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COLUMN: Auto pay

2009-02-17 07:59

Morgan Naidu

I really want to be a car industry executive in my next life.

Yes, I realise it’s a bit of a strange yearning, what with the global credit crisis, tumbling sales and the like, but I hear the pay is just so damned good.

I mean, it's got to be the gig of a lifetime.

You run one of the big and more established mother (car)ships in the USA, you preside over flailing or climbing sales – doesn’t matter which; you fight with the unions and cut staff, working hours or medical benefits and you even promise to make just a single, lonely, solitary dollar for an entire year as a show of sacrifice.

This, despite the fact that that in preceding years you have raped and pillaged the company’s bank accounts, walking off with multi-million dollar salaries and bonuses even when the mother ship was shedding both revenue and profit by the billions.

What’s that, I hear you guffaw? There's no way this kind of corporate excess could be allowed in our present times of crisis.

Well, think again.

For the love of money

In the United States of America, car companies prayed for a white knight. Their saviour turned out to be a black prince who, whilst searching for his very own car czar, lashed out at corporate greed.

This corporate greed and arrogance showed itself when the so-called big three of the car industry, Ford, Chrysler and General Motors, arrived in Washington, caps in hand begging for billions in bailout money. Yet, each of the company’s executives had flown in on expensive company jets, with Ford’s Alan Mulally refusing a symbolic gesture of just one dollar as his next year’s salary.

The poor fellow later changed his mind and said that he would in fact accept a dollar if Ford did indeed did take government bailout money.

What a standup guy is old Alan of Ford, willing to suffer for the auto cause. Of course, his suffering may come in the form of canned caviar rather than the freshly flown-in Beluga he usually ingests – he did after all make more than R180-million just in signing-on fees when he joined the Blue Oval carmaker.

Another fine, upstanding fellow Mr Bob Nardelli, whose Chrysler group saw sales plummet by more than 40% in the last month’s sales figures, also is on the princely sum of one dollar annual pay. He’ll survive, however, thanks to a more than R2-billion severance package he negotiated with his previous employer who ousted him just before he joined Chrysler.

GM’s chief executive Rick Wagoner also valiantly took one for the team when he settled for a dollar a year deal. But, let's not forget the R150-million previous year’s takings or the fact that he has presided over GM’s systematic slide down the auto industry toilet bowl of despair.

Even more telling is the fact that the collective salaries of Toyota Motor Corporation’s top echelon of 30-plus executives is equal to the salaries of just two of America’s ailing big three.

Not that Toyota in the USA is exempt from any credit crisis, but the world’s leading carmaker has just announced that some 3 000 US executives and salaried staff would take a 30% drop in salaries and bonuses.

Us and them

Perhaps this is a simplistic view of the exorbitant executive pay culture, but the average South African consumer looking to buy his or her first car is not comforted by the claim that salaries are based on market forces.

Like it or not, the credit crunch currently squeezing the international car giants has already impacted on our local car market, with budgets slashed and outlook bleak as the market subsides by over 25% on the same month last year.

How will the CEOs of South African car firms respond to the challenge of the crisis?

Will they announce pay cuts, give up their corporate perks and fancy villas at Silver Lakes?

Or perhaps, they will be left to plunder while others ponder a solution for the industry.

Oh, yes, decisive moves have been taken. Volkswagen announced some 400 job cuts, Mercedes Benz another 100 or so in the past week.

In the midst of this quagmire, some clever spark from Nedbank said that government needed to help out the local car industry to the tune of R10-billion.

But, all the money in the world will not automatically increase demand and sales.

It will not remove the layer of cynicism over exorbitant executive pay either.

Not while we have the antics of an Eastern Cape-based car company's managing director who ran up the company credit card with extravagant renovations to a rented house, importing of fine European office furniture and the ordering of a company car – a particular model that was not even available in SA. He was ultimately banished to some plant in Eastern Europe, word of his wanton misspending all neatly hushed.

Ah, yes, dear God, please make me a car company executive in my next life. I promise I’ll be real good… at being very bad!



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