By on May 1, 2013

Our beloved Ed Niedermeyer is back in the Wall Street Journal with another op-ed, entitled “Welcome To General Tso’s Motors”. I’m sure you can all figure out the gist of it. Check it out here. Anti-GM-bias police, grab your defibrillators.

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83 Comments on “Ed Niedermeyer Returns To The WSJ...”


  • avatar

    I’m excited.

  • avatar
    thegamper

    I can understand backlash regarding money spent overseas when the idea behind the bailout was to preserve the “American” manufacturing base and jobs. However, I think Neidermeyer is taking a short sighted view designed to drum up nationalist sentiment. Understandable to a point as American taxpayers did float the General a lifeline.

    More importantly though, I would want my tax dollars to ensure that the company survives indefinitely, not just until the next election or until the next time the UAW bleeds the company dry. Thus, it should be a goal to for GM to invest where it believes it will see the highest return. The highest possible return will hopefully be enough feed current and future jobs here in the US as we have seen that they are sometimes not profitable ventures that need to be subsidized by other profitable areas within the company.

    To suggest that GM is giving the finger to the taxpayer as a thank you for the bailout just because it is making large foreign investments, doesnt make sense on any level.

    • 0 avatar
      sunridge place

      he’s a political hack..what would you expect? that’s what they do.

      • 0 avatar
        chuckrs

        sunridge – are you referring to Niedermeyer? Just because he pointed out an unpleasant truth that the bailout preserved neither US jobs nor manufacturing base doesn’t make him wrong.

        thegamper – I don’t want a thank you or the finger from GM. I want the money back. Unfortunately, that is a sunk cost and we didn’t get a streamlined and re-energized company out of the ruins of the old one.

        • 0 avatar
          sunridge place

          One more point for you @chuckrs

          ‘Just because he pointed out an unpleasant truth that the bailout preserved neither US jobs nor manufacturing base doesn’t make him wrong’

          You fell victim to the political hack of this article if you really think the bailout didn’t preserve US jobs or the manufacturing base. You fell victim to his comparison of 2005 employment levels today versus a look at the 2009 employment levels after GM laid off/bought out 10,000′s of thousands of hourly/salaried employees.

          • 0 avatar
            chuckrs

            Glad I smoked out a more complete reply. But I don’t think I fell victim at all. If I understand your comment, GM did buy out thousands of employees.
            We can never jump into an alternate reality and compare results of this TBTF taxpayer bailout with the results of either a BK reorg plan or an aggressive turnaround, so this will continue to provide endless fodder for debate. Either of those options may or may not have obtained a better result. That’s the reality that the rest of us who are not TBTF or connected have to live with. Beyond the arguments you marshal to show Ed is wrong, there is a bigger issue – should government pick winners and losers in any other way than competitive acquisition of necessary products and services? People have the right to life, liberty and pursuit of happiness and government is meant to help foster those rights. Corporations, unions and governments themselves have no such rights. BTW, I’ve been in business since 1977 through some very good years and some very bad years and I know the pain the latter can inflict.

          • 0 avatar
            sunridge place

            ‘Glad I smoked out a more complete reply’

            Actually, the point of my original short post was to smoke out people who didn’t recognize it for what is was…a piece of selected facts and half-stories tied to an agenda.

            ‘But I don’t think I fell victim at all. If I understand your comment, GM did buy out thousands of employees’

            I’ll walk you through what he did. He took GM US Employment numbers in 2005–4 years before the government got involved (mainly because no private lenders could or would–but that’s another story.)

            Then he compared those 2005 #’s against employment levels today to make it look like the bailout caused GM to have 76,000 less headcount in the US today versus the bailout. What he should really look at is the number of GM employees today in 2013 versus the #’s at the time of the bankruptcy or after the restructure. The auto bailout never promised to restore GM to its employment levels of the past.

            But, somehow you think GM has less employees because of the bailout. Somehow, you think the government bailout caused GM factories to close. No, the factors that led to the bankruptcy caused that. The bailout helped save and add some jobs from that low point forward.

            My point isn’t to argue to bailout pros and cons…you seem to go right back there as does Ed’s ‘well, what my main point really was was that I don’t want my taxpayer money going to China’

            Would it help if they said that all investments in China will come from profits earned in China?

            A well-written hack job makes you think you aren’t a victim. I never said Ed’s piece wasn’t well-written. I just called it out for what it really was.

          • 0 avatar
            chuckrs

            You object to Ed’s cherry-picked numbers. You should cherry-pick your own and present them. Your assertion that the bailout wasn’t sold as a job saving measure is a little tough to accept – google ‘auto bailout to save jobs’ and you get 9.7 million hits, the first page of which, mostly newspapers – first hit NYT – say otherwise. Did Steve Ratner ever say that? I don’t have the time to find out and I can’t go deep enough to find contemporaneous cites at the time of the bailout. With the MSM willingly carrying the water for this intervention, I wouldn’t have if I were in his position. Also, I do believe that of the three possibilities for reorganization I mentioned, the worst was chosen. Not necessarily for the outcome – there is no way to compare the results – but for what it means for government’s assumed right to interfere.

          • 0 avatar
            sunridge place

            ‘Your assertion that the bailout wasnt sold as a job saving measure is a little tough to accept google auto bailout to save jobs and you get 9.7 million hits’

            I googled ‘pizza bailout saved jobs’ and got over 32 million results. Seriously?

            Please re-read and try to comprehend what I wrote and why I wrote it. I wrote:

            ‘The auto bailout never promised to restore GM to its employment levels of the past’

            That was in reference to Ed’s cherry-pick of 2005 GM headcount to today. Ed himself acknowledges job gains from the bailout.

            http://www.weeklystandard.com/author/edward-niedermeyer

            I never said the bailout wasn’t sold as a job saver. I wrote that the bailout wasn’t sold as a way to get GM back to their headcount circa 2005 or before…two different things if you can grasp it.

            So,when Ed used today versus 2005 headcount, it was a factual statement meant to make a reader think that the bailout caused GM to lose jobs not gain them….but it was not the full story or context. Understand now?

