Bloated Rhetoric and PR Sinks the Big 3 Bailout
This bailout of the Big Three automakers is not an easy issue, and their flying in three seperate private jets is just part of the problem. Americans will take this hit, including the unions and including the notion of both jet pooling, carpooling and a commitment to mass transit. This is an opportunity Bush will shrink from, as have the Dems, so far.
I am reminded of those dancing hippos in Disney’s Fantasia. Everyone is dressing up nice, flying on their fanciest corporate jets, puffing themselves up before the camera. Congressmen, Titans of failing industry, Senators, Talk Show babblers, Union Leaders. It’s all a dance with far more attention to the drama than to the facts of the issue. Will a bailout help America? Isn’t that the most basic issue here? It seems much less the focus today than that a potential candidate for President in 2012, Mitt Romney, has come out against the bailout in the New York Times. This has become far more a PR and political event than a rational and steady examination of the economic advantages and disadvantages, as far as I can tell.
On the PR side, the Big 3 Execs should certainly have jet-pooled to the hearings in Washington. Oops! Tres stupide, non? We just got out of an election where the word “elitist” is being thrown around like confetti and the boys from Detroit each take their own private jet to DC? Hey, don’t get me wrong, I believe in companies using private jets. I am the son of an executive and I flew on those jets with Dad for several years, at least a half dozen times. I have no problem with the use of private jets, but GOOod GOD, MAN, FIRE YOUR PR PEOPLE NOW! Mr. Wagoner, Mr. Mulally and Mr. Nardelli, get a clue.
How about those bloated salaries? Do you think, Mr. Wagoner, that it is unfair of we who you are asking for a handout ask about your pay? (Forbes rates it around $14MM last year.) Mr. Mulally? ($21.7MM in 2007.) As far as creating a little tiny bit of goodwill in front of Congress and the Senate is concerned, these guys should have opened with a description of plans already underway for scaling back pay of executives, including themselves. They did not, but instead showed up in a phalanx on private jets. That PR blunder is overshadowing the issue, and part of delivering a message is managing such distractions.
More bloviation comes from the Senate, where Harry Reid is passing the buck to George Bush and to a GOP proposal. Hey, Bush has got the cash now in that $700BB bailout package they don’t seem to be spending, and he’s still in charge. There aren’t two Presidents at a time, after all. Bus will do the sensiblwe thing, right? Can you say “Heck of a job, Pausony?”
This is a debacle in the making with no easy solutions. The potential impact is devastating, whether we go through bankruptcies for the Big Three or whether we bail them out. The State of Michigan could go under, we could lose millions of jobs, and inaction or the wrong action could trigger a deep depression. Or so the bloviating is warning us. It’s time for a steady hand, and that hand we elected doesn’t enter office until January 20th. But let me suggest a solution.
Someone should take charge. The salary and pension structure at the Big 3 is the problem, and if there is a bankruptcy, then the Big 3 would be able to bargain hard for concessions. Bankruptcy has its perils, however, in that people likely won’t buy cars from companies in peril, as they are worried about warranties and the like. Bankruptcy is rightly seen by the automakers as the first step towards collapse. Whoever takes this by the horn needs to offer a way to keep the auto companies viable for the long term, and that means massive UAW concessions. Nope, that’s not going to make the unions happy, but it is reality. It’s time to mandate a government controlled reorganization tied to a bailout, a reorganization tied to cuts in pay and pension reform for the entire auto industry. If this means an equity stake by the government, just as we now have one in much of the banking industry, then so be it.
Bold? You betcha! Politically risky, since it stomps on the unions like a bug? You betcha! But let’s look at some positives about the US Auto Industry. JD Power’s evaluations of the quality of the cars themselves are as high as they’ve been in a long time. The productivity of American auto workers is high, though their salaries be bloated. What is needed here is a plan that addresses costs for the auto industry both short and long term, that addresses the need to turn the industry radically towards energy efficiency and new energy technologies, and that injects buying power into the hands of American consumers. Only government action can do such a thing, and only bold government action.
I imagine at Barack Obama headquarters, where today they are focused on Janet Napolitano, our soon-to-be Secretary of Homeland Security. It is time for Barack Obama to call up Nobel Laureate Paul Krugman, investment genius Warren Buffet, and the rest of his stellar economic team and ask what the bold plan should be, the nuts and bolts of it, and then take that plan to the people. I can hardly blame Obama if he does not push this hard, given that he is not President yet, but it seems to me that the time is here for action, and nobody trusts Bush. This one will ultimately be in Obama’s hands, so maybe it is time to act now so that Bush and the GOP don’t dig us a deeper problem.
