GM hosts fleet buyers at spa in scaled back event
CHANDLER, Ariz. — Just weeks before a deadline that could send it into
bankruptcy, General Motors is entertaining 500 of its biggest customers
at a luxury spa and golf course in Arizona.
GM, (GM) which has borrowed $15.4 billion from the U.S. government in
the past six months, shipped in 150 cars and trucks to the event this
week at the Sheraton Wild Horse Pass Resort & Spa, and paid for airfare
and hotel lodging for 90% of the guests.
The affair is scaled back from previous years, says GM spokesman Terry
Rhadigan. Guests have to pay for their own golf outings, he says, and
most of the days are packed with informational sessions on GM's 2010
product line. The guests are GM's fleet and corporate customers, which
accounted for 27.6% of GM's business in 2008. Fleet customers can buy
dozens of vehicles at a time.
EVENT COSTS DIP: Critics say it looks bad; GM says it promotes purchases
"Our approach this year has been noticeably austere," he says. "We
obviously had the option to cancel the event or move it ... but ... do
we want to just let our competitors move in and take this important
business from us?" Business with fleet customers is "highly profitable,"
he says. They often order next year's models in June.
GM is operating on a taxpayer-funded lifeline, having taken $15.4
billion in government loans. It has said it needs up to $30 billion. It
faces a June 1 deadline to slash debt and sign new contracts with its
labor union, or the government has said it won't provide any more money.
A small number of the customers attending the event were government
employees who paid their own way, Rhadigan says.
Helio Fred Garcia, a professor of crisis communications at New York
University, says GM's fleet meeting isn't the same as events by other
companies that have been criticized for sponsoring lavish entertainment
while taking taxpayers' dollars.
"If GM is going to survive ... it has to maintain sales in a competitive
marketplace," Garcia says.
President Obama has called for "shared sacrifice" among all of GM's
"I would hope that GM management would spend our financial dollars
wisely, and in a manner that would be certainly appropriate in the
taxpayer's minds," says Jack Dickinson, president of GM retiree group
OverTheHillCarPeople.com. White-collar retirees lost health care
benefits at the start of 2009. "I would hope that our management has the
foresight to stay away from things that would project a negative image
with the public."
GM, Chrysler and Ford executives were harshly criticized last fall for
flying on private jets to Washington to ask for government aid. Leslie
Paige of Citizens Against Government Waste says it's clear GM didn't
learn from that.
"GM has a tin ear to these things," she says. "There shouldn't be any
wining and dining right now. They took taxpayer money. If you're going
to do that, you need to make some very public displays that you get that
the taxpayers are part owners of the company now."
Tom Donaldson, a professor at the Wharton School at the University of
Pennsylvania, says GM and other companies accepting government aid
should be working hard to stay under the radar.
"Even legitimate functions that help sales, that create partnerships,
that are not over the top and luxury, they are almost out of bounds from
the public standpoint," Donaldson says.
GM says the Treasury wasn't consulted on the event, nor would it ask for
permission. The Treasury has said it doesn't want to interfere with GM's