Wednesday, November 19, 2008

Vicious cuts at Detroit's Big Three miss the low hanging fruit

Brian Ross and Joseph Rhee have the story in the New York Times.
The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.
Well, big private jets don't cost much...
(Rick)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.
Well, OK, but they already own it, right? Can't cost much to operate. Pennies.
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.
Well, OK, a lot of pennies.

Ford, tho, Henry Sr's old place, surely is more tight fisted.
Ford CEO Mulally's corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
Hmmmm...Detroit to DC is roughly 1000 miles, costs $20,000. Detroit to Seattle mebbe twice as far, but the cost shouldn't be twice as high. There must be some efficiency. But let's call it $20,000 per week so the poor babies don't have to remove from chic Seattle to that tacky, icky old Detroit where he pulls down $28,000,000 per year to drive Ford into the ground...I mean selflessly serve as a Titan of Industry.
Mulally made his case Tuesday before the committee saying he's cut expenses, laid-off workers and closed 17 plants.


"We have also reduced our work force by 51,000 employees in the past three years," Mulally said.
Good for him. Reducing unnecessary expenses is key. Good man!
Yet Ford continues to operate a fleet of eight private jets for its executives.
Oh.
GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.
Oh, well, if it's non-negotiable, they must be locked in, no matter what, sort of like the Constitution mandating elections. Or the school lunch menu saying that Thursday the kids will have green Jello.

Mitt Romney has a decent column in today's New York Times about these jokers. Among other things, he says "management as is must go...Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat." But...but...Those are non-negotiable. Hand over the billions, chumps...I mean Taxpayers.

As Romney said: "Let Detroit Go Bankrupt." That should be non-negotiable.

UPDATE: Jim Lindgren at Volokh Conspiracy has more.

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