Out of Touch and Out of Reach

Watching the "Big Three" CEOs receive a big zero from Congress last month reminded me how detached both upper management and workers can be from reality.

As has been widely reported at this point, GM Chairman and CEO Rick Wagoner, Chrysler CEO Robert Nardelli and Ford CEO Alan Mulally flew to Washington, D.C., on private corporate jets to beg Congress for bailout money. Wagoner's trip alone, on GM's corporate G4 jet, cost an estimated $20,000 roundtrip.

I'll admit it: I laughed out loud last month when Rep. Gary Ackerman, D-N.Y., of the House Financial Services Committee asked the Big Three CEOs: “Couldn't you all have downgraded to first class or jet-pooled to get here? It would have at least sent the message that you do get it.”

Ackerman compared the high-flying CEOs descending on Washington to beg for a bailout to “seeing a guy show up at the soup kitchen in high hat and tuxedo.”

Obviously, they don't “get” it. In fact, when asked by members of Congress if they'd be willing to take a pay cut to $1 per year, only Chrysler CEO Nardelli agreed. The other two seemed genuinely offended the question was asked, causing another round of laughter from me.

I don't expect a Big Three CEO to settle for $1 instead of tens of millions. But I'd like to think they'd be willing to take a symbolic hit for the team, especially considering that “the team” includes almost all the citizens of the United States since the failure of the auto industry in this country would impact many millions of workers in a variety of industries, including mine.

(Warning: the sound you are about to hear is my father, the union organizer, turning in his urn.) The CEOs aren't the only beggars in fur coats here. Ron Gettelfinger, president of the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW), testified his union represents 1 million active and retired workers, most of whom work or receive retirement benefits from the Detroit-based auto companies or auto parts suppliers around the country.

Gettelfinger righteously asserted, among other things, that the bridge loan to the automakers should be conditioned “on stringent limits relating to executive compensation.” He went on to blame the current automotive industry crisis on plummeting vehicle sales — the lowest in 25 years — that he says were caused by the credit crisis and “general economic uncertainty.”

In reality, the economy probably did contribute in part to the crisis at the Big Three. Greed and arrogance, however, contributed even more.

Greed: If skyrocketing executive compensation and use of G4 and G5 jets are indicative of a certain detachment with the grim reality of the situation, so were the union contracts that payed workers over $30 an hour and provide them with a lifetime of retirement and health benefits. Health benefits for retirees alone cost the Big Three over $6 billion per year, a significant contribution to the $25 per hour gap between the labor costs of the Big Three versus those of foreign automakers' U.S. facilities. A 2007 UAW contract allows the Big Three to hire workers starting at $14 per hour and create an independent trust fund that allows the union to manage health care benefits, but is it too late?

Arrogance: In an interview on Larry King Live, Michael Moore, who made the film “Roger and Me” detailing the devastating impact the downturn the auto industry suffered 25 years ago had on Flint, Mich., said, “Well, what really went wrong is that General Motors has had this philosophy from the beginning that what's good for General Motors is good for the country. So, their attitude was … We'll tell you what to buy. You just buy it.”

The same could be said of every U.S. automaker. They kept pushing gigantic SUVs and extravagant sedans, even as consumers started buying imports with higher gas mileage, fewer bells and whistles, better warranties and in some cases, better safety ratings.

During W.W. II, President Roosevelt told U.S. automakers that what they needed to build were airplanes and tanks, not cars, because the country was in crisis and it was change-or-perish time. Moore's suggestion for President-elect Obama smacks of similar common sense: Tell the automakers that they need to refocus their efforts on building mass transit and hybrid cars and on developing cars that do not rely on fossil fuels.

Banking Committee Chairman Christopher Dodd, D-Conn., told Wagoner, Nardelli and Mulally that the auto industry was “seeking treatment for wounds that were largely self-inflicted.”

True, but the greater truth is this: the U.S. government has to step in — with both money and guidance — or the Big Three are going to wound us all.


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