Now that GM has launched its PR response to Jet-Gate, Ford is also taking steps to be ensure that it is perceived as an austere, efficient company. And no, they’re not making Mulally give up his Lexus (he was already supposed to have, although ABC News appears to have caught hime in flagrante delicto with his LS430 as recently as this summer). The AP reports that post-begathon criticism has Ford staff “looking at all of our operations to reduce costs and operate more efficiently,” which just might include giving up some undisclosed number of the five jets it currently operates. “Ford’s top priority is to continue making progress on our transformation plan, and we do not want anything to distract us,” spokesman Mark Truby said in a statement. “We are exploring all cost-effective solutions for our air travel.” Ford operated nine jets in 2005, when its stock price opened the year at $13.17. Ford’s stock is currently valued at $1.43 per share.
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Optics!
Honestly I think it would be great if execs were expected to own at least one car from a different company; the more the better in fact. I wonder how much of Detroits myopia was the result of only driving company cars.
Actually, part of the problem back in the 70s and 80s is that execs rarely drove their own products, usually getting chauffeured. Also, the fact that they just dropped cars off at the motor pool meant they never had to experience what it was like to get a car serviced.
My guess, though, is that Fujio Cho has a Lexus LS460 long wheelbase and a driver. I don’t know what Dieter Zetsche drives, but back in the days of the Red Brigades and Beider Meinhof gang I’m pretty sure the head of M-B had a driver and an armored S Class.
BTW, I contacted the General Aviation Manufacturers Association and the nice PR lady said they weren’t very happy about the bashing of business jets and were preparing some kind of response. Between 20,000 and 30,000 Americans are employed in building private and business aircraft, plus those servicing them.
Ronnie: 20-30000 people are involved in the circus peanut manufacturing business too…
I’m not against private jets, but it should really be something that you do with your profits, and you especially shouldn’t take it to beg for loans. If someone showed up at the welfare office in a Mercedes, I’d hope they’d get laughed out of the building.
I totally sympathize with the Detroit-3 about this intractable air-travel problem. If only there were some kind of company out there that would offer, I don’t know, some kind of mass transportation service … by air … perhaps in exchange for a fee. I can’t believe no one’s thought of that.
If I were Mulally I would have driven a Ford GT to DC.
With a lawyer with a briefcase full of cash in the navigator’s seat.
–chuck
Ronnie: 20-30000 people are involved in the circus peanut manufacturing business too…
Instead of just making a glib remark, which I can easily do, I actually checked on employment figures and contacted trade associations to come up with that figure. The figure is approximate because I wasn’t able to get figures for LearJet out of Bombardier, who owns them, but just about 20,000 people work for Gulfstream and Cessna directly. GAMA’s rep told me that the number of people in the industry who don’t work directly for mfgs is also significant, meaning pilots, attendents and mechanics. Maybe Steve can give us a clue how many mechanics are needed.
Tell it to the folks in Wichita. I suppose as long as you’re not one of the people who work for Cessna/Citation, LearJet or Gulfstream, it doesn’t matter what happens to them, right?
But hey, who needs a domestic general aviation industry, right? Honda is coming out with a small jet and it’s supposed to be the class of the field. I’m sure that Embraer will also be happy to pick up some business.
After all, those are luxury items. Who really needs a private jet? I mean, it’s not like the folks who work for Gulfstream can afford one.
We almost put the US private boat industry out of business with the so-called luxury tax on “yachts”, 10% on anything that cost more than $100K. Sales of US made yachts dropped by 90%. Since those are pretty big ticket items, the total lost revenue to the companies and lost tax revenue to state and federal governments was significant, but, hey, we sure showed those fat cats who owned the yachts didn’t we? Well, at least we showed them that they could pick up an Italian yacht while on a trip to the continent and save $10,000 to $200,000.
It’s like I told my cousin when she said that nobody needed to buy an Enzo, that instead they should use the money to feed people. I said that they were feeding people, Ferrari employees.
I’m not against private jets, but it should really be something that you do with your profits, and you especially shouldn’t take it to beg for loans.
This isn’t about profits or loss, it’s about PR, image and perceptions. I have no doubt that based on travel time and the salary costs of the people involved (including staff and other execs who had to travel with the CEOs to Washington) the use of business jets most likely saved money, which is what they should be doing when they’re in crisis. It just didn’t look good.
Next time, if they don’t caravan to DC in Volt, HySeries, and EV prototypes, they’ll just fly in to Baltimore instead of Dulles and drive the rest of the way to DC.
Ronnie,
I agree with you that at this point, it is all about perception and image. These 3 execs are showing incredibly poor judgement with their lack of preparation for these hearings, lacks of solid business plans, lack of sensitivity on ‘jet-gate’.
Reality is that all 3 demonstrated a profound ignorance of where people perceive their companies. And really, they were begging for money and but refused to share some of the pain and cut their own salaries. That’s not leadership.
Morevoer, that shows the type of accountability and pay for performance attitude that helped create these incredibly insulated companies in the first place.
