December 4th, 2008
10:19 AM ET

'The Big 3' and the 'B' word

'The Big 3' + 1:

Rick Wagoner, GM CEO – Alan Mulally, Ford CEO – Ron Gettelfinger,
UAW president – Robert Nardelli, Chrysler CEO

Michael Schulder
CNN Executive Producer

Don’t say that word! You know … “that famous term that everybody’s using,” as the United Auto Workers President Ron Gettelfinger put it yesterday. He wouldn’t bring himself to actually utter the word “bailout,” which the people at Webster’s dictionary recently noted was the most looked up word of 2008.

Gettelfinger and his industry prefer a different B word – “bridge loan.” You’ll hear more from Gettelfinger and the Big 3 CEOs today, when they get a re-do on their plea to Congress for up to 34 billion dollars in government aid – which is 7 billion more than they were asking when they went to Washington 2 weeks ago. Time is money.

Who is Ron Gettelfinger? He started as an assembly line worker in 1964 at a Ford factory in Kentucky. He worked on the chassis repair line before rising up the UAW ladder.

An old NY Times profile describes him as a religious man who doesn’t smoke, drink or gamble. He’s a former Marine who grew up on a family farm in Indiana – one of 12 children.

One of 12 children – the guy GREW UP on an assembly line!

Gettelfinger has negotiated some tough deals with management. But he’s also responsible for convincing workers to make some major concessions, or givebacks as they’re called. And now he’s convinced the union to offer up more concessions to help keep the Big 3 afloat – like halting the policy of paying laid off workers 95 percent of their salary.

Then there are the CEO’s.

Chrysler’s CEO, Robert Nardelli, landed at the auto company on one of the biggest golden parachutes ever made. He had been forced out of his previous job as head of Home Depot with a 210 million dollar goodbye package. Chrysler’s a private company so it’s tough for the public to get a fix on how long it can survive without aid.

As for Ford, it’s believed to have a bit more staying power than the others because it has enough cash on hand to get it through another year. Its CEO, Alan Mulally, has a master’s degree in astronautical engineering. He IS a rocket scientist. And he got a stratospheric signing bonus when he joined the company in 2006 – but poor results forced his compensation down in 2007 by more than 40 percent – to under 23 million dollars.

An equally interesting character at Ford, operating behind the scenes, is Mulally’s predecessor, William C. Ford Jr., the great grandson of founder Henry Ford, He has a reputation as a conservationist who’s determined to see the industry move to battery powered electric cars, provided we don’t depend on Asia for our batteries, as we do now, but make them in the USA. The extended Ford family still controls the company. During the past year, the value of William C. Ford Jr.’s personal company stock holdings sunk from 39 million dollars to 7 million. At this rate, he’ll NEED better mileage.

General Motors CEO, Rick Wagoner, who stands 6’4”, was on the Duke University basketball team and was said to have dreamed of becoming a pro. He wound up with a Harvard MBA. But he didn’t name his dog Harvard. He named him Duke. Wagoner’s been with the company for 31 years. Of the Big 3, G.M. is considered to be in the biggest danger of collapsing without a big infusion of government money. The Duke man and the chassis man need each other now. They’re on the same team.

Filed under: Bailout Turmoil • Economy • Michael Schulder
soundoff (140 Responses)
  1. Char

    I am 62 years old and I have never seen anything so important and at the same time so many skill, educated people not knowing what to do. If we look at the people in America first, the rest of the answers will be there. 1. Un-employed how do we help the many that have lost their job?. 2. Students in college how can we help them stay in school? 3. People loosing their homes, how do we stop this before it happens? 4. Health care in America, how do we make it better? I am a average person with little knowledge about fixing our economy, but I feel it is important to stop this cycle which had produced a large un-employment rate. There too many people on Capital Hill that do not even know what it is to struggle from day to day. It is hard to understand what it means to not be able to pay your bills if you have money. Have any of the Big 3 men talked to their works, to get a view of what it means to be the one that might not have a job tomorrow? I do not think so, because they would not have arrived in DC in a corp plane. It seems that they spent money on that trip that could have been given to their workers. I do now believe they are in touch with the main issue, that is their workers.

