CEOs agree to salary cuts; UAW to reopen contracts

The CEOs of Ford and General Motors have joined Chrysler’s Bob Nardelli in agreeing to take a $1 per year salary until proposed Federal loans have been paid off. The two CEOs had told Congress that salary cuts would be counterproductive.

The concession mimics one made by Lee Iacocca, reportedly at the request of the Carter administration, which placed many demands on Chrysler before backing loans in the 1970s; these loans were paid off early and avoided Chrysler’s bankruptcy, fueling a highly successful run of vehicles including minivans, the Omni/Horizon, Jeep Grand Cherokee, and the then-acclaimed K-cars, which were followed after another period of losses with the again-successful LH cars, JA cars, Ram trucks, and the first profitable American entry-level compact for some time, the Neon.

The Carter administration had also demanded the resignation of Chrysler’s leaders. This step was demanded by some Congressmen in the current situation, but since two of three domestic leaders are new to their positions, a similar step today would presumably only be required of General Motors.

The three automakers have submitted plans for recovery to Congress, and the UAW has announced that it will reopen contract negotiations if needed for the loans to be made. Numerous Republican Congressmen have demanded that the automakers declare bankruptcy to void pensions and union contracts. Some Democrats have also demanded that automakers comply with higher gas mileage standards to receive aid.

Steps to cut executive and rank-and-file pay are only being demanded of automakers; media reports indicate that around $2 trillion has been devoted to the finance and housing industries without similar conditions.