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Wednesday, March 25, 2009
Thousands Of GM Workers Get Company Cars, Gas
General Motors continues to slash costs. But even as the company asks for more taxpayer loans, there's one perk GM refuses to give up: a company car and company-paid gas for about 8,000 white-collar employees. A former GM economist estimates that last year alone, the automaker spent nearly $12 million on fuel for its staff. By all accounts, GM's car program is a great deal. Rob Kleinbaum participated in it when he was a global strategist at GM in the early 1990s. He said his nicest company car back then was a Chevy Suburban with 10-way adjustable, heated leather seats.
"It's a really highly valued perk," Kleinbaum says of the program. "It's feels kind of fun. You get to drive a new car every three months. You never have to pay for it. Gasoline is always free." The program is not quite as good today; managers now get a new car every six months. Kleinbaum says it's one thing for a company to offer such a generous perk when it's making tons of money, but GM lost more than $30 billion last year. The company has already received more than $13 billion in taxpayer loans to avoid bankruptcy and is asking for up to $16 billion more.
Kleinbaum says continuing to provide cars and gas sends the wrong message. "This is much like when the CEOs flew their airplanes to Washington, begging for money," he says. "It's not as insulting as that." But Kleinbaum says the public will wonder: "Why are these guys getting free cars and free gas when the American taxpayer is paying for it?" Kleinbaum says GM should kill the program — not because of the expense, but because it reinforces a corporate insularity for which GM has been criticized in the past. Kleinbaum says the perk prevents GM employees from fully understanding what customers want and what they go through. Kleinbaum says when gas hit $4 a gallon last summer, GM employees who enjoyed company-paid gas missed the pain consumers felt in their wallets.
"I would be totally in favor of eliminating this benefit," Kleinbaum says. "More because it would drive everybody in the company to be much closer to the marketplace and so they kind of feel the same things their customers feel."
A GM spokesman defended the program, which has been around for at least 50 years. He said the perk is part of white-collar employees' overall compensation, which GM says is competitive with Toyota's and Honda's. And the benefit is not entirely free. For instance, managers pay a $250 administrative fee each month to participate. GM says other companies have car programs, too. But both Ford and Chrysler say they don't provide gas for such a huge swath of employees. For instance, Mark Truby, head of Ford's corporate communications, said he pays for gas out of his pocket and is not reimbursed.
GM insists its employees appreciate the impact of high fuel prices, but one current GM staffer interviewed for this story said the perk does blind some people. He recalled that when gas spiked last summer, a colleague complained. It wasn't because of the cost. It was because he had to swipe his credit card twice to fill up the tank of his big SUV. Inside GM, the perk is formally called the Product Evaluation Program. The company says it's an important tool to improve vehicle quality. Employees must make routine reports to an internal Web site and immediately identify problems. But one former GM economist questioned the program's value.
Walter McManus worked at General Motors during most of the 1990s and now runs the auto analysis division at the University of Michigan's Transportation Research Institute. "I'm not aware — when I was in market research or in product planning — of anyone at GM ever using the information for any sort of analysis or any product development decisions," McManus said. "No one that I knew took it seriously." GM disputes that; a spokesman said employees provide frequent, critical feedback for engineers. General Motors won't say what it spends on the program or even how much it spends just on gas. But using GM numbers and recent federal data, McManus and I tried to come up with a number. The annual cost for gas last year — as best we could figure — was nearly $12 million.
GM has talked about ending the program, but a spokesman said employees have built their lives around it. It allows many to live far from their offices and commute at little expense. The spokesman said killing the program now would be "extremely" disruptive.
-excerpt from NPR