    December 5, 2008 at 9:46 am |
  2. lauren stephens

    hellllo stupid government.... didnt we just bail out the banks with tons of money? so let the banks bail out the auto industry. doh! this is so ridiculous.

    the car makers and their lending companies (such as ford motor credit and gmac) didnt mind repo'ing YOUR car when YOU were on tough times, why should we care about THEM now?

    oh boo hoo hoo

    December 5, 2008 at 9:41 am |
  3. Pearl Pfiester

    GM made an electric car, EV1, in 1996 because of a mandate in CA for greener emissions. Claiming there’s “no demand”, GM TRASHED the brand new cars and technology despite Americans begging to buy their leased EV1 car.

    Watch: “Who Killed the Electric Car?”

    These companies made their bed so they can lay in it. “What comes around, goes around”. Let’s invest in companies who utilize technology instead of hiding it.

    December 5, 2008 at 5:09 am |
  4. Paul

    Here's my idea for a 3-prong/3-year "bail-out" plan, where every major stakeholder chips in or gets an incentive for putting more skin in the game:

    1) The company (management & the unions) make the biggest concessions of all - 30% reduction in costs, primarily direct & indirect pay, starting immediately & continuing in 2009, 2010, & 2011, to be revisited only in 2012 & partially eased based on profitability targets to be set today. All bonuses & special perks frozen for 3 years, only deferred compensation allowed & tied to profitability of the companies as of 2012 or later. Let the companies concentrate on making better, less expensive, & more fuel-efficient cars.

    2) The American consumer has to be given a sizable incentive to buy American - as counter-intuitive as this may sound in these tough economic times (car sales dropped 30% or 40%, but they're far from 'Zero') - I’m convinced this beats simple hand-outs or cheap loans to the same companies who got themselves into this mess in the first place or even the government taking an equity stake in failing enterprises. The way it might work is simply giving 3-year loans with 0% interest plus instant cash rebates of, say $1,500 to $3,000, to car buyers (higher for smaller & more fuel-efficient models). So, instead of the Auto companies having to take more losses to continue to fund such incentives, a government-backed program setting aside & channeling money thru the banks already benefiting from government/taxpayer bail-out money would act as an indirect economic stimulus - something like a tax rebate check that you can only spend at one of the Big 3 car makers. Home owners have been a primary focus of the $700 Billion bank bail-out, so why not extend it to Car owners & help car makers in the process?

    3) The government sets up the incentive plan thru the bailed-out banks, as well as the oversight mechanisms necessary to enforce the changes & cost cuts at the Big 3, as well as the strict emissions & fuel-saving targets to be implemented for as long as a single dollar of taxpayers' money makes its way to the auto makers. Obviously, the taxpayer remains a major stakeholder in funding & reaping the future benefits of keeping jobs in the U.S., as well as a healthier & more competitive auto industry for the future. I’m pretty sure economists & financial experts can figure how to pay for these incentives & how to recover taxpayer money, as with the failing banks.

    Beyond that, let the market take care of the rest and competition ultimately decide who survives. In 2012, if any of the Big 3 is still faltering, tough… then it’s time to pull the plug for good !!

    December 5, 2008 at 5:07 am |
  5. Quit Whining and Crying

    When that cold day in hell arrives and the congress bails me out for making poor management and product choices, then you can get bailed out.

    Otherwise, quit crying and go to Citibank and get a loan like eveybody else has to!

    December 5, 2008 at 2:32 am |
  6. HJC

    I would gladly invite you, sir, to work one day on an auto assembly line.
    It is definitely not as easy as one would think.
    At the facility that I work at, we build 72 vehicles an hour. That's less than a minute per vehicle...I doubt thst your job is as demanding. Hmm...I've never just pushed a button in my 22 year carreer but I have had a hernis a torn rotator sup and carple tunnel in both wrists....go figure...I have such a cushy job!