      • 0 avatar
        28-Cars-Later

        But Maureen Dowd and Paul Krugman aren’t, right?

        What Niedermeyer is writing about is nothing new but this point is most telling:

        “Certainly the future that the Obama administration has promised—one of high-tech green cars designed and built by GM and Chrysler in America for export around the world—doesn’t seem to be forthcoming. Instead, GM has become what one might call America’s subprime auto maker, increasingly dependent on cheap credit, fueled by the Federal Reserve’s near-zero interest rate policy, to support its made-in-China production strategy.”

        So the ZIRP strikes again, and by the time it does finally rise GM will be pumping out product Made in China. The bailout simply eliminated their debts, bought them time to implement their China strategy, while also buying time for top tier UAW folks to get their pensions. You’ve been hookwinked, America.

        • 0 avatar
          dan1malk

          Nice tin foil hat you have there.

          The big picture is that China’s auto industry is growing. (maybe sales have declined slightly, but their cars are getting better and stronger towards competing with the rest of the world.)

          Chinese cars will be sold in the US one way or another. Maybe not in next 5 years, or 10 years, or maybe even 20 years, but they are coming… No doubt. More and more we hear of light duty trucks, and small city cars, and various EV projects the companies there are touting as wanting to sell in the US. It’s just a matter of time before one of them passes all out test and standards and makes its way into US dealerships. As we know most of the American have no idea where their cars are made, and never consider it when making a purchase. People will buy whatever they think the best product for the is.

          So, to me anyway, the big question is would we rather see GM sells those cars here (and elsewhere globally) or have some Chinese company come and do it themselves?

          He’s a hack because of how dramatically he spins this to draw clicks.

          A company that owes a lot of money is doing what they can to make it back. Simple as that.

      • 0 avatar

        Want to talk about “drumming up nationalist sentiment”? Set this blog’s way-back machine to 2008-2009 and take a look at the arguments being made by the pro-bailout crowd: between “we won WWII for you so make with the cash” and “the decline in US manufacturing can be laid at the feet of anyone opposing the bailout,” the entire policy ran on nationalist sentiment.

        The point of this piece is not just to point out that those justifications were bunk and that transnational corporations can’t be relied upon to support national interests no matter how much cash you hand them, but that the bailout did nothing to change the industry’s underlying dynamics. Spending the money didn’t prevent GM from moving not just production but ever more development work to China, just as it has had no effect on the recent influx of US automaking jobs from Japan. If we could have roughly the same circumstances as we are “enjoying” today without spending $50-$100b, I’d call it a net positive.

        Yes, hindsight is 20/20… but that’s no excuse for not learning from your mistakes. I have no problem with GM becoming a Chinese company, but I have a very big problem with sponsoring such a transition with my tax dollars (and the arguments referenced earlier). If your standards for your elected government aren’t higher than that, you must not have much at stake in America’s long-term future.

        So go ahead and break out the ad-hominem attacks, dear pseudonymous commenters. Revel in your deep sense of satisfaction with the way this government-auto industry experiment has turned out. Let us simply resolve to never again pretend that what is good for GM (or any other transnational corporation) has anything to do with what is good for America.

        • 0 avatar
          thegamper

          Unfortunately you would have paid your tax dollars out to the same people wether the bailout happened or not. On one hand you got to bail out the UAW and let them hang on until they die or they run the company into the ground again. The latter seeming most likely. Without the bailout though, (and I have no figures to back this up) the entire state of Michigan would have become a welfare state in which case the price tag “could” have been even more extreme in the long term. My issue is that investing where the money is to be made does not a Chinese company make. Based on your article, you seem to be espousing the idea that our tax dollars (assuming you can differentiate income from bailout money) should be spent in the US. Grand idea in theory I admit. However, chasing profit, wherever it may lie, is the grander idea for a return on your tax dollars as China profits can be repatriated and can subsidize the US jobs/benefits/pensions the bailout was intended to save. Handcuffing GM to avoid foreign investment in the name of appeasing taxpayers is throwing your bailout tax dollars down the drain that much quicker and more certainly.

        • 0 avatar
          justgregit

          Mr. Niedermeyer,

          I understand and appreciate your passion regarding this issue, however, I don’t see why we should care where GM is making vehicles.

          While I too felt that GM never should have been bailed out (it would have made more sense to just sell the brands off to other companies, very likely Chinese, as was done with Volvo and Chrysler), I do not know that we should necessarily care what the business does now.

          Perhaps this is my view as an economist who works in international tax (and thus tend to be sympathetic toward international business decisions), but I would advise that a private company should advance its business in a manner that maximizes its overall profit potential. I realize this may not create the most overall jobs, but it is, in fact, in the best interest of the taxpayer.

          Recall that the US still holds a substantial share in GM. According to this recent article (http://www.fool.com/investing/general/2013/03/23/why-government-motors-still-owes-you.aspx), the government still owned 277 million shares of GM at the end of February, which would require basically a 100 percent increase in the stock price to be made whole again on its investment.

          While I do not disagree that this was a poor investment initially, I would much prefer, as a taxpayer, to have the company make fiscally sound business decisions and have the value of the remaining holdings maximized. I trust that GM’s management is focusing on this process in an its maneuvering in China.

          Put simply, if these decisions lead to a 10 percent increase in the shareprice while the US still holds GM stock (which it has already increased by at the time of the Motley Fool article quoted) the US government has earned another $2billion on its investment in the last 1.5 months or so, and earnings could theoretically be much higher. On the flipside, markets are fickle beasts, and a mistake could easily cost the government far more. I would rather take the upside risk on foreign investments to reduce the losses on the existing holdings, than make poor business decisions in the name of American jobs.

          As you say, hindsight is 20/20, and I, as well as I think most reasonable people, agree with you that the bailout of GM was a terrible decision (no matter what politicians will tell you). That being said, what is done is done, and looking forward, I would much prefer to see GM make smart business decisions that maximize the value of the United States’ remaining holdings rather than make poor decisions as either some sort of political repayment or for other nationalist pride.

