/or their family members around the country, back to school, to campaign events, for vacations or, simply, home or to Washington and, while doing so, wineing, feeding or servicing them or exposing them to corporate propaganda.
You got good investigators? Find out how often Kwame Kilpatrick or his mother or his girlfriend(s) flew on one of these aircraft. You can't touch that kind of clout in coach on Lufthansa!  

By Anonymous Anonymous, at Thu Nov 20, 07:19:00 AM:

I don't see the big deal here. The US National Debt is 10.5 Trillion and the President still uses Air Force One..  

By Anonymous Anonymous, at Thu Nov 20, 07:21:00 AM:

I didn't find the corporate Jets disturbing. I did notice one of the executives exited the Jet and entered a Mercedes Limo. Now thats disturbing. I can remember when a Limo was almost always a Caddy or Lincoln.  

By Anonymous Anonymous, at Thu Nov 20, 11:12:00 AM:

Brilliant!!! Sell an asset in a market that has devalued said asset!! So, after getting say .20C on the dollar by selling in a panic, would the same people now castigating them for using the plane be harping on them for selling an assety below value?

Get over it, those planes are the least of our worries under Dear Leader O.............  

By Blogger Cardinalpark, at Thu Nov 20, 03:14:00 PM:

It is ridiculous that these guys flew corporate jets to DC. Yet I would suggest to you that, while offensive, it is not reflective of a leadership failure.

Let me posit that car industry leaders are absolutely and completely in cahoots with union leaders. Even moreso, the CEOs actually work for the unions. They might as well have membership cards.

Huh, you say, how's that?

The fact is, the shares of the car companies do not confer ownership on the shareholders. They are options at best, but intrinsically worthless.

No, management works for the creditors, and the biggest creditors are the unions/workers. Since the capital markets are no longer willing or able to fund the union/government program known as Detroit, the unions have instructed mgmt to go to Washington and beg for money to sustain the existing union and capital markets liabilities.

They're doing what they're told. And as compensation for taking that awful job, in a terrible place, they are overpaid in cash and given perks.

But don't conclude it's an absence of leadership. Instead, it represents that unity of interest that completely exists between management and workers, each of whom seeks to protect the status quo.

Who knows? Maybe by offensively flying in private aircraft (and not even plane-pooling), they were trying to make it imposssible for the politicians to agree a bailout. But I doubt it. They're not that clever.  

By Blogger davod, at Fri Nov 21, 05:23:00 AM:

"Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat."

I did notice they seemed to be wearing expensive suits. I couldn't see the shoes or pens or watches, or underwear for that matter.

At this rate I shall have to start reading up on my tenets of Socialism (mind you, we are almost there already).

I am sure the business jet market is having enough trouble in this environment without current users being shamed into selling tjeir jets.

What do you suggest is appropriate?

At the most, these people are guilty of bad PR advice.  

By Blogger davod, at Fri Nov 21, 05:25:00 AM:

"Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat."

I did notice they seemed to be wearing expensive suits. I couldn't see the shoes or pens or watches, or underwear for that matter.

At this rate I shall have to start reading up on my tenets of Socialism (mind you, we are almost there already).

I am sure the business jet market is having enough trouble in this environment without current users being shamed into selling tjeir jets.

What do you suggest is appropriate?

At the most, these people are guilty of bad PR advice.  

By Anonymous Anonymous, at Sat Dec 06, 04:37:00 AM:

Private jet Rental - To experience the immense comfort in journey with private jets, books a jet right now with www.bookajet.ca.  

By Blogger Private Jet, at Mon Oct 18, 01:21:00 PM:

I am sure the Private Jet market is having enough trouble in this environment without current users being shamed into selling their jets.  

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