    December 5, 2008 at 1:48 am |
  7. Amy

    Excuse me? $65.00 an hour? My husband has been on the assembly line for chrysler for 10 years and I can tell you that he doesn't make even half of that. Does he get paid well? Yes. Does he work hard? Yes. Does he push a button 40 times a day? NO. He puts about 6 parts on the truck he is working on while it is moving every 1 minute and 6 seconds. He is climbing in and out of the truck while he is doing this. His hand are cracked and bloody and his back hurts so badly he can't sit down when he comes home. I'm not asking for pity. Work is hard. Blue collar work is hard. But how DARE you spout your misinformation about what they get paid, because you wrong and what they do while at work, because YOU ARE WRONG!

    December 5, 2008 at 1:06 am |
  8. sk

    Hi All
    I am from a small place in India. But you must be knowing its a global village now and I am eually aware what it means by bankruptcy of "Circuit city" "Lehman" and probable "GM"
    I think globally, personally (right inside my home), office place everywhere its the same principle applicable. There was an excellent email by a restaurant owner from Texas to Mr Obama. He works 12 hours for 7 days, employees 20 or so people, has a debt that he can pay in cash. (Not from bank) in a day. Works out a lot for his health so is not dependent on the health care. happy life I guess.
    This is applicable to me and Mr CEO (all 3 of them)
    First step is to get read of their private jets. Cool. Does not help. Next step is to get read of OIL itself. (They have to work on that and close that) There is extra talent available than required for this to happen.

    December 5, 2008 at 1:01 am |
  9. Tracy

    How dare the big 3 tell the government they shouldn't have bailed out the banks and then expect themselves to be bailed out. This whole bailout plan will go down in history as the WORST thing ever done by a government. I just hope we become part of Canada when the USA goes bankrupt itself. I'm disgusted that I have to pay because a bunch of people got/made bad loans and now can't bail themselves out. The banks should have been allowed to fail to. Let the chaff fall from the wheat.

    December 4, 2008 at 10:32 pm |
  10. Ken T

    The amounts of money here just takes my breath away..AIG 144 billion dollors? 34 billion? 300 billion..whats next?? Ill tell you..every state in the usa has applyed for BILLIONS!!!! California wants 300 billion.Keep in mind,the movie industry just got a 50 billion christmas present just so they could get the vots for the 700 billion..I read something the other day. I couldnt even stomic reading the artical..700 TRILLION!!!!.. AND NOT ONE PENNY going to tax payers, home owners trying to save there homes....we get to loose our houses,jopbs,and eat out of garbage can!!! Aparntly has long has the big business on wall street are taken care of......(oh...by the wasy theones that created this mess in the first place.)

    GM needs to go down in flames and take there union with them..I dont know how rick wagner got to be the ceo..FIRE him now!!!No bonus's.. and get some one in there who has the BALLS to say no to the union..

    December 4, 2008 at 10:31 pm |
  11. 007panda

    Whatever the result is, I wonder why CEO of Big 3 have never tried to
    cut their annual income to a dollar by themselves before congress man asked?

    December 4, 2008 at 10:21 pm |
  12. jaw

    One simple question that everyone that replied should ask themselves: If you stood before congress as an individual, with the same lack-of-game-plan as the B3 did, and you were in as much of a messs personally as they are heading to, how could you justify accepting the $ without a pay-back plan or budget, and how could you convince them to bail you out, with other taxpayers $? No brainer, let 'em sink, privatize, give current employees the opportunity to be Hired under a new structure (not re-hired), and quit paying someone $70 per hour to watch a robot assemble a car. If anyone in this country deserves this kind of compensation, it is our military, as it is what has defended the opportunity for freedom and free enterprise, not handouts.

    December 4, 2008 at 10:19 pm |
  13. Lee

    I understand the fear of job loss, but these companies are already making us lose jobs. As many have said, most of their plants are overseas. This country's economy and business has always been based on supply, demand, and how much corporate america could fleece you before you caught on. Back in the day steel was big – they owned everything and everyone, but the government at one point broke them down into littler companies b/c of monopoly issues. When companies have failed in the past nobody stepped into rescue them. They left a vacuum for the next up-and-comer. Corporate america has bought and swindled us good this time all the way from the little guy to the government. They've lobbied well. And now they're fleecing us still. That's what these bailouts are – more fleecing. Pouring money into companies that refuse to change. How much money they spend on ridiculous bonuses, bad advertising, and relocation of manufacturing to foreign nations.

