02 December 2008

$25 Billion for These Guys?

"Leadership is not the same as reaction. Even a cat will jump off of a hot stove. Leadership involves prediction."
[loosely quoting] W. Edwards Deming

The big three auto companies are clarifying their request for $25 billion to bail them out.

GM"s CEO will drive to DC in a hybrid car.
Ford's CEO will work for $1 if the auto industry gets $25 billion. (Which, oddly enough, suggests that if his company has less money he'll ask for more pay.)

These two were sharply criticized for flying to DC on private jets, asking the American taxpayer for money. And Ford's CEO, Mulally, said that he thought his $21.7 million compensation package was okay, even when the company he was leading needed to be bailed out.

I guess this shows that these CEOs can be shamed into changing their behavior. But it also seems to affirm that they are merely lurching from one reactionary move to another. And in an industry where developing a new model car can take 3 to 8 years, leadership by reaction is far more of a liabilty than high gas prices or tight credit markets.

It seems doubtful that these CEOs have a bold vision of the future or have any real connection to the average consumer. Given that, it is not obvious how they'd be able to put $25 billion to good use. I say invest the money into mass transit instead.

6 comments:

ThomasLB said...

I'm still amazed at how ill-prepared they were at the first congressional hearing:

Auto Dude: Can we have 25 billion dollars?
Congressdude: Depends. What are you going to do with it?
Auto Dude: Uh… I dunno. Can I get back to you?

Right there, I think I would have shown them the door.

Ron Davison said...

Thomas,
no wonder you are no CEO. You would need to know how you'd spend $25 billion before knowing that you'd want it? Knowing how you would spend $25 billion would take lots of thought and effort. Knowing you want $25 billion takes almost no thought or effort.

Will "take no prisoners" Hart said...

I've seen dogs beg with more subtlety.

Lifehiker said...

I am very sceptical regarding the auto companies. All participants in the "big three" - management, exempt employees, union workers, and retirees have, for all intents and purposes, colluded in a giant "I'll scratch your back, you scratch mine" scheme for many years, thereby creating an unsustainable financial model for the industry.

I wouldn't bail them out unless they all came forward and committed to give-backs and work rule changes that make a convincing case for future competitiveness.

If all they can talk about is new models, more fuel-efficient or whatever, they will die because their competition will do those things at least as well but at less cost. They will die a not-so-slow death on our dime.

Gypsy at Heart said...

Take no prisioners: Well put.

Ron Davison said...

Will,
very funny (or sad - which is it again?)

LH,
amen. it still isn't obvious to me that they've figured out how to change things.

Milena,
Will did say that with great efficiency, didn't he?