When I moved to the UK, I was shocked by the price of petrol. “Britain’s an oil PRODUCING nation,” I kvetched to my accountant. “How could the populace allow their government to tax their petrol to the point where it’s the most expensive gas in Europe?” “Do you have any idea how much income tax you’re paying?” my personal pencil pusher asked. “If I were you, I wouldn’t worry about it.” In the same sense, I wouldn’t worry about GM CEO Rick Wagoner’s Gulfstream. It’s as nothing compared to the amount of money he’s pissed away on, well, everything else. Of course, it’s not the money, it’s the principle.
Now if you think I’m about to launch into a boilerplate tirade about Wagoner’s spendthrift ways in relation to the sacrifices made by the hard-working men and women who’ve either lost or are about to lose their Generous Motors entitlements, think again.
Firstly, I’m not convinced that any member of the United Auto Workers (UAW) has made what I’d call a genuine sacrifice in the last, oh, thirty years or so. Whenever the MSM announces “job cuts” at GM, they singularly fail to mention the fact that the UAW members are not looking at a final paycheck and a faretheewell. They’re paid some 90 percent of their working salary not to work. If they agree to go, they get a big kiss-off. Benefits cessation? As if. There are professional parachutists who can’t manage that kind of soft landing on a clear, windless day.
Symbolically speaking, Rick’s jet is no more “gold-plated” than the UAW’s compensation.
The real affront here is the same one identified by Car and Driver writer Brock Yates back in the day, and Michael Karesh in his recent editorial: GM’s disconnect with its customers.
Yates described a corporate culture in which no perk was beyond reproach. From an endless succession of immaculate automobiles to personal riches beyond imagination, GM’s suits were the big swinging dicks of Detroit. Despite— and also because of— their rewards, they lost any sense of accountability to the people who kept them in the style to which they became accustomed.
Rightly or wrongly– and I’m thinking rightly– Wagoner’s jet travel signaled the taxpayer (and thus the taxpayer’s duly elected representatives) that Detroit’s sense of entitlement has not changed. The Gulfstream as revealed Wagoner as a Big Wig who literally flies above the concerns of the common man. Sure, lots of CEOs have jets. But they’re not asking for a publicly-funded bailout by threatening the entire country with economic collapse.
Americans aren’t stupid— especially when it comes to their money. They “get” the connection between a CEO swanning around in a big ass jet and his company’s inability to build a product that Joe the Consumer wants to buy. They can also connect the dots between that failure as the CEOs appearance in the nation’s capitol with The Mother of All Begging Bowls.
“I had several business meetings this morning,” Wagoner told ABC, when confronted by his jet-oriented corporate profligacy. GM’s CEO instinctive reply shows that he believes his importance is more important that appeasing misinformed public sentiment (from people who clearly can’t identify with the demands placed on the CEO of the world’s largest automaker). In this Wagoner’s woefully mistaken.
Wagoner’s mach .88 Grosse Pointe myopia failed not one but TWO constituencies. First, GM’s “base,” the millions of people who drive a GM product or depend on same for their living. Hey Rick, come see what it’s like to drive one of your cars! Second, taxpayers. Voters who love America, but don’t love wealthy people who think they know better than they do, when, clearly, they don’t. Once again, still, GM has shown that it’s forgotten who puts food on their table.
So now what?
Chances are Wagoner will return to DC via a commercial flight. He might even, hold your nose, fly economy. Wrong answer. That would make the CEO the butt of humor and embolden the press to dig even deeper into the real disgrace: his salary. It will be seen, rightly, as cynical posturing, rather than genuine contrition.
Alternatively, commentators have suggested that the CEO should drive to Washington in a plug-in hybrid electric – gas Chevy Volt prototype. It would demonstrate that GM has something called “a future.” Wrong again. This kind of grandstanding will invite examination of GM’s product plans, which are now frozen, delayed and or disarrayed. Call it The Emperor’s New Automobile.
The only possible PR angle that will work here: Wagoner arriving via an American-made compact car: the Chevrolet Cobalt. To successfully suckle, Rick needs to do commute in GM’s penalty box, to display a politician’s knack for the “common touch.” Of course, Wagoner doesn’t have the slightest idea what that really means. Which is why he had to go to Washington in the first place.
How low does Rick’s disconnect go?
The jet-gate fiasco demonstrates the foggy world Rick must navigate every day. But how bad is it? I would love to see Rick Wagoner get maliciously “punked” in some of the following scenarios:
I wonder if you swapped the badges on a Focus and a Cobalt if he would pick out the ruse?
Would Wagoner – in order to advertise GM’s “commitment” to “our green future” – be stupid enough to drive an Chevy Aveo from Michigan to D.C.?
