• Feb 12, 2009
Hyundai America CEO John Krafcik delivered a keynote address at the opening of the Chicago Auto Show media preview where he called on the industry to dramatically change the way it does business. According to Krafcik, for decades, extravagance has been the name of the game in the car biz – just as it has been in most of corporate America. In the past six months, however, things have started to change, with automakers cutting back on the overblown productions at auto show press conferences and in many cases eliminated such conferences altogether. But Krafcik doesn't think the swing has gone far enough.
That's just one small part of the problem, though. Krafcik acknowledged that the industry as a whole is seen as slow and unresponsive as well as wasteful. He called on voluntary limits to executive compensation that are tied to some multiple of what the average worker gets paid. "What if our industry was the first to exercise a more inclusive form of capitalism that voluntarily restrained executive compensation to a reasonable multiple of average employee salary? And what if our industry adopted a uniform code of conduct regarding gifts, meals and business entertainment?"

Krakcik wants his industry to be more modest and humble. Instead of fighting everything that needs to be done, he believes the auto industry must take the lead in re-shaping corporate America.

[Source: Automotive News - sub. req'd]


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  • 25 Comments
      • 5 Years Ago
      You guys should see what Mr Hurd thinks is cool - having 500-1000 times the remuneration of an average employee is simply not enough it seems. Who the hell votes for government who allow this crap? Seems like the top 1% are on a guzzle overdrive even now, while screwing the massive majority of decent people. What kind of democratic principle underlines this? Who votes for this? Surely 95%+ of americans would vote for "the top guy will never be payed more than 30 times the average employee salary"? Hell, 20 times - what the hell has been going on in our country? See below for some insights from the employees of a once excellent company:

      http://www.damiansaunders.net/2009/02/26/commentary/hp-pay-cuts-an-unfair-act-of-economic-opportunism-and-greed/

      • 5 Years Ago
      I recognize what he's saying but I don't know if what he wants to happen is possible. Changes can't be made on the fly, it takes time to re-design parts/assemblies, re-do structural and dynamic analyses, tweak any problem spots, release the drawing, change any tooling that supports it, get the stuff made, and put it into the production flow. This takes months, not days, as our ADHD society might expect nowadays. This isn't re-writing 5 lines of code and uploading the new beta to a server.
        • 5 Years Ago
        I don't think he was trying to change the paradigm of automotive engineering.

        I think he was talking about automotive MANAGEMENT culture, and the business of making cars.
        • 5 Years Ago
        Agreed. You can't just see a new trend and release a car to capitalize on it in 3 months. In a capital and labor-intensive business like automobiles, moving slowly also helps with risk management. And it usually works, except when we see these huge disruptions.
      • 5 Years Ago
      Finally someone gets it!!!!Want to be which company will surpass Ford as the next north anerican auto giant.
      • 5 Years Ago
      It's all about morality.

        • 5 Years Ago
        ...and because We've lost it and are at odds about what it is,one day We'll have to submit to a strong armed dictator(c'zar is the P.C. term) type who'll have to take charge(or maybe a guy like this who is given a soapbox for a period of time).Most likely out of economic necessity.Too bad
        For too long it's been take what You can get as the American business ethic.
        I'm especially disappointed in our business leaders.
        I believe the reason why Japanese car makers have been so successful is because their management is more accountable and almost married to the Co.
        In the USA CEO's just raid the treasury and jump ship.
        Now the taxpayer has to sustain the expectations of greedy workers and executives.
        Enter Socialism.
        • 5 Years Ago
        I do agree about the CEOs raiding the treasury now. But companies and agents of companies haven't been moral for a long time. The Pinkertons existed before Japan rose, fell, rose and fell again.

        Look at what the railroad companies did, especially out West.

        And whatever's wrong, it isn't really new.

        http://en.wikipedia.org/wiki/Tulip_mania
        http://en.wikipedia.org/wiki/South_Sea_Company

        And it isn't like the Orient has this worked out either.

        http://www.boingboing.net/2008/01/12/one-million-bilked-i.html

        That's enough links, but look up Chinese stock market fraud too.
      • 5 Years Ago
      He looks like the public defender in "My Cousin Vinny"
      • 5 Years Ago
      TWO WORDS the naive optimists should acquaint themselves with for 2009:

      FORCE MAJEURE
      • 5 Years Ago
      I live pretty well on $40K per year. I like to see these CEOs do the same.
        • 5 Years Ago
        +1.

        "..modest and humble.."
        • 5 Years Ago
        Are you insane? I hope you are being sarcastic. If you are not, then we are ALL in big damn trouble.

        I make about that much money, and I am barely treading fiscal water, and I am mostly out of debt, and have no car payments.

        What insane person is going to HEAD a company, with all that entails, for that pittance of a wage? You would get people wholly unqualified to do that job if you only paid that much money, and truly competent people would find something else to do, that would support a better lifestyle. I want a better lifestyle through hard work, don't you?

