Wednesday, November 19, 2008

Auto Industry CEOs: Curing the Company by Killing the Jobs

The Big 3 CEOs have been testifying before Congress about why they deserve a big fat piece of the taxpayer-funded bailout pie. They have been voicing the very real concern that if they go under it would be an economic disaster for the entire continent and result in the loss of millions of jobs. But their principle argument seems to be that they are already doing their level best to be 'more competitive' and 'restore profitability'.

Here's Ford CEO Alan Mulally on his company's "Competitive Transformation":

Few companies in the history of our country have restructured more aggressively. I can tell you that in my experience, the union under Ron Gettelfinger is working with us as part of the solution.

In a very short period of time, working together, we have reduced excess capacity, closing 17 plants in North America – including more than one-third of our assembly plants – in the past five years. We have also reduced our workforce by 51,000 employees in the past three years, shrinking our hourly workforce from 83,000 to 44,000 and reducing salaried headcount by around 12,000 from a base of 33,000.

...Our agreement with the union also established an entry level wage that reduces future costs and will make us more competitive going forward longer-term. And, for the first time ever, it included no base wage increase during the four-year period covered by the agreement.

...We also will continue the ongoing consolidation of our dealer and supplier network. Our plans call for reducing our supplier network by more than 60 percent and thereby improving supplier capacity utilization and financial viability.

...We have announced plans to further reduce employment and cut benefits and compensation at all levels. We have eliminated merit raises and bonuses in 2009, and we continue not to pay any dividends to our shareholders.

Of course, all of this admirable belt-tightening doesn't apply to the private jets they flew in on so they could appear before Congress in a timely and efficient manner. But hey, at least they're willing to make some other personal sacrifices to help their ailing companies - like giving up their multi-million dollar salaries. Except, apparently, Mr. Mulally.

Chrysler was bailed out by the federal government once before, in 1979, with $1.2 billion in loan guarantees. The company repaid the loan, plus interest, ahead of schedule. Back then, former Chrysler CEO Lee Iacocca reduced his salary to $1.

Under questioning from Sen. Jon Tester, D-Mont., Mulally didn't join the other two executives in saying he'd do the same now.

"I sure respect the intent of it, but the most important thing is that we not degrade our ability to be competitive and deliver this plan," Mulally said.

1 comment:

  1. "the most important thing is that we not degrade our ability to be competitive"

    lolly lolly lol lol lol