          So while you accuse GM of not doing “what is good for America”, I would, in fact, counter that what they are doing is best for America. The less money we lose on what was already a terrible decision, the better. I would rather see GM profitable and reducing our losses than saving a couple hundred jobs in Arkansas. I find it somewhat ironic that someone writing under the auspices of the Wall Street Journal can write something so obviously anti-business, anti-trade, and pro-socialist. You seem to be suggesting that a company invested in by the US government would be better off giving in to political pressure in misguided business decisions than maximizing their profit potential.

        • 0 avatar
          thornmark

          Good article. We all know the real political hacks supported the GM bailout/bankruptcy otherwise it would have been structured far differently and it would have not been formost a UAW bailout.

          As for GM, it is boxed in. Thanks to the UAW it cannot expand w/ non-union plants in the US and if there is to be any chance for the taxpayer to break even ($53) it must do well in China and that means more investment there rather than here.

          It may also mean that GM may be stocking its US shelves w/ “made in China” product in the future. I suspect that China will eventually make sure that Chinese manufacturers dominate its market and that will make the US bailout, structured as it was, look even worse. Consider what they have done recently to the Japanese.

      • 0 avatar
        sunridge place

        @chuckrs

        Yes, I was referring to Ed. He said he left TTAC to enter the world of politics didn’t he?

        Maybe hack is the wrong word. My definition of a political hack is someone who writes part of the truth or doesn’t provide background fundamentals of the facts that he is writing about to advance a thought process. Certain people don’t have the industry knowledge or brainpower to understand the fundamentals and can walk away from a piece with half the story. Both sides do it as 28 points out–and I wasn’t disputing that.

        Examples of this in Ed’s piece on a quick read:

        Ed’s fact:
        GM announced it would spend $11 billion on new production facilities in China by 2016, creating some 6,000 new jobs there. By contrast, GM has invested only $8.5 billion in U.S. operations since its 2009 bankruptcy, and since 2005 the number of workers it employs in North America has fallen by 76,000, according to the industry publication Automotive News.

        Reality= GM didn’t need to invest as much in the US. They had WAY TOO MANY plants here. They have invested to upgrade and consolidate etc in the US but it costs a lot more to build plants from scratch than to retrofit. Should GM just start building more plants in the US for the hell of it to match the investment in China? Uhh…overcapacity was probably a top 3 reason why GM crashed in the first place. Should GM have kept the extra 76,000 employees on their payroll? No, they were too fat for their sales #’s in the US. If I need to explain why GM can’t build in the US and sell in China on a large scale let me know and I’ll explain it to you. Ed sure didn’t in his piece.

        Ed’s fact:
        GM is targeting 100,000-plus exports of Chinese-made cars this year, a record, with export growth likely to be more than 50%.

        Reality= Where are those exports going to? Probably India/other parts of Asia. Ever heard of the Chevy Sail? Not here…that car wouldn’t sell here. But, it will sell in other parts of Asia. Why not take your production facility in China and export some of that to markets where it sells? Should they build a plant in Michigan to build the low cost Chevy Sail then ship it across the Pacific Ocean to Thailand or should they build a plant in the region and in the country (China) that sells the most and export a small % of that production to Thailand/Indonesia/India etc. Lets sink a bunch of money building Chevy Sails in all countries in Asia? Or, lets build one in China and export 10% of our production of the Sail to other countries around here. You tell me what the smart move is.

        Ed’s ‘fact’..more of an opinion:
        Instead, GM has become what one might call America’s subprime auto maker, increasingly dependent on cheap credit, fueled by the Federal Reserve’s near-zero interest rate policy, to support its made-in-China production strategy.

        Reality= Now he moves into full hack mode with that statement. If that’s not a political hack statement…what is? Through various sources, GM is not the #1 subprime new car seller in America by %. Other OEM’s are in the subprime space too. They have no active plans to build in China and export to the US yet that sentence sure as hell assumes it.

        Ed also uses selectively uses part of the quote in the statement about exporting to the US from China. That’s a classic hack move. He failed to mention the ‘we have no current plans to do so’ I go back to what I wrote a few days ago. It was a question from a reporter at the Shanghai Auto Show. Should the head of GM China said ‘well, we would never consider that due to the poor quality of cars built here and the fact that Americans hate the Red Communist Chinese’ Ask Toyota how perceived insults to the Chinese people help with car sales.

        GM would be foolish not to be aggressive in China. VW is. Ford is. Toyota wishes it could be. The fact that ramping up in China means more $$ is being invested there than here? Its just a reality. The fact that they might want a designer/engineer in China to work on the development of a vehicle being sold there? Do you think Bob Smith a designer or engineer schooled in the US knows what the Chinese customer wants to buy? Or does Zhing Zow Wow perhaps know better? Yes, some of that work should flow into other global programs. Each country or division working on its own island is yet another reason why GM crashed and burned.

        Before the island crisis, Toyota was being criticized for being deaf to the wants and needs of the Chinese customer and cramming their global products into China. They weren’t listening.

        http://www.nydailynews.com/autos/toyota-misread-chinese-market-article-1.1194596

        Perhaps its smart to base some R&D there instead of assuming Bob Smith with his Purdue Engineering degree can nail that competitive market.

        Thus, its a hack piece. Some facts with little context meant to persuade or influnce people who aren’t smart enough to know all the facts.

        • 0 avatar
          kenzter

          Couldn’t have said it better myself Sunridge. Thank you.

        • 0 avatar
          dan1malk

          This.

          The WSJ should hire you instead of this guy. He’s just grasping at straws with his narrow-minded views and opinions.

        • 0 avatar
          european

          sunridge place said:

          “Through various sources, GM is not the #1 subprime new car seller in America by %”

          name those sources please. links or it didnt happen.

          it’s easy to claim BS online without any proof. so prove your claims!

          • 0 avatar
            sunridge place

            Ok.

            http://www.autonews.com/article/20120604/RETAIL07/306049962#axzz2S4LhLr00

            Scroll all the way down if you don’t have time to read the article. Are Autonews and Experian are decent enough sources for you?

