You’d think a guy would have to be pretty smart to get a job running any of the Big Three automotive companies. You’d think they’d realize how awkward it would look to fly down to Washington D.C. in a private jet at a cost of $20,000 paid for by the company they head and then try and claim that their companies are flat out broke and need a government bail out. You’d think that, but you’d be wrong:
All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.
“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.
While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits.
“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”
Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.
After the hearing, Wagoner declined to answer questions about his travel.
I’m seriously torn over this whole situation. There’s a part of me that would love nothing more than to see these clueless pricks crash and burn in a major way. The Big Three created this mess and they should feel the impact of it. The other part of me also realizes that letting these companies crash and burn is going to hurt a lot of people everywhere, but especially here in Michigan. Being a life-long Michigan resident you’ll forgive me if I’m a little concerned about the damage a failure of that magnitude will have on my state. We’ve already suffered through the worst economy of the past eight years even while the rest of the country was doing pretty well, at least until recently. Of course you could argue that it’s our own fault for relying on the automotive industry as a major part of our economy for too long and that’s a valid argument. So I go back and forth between hoping a bailout happens and hoping it doesn’t.
One interesting story I cam across that could throw an interesting twist into how this all unfolds is word that China might buy out one or more of the Big Three:
Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China’s leading business newspapers, with a daily readership over three million.] The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?
A take-over of a large overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble…
Word has it that China has over $2 trillion in cash reserves that could be used for just such a purchase. It’ll be interesting to see how the Free Market Conservatives react if Chinese companies make a big to buy either Chrysler or GM, or both. Could they handle losing two major automotive companies to a foreign power? What happens if Ford goes belly up after such a sale? I’d bet you’d see a quick change of opinion if China starts waving some cash around.