    Last time I had checked the US was a CAPITALIST country. Which means you try – and if you fail... well you fail and you better try again or be poor. If the government keeps with these bailouts we become SOCIALIST or COMMUNIST which last time I read the history books worked out really well for the USSR

    This is a joke. People have been losing jobs and getting more poor every day b/c of these greedy corporate buggers and now they have the gall to ask for the help of those they so quickly fleeced and left for broke. It makes me honestly sick!

    December 4, 2008 at 10:04 pm |
  14. Lou

    Why would anyone want to buy a car from a company that is in the process of failing?

    How dumb does the Big 3 think the American public is?

    December 4, 2008 at 9:57 pm |
  15. Rob

    Here's another B-word.


    I'm not talking about chapter 7. Chapter 11 has not been explored with any seriousness. Chapter 11 would force the needed changes in the Big 3 and could prevent them from defaulting on this government "loan" due to poor strategies and unreasonable contracts with the Union.

    I just don't understand how we continue to reward poor leadership with benefits that well managed companies will never see. Why doesn't Tesla Motors get some of this action? They too are an American car manufacturer.

    Oh! That's right... they have good management with a sound business model. I guess that means we need to penalize them!

    December 4, 2008 at 9:53 pm |
  16. Dave

    This is quite a connundrum. So many jobs are related to the auto industry that if they went under, just one of them even, the fall out would be tremendous, or at least that is a worse case scenario on one side. On the other they get their BILLIONS, with a B to stay afloat and then somehow they change what they have been unable to change for the past 2-3 years at least. Are we that gullable? Can congress not demand a change in leadership or perhaps have a 3rd party help or consult in their change? These same old out of touch millionaires running the company cannot cause change, they are part of the problem, not a solution.

    I agree with some of the posters, help them during their bankruptcy/reorganization as needed through tax breaks for auto taxes, have the government control gas prices (yes I think they are capable of having substantial influence in this – see $4.00/gallon 2 months ago to $1.48 today) to help promote auto usage, just what the environment needs. No to the bailout money. It is ludicrous money has gone to banks who have turned around and bought other troubled banks, that is not what the bailout money was intended for.

    I am afraid this is just another example of our government demonstrating an inability to manage our tax money, the proverbial $200 hammer, if you will. The banks I reference above should be heavily penalized as should AIG for spending recklessly after being provided "help" money.

    We are saps and the rest of the world is laughing at us every day.

    December 4, 2008 at 9:42 pm |
  17. Jeff Reed

    I think the auto unions which have fleeced the comman man for money for decades should dip in their coffers and help bail out the Automakers!

    December 4, 2008 at 9:41 pm |
  18. Anand

    The interesting part of the automakers bailout was accusing them of making cars that people weren't buying. Is that really true. Last year about 16 million cars were sold and WE people were gladly buying SUVs and Hummers. And why were the automakers being accused? People are as much responsible for global warming, environment and energy saving as automakers.

    In the interest of disclosure, it'd be really interesting to have all the members of Congress disclose what vehicles they own. So also the holier than thou media and news reporters, the government agencies.

    No one seems have the moral courage nor care for to earn it with being responsible and therefore not in any position to cast aspersions.

    That unfortunately is the state of affairs with our society. And in the interest of disclosure myself, we own a Toyota Prius for 3 years and a 3 series BMW and our house is 99% CFL lighting, we do recycle and conserve water and donate a whole bunch of clothes to Salvation Army.

    God save America.

    December 4, 2008 at 9:39 pm |
  19. Jack

    Let's see .. Last week they asked for 25 billion. This week they're asking for 34 billion. Will they need 43 billion next week? Sounds like my son knows I'm a pushover father and knows he'll get what ever he asks for.so he ups the ante. I should learn to be a better father and say "No" so I can teach my son a lesson about greed. I want him to be more responsible now so his future will be brighter. I know he'll do and say anything now to get his money, but I must be strong and put my foot down now and say "No" or not only will he never learn but I'll never be a good father.

    December 4, 2008 at 9:39 pm |
  20. Victor Andrews

    The bailout is a bad idea. If no private sources will loan you money based on your "plan" then sell additional stock to raise funds. Or sell assets. Or bring in partners. Or consolidate.

    Or fail.

