Money in Troubled Times

Should Taxpayers Be Helping China Compete Against Us By Bailing Out GM?

GM is helping China build a massive car making business.
China’s new car business is presumably for export since China admits it currently has too many cars in their cities.

This goes to the crux of the issue….labor.

On one hand people expect GM to maintain a profitable business manufacturing cars, and on the other they want them to build them in the USA.

Then we ignore the reality….NOBODY makes small cars in the USA. It’s a money loser for everyone. Europeans only build SUV’s here and the Japanese makers primarily do it for PR (Toyota admits this – they only build about 5% of their vehicles here, and take a loss on it). Look at Mazda – they make the 6 here, but not the 3 series. They will NEVER make the 3 series here, because it’s too small.

Yet, we expect US automakers to build here and be wholly competitive against manufacturers in Korea or Japan, where currencies have been historically floated at friendly rates for export, and the manufacturers don’t have to worry about health care or any benefit cost at the low end of labor (that builds cars).

Liberals complain that GM/Ford don’t make 50mpg gas sippers, and prefer huge SUV’s….but ignore the market realities those companies face. The market has DEMANDED big cars. The Prius was onlly profitable for two reasons – Japanese government subsidies which paid for research and to promote domestic (Japanese) sales AND the market ride up Oil had the last few years. If Oil prices don’t change – GM will take huge losses on every Volt that is sold. Look – the market is NOT viable in its current form. Building ANYTHING priced under 20k in the USA, is a guaranteed money loser. I worked on the GM EV1 program (the LAST time I worked in Automotive, fwiw)….I can speak to the realities here.

Then Conservatives try to confuse the whole issue by blaming the Unions in the USA…pursuing a personal vendetta rather then facts. The reality is that Union autoworkers make $1 less an hour than Non-Union, in the USA. New Union members make $14/hr….just over HALF what non-union auto workers make.

The real struggle for companies manufacturing domestic autos in the USA are RETIREE HEALTH BENEFITS…..something companies making stuff don’t have to worry about in the rest of the world…because Japan and Germany (and everywhere else) has national health care.

The bottom line – is that the Unions have nothing to do with it. It comes down to MAKING MANUFACTURING VIABLE IN THE USA. This means reapproaching NAFTA, free trade and gobalization. We can’t deny that those things exist….become completely protectionist, but we need to rewrite the rules to make our manufacturing base viable, or we are in big trouble.

Remember – these auto makers make up our manufacturing base. The base that built the tanks and bombs for our wars.

Should we rely only companies which were founded with strong ties to the Nazi party, like Volkswagen and Mercedes? Or should we rely on the companies that built all the planes that attacked us in Pearl Harbor (Mitsubishi) or all the trucks used by the Japanese Army (Toyota)?

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