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American Airline is in bankruptcy. Even more to the point, GM itself went into bankruptcy. What we have now is "New GM." What the "bailout" did was turning the normal bankruptcy protection order of precedence on its head: looting taxpayers, bond holders and shareholders for the benefit of union members and politicians. For every $80/hr union job that is saved, that's 4 $20/hr non-union jobs lost (and probably more) despite the desire among the unemployed workers to work for less than $20/hr, consumers' desire for better bang for their bucks, and the desire of everyone else in the industry to bring the two together. The overpaid union jobs saved in the "bailout" is literally a volume constrictor on the industry.
Even the idea that if GM went away (more than just bankruptcy protection voiding the union contracts that ailed the company to begin with, but a full liquidation) there would be 1.5mil jobs lost is utterly fallacious: would consumers suddenly buy 2 million less cars? If the answer is yes, then what's better than to have the 2mil volume cut from the least efficient producer instead from the more efficient ones? The real answer is of course that people would buy cars of other brands. That means more volume, more jobs and more dealership (if necessary) at other manufacturers . . . the same manufacturers that can make better use of the natural resources and human labor that go into making cars than the domestic GM operation.
The reality is that, GM's operations overseas, like those in Brazil and China, are actually quite profitable and they are making more cars than the GM plants in the US. A normal bankruptcy protection procedure would have eliminated the wasteful GM corporate/labor structure in the US that dated from the 1950's when GM enjoyed nearly half of the entire world's market share; would have made for more rational labor contracts therefore more jobs in both car-making and related sectors (like dealership, support and parts). Instead, the political favoritism protected the very segments of GM that caused the problem and sacked the man who built the highly profitable GM Brazil and GM China operations, and socked the taxpayers with a huge bill that will never be paid back. The cost of GM bailout is far larger than the 30 billion often quoted; in order to avoid a WTO litigation from all car makers of the entire rest of the world and potentially plunging the world into an immediate trade war, enormous sums were handed out to practically all the major carmakers of the world in order to keep their mouths shut.
GM worldwide production beating Toyota's in 2011 involved several factors not due to GM itself:
1. The Tsunami and radioactive fallout in Japan in March stopped Toyota and many of its suppliers for months.
2. The Chinese love American brands better than Japanese brands (exactly the opposite of here in the US). To put numbers into perspective, US annual auto production is about 8 million; that of China is now around 19 million. The number of cars produced in one of GM's joint venture plants in China (Shanghai GM, nearly 2 million cars a year) is comparable to the entire GM production volume in the US. There was no reason for something like Shanghai GM to stop producing cars even if GM went through a normal bankruptcy. Even if GM got liquidated altogether, the Chinese would just buy Ford instead, perhaps switching the entire joint venture to partnership with Ford. The Chinese consumers simply prefer American brand cars to Japanese or their own brand cars, just like we here prefer European cars and Japanese cars to domestic brands.
3. Double counting. The 8.5-9 million units cited in GM worldwide production counts the entire production volume of the joint ventures. GM often owns only 50% (or less, 49% as in the Shanghai GM case, with remaining 51% owned by SAIC). Of course, Toyota also only owns 50% or so of its joint ventures in those markets, but GM's global production volume is far more reliant on those joint venture outputs.
posted by 75.67.1...
, Fri, 20 Jan 2012 08:54:30, Fri, 20 Jan 2012 09:04:44, Thu, 19 Jan 2012 13:58:46, Thu, 19 Jan 2012 15:44:26, Thu, 19 Jan 2012 15:31:43, Thu, 19 Jan 2012 16:04:20
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