Thursday, November 27, 2008

Big 3 Are Profitable Around the World, But Not U.S.

GM CEO Rick Wagoner told Congress last week that GM's China operations are profitable. They actually help to underwrite the massive losses in the U.S. The brainpans on the Hill might have asked why Ford and GM managed to build viable auto businesses all over the world but not in North America.

You don't need the Hubble telescope to tell the answer: The UAW is present only in the U.S., not all over the world.

Here's a plan: Buy out the UAW with taxpayer dollars and free the Big Three to staff their factories with nonunion workers the way Toyota and Honda and BMW do. Last week's Hill circus notwithstanding, the negotiation that really needs to take place now is between Democrats and their union allies. The Big Three executives are just in the way.

~Holman Jenkins in today's WSJ


At 11/27/2008 12:15 PM, Blogger Ben Eng said...

Why bother buying out the UAW with taxpayer money, when we can do nothing and allow GM to file for bankruptcy protection to reorganize?

At 11/27/2008 12:43 PM, Anonymous Fred said...

U.S. congress is present only in the United States.

The EPA has rules that stop European Diesels from being used in cars in the United States. As an example, the Jeep Liberty had a modern Italian Diesel as an option until 2007 when the EPA rules changed and that engine wasn't legal.

That Italian Diesel is still used in Europe in a lot of those little cars we wonder why we can't get here.

At 11/27/2008 3:18 PM, Anonymous Anonymous said...

Excellent post. Indeed, the UAW with its thuggish, selfish leadership doesn't exist anywhere in the world. Only in the socialist Detroit.

I doubt our socialist-secular president-elect B. Millhouse Obama or his socialist cohorts in the Congress will cross the union bosses. Its payback time. So they use the taxpayers money to repay for their victories.

P.S. The idiot youth (the by-product of "public," i.e. socialist/statist education) who voted for B. Millhouse Obama will end up paying higher taxes and use devalued dollar. They deserve it. I say keep on inflating our dollar and making unfunded promises. :)

At 11/27/2008 11:36 PM, Anonymous Anonymous said...

You can surely predict that any rescue package from Congress will not include any concessions from the UAW, so it will only delay the inevitable.

One thing GM could do is to gradually migrate sourcing of their US market cars from US plants to foreign plants, then start closing US plants. That's not that hard to do when cars are now based on global platforms. Of course, the plants that get closed first are in the states most supportive of unions or the ones with the most problematic locals.

Or split the company into a US/Canada based company and the rest as another company, then let the US/Canada company go bankrupt, saving the other company.

GM not only must dump the UAW to get competitive wages and benefits, they also need to dump the UAW's restrictive work rules.

And yes, the EPA needs to allow the new European green diesels in the country - not so much to save GM, but to save fuel.

GM should also reduce the number of brands it has (Chevy, Buick, Pontiac, Saturn, Cadillac, Hummer, GMC). There's too much product and dealership redundancy. I see keeping Chevy at the value-priced end. Combining the small car part of Saturn (e.g the current Aura and Astra) with Cadillac (dumping the rest of the Saturn line) to be the high-end line keeping the Cadillac name. Light duty trucks go to Chevy, Medium/Heavy trucks go to GMC, Hummer is dropped. As for Pontiac and Buick, I'd be really tempted to eliminate those brands - I'm leaning that combining them into a single brand doesn't eliminate enough redundancy.

At 11/28/2008 4:36 AM, Anonymous Anonymous said...

Sure, using chinese workers is a much cheaper way.

At 11/28/2008 8:35 AM, Blogger @sethstorm said...

One thing GM could do is to gradually migrate sourcing of their US market cars from US plants to foreign plants, then start closing US plants.

Problem: You would have manufacturing by places that have no accountability nor any care for quality(looking towards a couple of places in the Far East that aren't Japan) - never mind that they wouldn't know how to design affordable muscle.

That Italian Diesel is still used in Europe in a lot of those little cars we wonder why we can't get here.

Europe: You get a choice between extremely small or extremely expensive - no real middle to speak of(where GM fits well here).

Keep your diesels out until they have a bit more car attached to them for $20-25k than a compact.

At 11/30/2008 4:34 PM, Blogger The Daily Pander said...

If the top managers (say, ranked by salary) of GM, Ford, Chrysler, the UAW and each member of Congress who advocates a non-bailout bailout puts at least 25% of his or her net worth into common shares of the Big 2.5 then I, speaking strictly for myself, will support government financing. If not, then that's all anyone really needs to know about their prospects.


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