If you rolled out an EV1 from a museum somewhere and bragged that it was a Chevy Volt, would he buy into that? Or would he realize he was huckstering the ride he’s looking at now ten years ago?
These are just some of the possibilities. The potential is limitless, if only someone could pierce his bubble of dystopia and set him up for such a YouTube gem? We can only dream…
CEO’s should be forced to drive their lowest priced vehicle. If that leads to the decision to upgrade the bottom, and have those upgrades work their way up to the top, the end result is tangible quality across the board.
And imagine how much less it is to run an Aveo than it is to run a G5.
Suggesting that the CEO of a major corporation in the midst of a bankruptcy crisis waste at least an entire day driving from Detroit to DC is just ridiculous.
I wouldn’t drive from Detroit to Toledo in a Cobalt… so the odds of Rick doing his 2 minutes (much less 12 hours) in the penalty box is remote. Plus, the connection to the symbolism is way too obscure for him to grasp.
The reason he can’t drive the Volt is because they don’t have a functioning prototype – at least not one that’s not clad in Malibu skin, strewn with wires, held together with duct tape, and sporting a big ol’ prototype engine kill switch bolted to the IP (the development folks know what I’m talking about).
I forsee him wheeling up in a Cadillac Escalade Hybrid – you know, the same posturing, showboating, delusional disconnect of a half-attempt that he’ll pitch in the courtroom.
If Mullaly were wise he’d have one of those new Fiestas being airshipped right now for his road trip… and it probably wouldn’t even be that bad of a trip.
Nardelli had better have his AAA card handy for when his [insert any Chrysler product name here] craps a transmission somewhere in Ohio. If he’s lucky, Enterprise will then hook him up with a fitting Nissan Versa.
I wonder if you swapped the badges on a Focus and a Cobalt if he would pick out the ruse?
That would be hilarious.
It doesn’t matter what he does now in regards to travel, he is screwed no matter what he does.
One thing that he can still do to show that he is finally “getting it” is to step down.
It could be hilarious, if GM would not get the cash. But they will. If Citibank received 20 billions, because they can’t count and assess risk, what makes GM who can’t build cars ineligible?
I agree with the statement about being disconected, but would add that while GM executives get richer and richer, as they have lost market share, the ‘gap’ is even wider, as the domestic ‘customer base’ in aggregate has become older, less affluent, less educated, and more rural. With the exception of the 90’s SUV craze, the there are huge demographic gaps in virtually every segment for imports vs. domestic.
Suggesting that the CEO of a major corporation in the midst of a bankruptcy crisis waste at least an entire day driving from Detroit to DC is just ridiculous.
It wouldn’t be wasting a day, though, if they made a media event out of it.
John
In Rick’s defense, one can say that he’s no less PR-conscious than the average D3 CEO!
And autonut makes a good point. Citibank, which is supposed to be expert in the lending and investing business, turns out to be a dumbbell. But it scoops up $20 billion. So Detroit can logically figure, why should incompetence be a bar to a bailout? (Yes, I realize credit is more essential to the economy than Pontiacs.)
JK43123: “It wouldn’t be wasting a day [driving to Washington], though, if they made a media event out of it.”
Right! Now here’s what they can do: the CEO’s charter a bus and along the way they pick up the governors of Michigan, Indiana, Ohio, etc. and the mayors of Detroit, Cleveland, etc. There’d be brief rallies at major factories of the D3 and suppliers where employees can cheer begging-bowl speeches. Now, that’s a media event.
Hey, riding to D.C. would not be a waste of a day! Anything that gets Rick and his bumbling managers out of the office would be an improvement.
Really, send him in an Escalade with a detour through Gary. Problem solved.
As autonut said, if Citibank got $306 billion (with a “b”) today, the Big 2.8 should certainly get their money too, no matter how idiotic they could be. The problem is, GM & Co are asking for the money from the Congress, and Citi got theirs from Hank “Bailout” Paulson.
Honestly, I have completely changed my mind regarding the Detroit 3. Give them the bailout with no strings attached. After I read about the Citi today, I give up. And yes, GM, Ford and Chrysler will be in the line 6 months from now, coming back for more, just behind Citi, AIG, Fannie&Freddie and who knows who else. Disgusting…
And imagine how much less it is to run an Aveo than it is to run a G5.
Oooh, that took me a minute. You’re talking about the Gulfstream G5…
I thought for a minute you were talking about the Pontiac G5! Ah, there’s a re-badge from hell.
VWoA made the right decision to leave Detroit.
Rick wouldn’t know the difference between a Cobalt and a Focus due to having 2 major competitors in the same town where they share employees from the same pool of relatives and friends along with sharing the same pool of people with the supplier base and local media.