            You’ll see GM behind Hyundai/Kia and Fiatsler and just ahead of Toyota/Ford on the list.

            Perhaps you too are a victim of a hack job. Perhaps you’ve read articles like these:

            http://freebeacon.com/grand-theft-auto-loans/

            or

            http://www.libertyunbound.com/node/864

            Guess who is quoted in both those articles? Our friend Ed.

          • 0 avatar
            european

            @sunridge place,

            the link you gave was for Q1 2012!
            so its basically 2011 data.
            the freebeacon article is from 2013.

            some things changed inbetween, like
            “free” money that helps subprime lending like….

            Quantitative easing 3 (QE3)
            http://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions#Quantitative_easing_3_.28QE3.29

            Quantitative easing 4 (QE4)
            http://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions#Quantitative_easing_4_.28QE4.29

          • 0 avatar
            sunridge place

            @European

            Do you really think the market has changed that much in a year?

            http://www.vehiclefinanceconference.com/exhibitor_files/ExperianAutomotivePresentation_AFSA_Vehicle_Conf.pdf

            Go to page 32 for another view of it…it has the whole 2012 year. Please note that Buick/GMC/Cadillac are in the middle of the low and high end and please note the brands below Chevy.

            And, the topic of automotive subprime itself is a hack tactic. Do a search in the comments of Derek’s recent series of articles on the topic on here.

          • 0 avatar
            danio3834

            @euro. Demanding sources, then nitpicking non-points doesn’t refute anything, it’s a red herring at best, and a lazy response to an argument at worst.

            It would seem that a simple search of your own would have easily found the links sunridge provided if you really were interested in the information.

        • 0 avatar
          28-Cars-Later

          One thing I can say about Sunridge is he consistently defends his points with intelligence and facts always with some modicum of respect. Such folks make us all a bit more knowledgeable, even if we may disagree.

        • 0 avatar

          I am detecting large quantities of win here. Bravo, good sir, bravo!

          Beers on me if you ever come to NYC/Southern Conn.

  • avatar
    kosmo

    “Political Hack”: Somebody that espouses political views different from your own.

  • avatar
    Chocolatedeath

    I dont need to read the article. If it walks like a duck…well you know the rest. Sort of like watching the movie Titanic..you already know whats going to happen.

  • avatar
    APaGttH

    American taxpayer dollars to bailout a floundering car maker owned by private equity corporate raiders who got screwed over by Daimler, to then have said same private entity sold to a struggling Italian auto maker – good. Same entity MIGHT start building Jeeps in China for sale in said country instead of US exports – also, apparently – good.

    Publicly traded bailed out auto maker who MIGHT build 100K cars a year for export from China to the US sometime in the future, and one of the biggest players in the biggest car market in the world – bad.

    Yup, makes perfect sense to me.

    • 0 avatar
      european

      i prefer Ed’s writing to Derek’s “spoiled jewish princess” or
      Doug’s “ex-mailboy, oops i mean ex-manager, at Porsche” writing.

      Ed utilizes logic in his analyses (which one might not agree with), while the other 2 bozos only use dumb worn-out prenotions* to incite even dumber&useless responses from the readers. Ed beats them easily.

      *prenotions like “oh, honda crossturd is so hated, lets write a piece about that and let the commenters rant away. yadda yadda yadda”

      • 0 avatar
        Summicron

        Gonna look good in that hat.

      • 0 avatar

        ===================================================================
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        Calling anyone on TTAC a “spoiled jewish princess and a “bozo” is a breach of TTAC’s commenting guidelines which can be found at http://www.thetruthaboutcars.com/faqs/

        EUROPEAN will refrain from making any comment whatsoever on TTAC for the period of one month, starting with today. Violation of this ruling will trigger an immediate ban.

        A breach of the commenting guidelines after the one month period likewise will trigger a permanent ban without another warning.

        ===================================================================

        To all:

        Its not what someone says that can result in a ban. Only how it is said. TTAC is known for the quality of its comments. Rude, uncivilized comments diminish the quality and destroy TTAC. They will not be allowed.

    • 0 avatar

      FWIW, my views on Chrysler closely track those espoused by Peter DeLorenzo in his most recent rant: http://www.autoextremist.com/current/2013/4/29/the-great-sergios-end-game-is-finally-exposed-and-it-aint-pr.html

      Hardly a ringing vindication of the “saving America’s auto industry” narrative either. Again, that anyone sees this as a satisfactory outcome to a public outlay in the tens of billions is a little mind-boggling to me.

      • 0 avatar
        CJinSD

        Chrysler’s future does look pretty bleak if the VEBA sell their share to Fiat’s bankers, but I don’t think DeLorenzo did much to support his point. He used lots of fiery rhetoric, but I didn’t come away with a convincing command of the math. Is VEBA valuing Chrysler at 28 billion dollars? Did Marchione offer them 374 million dollars for 3.3% of Chrysler’s shares, putting a valuation on the company closer to 11.3 billion? Who gives a fig what VEBA says they think it is worth? They’re collectivists, not financiers. Chrysler made 1.7 billion last year, a number they might reach this year if they’re lucky. Assuming VEBA will go away for the 5 billion they need to cover existing liabilities, how long does Marchione have loot Chrysler before the US operation goes pear shaped? Chrysler without UAW ownership is just plain old Chrysler. They’ll be a strike target trying to sell approximately assembled mediocrities to a disillusioned public.

        • 0 avatar
          Athos Nobile

          I read DeLorenzo piece last night and I’m with and Ed on this. Actually, I knew owning Chrysler altogether was the objective since Fiat got handed the keys. If you thought an IPO was ever in the cards, you are either naive or delusional. What will come next is the destruction of Chrysler’s brands except Jeep, and that will take longer, but will happen anyway. Dodge seems to be already in the meat grinder.

          The price assigned by VEBA to its share may debatable, but so is what Fiat pretends to pay.

          DeLorenzo has a very strong point in that VEBA has to stand by its beneficiaries, and collectivists or not, they are obliged to get the best value for them.

