The Arrogance of the Big Three

This week, the leaders of the "Big Three" American automobile manufacturers went hat in hand to Capitol Hill to make their case for taxpayer relief, at the tune of $25 billion. In a previous post, I mention in passing about how poorly conceived and ultimately fruitless the Chrysler bailout was, and I don't anticipate that handing over a large check to GM, Chrysler, and Ford at this point is going to see any different results. Each of the companies have terrible labor contracts with the UAW which are strangling the company and the company still builds cars which are not resonating with American customers.

Despite their insistence that American cars are equal or better in quality to their Japanese counterparts, I'm not sure if they've already lost a large portion of a generation of people - my generation - who don't believe them. I grew up in a period of time in the 1980's and this is my personal experience as it relates to American cars:

• Our family owned two American cars, which constantly had trouble (I remember my mom needing to insert stick in the engine area every time we wanted to start our Dodge), and later bought a Honda which lasted 14 years without any major problems.
• I grew up hearing Lee Iacocca claim that the reason why American car companies were losing ground to the Japanese was due to unfair trade practices, with an underemphasis on the need for his own company to improve their product.
• I watched, as an Asian-American, television commercials for American cars with xenophobic undertones. I distinctly remember a Pontiac commercial with Japanese background music with a voiceover mocking "maybe you've been watching too many foreign car commercials."
• I remember print ads which trumpeted the Plymouth Acclaim - "the car that beat the Honda Accord" and showed data that a majority of people who test drove the two cars preferred the Acclaim. What wasn't mentioned that the test drivers consisted of present Plymouth owners who didn't own a foreign car. Hmm... the Plymouth Acclaim vs. Honda Accord. I wonder who came out on top of that battle?

So for me, and for a lot of other in my generation - there's a complete loss of credibility. I've seen the same American carmaker rhetoric in the 1980's around "we have the best quality cars" when history has shown otherwise, so how can I believe the rhetoric now? Even with the improving J.D. Power scores for American cars, it's going to take a lot to get me to switch from buying a Toyota or Honda vehicle because of the undue risk I'd take by switching from a product which has been so reliable.

Fast forward to this week's bailout proceedings, and what's gotten a lot of attention is a report that the Big Three auto CEOs flew private jets to D.C. to ask for taxpayer money, acts which a congressman compared to "seeing a guy show up at the soup kitchen in high hat and tuxedo." I have to agree - this is simply exercising terrible judgment.

I worked for a private consulting firm, and we pretty much burned piles of money for fun (not literally) - which was fine considering we weren't publicly held, raking in a lot more money than we were burning, and the decision-makers behind lavish black-tie dinners and expensive gifts were also the owners of the company. I presently work for a publicly held company, where there is understandably a greater sensitivity in terms of internal spending, even to the point of recently banning company-paid meals for breakfast or lunch meetings unless the meeting lasts the entire day. Because of our responsibility to shareholders, everything needs to be above board and subject to the "sunshine" rule.

Believe me, our highest executives aren't exactly forced to brown-bag leftovers to take public transportation to corporate events, but we aren't begging for taxpayer money. It's hard to scream poverty when your mouth is full of caviar.