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Bailout Fever

On Wednesday, the big US auto manufacturers went to Washington to beg for taxpayers’ money to bail them out of possible bankruptcy. There was something symbolic about these auto execs flying in their big luxury private jets from Detroit to Washington. To me, flying to Washington in their gas-guzzling jets symbolizes their failure to innovate to address 21st century problems.

The big 3 US auto manufacturers have been facing major business challenges and financial losses for the last several years. The current recession and possible depression surely don’t help their situation, nor do they help pretty much any other type of business, but why on earth should the taxpayers be on the hook to bail out the auto manufacturers for problems that they brought on themselves? They failed to adapt to a constantly changing world by pushing their SUVs when they should have been working to design more fuel efficient cars.

I like Congressman Gary Ackerman’s (D-NY) comment: “There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands. It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?”

GM apparently saw the irony and just today announced that they are terminating the leases on 2 of their 5 corporate jets. As recently as September, GM was leasing 7 jets. Sorry Rick (Wagoner, GM’s CEO), nobody is going to feel sorry for you because you only have 3 corporate jets left.

Further diminishing their credibility, GM and Ford’s CEOs declined to offer to reduce their salary to $1 a year, as Chrysler’s Robert Nardelli has done. GM’s Wagoner made $15.7 million in 2007, while Ford’s Alan Mulally made $21.7 million.

The auto manufacturers need to feel the pain, learn from their mistakes, innovate, and come back when they are really ready to compete with Toyota and Honda.