          If VEBA is performing its due diligence to achieve that, and the price is actually higher than what Fiat wants to pay, they have to fight for that. Whether the legal terms, their budget, willingness or other factors permit that is another matter.

          And if what happened with the put option and what GM had to pay to get rid of its obligation to buy Fiat is any indication, the VEBA people should get some real SOB lawyers and prepare themselves for a long battle.

  • avatar
    mikey

    Congrads to young Mr N. The W.S.J, twice now. Its good to see the kid doing well.

    As far as the article goes? Whats good for GM is good for me. I checked my bank account this morning,and sure enough, my pension showed up again.

    Personally, I couldn’t give a fiddlers f— where the money comes from.

  • avatar
    johnny ringo

    Given all the recalls that have occurred with Chinese made products-milk
    powder contaminated with melamine, defective wallboard, children’s toys contaminated with lead paint(to name a few) I won’t be buying any Chinese made automobiles any time soon. General Motors gets a U.S. taxpayer funded bailout, this is basically the Corporation giving the mid-finger salute to the same taxpayers who helped bail the company out.
    But hey, what’s good for General Motors is good for the U.S.A! Or is it?

  • avatar

    the Chinese charge a 25% tariff on auto imports. I say we do the same and watch those Commies cringe.

    • 0 avatar
      28-Cars-Later

      25%? Do at least 50%.

    • 0 avatar
      threeer

      But we wouldn’t want to upset our fair Chinese friends, now would we? Nobody in the business world or government here in the States would grow a pair big enough to even consider recommending this…no…we need the Chinese money to finance our debt way too much to consider giving US manufacturing a fair shot overseas. I read labels more and more now, and though it has become supremely difficult to do so, try like hell to buy as much of my goods that are made here. Call that what you’d like…

    • 0 avatar
      sunridge place

      The auto tariffs were in response to the US tariff on tires from China.

      http://www.nytimes.com/2009/09/14/business/global/14trade.html?_r=0

      which was in response to China doing X which was in response to the US doing Y.

      fun games

    • 0 avatar
      danio3834

      Protectionism is knee-jerk and would hurt us more than help us.

      Let’s be honest, your average American isn’t willing to pay exponentially more for their Wally Mart purchases.

  • avatar
    Boxerman

    For once GM is a dynamic business with a plan and we have a problem with it. GM is going where the market is, it certainly where their market is. I am guessing that the people in GM due to their sucess have a freer reign to actualy design cars peo-ple want and do things.

    As to exporting to the US. Is it not asound strategy having plants dedicated to certain models, therefore if those models are desired in the US they are imported. Is that not what BMW and the Japanese have done with transplant factories for years, manufacture for the local market and also export.

    As to TECH transfer, the chinese are going to get the etch anyway, GM is just ahead of the game in China and the most agressive. Wow and agressive customer centric GM who would a thunk it. I applaud GM China for being a dynamic forward thinking profitable company.

    All we are seeing in GM in China is a dynamic profitable business, wow thats great.

    • 0 avatar
      Dubbed

      Also who knows, by doing R&D in China maybe it doesn’t have to pay for most if it. Their partner, SAIC, is government owned after all.

      • 0 avatar
        highdesertcat

        I’ve always been a proponent of pimping GM off to some Chinese conglomerate after GM went tits up in 2009. Chrysler was pimped in no time, with a healthy bribe to boot.

        So if GM moves the Tubes to China, even that would be welcome news, as long as they sent the money home to mama, like every other transplant does by sending the profits back to their home country.

        In the end, now that GM was kept standing by a huge infusion of cash from we, the people, the only thing that matters is that GM keeps functioning. Even if it is based in Red China.

  • avatar
    Dubbed

    I’m a little confused here. The reason is that the namesake for the piece is General Tso’s chicken. A very tasty dish that didn’t actually come from China but rumored to have come from New York City.

    Okay with that out of the way, what exactly is horrible issue here. GM is a large multinational company that manufactures cars on 6 continents and sells them in just about every nation. So we are to treat GM differently from every other American multinational that has to do business like this, McDonalds, IBM, and Apple comes to mind.

    I entirely understand the opinion in connection with the bailouts, emotions still exist. That doesn’t mean that this company shouldn’t change with the environment it exist in. We did give them $50 billion with the expectation that it shouldn’t happen again. So complaining that their doing what the blowing winds push you to do is somewhat short sided to me. The reason GM was in the shape it was before the bailout was partially due the fact that GM is slow moving monstrosity of a company. Here they are committing to actions that seem to make business sense. Investing in those markets that appear to have good ROI.. And I actually see a plan to not seriously invest in the Chinese market a sign GM is collapsing again.

    And I would prefer to see Chinese made Chevys around the world than Chinese made Volkswagons. Nationalistic arguments often appear knee jerk and rather reactionary.

    Not that I would buy a Chinese car.

    • 0 avatar
      Geekcarlover

      “Not that I would buy a Chinese car” Is that as they are now, or ever?
      I’m old enough to remember when the first Japanese car showed up in our neighborhood. Because of a large number of Navy personnel many had seen them in their native habitat, but were curious how one got here. And also why anyone would actually buy one as a daily driver, when perfectly good American cars were everywhere. If you wanted something imported the Germans made acceptable automobiles. (We had a VW camper) The general consensus of the men of the neighborhood was “nice try, but I’d NEVER buy a Datsoon or TOYota”.

      • 0 avatar
        Dubbed

        I’m aware of changing views on cars country of origin and related views on quality. Like how at what one time the aforementioned Toyota was considered junk. Or how Korean cars where junk. Or how, get this, American made cars were actually wanted around the world.

        My view on Chinese assembly probably will change in the future, right along with the rest of America.. It just that at present I can’t buy a chinese made car in America.. And at present the only chinese made vehicle that pique my interest was the discontinued Cadillac SLS.

