The “Big Three” Ask Mom and Pop for Some Extra Cash

Let’s put this into some sort of perspective. Clearly, in their first attempt for government financial help, the executives of the “Big Three” automakers had lost all notion of perspective. Just ask any teenager how best to approach a parent to ask for money. Rule Number 1: You have to at least make the impression that you are in dire need of it. If I came to my father dressed in an Armani suit, flashy tie, gelled hair, and freshly shined shoes and asked for $100 for the prom, he’d deliver a stiff kick to the family jewels before he gave me a dime. But it’s been a great many years since the CEO’s of Ford, Chrysler, and GMC were teenagers, so we shouldn’t be surprised at how unprepared and lacking sincerity they seemed to be at the first bailout hearing, right? Well, someone a bit younger should have reiterated to those big shots Rule Number 1 which in their case means: don’t take private jets to ask dad for money to the prom.

But like a good father, there’s room for a second chance. The government wants to see some effort if they are to dish out some serious cash, and told the auto companies to submit specific plans as to how they would restructure to become viable. And it seemed that this type of demand from lawmakers was just what the Big Three needed to get their heads out of their asses and start facing their problems head on. So what was one of Ford’s first announcements? Are you ready? You’re not going to believe it! They’re going to sell all five of its corporate jets!!! Ahhhh, now we’re starting to get it!

Ok, next on the agenda, cutting in half, the ridiculous amounts of different types of car models. Bill Vlasic of the New York Times puts it into perspective, “Between them, General Motors, Ford Motor, and Chrysler sell 112 different car and truck models through 15 brands in the United States. By contrast, the top three Japanese automakers -Toyota, Honda, and Nissan – have roughly half as many choices with 58 models combined sold through seven brands.” Now, I can appreciate the U.S. automakers growing their businesses to take on 112 different car and truck models. After all, there’s something obnoxiously American about owning a lot of different cars and trucks.  But now that everyone’s hindsight is a crystal clear 20/20, it’s safe to compare their car brand empires to the real estate market in Southern California over the last 10 years: it very simply, just wasn’t sustainable.

G.M. has already announced its intentions to try and sell its Hummer brand and is looking into dropping Saab, Saturn, and Pontiac. But it’s a serious process to eliminate car brands. It took GM four years and over 1 billion dollars to get rid of their Oldsmobile brand, according to Rick Wagoner, GM’s chairman. So it’s safe to assume a large portion of the potential bailout funds will very likely be used to trim the number of car brands.

Ford is in the best shape of the three and is claiming they only need their cut of 9 billion dollars as a backstop in case the current recession “is longer and deeper than we now anticipate” or if one of the other two companies go under. And of the three, Ford has disclosed a bit more on what their new plan for congress entails: Accelerating plans for more hybrid and electric cars, canceling all management employees’ 2009 bonuses, and the steps it has taken to cut its labor costs with the United Auto Workers union.  And a sure sign that the seriousness of the situation is sinking in, Ford CEO Alan Mulally announced that if the company does have to use that $9 billion, he’ll reduce his own salary from $21 million a year, to $1 per year (when asked a month ago if they would be willing to eliminate their own pay, of the executives of the Big Three, Mulally had been the most resistant).

And now, for the grand finale of his “LOOK, I FINALLY GET IT!” Campaign, Alan Mulally will drive a Ford Escape hybrid sport-utility vehicle to Washington to testify a second time before Congress. Now, despite this being an overtly obvious, but very well-intentioned PR move, a road trip might be exactly what Mulally and the other Big Three execs need at this point. A road trip can be a great meditation of sorts, enabling one to appreciate more fully the world we live in and bring clarity to one’s head. I can picture it perfectly: Mulally, on cruise control, jamming to his slightly scratched Journey: Live From Houston album, stuffing his face with beef jerky and Cheetos, admiring the endless farms and forests and rivers, realizing that he and the other Big Three got greedy. They got too big. They could have avoided this problem with a more disciplined business model. We didn’t need 5 company jets, he’d think. And then a sudden calm comes over him. Ford’s going to be just fine. In the grand scheme of things, there are worse things that could happen. We’re getting a second chance and I’m going to do it right this time around.  And he’ll pull up to Capital Hill and get out of his car a changed man. He’ll dust the Cheeto crumbs off his shirt, and make his way inside to once again request that money. And perhaps the Senate Banking Committee will find his plans and efforts sincere and well thought-out and agree to give Ford their requested money. And then, Mulally, grateful and proud, gets back into his hybrid and drives back to Detroit. But don’t be surprised if that car stays in DC and Mulally takes the company jet back home. After all, they haven’t actually sold the jets yet and he just scored $9 billion. What’s one more plane ride?

Written by Team Aguilar member Andrew Brentan

10 thoughts on “The “Big Three” Ask Mom and Pop for Some Extra Cash”

  1. Ford Motor Co., Detroit’s says it’s OK for now. Although it is seeking up to $9 billion in bridge financing, but says it hopes to complete turnaround without accessing the loan should Congress agree to make the funds available. But it wants the ability to access up to $9 billion in government credit. They also said that if GM fails it could take the entire domestic auto industry down with it.

    So FORD needs GM?

    http://nomedals.blogspot.com

  2. [email protected] York City Real Estate Blog

    I can’t believe Obama or anyone in DC is considering this. These companies need to die a natural death. I’ve spent my entire life purchasing cars made by companies that care about quality and reliability. My friends and I were always stunned that anyone would buy a Ford car over a Honda or Toyota. Now my tax dollars get to reward these companies for their incompetence? I am outraged! Let them die!

    dave’s last blog post..Plenty Of Office Space in Manhattan

  3. In this financial crisis all the things are going to be changed. The US government is ready to protect that. If can help the Government any how, we must do that. Paying more tax will effect us in this time, but Government is doing good thing.

  4. I am going to have to agree with Dave. These companies are relying on receiving a bailout if they ever get into trouble. Why should the tax payers have to pay for that? I think that if the government did give them a bailout, it should come with significant requirements– such as reducing emmisions in their automobiles. Oh, and taking private jets to bailout meetings . . . ridiculous. I like my Honda.

  5. If Ford can make efficient cars in Europe and make profit, I wonder why they can’t do it in US ?

  6. A lesson learned…our economy needs to bail them out whether we think it is a good idea or bad idea. This is a one time deal and if they mess up again, they are done. We are in “never seen before” times and it takes drastic measures to cure. Sometimes that means swallowing what we don’t want to.

  7. Stock Market Report

    I am totally in disagree with the bailout plan. They got into this mess and they have to figure out how to get out of it. I do not want any of this company to use my tax money to just make their way out of hell. Go bankrupt as any other company would have gone or even worse may be a proud citizen would never receive any bailout money from the government.

  8. Unions …

    that is one of the major problems of the US Auto Industry

    Japanese car makers are paying their workers much less because they
    are no unions

    Bust the unions and start making cars people actually want to buy

    Jack

  9. The problems with the ‘Big 3’ span multiple decades – not the current state of the economy. If the government gives them money, what incentive will they have to become more profitable? They will become the next ‘amtrak’.

  10. I think it’s a great idea to cut down on the amount of models and brands American dealers sell them under. It makes a lot of sense if you think about it. This post was also very well written, and the part made me laugh. Thanks for sharing.

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