How can their be any competitive advantage when all the company secrets are being shared at the dinner table or in the bedroom?
Whoops… yeah. Gulfstream. I forgot about the G-things happening at Pontiac. And I don’t mean “Good”. Except for the G8. That’s great.
I would love to see Rick make the road trip in a Cobalt. Had he done that initially it definitely would have scored him points. Now it will at least not deflate his position further.
I made the same point about citibank on the latest bailout watch, in the auto industry we can’t believe the double standards going on with the bank bailouts, in effect the banks did a worse job, some saw the meltdown coming and got out, fair play but others didnt so they get helped by their friends at the top. How we can argue backwards and forwards about the big 3 getting or not getting help is made a mockery by whats happening with the banks. I just wish one of the CEO’s next week would have the balls to stand up and question the circus that is going on in washington in relation to all this.
“…The only possible PR angle that will work here: Wagoner arriving via an American-made compact car: the Chevrolet Cobalt. To successfully suckle, Rick needs to do commute in GM’s penalty box, to display a politician’s knack for the “common touch.”…”
I drove a rental Chevrolet Cobalt Sport on a 3441 mile road trip this summer. Not a great car, but a significant improvement over the Cavalier. Unfortunately for GM, the Honda Civic weighs less while having significantly more usable passenger room.
The better PR angle would be to drive a prototype Chevrolet Cruze to Washington DC to show what the money will bring. GM might be able to work a deal where funds allocated for “green” cars gets redirected toward more desirable domestic small cars.
The next time Wagoner is heading to DC to beg they ought to make him drive there in an Aveo. The “Special Value” model at that.
This is all BS. Let’s not forget the other 2 dolts at the table from Cerberus and Ford. All 3 are begging for money because they see the free ride the banks are being given and want in on the action.
The ONLY responsible action is to cut this ludicrous transfer of wealth now. Want a bailout? No problem – it’s called Chapter 11.
Get these elected, media-whore “representatives” of ours to start doing their jobs. I don’t recall there being one person with turnaround expertise sitting on this committee. They have no expertise is in this area, so let’s cut the crap.
I’m not sure which group is more reprehensible: the hypocrite ‘leaders’ from Detroit, or the grandstanding sycophantic politicians wanting to appear to be doing something, when really doing nothing at all.
BostonTeaParty:
There’s obviously a dual-track pecking order for the Harvard grads getting bail-outs for the companies they go on to (poorly) run, and those who do not, and it seems the nexus of the haves is whether you can get an invite to Goldman Sachs office Xmas (Hannukah?) party.
However, one of the biggest motivators for keeping insolvent banks solvent vs. insolvent automakers is the credibility of US debt instruments. Fact is, this country is mortgaged (no pun) to the hilt with overseas creditors.
Fannie Mae and Freddie Mac are good examples of this. Foreigners own vast amounts of those “securities” and the unspoken expectation with those firms and their debt is that it’s backed by the US Treasury. Maybe that wasn’t “official policy,” but it definitely was implied by the nature of those institutions. If we would have let them go under, the credibility of our promises of repayment, implied or not, would have been called into question.
Protecting American banks and all those mortgages with all that (currently unknown) counter-party risk is critical not necessarily for “financial stability” I think in so much as it is about protecting America’s collective FICO score, especially our own sovereign debt rating.
Ironically, we are falling into the same trap as a teeny-bopper with too much on the Macy’s card, who then takes out a Capital One Visa to pay the Macy’s card. Obviously there is going to be a day of reckoning for the teeny-bopper as much as there will be for us, but right now borrowing seems to be exclusively to cover debts, and not buy more vote-toys like a defunct automaker. Using a loan to get votes via deficit spending…those days are over for the good ol’ USA.
To help their “busy schedules” and “reduce their carbon footprint” couldn’t they insist on doing a video conference?
Mr. Farago:
Along with the FELONS on Wall Street, the boys (and girls)who MANAGE Detroit belong in orange jump suits…on a Federal prison farm…sweeping, mopping floors, and cleaning toilets.
After WE (the American taxpayer) bail out the banking/credit industry, the sub-prime mortgage mess, now the domestic automakers, then WHOM is next? The steel industry? Anyone/everyone who lines up in front of Congress?
Correcting a wrong with another wrong does not make a “right.”
Will SOMEONE please send me a copy of Brock Yates’ “The Grosse Pointe Myopians.” (Car & Driver, April 1968 issue.) Along with my former students, I will FORCE all my family, friends, and neighbors to READ it.
Said prescient article should be distributed to all 535 members of Congress…to vividly color their thought processes…as they decide the fate of Detroit.
