Airline tickets and the collapse of the auto industry

I wonder if years from now historians will look back on the collapse of the U.S. auto industry and say, “Gee, they should have flown commercial”? Great theater in Congress yesterday, in case you missed it. The Detroit grand pooh-bahs were making their case for a financial bailout when two members had the temerity to ask how they made their way to Capitol Hill? Via commercial airline — or private jet?

Here’s the exchange.

Ah, c’mon Mr. or Ms. PR spokesperson. Liar, liar pants on fire. There may be good reasons to use a private jet. But security isn’t one of them. So it goes.

And you could almost hear the groans from those attending the hearing following the exchange between the congressman and the Big Three. Here’s Dana Milbank’s take on it in today’s Washington Post, “Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand“:

There are 24 daily nonstop flights from Detroit to the Washington area. Richard Wagoner, Alan Mulally and Robert Nardelli probably should have taken one of them.

Instead, the chief executives of the Big Three automakers opted to fly their company jets to the capital for their hearings this week before the Senate and House — an ill-timed display of corporate excess for a trio of executives begging for an additional $25 billion from the public trough this week.

“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,” Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. “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?”

By the way, from the photo that accompanies the Milbank article it looks like Wagoner and Nardelli just ate a shit sandwich. I digress.

The real point is this. I know that many who read this blog are students and former students, now young professionals. What we are seeing play out now is a real-world lesson on the key points that we look at constantly in public relations and media ethics classes. The need for honest, truthful two-way communication. The reality that reputation matters — and that reputation ultimately hinges on confidence and trust.

George Voinovich, Ohio’s senior senator, is quoted in the Akron Beacon Journal this morning as follows.

If GM is telling the truth [emphasis added by me] they go into bankruptcy and you see a cascade like you have never seen. If people want to go home and not do anything, I think that they’re going to have that on their hands.

The problem is that the American people have lost faith in business and political leaders to tell the truth — and we don’t trust them to get anything right. It started in Iraq. Maybe it ends now in Detroit. We’ll see.

Oh, one more thing. I go to Washington on business now once a month or so. I take a commercial flight out of Cleveland. George Voinovich has been on that flight with me twice.

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8 responses to “Airline tickets and the collapse of the auto industry

  1. Rob-

    Your last two posts were excellent. Remember when Lee Iacocca took a salary of $1 a year while he engineered Chrysler’s bailout and comeback? He talked the talk and walked the walk – PR 101, I guess.

    That symbolic gesture gave him great credibility with the public, transformed him into a corporate icon and helped generate goodwill toward Chrysler when it desperately needed it. (Iacocca more than made the money back, I’m sure, with his book and speaking appearances).

    The current Big 3 chiefs could learn something from Iacocca’s example.

  2. Bravo, Rob. I have notes for a similar post that I sketched out over coffee this morning. But you know what they say about the early bird…

    And speaking of worms, I think 3 of them are running companies in Detroit.

    You want a bailout? OK. Show some leadership, even if it’s symbolic. When Iacocca asked for a paltry $500-million federal loan back in ’79, he reduced his own salary to $1 a year until Chrysler was profitable again. It was a drop in the bucket given his company’s massive deficits, but it showed he understood the gravity of the situation. It showed leadership. People followed that guy, and he remains an auto industry legend.

    Execs of the Big 3 today seem to lack Iacocca’s perspective, not to mention his ethical standards. Jets and limos are an entitlement, and 7-figure bonuses are par for the course.

    And let’s not let Chrysler’s Nardelli off the hook without an extra kick in the pants. When he nearly trashed the operations of Home Depot, the board sent him packing with a $210-million severance package.

    It’s pretty clear why no one trusts business these days. We should buy them all white shoes and send the to a used car lot somewhere. (Disclosure: I drive a Subaru.)

  3. Bill and Tim — Thanks for the comments. The three of us have all been around long enough to know that leadership does matter. And Iacocca is the perfect example. He had a track record of success at Ford — a well-deserved reputation for honest, straight talk — and I think people trusted him.

  4. If ever there was a time to stray from your key messaging… geez.

    Loved this post. If there’s anything big business needs to take away from this recession, it’s that much of the blame belongs to the fat cat’s just like these guys; the one’s with the ridiculous salaries and opulent business expenses.

    But we should be looking at this from a PR perspective, and so I digress…

    Of all the reasons, why security? Lord knows 90% of commercial passengers wouldn’t recognize either of these guys if they walked on the plane wearing a pylon.

    What we have here is a PR professional who made a fatal flaw: he didn’t forecast the questions he should expect, and thus he couldn’t prepare the boys for the firing line.

  5. Brandon, you didn’t digress. You’re right on the money. Ouch. Can’t believe I said that.

    And you are correct about the PR professionals here. They didn’t anticipate that the use of private aircraft would be an issue — or a question. You get entrenched in the system and used to the perks. That’s part of the problem with this whole mess from the standpoint of management in general.

  6. Rob, I’m currently in Australia for an extended visit. I’ve learned that reports on the actions of the United States’ government, financial sector and corporations (and their CEOs) plays a huge role in the Australian media (I’m actually quite surprised by the amount/extent of coverage). Anyhow, that private aircraft issue garnered a ton of attention here on the other side of the world/Down Under. Definitely not very good “international” PR!

  7. Judy, Thanks for your comment. I imagine there is great interest because the U.S. has managed to wreck the world’s economy. Or so it seems. And you are certainly correct. The scene that played out in Congress with the Big Three this week certainly diminishes the reputation of American business — and I guess Americans in general.

  8. I had a discussion with an Aussie (a nurse) on my plane ride from Adelaide to Sydney about why the media focused so much on the United States. She claimed that the sense of “close connection” dates back to WWII, when Australia (as a resource-rich, isolated island/continent) was feeling quite vulnerable to foreign invasions. She said the assistance of the American military forces was very much valued and that the sense of kinship continues to this day.

    Re: the U.S. “wrecking the world’s economy,” certainly it played a part (with the mortgage crisis), t many other countries were following similar short-sighted patterns regarding lending without financial assurance. Think Iceland. Or the U.K. Or several European countries. So, no need to take on the whole weight of blame for the world’s financial woes onto your country’s shoulders!

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