Flying commercial: Gee, that might have saved a few bucks

Listening to NPR today while working at the office, I heard, perhaps, the most interesting quote coming out of the automaker bailout hearing, which took place Wednesday on Capitol Hill. I didn’t have time to make a note of it or search for it at the moment, but after work, after searching the Internet for a good 30 minutes, I finally had the bright idea that, “Hey, I work for a newspaper, I can check the AP wire.” So, here it is with comments following:

During the House hearing Wednesday, Rep. Brad Sherman, D-Calif., asked the three auto chiefs seated at the witness table before him to raise their hands if they had come to Washington on commercial airliners. No hands went up. Then he asked if any planned to sell their corporate jets. Again, no hands went up.

Sherman and Rep. Gary Ackerman, D-N.Y., told the auto executives they were having a hard time justifying to their constituents bailing out companies whose chiefs fly around in expensive private jets.

Ackerman said there was “a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off 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.”

A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it clearly lacks the necessary support to advance. — The Associated Press (Link to full article)

Thus, Sherman was essentially making the point that it was sort of hard to convince his constituents (and I would argue, the general American public) that bailing out companies whose owners say they want to save their companies (probably for their own vested interests and their expensive cars and jets), but don’t seem to care enough to make personal sacrifices to save money (Flying commercial: Oh, the tragedy!). Ackerman’s observation, “It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo,” was spot on. And I add this: Is Toyota, Nissan, Honda or BMW in dire straits? No.

Let’s compare American automakers with European ones, noting first, that most auto companies have taken a downward spiral during the last year because of the shakiness in the global economy. But American automakers are in far worse shape.

Closing shares for Wednesday, Nov. 19:

Toyota, 59.76; Honda, 19.89; Nissan, 6.78 vs. …

Ford, 1.26; GM, 2.79.

Why is this the case now? It’s probably multi-fold, with part of the reason consisting of the general economic climate right now and the other being that American automakers for years have made inferior products. There’s no bones about it, and perhaps now, it’s coming to a head. That’s not a knock on Ford and the like — I certainly want to see American products flourish — but it’s just the truth, and it’s no secret.

Consider this from former presidential nominee Republican Mitt Romney in a guest column to The New York Times:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Add to that economic mismanagement and the poor leadership and you have what we saw today. You have automaker execs flying in on private jets asking for donations from the feds, which, in itself, is ironic and a prime example of why they should be allowed to suffer their own fate. It’s really unfortunate for the thousands in the Detroit area dependant on this bunch for their livelihood. My suggestion: go South: apparently it’s set to become the new Detroit. Many have already.