“The certainty of being hanged, two weeks hence, does wonders to concentrate the mind!” (Samuel Johnson) Mr. Waggoner, Mr. Mulally, Cerberus Capital, WHY should anyone consider any of YOU worthy of attention? WHY do blitering IDIOTS, such as YOU, deserve any sympathy…and charity???
In the meantime, I shall(gleefully)continue driving my Honda Accords…which were BOTH built in MARYSVILLE, OHIO…unless and until (GM CEO)Mr. Rick Waggoner attempts to pry my cold, bloody hands off the steering wheels.
With gasoline and oil running through my veins, this fiery,old “Gear Head” (and MBA), I’d LOVE to have a piece of YOU, Mr. Waggoner! Ditto for (the late)Roger B. Smith!
Mr. Alfred P. Sloan, Jr: DO YOU HEAR ME??? ARE YOU ROLLING IN YOUR GRAVE NOW???
Very Sincerely,
Robert Warden
If he wants to be energy efficient, they’d set up a few web cams and he could do all this crap from his office.
But even THAT would send the wrong signal, that somehow America might survive without business day-trips to kiss ass in another town.
They should all take the train to DC, that is assuming that there is a train service from Detroit to DC. That way they will have time to think about their answers.
Gosh. I don’t know what to make of that pic. Is that TTAC’s opinion of me?
So there you have it: The Detroit 3’s plan: lobby Obama to make one of them treasury secretary, bypassing Congress entirely. After all, Paulson managed to use Congress’ unwillingness to stand up to Bush to get his piggy bank refilled, thus ensuring his ability to keep the party going with his friends.
Escorts for everyone!
So the Gov is going to print over 7 trillion dollars.
http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk
If they pump out 14 or 24 trillion; is it going to be any worse then printing 7? Is some amount going to fix and solve all the economic problems?
I don’t think they should print any. Consolidate and liquidate and work on making the dollar actually worth a dollar. Hell, I’ll drive a Honda.
Taking Amtrak from Detroit to Washington would be rich in irony indeed!
Well come on then, let’s see some real investigative journalism. What does a bizjet cost to run, and how much is the time saved worth? Are the shareholders getting good value out of the bizjet – if not, why haven’t they done something about it before now?
Mr. Farago, having come to this party, TTAC, a bit late (quite another story and much toooo long) I’m delighted to find that my pondering of the mismanagement issues regarding the misnamed ‘Big 3’ are being exposed, by you and others, for the arrogance that they exhibit.
Do I have an inside angle to the machinations of the domestic auto industry? On a peripheral basis perhaps. Directly, no. My circle of friends does include current and former auto workers and individuals within the middle to upper ranks of management and one special person who is trying, very hard, to sell these cars.
So why comment? Because of pain. The pain that will undoubtedly be felt by the poor schmucks on the line should this house of cards fall. The pain of associated industries. The pain that will be afflicted on the taxpayers who foot the bill while simulateously buy the cars.
So who do we target for our wrath? You alluded to this target in the above editorial. But are they the only ones?
The complexity of the answer is worthy of your best verbage but for now perhaps we can focus on what SHOULD have been? When a CEO is focused on profit and shareholders focus only on their immediate dividends what happens? Any CEO worth his salt goes to the product line that generates that cash flow…of course. A long term moderately profitable product doesn’t have the glamour but it does provide a baseline upon which a high ticket product can be presented.
I believe that the “3” gave over the baseline products that did make the auto industry as strong as it once was.
I believe that once it became obvious that this demographic was vulnerable other manufacturers filled in the gaps. Hence Corollas and Civics and such. Solid, reliable…you know the drill.
Now the “3”, in their arrogance, want to continue, as they always have. I don’t see the validity of any argument they present.
Gentlemen, rework that 1950’s business plan before you become a footnote in a book on how NOT to respond to market forces!
ciao, t
While the scope of banking bailout makes me cringe too, there’s just no way around the harsh reality: If the B2.8 go into CH11, it will cause major ripples, however life will continue.
If banks don’t have funding anymore, the whole economy stops, including the whole auto industry. Given the importance of financing for car manufacturers and buyers, no car industry specific baylout is of any use without a functioning banking industry.
You can kick and scream as much as you want, but it’s the truth. No economy can afford a collapsing banking sector.
If I was forced to drive from Detroit to Washington DC in a Cobalt, I’d consider calling Amnesty Internalional.
Mr Editor talks aboutCar and Driver writer Brock YatesCar and Driver? I thought he was a TTAC writer…
Oh, I see he’s not on the “About Us” page either. Came to your senses and realised I was right about him not being all that relevant any more, didja? (Not as relevant as he wanted to get paid for, anyways, I’d bet.)
Here’s hoping that’ll learn ya not to go deleting my comments when I’m right.
Triumphantly yours,
C.R.C.