  • avatar
    Speed3

    My reaction

    http://25.media.tumblr.com/tumblr_m1jqgklZMt1qzmjj5o1_500.gif

  • avatar
    Boxerman

    Given all the recalls that have occurred with Chinese made products-milk
    powder contaminated with melamine, defective wallboard, children’s toys contaminated with lead paint(to name a few) I won’t be buying any Chinese made automobiles any time soon. General Motors gets a U.S. taxpayer funded bailout, this is basically the Corporation giving the mid-finger salute to the same taxpayers who helped bail the company out.
    But hey, what’s good for General Motors is good for the U.S.A! Or is it?

    A significant portion of the automobiles you buy already come from China in the form of parts, same with harley davidson.

    As to product integrity, the Chinese I met there are even more reluctant to buy chinese products than we are. Thing is a GM from China is probably built to the same standards if not better than GM elsewhere, same with an Audi from China.

    Plus once you can get that great caddy or buick for less $$$ 90% of consumers will be buying. Its actualy a brilliant move, instead of trying to get people to accept chinese cars, you just sell good ones under the GM brand.

    lastly the Chinese have at least opened their market to us. China is Bigger for GM in cars than the US. What other country can you say that about. Plus in China GM owns their dealers, how good is that. Many American companies and brands owe their expansion and profits to sales in China.

    • 0 avatar
      threeer

      China is hardly “open” to us. We deal with either a huge import tariff if we attempt to sell a vehicle there built here (25%), or are forced to go into a JV with a Chinese company and virtually give away our technical rights (if not, hey…no worry, they’ll just outright steal them). I’d rather see the field leveled so we could sell more there built here, but that isn’t likely to happen. Ever. So…we build there to sell there, and I suppose that makes sense. If profits from those sales truly benefit folks back here in terms of increased employment, then so be it. Just be sheer population numbers alone in China, companies would be foolish to NOT attempt to break into that market…but I still want my next car to be made here, with as large of American parts content as possible…by a company with roots here (and I know how limiting THAT list will be!).

    • 0 avatar
      bumpy ii

      Thing with China is you get as much or as little as you pay for, minus a little skim off the top, but only if you maintain vigilant oversight.

  • avatar
    TonyJZX

    let me put it like this…

    i’m on chinese laptop of the famous chinese brand, Hewlett Packard

    its on a chinese 24″ screen of with the name of noted Chinaman, Michael Dell

    its on a wire to a made in china Cisco router with that famous Chinese bridge in their logo

    i call people on a chinese iPhone

    its inevitable that a Chinese made GM car will eventually have the reliability of the other chinese made products we all use

    whether we accept a car over a laptop is another thing but they have time, we don’t

  • avatar
    carguy

    While I do not agree with the gist of Ed’s article any more than I do with a Charles Krauthammer or Paul Krugman editorial in that it tries to force facts to fit an ideology rather than the other way around, I do congratulate him on advancing his career at the WSJ. Always nice to see TTAC alumns do well.

  • avatar
    DC Bruce

    It seems like most of the comments are missing the point of Ed’s article, although it’s not original. That point is that taxpayer bailouts of companies or industries (the U.S. tried this with steel in the 1970s and 1980s in various ways) very rarely result in benefits to the taxpayers as a whole. Rather, they result in benefits to particular groups: steel workers, auto workers, management, etc. And, in this case, as Mikey cogently points out: union retirees. (Salaried workers at Delphi have a different story to tell.)

    Whether GM’s recent business strategy vs-a-vis China is good or not is beside the point. The point is that “What’s good for GM is NOT necessarily good for America as a whole (or Canada, which participated in the bailout). The fact that some Americans or Canadians benefit is beside the point.

    So when a politician says that taxpayers should bail out this or that company, or industry, the voters should just say “No!”

  • avatar
    thelaine

    UAW Deathwatch.

  • avatar
    european

    well, i’ll keep it really really simple for folks like “sunridge place” and others who try to refute Ed’s arguments and call him a hack.

    what Ed really wanted to say is this:
    “GM can build whereever it wants. For all Ed cares, GM can build ALL its factories in China, but BUT! not using US taxpayers monies. There is no logic in supporting a company with your money when you get no direct benefits from it. End of argument.”

    only thing is, WSJ sure wouldnt pay for that brief statement, so Ed had to go deeper into facts, which “hides the forest from the trees…” or something like that

    • 0 avatar
      sunridge place

      Would it make you feel better if they just said:

      ‘We’re investing all the profits we’ve made in China the last few years and for the next few years into China for the future’

      In a sense, that’s what they are doing. I realize its not that simple.

      They made 2.19 billion in profits in China last year which was up 15% from the year before. This announcement is for the investment to be completed by 2016.

      Lets just guess:
      2010 China profit=1 billion
      2011 China profit=1.75 billion
      2012 China profit=2.2 billion
      2013 China profit=2.5 billion
      2014 China profit= 2.7 billion
      2015 China profit=2.9 billion

      There’s 11+ billion dollars…covers that investment in China with change to spare and it wasn’t even your tax money! It was the Chinese people’s money!

  • avatar
    wmba

    DeLorenzo’s rant on Chrysler was utterly ludicrous from beginning to end, based on his hatred and jealousy of Marchionne.

    Distilling down his rant, he is upset that Chrysler might use some of their money to prop up Fiat. Well, so what? Would it be the first time that the owner of two companies used profits from one to keep the other going? I have a friend who did just that in his little software empire, for goodness sake!

    But once it crosses borders it’s bad, though, right? Now it’s the mighty US subsidizing lazy Italians with taxpayer money, blah, blah, blah.

    However, Chrysler owes neither goverment, Canada or the US, any money at all. It paid everything back two years ago. How? Fiat got loans from banks. Are they not entitled to use subsequent profits from their operations as they wish?

    American companies have repatriated profits from their overseas subsidiaries for decades and decades. US behavior OK, anyone else, not OK? Rubbish.

    So then the twisted logic types drag up the argument, but, but Chrysler was “given” Chrysler. Yup, 46% of nothing at all. The company was bankrupt. Fiat offered to take it on, when no one else would. Should we now expect in retrospect that Jim Jones Motors from Ypsilanti or the owner of a hardware store in Hoboken should have been given the Chrysler’s hulk instead? That they would have done better than Fiat? No, it’s pure envy that Fiat pulled it off, so far.