I think they’ll likely get their bailout/bankruptcy delay funding, but like Citibank, it will be sending good money after bad.
Akio Morita, founder of SONY, had Bang & Olufsen a/v at home, to challenge his engineers.
Nothing wrong in driving the competition’s products, what is wrong is pretending your own is just as good.
I think Jet-Gate’s silly. These guys flew with advisers, lawyers, PR-people and probably other members of management. Private jets save time, and can increase efficiency — but they could have been better prepared for that question.
And they should have been a lot better prepared for the other questions. The greatest scandal from the hearings was Wagoner’s shrug when he was asked whether he’d need more money.
He knows he needs multiples of what they were asking for. They were disingenuous, and it showed – and that’s why they didn’t get any moolah this time around.
Ronnie S.
You are correct. Think it was the Ford plane but the CEO flew with lawyers and such to the meeting, about ten people total, and their average rate was $600 per hour. The savings by not flying all those people commercial was about $40k.
Now I agree that the perception is not that great, but much to the dismay of the commercial airlines there is a benefit to general aviation.
I’m surprised that there apparently wasn’t anybody in any of the companys’ PR departments that didn’t have the sense to advise their boss that taking the company jet wouldn’t be a good idea, image-wise.
Of course maybe they knew that but didn’t dare bring it up.
Or, worst case, maybe they _did_ bring it up and the boss said nonsense, we’re taking the jet, it’s nobody’s business how we get to DC.
Isn’t part of the overall problem that lawyers are being paid $600/hour for “advice” and that CEOs are getting paid $10m-$30m/year for “leadership”?
This kind of advice and leadership has been the driving force behind crushing the American blue collar work force. Oh yeah, and making substandard products which the companies don’t stand behind. How many $600/hour lawyers spend their days justifying avoiding legitimate product liability issues?
I think those lawyers are vigorously putting together the circus peanut industry bailout appeals package.
Stein X Leikanger: “I think Jet-Gate’s silly. These guys flew with advisers, lawyers, PR-people and probably other members of management. Private jets save time, and can increase efficiency — but they could have been better prepared for that question.
And they should have been a lot better prepared for the other questions. The greatest scandal from the hearings was Wagoner’s shrug when he was asked whether he’d need more money.
He knows he needs multiples of what they were asking for. They were disingenuous, and it showed – and that’s why they didn’t get any moolah this time around.”I suspect that ‘Jet-Gate’ is simply the direct result of the CEO’s lack of preparation to ask for exceptionally large loans of taxpayer money. It was like, “This meeting was critical enough for you guys to fly here on three, separate private jets, yet this is all you’ve got?”.
Isn’t part of the overall problem that lawyers are being paid $600/hour for “advice” and that CEOs are getting paid $10m-$30m/year for “leadership”?
That’s a legitimate point, but reality is reality and the reality right now is that is how much the companies are paying their CEOs and lawyers. Decisions made today are based on today’s actual costs regardless of the wisdom of those costs.
BTW, if you don’t like the idea of $600/hr lawyers, just remember how law schools and trial lawyers tilt politically. You can be assured that with Democrats in control of Congress and the White House that nothing will be done to rein in litigation, which is a huge cost to our society. We’re a society run by lawyers. The legislatures, state and federal, are chock full of lawyers, passing legislation that helps them, not us.
Frankly, I’d like to see a windfall profits tax of 50% on all attorneys fees from personal injury cases, with criminal penalties if they raise their contingency fees to pass that tax to their clients. Geoffrey Feiger says he’s doing it to protect the little guy against big bad insurance companies and careless doctors. Let him prove it by taking home $1.5 million a case instead of $3 million. They don’t create wealth, they are a parasitic drain on the economy.
My guess, though, is that Fujio Cho has a Lexus LS460 long wheelbase and a driver
Not a Century?
I just had a look on GM’s “People Finder” system, to see how many are employed in the corporate jet area of the company. Right now we have about 25 people in ground operations across 2 shifts servicing the jets. We also have about 24 Pilots and Co-Pilots, a few mangers, a Director of Flight Operations and a couple of administration staff.
I would hate to even guess how much it costs to employ that amount of people.
On top of that you have to lease the actual planes – until recently 7 of them for GM.
So, after paying all these people does anyone out there think that it is cheaper for the executives to fly on the corporate jets rather than comercial?
Holden:
Yes I think it can be cheaper for the executives, when flying with several passengers, to fly general aviation airplanes. In my opinion the jobs you described are fixed costs (or sunk costs?), and are likely incurred if the jet sits in a hangar. Variable costs make up a large portion of the hourly operating expenses and when that per hour expense is distributed on a per seat basis, the mission starts to make more economic sense.
So, after paying all these people does anyone out there think that it is cheaper for the executives to fly on the corporate jets rather than comercial?
When you consider that Rick Wagoner makes $41,000 a day (assuming a 365-day working year) or $3400/hr ( given a twelve-hour, seven-day a week schedule, which is pushing it) I’d say yes.
I’d also say that he’s only slightly overpaid.