Congressional leaders agreed yesterday to give the Big Three automakers more time to make their case for a $25 billion emergency bailout, but they demanded that General Motors, Ford Motor, and Chrysler provide detailed plans for using the money to assure their long-term viability without more handouts.
Apparently, the CEOs of these three automakers flew in the Capitol Hill without a plan to explain what they would use the money for. Worse, all three of them flew in with their corporate or private jets instead of boarding commercials. When asked by a congressman, if the bailout was approved, would any of the CEOs sell their jets? No one raised his hand. In fact, Chrysler does not own a corporate jet, but the CEO released a private jet for the trip. For you information, it costs $60,000 for the three jets to fly just ONE trip.
What's wrong with this picture?
The story reminds me of a friend of mime who was starting his business at the time and was shopping for office furnitures. In order to get a bargain, he purposely left his luxury Mercedes-Benz car at home and drove his 12 year old wagon to the shop instead. The reason, he later explained to me, was not to give the shop owner a motivation to jack up the price, because he looked like a rich man. Some of you as small business owners scout the flea market for things that you may be able to sell on eBay or your online stores. Would you wear suits and ties or dress up like a big shot businessman and negotiate with the merchants at the flea market for a few dollars less?
Secondly, when asked how they would spend the bailout money to rescue their business, the Big Three CEOs showed no detailed plans but vague words. It was like saying: "Just give me the money, and I'll figure out how to spend it." Some of you may have experience with getting fund from venture capitalists for your startups, getting a credit line from a local bank for your business payrolls, or trying to convince a potential business partner to join your business venture. Would any of you show up at the meeting without a carefully crafted business plan or any documents that demonstrate all the homework you've done, the best judgments you'll exercise to spend that money, and the efforts you'll dedicate to assure the return of their money?
It just sounds to me the Big Three CEOs somehow lost grasp of commonsense and did not do what small business owners do to survive. Perhaps, they did not care anyway. Even though not interested in a big reward of the bailout package, we - tax payers at least do not want to look stupid in handing in $25 billion to people who do not appear serious about it.
Change the culture driven by the short-term interests
All of us know the Big Three have been losing market shares and revenues for a long time. They are blamed for producing cars that are not as competitive as their rivals. The most obvious problems include low quality and the lack of innovation. But, the root cause of their failure is that these companies have been operated under an atmosphere very much like politics in Washington, DC. Like politicians who only focus on short-term interests and getting re-elected for the next term, the CEOs of the Big Three have focused solely on their quarterly reports and how to pump up their stock prices. That is why you see GM Chairman and CEO Rick Wagoner decided to terminate the EV1 electric car program and opted to produce gas-guzzling vehicles like Hummer. To assure their long-term viability, we must demand these automakers to change that culture from top-down and start focusing on addressing the long-term problems. If we want to see the investment of our hard-earned $25 billion bailout returned, we must demand the same kind of changes we've recently accomplished on the Capitol Hill.
Will our kids approve the $25 billion bailout?
Let's not forget that the $25 billion bailout which is part of the $700 billion rescue package has to be paid for by all of us, our children, and our grand children. Shouldn't we at least ask our children whether they would approve the bailout of the automakers in this picture?
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Well said. The behaviors of the CEOs were worse than that of a stupid and irresponsible.
ReplyDeleteLet’s see. They heard that government is giving out free money. Oh, goodie, let’s go get some. And by the way, let’s show them how important we are, after all, we are the CEOs of the biggest auto makers in the US. So they pump themselves up with hot air, and showed up in Capital Hill pretending as big shots. What arrogant buffoons they are! I’d say “No.” to them. There are too many others desperately needing help. We are already in a huge deficit, money is scarce. We must be wise in choosing whom we help.
It is indeed the kind of "arrogant" mentality the Big Three CEOs have shown that leads to where they are today.
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