Hey, check that out. A confirmed liberal, I just proposed a plan that smacks the unions hard and blames Democrats in Congress for passing the buck. Of course, I also blame the Republicans for ineptitude. Still, this is not a partisan issue. It is about our entire country potentially going into a depression, not a mere recession. That means drastic action, guided by the smartest men and women out there, needs to be put on the table and now.
And who are you to determine that the autoworker’s salaries are “bloated”? Unless you have “been there, done that”, you should not think yourself superior enough to judge.
I’m a former Michigan resident, Lynda, and I’ve personally met several of the leaders of both companies and unions there. But don’t take my word for it. Go look at the statistics. Find out how much of your car goes to salaries of carbuilders, the medical care (I hope a national healthcare system deals with this problem) and pensions. Then compare to other countries.
As noted above, this is a tough solution to a potential disaster of a problem. My prediction is that if there are not massive concessions on the part of auto workers, dealers and the Big Three, on the order of 10% or more, then we will see Michigan become a frozen tundra with almost no jobs. That’s how important I see this problem, and unions have to be part of a very tough solution.
@ Lynda P:
Lynda P wrote:
I don’t think the auto workers salaries are bloated. I think the salaries of those asshole CEO’s who haven’t been making good decisions since the 70’s are bloated. $14 million is a hell of a lot to bring home in a company that is about to go bankrupt. Whack the CEO’s salary and use it to help with the bailout then I’ll consider it.
The bottom line is that we’ve known that gasoline was a time bomb waiting to go off since the 70’s. So what did GM do? They created an artificial demand for SUVs and small trucks to get around CAFE standards ( since CAFE doesn’t apply to trucks ) rather than making cars that were more fuel efficient like Nissan, Toyota and other foreign manufacturers did. They spent millions upon millions lobbying Congress so they would not HAVE to innovate - money that would have been better spent on R&D or making sure their cars don’t fall the fuck apart. It could have been Chevy that came out with the first decent production vehicle to get over 45mpg, but they were too busy laughing all the way to the bank until the bottom dropped out of the market. “Lead, follow or get out of the way” indeed.
After killing the EV1 ( which sold out in 3 months despite a lack of advertising and yet they claimed it wouldn’t sell ) now they want to roll out the Chevy Volt for $35k? Please. Nobody can afford that. They obviously haven’t learned a damned thing since the 70s, when I might add Toyota had cars that ALREADY got 30mpg. Yet GM is still touting the ‘amazing gas mileage’ of cars like the Focus. It’s a damned joke. It’s been 30 years since the last gas crisis and they haven’t done squat. I’ll buy a TH!NK Global car for half that price and get better use of it.
If a do it yourselfer can take a Hummer and turn it into a hybrid getting 100mpg for about $10k then GM has absolutely no excuse.
Sorry, no more unconditional handouts for greedy assholes. Fuck GM. If they fire their executives and hire competent people then perhaps we can talk and even then we should take it out of the $700m ass rape Congress already gave us. Otherwise TH!NK, Nissan, Toyota and Kia can buy out their auto plants and put those 3 million people back to work.
I’m agreeing on the executive salaries, E, but the industry needs to come in line. I would be extremely pleased to negotiate the line workers there for $25 per hour across the board, and work towards a national health system that then relieves the healthcare burden. $25 per hour is a 10% cut, though GM puts the average at $39 per hour.
Sorry Steve, being a former resident of Michigan and having talked to CEOs and unionleaders doesn’t cut it. I agree with E about getting rid of management. Autoworker statistics that are published include pensions and healthcare of retirees also. So that boosts the “statistics” of overpaid current autoworkers. I agree that there need to be remedies and perhaps some remedies can be offered by the autoworkers. BUT, your column suggests that it is the “bloated” salaries of the autoworkers that is the problem. While I don’t necessarily agree with a bailout of the auto industry, I do agree that measures can be put into place and implemented AND overseen and regulated while providing SOME money when certain goals are attained. I have worked for a major air carrier since 1969. In 1981 we were taken over by the ultimate corporate raider. In 1983 he threw out all the contracts and bankrupted the airline. As a result, bankruptcy rules were changed somewhat. But I can say from personal experience that the writing was on the wall for most of us who went through the ailine debacle. It has been as plain as day and in your face for 25 years that CEOs, CFOs, COOs, ad infinitum would rape and pillage and bring down anything in their way. So don’t ever blame labor for bringing this country to its knees no matter how much they make.
No, Lynda, my column suggests that everyone take part. That would include the UAW, the management at the firms, and the federal government.
There is a narrow view of union organizing and bargaining that says that wages and benefits shoould always increase. Partnering with firms is the last thing from most union minds. Hey, the UAW has some deep pockets, and I’ll suggest something really whacky here. Why don’t they invest in the big 3 and then help make the decisions. In the long run that’s the only way they’ll get 60% of promised pensions paid. That’s the real landscape here. We cannot look to the past, we must see the reality of the landscape as it is.