This article paints a pretty grim picture for GM. As a stalwart of the American economy, what are the ramifications of them running out of operating cash? Will they close the doors? How would that affect the automobile industry?
Well for one, my brother and sister in-law will lose their jobs. It seems like we could fix GM relatively easily:
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Finally have universal health care so we could take the burden off GM (I think $1,500 of health benefits for present and former employees is built into the cost of each car).
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Have the govt order a fleet of US made plug-in hybrids for all it’s cars, post office trucks, etc. That should jump start things.
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Require densly populated cities like NYC and Boston have all their taxis be US made plug-in hybrids.
GM has a lot of suppliers. They in turn go to restaurants ,bars and movies. If they go under the ripple effects will be huge. GM pays about 20 % of the tax base in Warren, Mich. There are satellite companies ringing the tech center. They will go under too. The impact to Detroit area would be huge. Then of course foreclosures, drugs ,alcoholism and wife abuse would rise.
Saving GM would have to include provisions for them to stay in the US. To hand them a boatload of cash so they can move more jobs to China would be stupid.
These American people are auto buyers too.
I agree-the impact would be huge. ech GM job supports 7-7.5 outside jobs. Michigan is already broke-it woul end in the state having to lay off large numbers of employees.
I LIKE the idea of the government subsidizing the purchase of GM (USA built0 new cars-it would be cheaper than paying welfare to out-of-work GM employees. By the same toke, the USW HAS to see reason-you cannot pay people to do nothing, and pay the health benefits of the past.
You also have to remember that a lot of R & D is auto related. There is an endless amount of time trying to find better and cheaper ways to manufacture. The autos require a lot of technical expertise and much of the computer design soft and hardware came out of the industry. GM once had a ton of mainframes in the basement hooking up the world. Now they have moved up into new and interesting design software. They have pushed many peripheral technologies and America would be much the worse without them. If we just ship all that offshore ,India and China will outstrip us in every way. They will have the impetus for the technology of the future. We will all be bankers and lawn cutters.
Is it even plausible that they would close shop? I mean this is General Motors. Would Ford or Chrysler absorb them somehow?
These ideas irritate me to no end.
“Hey, Toyota and Honda. Good job running successful, profitable companies, and selling cars that people actually want to buy. We thought about trying to compete, but in the end decided it was too much bother. Instead we’ll rig the system through legislation so that people will be forced to buy our cars over yours against their will.”
I mean, it isn’t even as if these companies are succeeding because they’ve outsourced their manufacturing to cheaper countries (although I personally do not have any problems with them doing that either). They’re made in Japan and the United States (which is more than one can say for many GM or Ford cars).
The foreign car companies have simply done a better job at selling cars in a profitable way. It is wrong to punish them for that.
As GM goes, so goes the nation (paraphrased)
Driver8, you are naive if you don’t think foreign governments aren’t “rigging the system” to help favored domestic corporations. And the point of isn’t to “punish” foreign corporations (why should we be concerned about them in the first place?), the point is to help an important national industry.
As mentioned above, GM has importance beyond automobile manufacturing.
The article I just saw said that GM was thinking of calling the merger talks with Chrysler off. I’m not sure whether that’s just ‘GM-is-in-control’ merger talks.
I grew up in Whitby and Oshawa, home of GM of Canada. This is not going to be pretty.
Driver8, there’s no reason that Honda and Toyota and their employees wouldn’t also benefit from the introduction of universal health care in the US. It’s just that GM is closer to the edge. But GM had made short-sighted decisions for decades, and now they’re trapped. They may not have enough time for their new long-term plans to bear fruit.
Some foreign car companies have been helped by their countries. Is that OK? Why shouldn’t we? Japan has a long history of assisting their corporations. Most countries have done so. Only in America do we think the government should be separated from the corps.
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How you gonna pay for that?
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What happens to the vehicles they already have? And how you gonna pay for it?
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By what authority? And what happens to existing vehicles. And how are the cities supposed to pay for it?
Just throwing this out there to chew on, I’d have to think more on it before deciding if I even support it:
Could we temporarily raise tariffs on imported automobiles so that it makes more sense to buy American? The legislation could be written to automatically expire in 2 or 3 years if you’re concerned about slippery slope or disrupting the free market too much.
I would be very interested to see an analysis of foreign versus US subsidies of their own auto industries, and how that reflects in the price of a Ford or GM car versus a Toyota or Honda that is sold in the United States.
That being said, the items I was quoting (with the exception of universal health care, which I am cautiously in favor of) go far beyond that. They restrict the buying entities to only picking cars made by American companies. It basically stated that if a taxi company in NYC bidded for cars and decided that Toyotas were more financially feasible, it should be forced to buy GM cars instead.
You can’t help your own companies without punishing foreign corporations. You can call it whatever you want, but any way you slice it that is tariff. Also, we wouldn’t be just punishing foreign corporations. We would be punishing consumers by giving them artificially higher prices and lower quality. We would be punishing other industries where foreign countries would likely retaliate. Protectionism almost always have a negative effect on an economy as a whole.
It would be hugely ironic if this hurt GM and Ford and helped Toyota and Honda. I though a lot of GM and Ford cars were made in Mexico, and a lot of Toyota and Honda cars were made in the United States.
Just make it even with other countries. Tariffs agreed upon have been very one sided for the foreign manufacturers. When wages in Japan and Germany came closer to ours, they began manufacturing here. That is the key. The so called point of NAFTA was to raise wages and environmental standards in competing countries. That has not been done. We have just moved to where cheaper labor and weak environmental standards exist.
China did not build a better mousetrap. We deliberately moved lock,stock and intellectual property to a place where corps could increase profits at the expense of American workers. But the real cost will be dropped on the entire country. It can and must be stopped.
Tariffs are almost always a bad idea because of retaliation. Besides, given the low value of the US dollar, American products are cheaper overseas and thus attractive to foreign consumers. Retaliatory tariffs could kill our exports at a time when we need them the most because of low domestic consumption.
Perhaps, but that’s been the competitive model for Asian corporations for a long time. How do you think the Japanese steel industry developed into a world leader in a country where they have to import all their iron ore? How did companies in Korea and Taiwan gain important slices of the worldwide electronics and semiconductor trade? It’s because their governments stepped in to spur those industries.
It should be clear that the US shouldn’t want to exist as a nation of managers, consultants, and landscapers. We shouldn’t give up on important industries that we’ve done well in (and can do well in going forward) because of tough economic times or because we’re pissed off that mismanagement. There’s too much invested here.
Its turning into a national emergency; the same way the Wall Street bailout was paid for.
Do you not realize that there is something called fleet turnover? The cars need to be replaced as they age anyway.
I’m guessing through the aurthority that licenses taxicab operators. Here’s the NYC Taxi and Limousine Commission for one example. Again, cars wear out and need to be replaced by the operators anyway.