Perks Die Last
We need not review the litany of bad news to remind you the Motown’s money’s too tight to mention. But amidst all of the plant closings, layoffs and rumors of bankruptcy, one song remains the same: management perks. The Detroit News reports that even as executives descend on DC begging for bailout billions, Ford, GM and Chrysler refuse to eliminate programs which subsidize car leases for management, often with insurance, maintenance and gasoline included. And this isn’t going over well with workers. “We’re taking concessions,” says UAW worker Jim Willington of Ford’s Woodhaven Stamping Plant. “They should level the playing field. They ought to be willing to buy the products. They can afford it.” A little perspective after the jump..
To be fair, GM and Chrysler are limiting their programs. GM managers used to pay $150 a month for their vehicle, fuel, maintenance and insurance, and got four different vehicles each year. Starting in September, the fee was increased to $250 a month, and the length of each lease was extended from three months to six. A similar program at Chrysler now limits managers to a single vehicle per year. Ford’s program has variable pricing, but allows family members to qualify, sticking Dearborn with the sky-high cost of insuring the teenage progeny of its managers. Ford also recently expanded its lease program to reduce inventories of Fusion and MKZ. Meanwhile the automakers claim that these programs are one of their only ways of retaining employees, and it’s better than having vehicles sitting on lots. But if GM can do without developing any new vehicles, can’t they also do without this perk?
I keep hearing ...in all industries... how we need these perks to keep good people but am I wrong to say good people will stay with a good company? If the company goes ch11, where are your perks then? Where will you go? Is there a market for auto execs and middle managers? Is Toy/Hon/VW hiring in droves? I am not advocating cutting these perks since I don't know the cost/benifits but "if I ran the company" these are areas I would not overlook to prevent my company from going under.
There are significant product benefits to GM's PEP program. All participants are required to fill out an exhaustive, JD Power-like survey for each vehicle they drive, so that the company can get some predictive data. Any problems reported require personal followup from the engineer responsible for the part. Second, the service facility at the Warren Tech Center is tied directly to the assembly plants. Quality spills (i.e., a large percentage of drivers of a certain model bringing the vehicle in for the same problem) are detected quickly and immediate feedback given to the assembly plant. It is much faster response than going through dealerships. Finally, for new models such as the CTS, Malibu, Traverse, etc., a large fleet of early production vehicles, called "Captured Test Fleet", are built for the PEP program and employees drive them under real-world conditions. Drivers are required to immediately report any quality issues (in real-time via a special OnStar hotline). Any problems can be caught and fixed before the vehicle goes on sale at dealerships.
Another point . . . I would guess that the companies benefit in some way by these programs, or at least believe that they benefit. When times get tough, they're more like to expand them than cut them. And I doubt the reason is to keep more employees around. Lower market sales often lead to better deals on slow-selling models, faster turnaround on leases, or expansions in the number of available leases. I may be wrong, but I believe that Chrysler expanded their program to include lower-level employees . . . essentially senior working-level engineers, who would not be eligible at Ford or GM. Given this behavior, it seems that cutting this 'perk' would not benefit the company . . . it would just be a symbolic move to placate uninformed people. And bravo to prthug's post. I'd gladly give up a lease car 'perk' in exchange for cost-of-living pay increases or worthwhile health insurance alternatives.
GM's PEP program did indeed include competitor's vehicles at one point. In the early to mid nineties I remember my father bringing home Volvos, Hondas and Nissans pretty much for a weekend or two before going back to a GM car for the rest of the workweek. I've personally bought many PEP cars because of their incredible discounts, cars that I would never have been able to afford otherwise. Volume is volume and if they weren't making money on the sale, they sure as shit were on all the financing.