    But the American public needs to accept responsibility for the bailout when it comes. I will not vote for anyone who has supported any of the bailouts. Period. Never. Hopefully the rest of the voting public will remember and do the same.

    December 4, 2008 at 9:38 pm |
  21. robert

    I do not believe what made this country great was a dependence on government aid in times of crisis. I have lived in other countries and there is no country in the world where the average citizen has so many opportunities to succeed in business or otherwise. But with the opportunity to succeed comes the opportunity to fail, learn from mistakes and try again. Good healthy competition always leads to innovation, creativity and progress. If the auto industry or any other industry for that matter is allowed to fail, new innovators will rise up modify, change and something greater will result eventually. Maybe even some of those laid off workers can get re-educated, take some risks and be the leaders that move us forward again. I say let the companies fail and watch the beauty of the American way work itself out.

    December 4, 2008 at 9:36 pm |
  22. Heidi R

    It seems like the Big "3" CEO's have enough money between the three of them to make a loan to the company for which they work for. They do not need that much money...no one needs that much money.

    December 4, 2008 at 9:31 pm |
  23. bob

    PLEASE, PLEASE don't give the big 3 a penny. They haven't produced a viable plan yet and really don't have one! These CEO buffoons have already proven beyond the shadow of a doubt that they couldn't manage to find their way out of a wet paper bag. Why give them more money that they can use to temporarily boost stock prices with any buy more time for them to sell their stock options and ride off into the sunset, while the taxpayers are left holding the bag. Bankruptcy is the absolute best solution for getting rid of the incompetent management, uncompetitive union contracts, and operational waste. Only then might we see a long term, successful revival of the American automobile industry.

    December 4, 2008 at 9:28 pm |
  24. Kathy

    Gary Klug asked a pertinent question. Where is the bailout money coming from. From the OPEC nations, the Saudis, China. The government is virtually broke. Our tax money is their paycheck. Problem is they can't make it stretch. I've heard different figures raning from 3 to 4 months of taxes collected going to paying interest on our debt to foreign countries. So who bails out America? We can bailout everyone and just run up more and more debt, and I doubt anyone will bail us out. And how about all the money shelled out that wasn't in the TARP? Did Teasury tell us all about that – how about money given to Enron? Did you hear about that? I think we are headed for a depression or worse. We have to stop all this. If we actually had money that wasn't borrowed, well maybe.... But all the US government has is a credit card. And I suspect Paulson is in China begging for more and hopping the Chinese don't wise up and ask for more interest. I fear we are done for one way or another. In the Great Depression, we were a creditor nation. Now we are a debtor nation. I fear the Great Depression is about to be surpassed.

    December 4, 2008 at 9:24 pm |
  25. Tony Kassebaum Boulder City, Nevada

    When United Airlines, Delta, and Northwest Airlines filed for bankruptcy their planes didn't fall out of the sky did they? People kept flying on those airlines, I know I did. So if one or two of the big three file bankruptcy, I don't think people will stop buying cars from them.

    December 4, 2008 at 9:20 pm |
  26. Charles

    Sandy Murdock
    I own a Saturn, but if GM is bailed out I will never ever buy another American CAR never…………I

    I second that Sandy!

    December 4, 2008 at 9:18 pm |
  27. Andy

    In principle, I don't believe these guys should receive taxpayer money. In reality, I DO believe, the companies that make stuff are far more deserving of my tax dollars than the companies that make nothing. The automakers' plans are weak? The banks had NO plans! The automakers aren't sacrificing enough? The banks sacrificed NOTHING! The automakers made their own mistakes? WHO created the exotic loans?!?!?!? The BANKS! Ford, Chrysler and GM (Huge American manufacturers) are having to kneel and beg for 30ish billion. The banks have only to pick up a cellphone on a Sunday to get 50 billion! CitiGroup (or is it CitiBank, or CitiMortgage, hard to keep track) gets billions without asking. The benificiary? A Saudi Sheik! Just curious... Are Bush's, Paulson's, et al.'s roots/friends in manufacturing, or finance? Hmmm...Is America great because we rocked in manufacturing or because we had a couple of dudes moving pieces of green paper back and forth to each other? For too long we've sacrificed our ability to make stuff for the easy life of the banker, the stock broker, etc. We need to get our hands dirty again. We need to develop engineers (their numbers are dropping drastically year after year.) That is the pool from which the Edisons and Fords and Wright Brothers come. We need to be innovative in manufacturing, NOT in lending!