    Fiat had to pass two milestones to gain control of Chrysler under the bailout. To get over 50%, they had to pay off the loans. To get to 58.5%, they had to develop and make in America a 40 mpg car.

    Then Delorenzo goes into a tear jerker about that rotten, capitalistic Fiat trying to buy Chrysler’s VEBA shares on the cheap. What are the poor retirees going to do for health care? Well, they already did far better than if Chrysler had completely disappeared in 2009. That bit of logic is entirely missing in Delorenzo’s rant. If trying to get a good deal on a purchase is bad, well blow me down, what happened to good old capitalism?

    The whole tone of Niedermeyer’s and Delorenzo’s pieces is xenophobic. US companies can be capitalistic (but not use in GM’s case, ownership issues to expand overseas), but nobody else should be, and in Delorenzo’s case, lets get into personal mud-slinging to obfuscate the facts. Let’s beat the patriot drum and get the know-nothings in an uproar.

    Got no time for either “argument”. If GM can stay alive, make money overseas, raise their share price, well then good for the US and Canadian taxpayer who can flog off their shares when they get back to par.

    In Fiat’s case, complaining about them acting like a normal for-profit company is just outright BS.

    • 0 avatar
      danio3834

      That’s the about the gist of what I got out of that article as well. I was expecting some kind of substance or evidence to support the claims of foul play, but instead I got a healthy drink of green Haterade.

  • avatar
    wmba

    The above note addressed to Ed Niedermeyer, the server logged me out while I was composing my response that he agreed with Delorenzo, and then lost my place in the comments section when I relogged in.

  • avatar
    geeber

    wmba: Well, they already did far better than if Chrysler had completely disappeared in 2009. That bit of logic is entirely missing in Delorenzos rant.

    That’s irrelevant, given that I don’t see DeLorenzo criticizing the idea of bailing out Chrysler in 2008-09. He complains about what Fiat has done since, but that is another ball of wax. And, yes, it is a concern if Fiat gets a lowball price on Chrysler shares in the VEBA and thus hampers the ability of the fund to meet the health care needs of Chrysler retirees.

    • 0 avatar

      So, you put your finger on it: DeLorenzo was a huge bailout booster, which makes his rant (hey, it’s clearly labled) ring a little hollow. But that’s exactly the problem I have with all the born-again free-marketers and world citizens in Detroit who spent decades vilifying the American-employing “transplants” before throwing every possible argument into getting a free-market mulligan.

      At least DeLorenzo has the decency to be angry when he feels ripped off.

      That said, I appreciate the relatively civil, fact-based debate here. I get that not every American feels ripped off by the auto bailout, and I appreciate them making their case. I just hope they see the need for these companies to put this episode in their past –for their own good rather than for any political reason– which can only be accomplished with a credible attempt at making American taxpayers truly whole.

      • 0 avatar
        sunridge place

        Ed,

        Some simple quesitons if you are kind enough to consider answering some or all of them.

        Set aside your thoughts about whether the bailout was a good or bad idea and act as an automotive consultant to GM once the bailout happened.

        1. What would you have done differently since then? You seem to indicate that GM should have made minimal global investments compared to US/Canada-the govts that provided the $$ in the absence of the private market

        2. What capital and headcount investments in the US are missing since the bailout for GM? In other words, do you feel these overseas investments are taking away anything from US job creation and investment for GM? If so, please be specific.

        3. Are investments in China, South America etc bad business ideas?

        4. When considering investment, should GM consider the bailout over the best logistical and profit potential?

        5. Should GM be building plants for each vehicle in each market in Asia to avoid exporting from China to those markets? Or, does it actually make sense to export the Chevy Sail and other products from China plants to Thailand/Indonesia/etc

        6.Should GM try to build high volume vehicles in the US for export to China?

        Thanks

        • 0 avatar

          I’m beginning to think that you’re willfully misunderstanding my criticism. The overriding issue isn’t that these are bad investments per se (although GM is clearly taking on serious risks in China and elsewhere), but that GM has failed to appreciate the symbolic importance of its outstanding obligation to the American people. At the point that GM made nearly 3x the EBIT in NA as it did in all of Asia in Q1, I’d say eliminating a sense of obligation to US and Canadian consumers is every bit as important (given GM’s struggle to expand profit and market share simultaneously in these crucial markets) as investments in China.

          If GM were making it clear that the inevitable shortfall from Treasury’s stock sale was going to be refunded (even on some kind of payment plan), GM’s investments overseas would be no different than any other company’s. Until that happens, however, GM can’t rely on any loyalty from US consumers… something that has underpinned its business here for decades.

          If GM took that advice, my criticism would narrow to a single point: that GM’s industry-leading level of technical cooperation in China is sowing the seeds of its long-term demise. If, as you and GM insist, a Chinese production base is just good business, what happens when SAIC reaches technical parity with GM? What is GM’s competitive advantage?

          That VW has been in China longer than GM and yet still hasn’t opened itself to the level of technical sharing that GM has tells me that SAIC knew GM was trying to play catch-up, and used that advantage to get what the Chinese government has wanted all along for its auto industry: Western technology to wed to local production advantages, thus giving China’s car industry a global advantage. I think GM has played right into this, and faces enormous long-term risk as a result.

          • 0 avatar
            sunridge place

            You never really made your main point in the WSJ piece then. If you had written a piece about what GM should do with the gap after the stock sale is complete, it would have looked a lot different.

            One of your main points was:

            GM is exporting from China…but you never said that those 100,000 units are a small fraction of their production nor mentioned that those exports were going to nearby countries or South America and are vehicles that aren’t even built or sold in the US. Most of it is the Chevy Sail.

            http://www.morningwhistle.com/html/2013/Auto_0122/216796.html

            The payback is a fair point and I’ll bet you there is some consideration to doing something when the stock sale is complete and the exact dollar figure is known. Would it be smart to announce that now? Could an annoucement like that possibly drive investors away from the stock given the future financial impact that would have to GM causing the stock price to lower and increase the gap? Things to think about.

