As if the $700 Billion bailout for the mortgage industry wasn’t enough, now the reality of an auto industry bailout is possibly taking fruition. Yesterday marked the day of mockery, as the CEOs of the big three (GM, Ford and Chrysler) decided to fly in their private jets into DC to meet with Congress in order to beg for a handout.
Obviously, seeing that these arrogant CEOs did use their very expensive and costly private jets to get to this meeting, the members of Congress laughed in their faces.
When asked who would NOT return home, using their private jets, neither of the CEOs raised their hand. When asked if the CEOs had a plan for the bailout, they neglected to provide one. When asked how much money they would need, they didn’t have an answer.
Does this sound like a well thought out plan to you? These people are CEOs (Chief Executive Officers) of three of the largest corporations in America, responsible for hundreds of thousands of employees, leading to even more jobs from third party companies, such as distributors/dealerships/retail stores. I’m not sure why these guys were hired/elected into their positions, but they’re obviously NOT acting responsibly and they’re NOT fulfilling their obligation to their stock holders, employees and partners. In my opinion, they really need to go, regardless of the outcome of this whole ordeal.
These companies do NOT need a bailout from the government. When have we actually seen a bailout/handout work? The $700B bailout didn’t do anything. People are still in the same financial situation they were, before. The stock market is crumbling and the DOW is now below 8,000 points (about 7,500 at the end of the day, today). A bailout will not give these companies what they need and will inevitably lead to more problems in the future, where these CEOs will clearly depend on the generosity of the government and their socialistic tendencies. Responsibility is lost.
I do find, however, that if the government didn’t have such stringent regulations on car production, the companies would at least be able to produce whatever they want, and that which actually sells. We could attribute these companies’ failings to the government, directly… just another case of them getting involved and destroying yet another industry. Other car companies, like Toyota, Honda and Hundai do not have these regulations, and thus… can produce more of what sells, rather than a percentage of what doesn’t. This is no excuse, of course, for the horrible leadership of the top three’s CEOs.
I can think of a number of ways these companies can get themselves out of their current funk:
1. File Chapter 11 Bankruptcy. Yes, no one really wants to do this, but this can save them in the long haul. They can restructure their overall business plan, budget, etc.
2. Replace the CEOs that have obviously driven these companies into the ground. Replace them with new blood, that sees and leads outside of the box.
3. Sell the subsidiary companies, or renegotiate contracts. This will sever the many companies that GM, Ford and Chrysler have purchased throughout the years and allow them to compete in the market and will probably lead to innovation. This will lower costs for the big three, maybe make them some money. Employees will be spread out, lessening the burden on the three, as well.
4. Kill failed projects. End the manufacturing of unnecessary parts and cars that do not sell. Limit the amount of cars they produce and possibly hit niche markets.
5. Renegotiate terms with the labor union, bringing down wages of CEOs, top execs AND those in the union.
It’s surprising that the employees at these big three are earning top salaries in their profession, when their companies are failing. They earn, on average, $77 per hour, compared to about $45 per hour at various other non-American car companies. Why should this be the case?
Oh, and sell the private jets. That can save the companies hundreds of thousands (maybe millions depending on how often they’re used, and where they fly them to) per year.
The auto industry needs to get real and search for their own resolution.