    December 4, 2008 at 9:18 pm |
  28. Steven

    I worked for one of the "Big 3" for over 14 years as a mid level manager in a manufacturing facility. Unfortunatly,in 2006 the facility I work for was closed due to "down sizing". It didn't seem to matter to the company that our facility was the most efficent, most productive, award winning plant in North America. They closed it any way. Now with that being said, I have since went to work for another company that manufactures American made products, and I see so many things that are done differently here vs the auto industry. The Big 3 need to wake up, ditch the blood sucking UAW, and restructure there companies starting with the salaries of Executives and the wages of their work force. Bring product back to the U.S. instead of Mexico, Canada, and Europe. It really does not make since to "bridge a loan" to companies that are reducing jobs in the U.S., now does it?

    December 4, 2008 at 9:17 pm |
  29. Christopher

    Technically, it will not be a bailout for GM, The United States Government still OWES GM what would be today's equivalent of several billion dollars from WWII military purchases.

    Or the United States could just renew the Korean war, it is going to happen eventually. It still isn't over because it was a ceasefire, not a peace treaty. The new war would then boost GM's sales but this will most likely never happen.

    December 4, 2008 at 9:17 pm |
  30. Rich

    I think the quality issue may be a little missconstrued,
    could it be that GMs and Fords last alot longer then the forign
    brands. I drive a 91 chev 115000 miles, and 93 buick 97000 mi, and a 91 ford van 128000 mi , and they all run and drive exelent. When and if they wear out I will buy another GM or Ford. Oh I have driven and rode in the forgin brands not the feel of a GM or Ford. Save these
    great companies. They will come back with a little help. We all got fooled by 4.00 a gal gas.

    December 4, 2008 at 9:16 pm |
  31. David P.

    I agree, I think the Oil Companies should bail out The Big 3 since they have the money to do it. It's not the Government's job to bail out these car companies or Wall Street for that matter. I think if the Government turns over our hard earned tax dollars to The Big 3, at the very least the car companies can do is provide every tax paying American citizen with a brand new Free car. That would be a nice Christmas gift in exchance for their so-called "Bridge Loan". It's still a bail out.

    December 4, 2008 at 9:15 pm |
  32. David King

    I don't want to bailout the auto companies but do we have a choice. I think many of us think, well I don't work there and they make too much anyways – true enough. However, I run a small shipping company and although our ships are fully covered under contracts for the next five years, we are already seeing numerous defaults – we are in good shape but we will trim. If you are employed and somehow think you are going to get out of this unscathed wake up, plenty more bad news to come. Like it or not we need the auto industry and the society as a whole to consume or we are in for a difficult road ahead – my thoughts anyways.

    December 4, 2008 at 9:15 pm |
  33. nicholas c

    What really bothered me was the offer to work for only $1 salary. Since the total compensation for these men is 2 million in salary and 18 million in perks and bonus, the offer to suspend 10% of the compensation did not seem very viable to me. If you are saying the company is dire need, do your part as well. Drop the 18 million and I would be impressed enough to agree to a loan. Look at what the middle class is having to do without already.

    December 4, 2008 at 9:13 pm |
  34. luci

    see what they said.. if the goverment can bail out financial institutions, then they should bail out us..what is next then? toy company, retail stores and etc?

    December 4, 2008 at 9:13 pm |
  35. Nicole Stocker

    There is no doubt that the Big 3 and the UAW need to make some serious changes... they have made huge mistakes that must be rectified to the greatest degree possible. However, how is it that American taxpayers are willing to write blank checks to the fat cats on Wall Street with little to no restriction but cheer hanging the auto industry out to dry? How can you be so blind? Financial institutions and their shady business practices have our economy mired in a dire financial crisis and the auto industry is vilified for its excess? Wake up America...there is plenty of blame to go around. The Big 3 should absolutely not be shouldering it all.

    December 4, 2008 at 9:10 pm |
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