The Big Three and the Bailout

Regarding the Big 3 CEOs driving to DC (instead of taking private jets), I was pretty much on the same page as Ezra Klein, who wrote, “The industry has lots of problems, but overuse of the corporate jet by busy CEOs is not one of them. This’ll waste 18 hours or so at a time when the executives presumably have work they could, and should, be doing.”

I’d go one further and say that runaway executive compensation is not one of the pressing problems facing the auto industry, either. And yet that seems to be one of Congress’s genius “strings” that they’re going to attach to any bailout plan.

All that said, I completely agree with Ben McConnell’s take:

If they were very smart, the CEOs would drive unreleased, next-generation cars that get 100 MPG. They’d stop in a half-dozen towns along the way and invite a newspaper editorial board writer to ride shotgun for a dozen miles. They’d update their status on Twitter. They’d write a few posts for the company blog. They’d shoot video on a Flip camera and talk about how they screwed up at their first appearance, how they’re selling their fleet of corporate jets, and their plans for the future. If they behave like real people instead of CEO machines, they might arrive in D.C. backed by some pretty good word of mouth.

Set aside the issues of driving on highways in cars that aren’t street legal; I think this is the right idea. The Big 3 are cutting back on traditional advertising right now, it’s a perfect time to think about low-cost, effective word-of-mouth campaigns. GM’s has a blog, they ought to use it. It’s time to rebuild their relationship with their customers — flesh-and-blood customers, the U.S. taxpayer is not a sufficient proxy.

Now, in all fairness, GM has come up with a plan (PDF). It’s aggressive, but probably not aggressive enough. They’re proposing shrinking their dealer network down from 6500 to 4700. I’ve read analysts say they need to go down to about 1500 dealers (!) to be viable. They’re also looking at shuttering several brands, which is smart.

Also, Alan Mullaly, Ford’s CEO, seems to get it, as I’ve written before. So you can’t lump these three companies all in together. Chrysler, on the other hand, is totally screwed.