        This country was built on the motivational profit motive, and that is not the same as immoral greed. Wanting to be properly and WELL compensated for excelling is normal, and the engine of the economy.

        If you are serious, then there is a big problem with understanding BASIC economics in this country.
      • 5 Years Ago
      Why doesn't this guy start the ball rolling... im sure congress would bust the big 3's balls so hard that they are forced to follow
      • 5 Years Ago
      See, now this I have a LOT of respect for.

      A business man who wants to figure out better ways of doing business, and in favor of SELF regulation and SELF governance, and cooperation.

      No mention of government, and that alone is a point that gains respect from me.

      THIS is capitalism, and it works every time it is tried, if the government can be kept at bay, and allow people and businesses to do what is best, both for themselves, and their customers.

      This grows business, revenues, and even tax revenues from that growth. It may not show in down market periods that enforce market efficiency, but it goes very well when the market stabilizes. It does not, however, feed political power, and that is a good thing.

      Kudos to Hyundai. They are hungry to compete by making good product, and they are smart enough to realize that they are the ones to make it happen, not someone else, or taxpayer dollars.

      If I saw this kind of self evaluation, and product push from other companies like GM, we would see much less need for bail outs, and support would rally for hopeful outlooks.
        • 5 Years Ago
        Yes, capitalism works every time it is tried. When Enron decides to buy up all the electricity in California and then waste it by putting it down power lines that don't have enough capacity to carry it, thus making the electricity they didn't waste more valuable, it sure as heck showed us that capitalism works every time FOR THE COMPANIES.

        Or maybe when companies conspired to fix the price of concrete in the Indiana (actual jail time was served).

        http://www.usdoj.gov/atr/public/press_releases/2005/209816.htm

        Companies will always do what is best for them, including putting out PR statements that don't mean anything. I'm more concerned about the consumer.
        • 5 Years Ago
        I agree, when companies do this stuff, it isn't good capitalism. And companies, if left to their own devices, will not engage in good capitalism, because under capitalism, marginal profit drops to zero.

        But you say leaving things alone works every time. It doesn't. There is no magic to not regulating companies. You can still have bubbles where companies work in their own interests, but it still blows up because their business model didn't work. You can have collusion, where companies work in their own interests to the detriment of the consumer. You can can have Maiden Mills where the company acts very morally and still gets crushed (to the detriment of the company owners and workers) by capitalism.

        As much as we would like to think that markets lead directly to wealth and the improvement of the condition for all of us (the theory of capitalism), it frequently doesn't. Constant supervision is necessary.

        And empty statements like this guy makes (seriously, every company already has a policy on gifts, meals and business entertainment) don't really change anything.
        • 5 Years Ago
        @LS7...

        Are you kidding me? Doing what is best for the company SHOULD be the same thing as doing the right thing, not the wrong thing.

        Enron ended badly. IT WASN'T good for them. It may have seemed good before the end, but it wasn't good.

        Companies that commit fraud, price fixing, etc... should be prosecuted under the law. That does not mean they should be co-opted by government oversight in their operations, or bailed out.

        That would kind of mean that doing BAD things have consequences, and by definition, are not the best thing for the company, or their clients or consumers.

        A good company that does well, is one that operates morally and ethically, and makes a profit at it. Take any of those three things away, and you have something else, and not good capitalism.
      • 5 Years Ago
      Hyundai's US operation goes through a different CEO about once every 12 months (after they miss Seoul's insanely unrealistic sales targets, they're out the door). So we're supposed to listen Hyundai?
        • 5 Years Ago
        i think companies surviving on government handouts could learn a thing or two from those that are doing well.
      • 5 Years Ago
      I'm not sure he even said anything there.

      I think what he said is "look at me, in my headshot, I'm wearing a casual polo shirt!"
      • 5 Years Ago

      'a more inclusive form of capitalism that voluntarily restrained executive compensation'

      He's drunk!!!! and hopefully not driving.

      I'll tell you what, Johnny, you restrain yourself and hand over to our new overlord government or whoever wants more of your paycheque, but I refuse. I need more these days, not less!!

      Our Republic is being toppled and a neo-marxist, new left thinking regime been handed power.

      We fell asleep at the wheel. Good Night, America. The nightmare is real and we're not going to wake-up from this one
        • 5 Years Ago
        The sky is falling! The sky is falling!

        Don't you think you're going a little over-the-top there?
        • 5 Years Ago
        All he did was talk.

        Things are different for small and large companies. Due to the fact that people expect to make more money than the people working for them, execs of large companies always make more than those of small companies.

        So it's easy for the CEO of Hyundai America (a rather small company) to make talk about how their CEO salaries are lower. He knows his competitors can't match him. When the Chaebol (like Hyundai Korea) are ready to do what this guy says, then we'll know things really have changed.
        • 5 Years Ago
        Dude, you're nuts. Seriously.
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