            I do think you’re a bit paranoid about the technology thing. Is it the fact the Chinese citizens as GM employees are doing some development/design work or the sharing between the companies?

            Thanks for replying…its one of the good things about TTAC.

  • avatar
    blowfish

    WSJ as wall street journal, they need paid readership and without asking for the price i simply can’t afford it.

    Would be nice if u folks could kindly re-print the sensational articles here. Not sure if it would be kosher with the copy rights!

  • avatar
    Vance Torino

    Oh, great.
    Instead of the head-up-ass GM we’ve come to admire and enjoyably trash for 3 decades, General Motors starts behaving like a global player,
    investing in growth markets,
    allocating resources efficiently…

    So the point is…?

    • 0 avatar

      If I had any confidence that this “efficient allocation of resources” would help make taxpayers whole in any way, I’d have no problem with it. If Dan Akerson came out and said “GM is hiring a 3rd party audit of our outstanding obligation to the American and Canadian people, and we as a company vow to pay back whatever they think we owe,” I’d be happy to let them run their business as they see fit.

      Blackmailing taxpayers into a rescue from decades of self-inflicted wounds (for which executives compensated themselves richly) only to ignore (or mislead Americans about) any sense of obligation as a result of said rescue is not the kind of behavior that Americans should just sit back and take. If not for moral reasons than for practical reasons: if we just let any sense of obligation for this round of bailouts slide, how on earth do you expect to prevent future thefts of public money?

  • avatar
    thelaine

    GM is doing exactly what they need to do to survive. They are moving production as far away from the UAW as they can while still remaining on the planet. Expansion will be non-union.

    • 0 avatar
      sunridge place

      Union plants in the US are getting more production as the market grows in the US. NOBODY can build in the USA, Mexico, Canada, Antarctica, etc and sell in China.

      Do you understand that simple concept?

      • 0 avatar
        thelaine

        My tax money went to bail out UAW slobs and GM corporate shtbags with no legal obligation whatsoever on their part to ever pay it back.

        Do you understand that simple concept?

        • 0 avatar
          sunridge place

          Well, say that the first time then…

          Say that the GM corporate shtbags are moving production away from the UAW slobs..then I would ignore you like I ignore the rare useless trolls on here. My bad.

          • 0 avatar
            thelaine

            Well Sunridge, haven’t we gotten highhanded and condescending? Let me say that I am not crushed by your threat not to reply nor will I shape my comments according to your demands. I already know your position. You benefited from the bailout and you will rationalize it and defend it to your dying breath. Good for you and Mikey and everyone else who got some benefit out of this deal. I am genuinely happy for you guys and your families. That is how the game is played. You won.

            The UAW and GM managment had a suicide pact. The union was hostile to GM and negotiated deals which helped destroy the company. GM management sucked money out of the company to enrich themselves and tried to loot as much as they could before the music stopped. Good times. Fine with me. I couldn’t care less.

            When it came time to pay the piper, the taxpayer was told to bend over. This is, unfortunately, where everybody else got dragged into the picture. No, I don’t like that part one bit. I suppose that is what makes me a troll, whatever that is. Before I started reading TTAC I thought a troll was the guy who wouldn’t let you cross the bridge until you answered a riddle, but whatever.

            I don’t like the any of the bailouts, subsidies, mandates, special tax deals, or any of the other corruption I am patted on the head and told is good for me by those who know better, or referred to by a pejorative.

            Delco workers took a pension haircut and UAW workers did not. This was pure corruption. It was payback for political support, using taxpayer money. Go ahead and rationalize it. I know corruption when I see it. Bankruptcy is what happens when your union and your management rape the company until it bleeds to death, unless you have the connections. Then someone else is made to pay for it, and let the rationalizations begin.

            I am certainly used to seeing rationalization. Every subsidy and mandate has plenty of it. Electric car subidies, windmills, ethanol, tax favoritism, you name it. Get yours and justify it. Point to the Iraq war or some other waste or claim you are helping the environment or “creating jobs.” Claim your subsidy is just pennies compared to someone else’s subsidy. Whatever makes you feel better. If you want to see how it all ends, just look to Europe. That is where we are headed.

          • 0 avatar
            sunridge place

            I didn’t personally benefit from the bailout and where have I defended the bailout on here?

            I’m defending the actions GM has taken since then as smart business moves after reading an opinion piece in the Wall Street Journal that used selectively picked facts to try and persuade readers that GM is somehow being unpatriotic and becoming Chinese Motors.

            Do you even understand the difference?

          • 0 avatar
            corntrollio

            A lot of people don’t appreciate that subtlety, sundridge. Good posts here, by the way — much more coherent than Mr. Niedermeyer’s sloppy op-ed (but most op-eds suck, so it’s not a surprise).

            I’ve also noticed that most people complaining about “my taxes” going towards GM probably don’t even pay very much in income tax.

    • 0 avatar
      highdesertcat

      Yeah, I agree with thelaine. Regardless where they build, whatever union they will be forced to deal with at those locations will not be as problematic as the UAW with its established track record.

      Whatever GM needs to do to survive, as long as we, the people don’t have to bail GM out again.

      In fact, I am a proponent of building in Mexico. Maybe then more Mexicans will stay home and work there.

      But if they want to sell in China, they’ll have to build in China. Maybe GM could build Buicks in China and then export them to the US.

  • avatar
    rpol35

    It’s definitely unfair!

    Every car manufactured in China by General Tso’s Motors will come to the U.S. with a serving of General Tso’s Chicken, white rice and steamed vegtables right there on the back seat. How the hell are you supposed to compete with that?

  • avatar
    Larry P2

    The world according to TTAC:

    Volkswagen is expanding rapidly into China (the world’s most rapidly expanding car market) cuz its the World’s most up and coming carmaker with luscious interiors and other wonderful things and so deserves to take over that huge Chinese Market in a brilliant preemptive strike, and the rest of the world next. RAH RAH! Go VW!

    GM is expanding rapidly into China cuz it is deliberately trying to bone the government, which was lured into that unfortunate bailout under fraud and duress, and ass rape the American Taxpayer. BOO!! HIS!!!


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