Detroit bailout: 7 key questions

Here's an idea I read on another website today. Since the oil companies are still making money hand over fist these days and since their profits are so tied to the auto industry, let's have Exxon, Shell, BP et al bail out the US auto industry.

Hmm, I wonder where the calls for a bailout were when oil was at $8 back in the 90s? Or perhaps when the oil market crashed in the 80s? Or when laid off workers were burning down their own houses for insurance money? What about those millions of workers?

I am sorry but I just find it insulting that people are calling for a bailout for autoworkers when the plain and simple truth is that there is just too much overcapacity in the system. We won't buy as many cars like we used to. We don't need to employ hundreds of thousands of guys to put together cars. And the Big 3 certaintly don't have the market share like they used to.

Is there a problem of letting Toyota and Honda fill the spots that the Big 3 couldn't? It isn't like the demand for X amount of cars is going to go down. People will just buy Toyota cars now rather than the Big 3. The extra demand will spur additional investment in capacity, and more than likely all of the suppliers/dealers will just end up working for foreign automakers. Yes people will lose there jobs, that is expected because they just can't exist in the economy anymore. Trying to maintain corporate welfare is just taking money out of all of the successful business' pocket.

And you want just take money from one of the few remaining sectors making money? What the hell is wrong with yall? Another one of those oil conspiracies gone crazy and looking for someone to punish.

edit: I would also say that places like Michigan need to diversify. I would think they would of learned their lesson after the first crash but obviously they are just trying to cling on. Texas has moved on from relying on the oil sector for its economy and we are much better for it.

The biggest problem the Big 3 have is they refuse to adapt. People want smaller, more fuel efficient cars, and they are still building thousands of giant SUVs. Why, because they can't seem to make a buck on small vehicles. For all that some people (like Stemmer) criticize the Japanese automakers, they are true adapters. They came into our market with small, fuel efficient cars and when they saw a need for pick-ups and SUVs, they built Tacomas and Highlanders. But they never abandoned the small car market, and they still contribute to their bottom line.

Big Three CEOs Flew Private Jets to Plead for Public Funds

Auto Industry Close to Bankruptcy But They Get Pricey Perk

By BRIAN ROSS and JOSEPH RHEE
November 19, 2008

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.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

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 one of eight luxury jets in the GM fleet 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.

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.

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.

Yet Ford continues to operate a fleet of eight private jets for its executives. Just Tuesday, one jet was taking Ford brass to Los Angeles, another on a trip to Nebraska, and of course Mulally needed to fly to Washington to testify. He did not address questions following the hearing.

"Now's not the time to do that sort of thing," said John McElroy of the television program "Autoline Detroit."

"Now's the time to be humble and show that you're sharing equally in the sacrifice," McElroy said.

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.

Private jet travel is perhaps the greatest perk of all for CEOs, who say it allows them to travel more efficiently and safely, even in a recession.

AIG, despite the $150 billion bailout, still operates a fleet of corporate jets. The company says it has put two out of its seven jets up for sale and is reviewing the use of others. Though there are no such plans by GM or Ford.

"It appears that the senior management of the automakers simply don't get it," said Schatz.