By on August 13, 2013

gm-plans-south-korea-exit-due-to-north-korea-tensions-57494-7

Following labor unrest and increasing costs at their operations in South Korea, General Motors has begun to reevaluate GM Korea’s role in the giant automaker’s production plans. Currently GM Korea, formerly Daewoo, builds about 20% of GM’s global production. The already announced shifting of production of Opel’s Mokka small crossover to the Zaragoza facility in Spain starting in the second half of 2014 may portend other changes in GM Korea’s role. Both foreign and domestic Korean automakers have expressed concern over rapidly rising wages in that country. The strong Korean currency, the won, coupled with those rising labor costs have made Korea one of the more expensive places for GM to build cars.

GM Korea is one of the Detroit based car company’s production hubs, particularly for developing markets, though the Korean built Aveo/Sonic is sold in Europe and North America as well. At least 80% of GM Korea’s products are exported, according to some sources, over 90%. GM Korea also has had an important role in developing GM’s smaller car platforms but Reuters’ sources say that development of GM’s compact Chevy Cruze’s platform has been moved to the automaker’s Tech Center in suburban Detroit. GM is also building four new assembly plants in China, which could supplant Korea as a GM export hub.

A spokesman for the union representing GM Korea’s production workers, who received a $9,000 signing bonus in their most recent contract, said that the company is bluffing. ”Our view is that management is making threats to pressure us and make us cooperate,” Korean Metal Workers Union spokesman Choi Jong-hak said. Strikes before the settlement cost GM Korea, according to the company, about $92 million in lost production, about 48,000 vehicles. During the labor strife, union members raided the office of GM Korea CFO Stephen Small, brandishing steel pipes while demanding bigger meal subsidies, to which the company later agreed.

GM already told the union that the next generation Chevrolet Cruze would not be assembled in Korea, though the existing version will continue to be made there to be sold in emerging markets. The Zaragoza facility is said to be one of the plants under consideration for next gen Cruze production (along with Ohio’s Lordstown facility that builds Cruzes for the North American market).

GM’s current small car success (the Sonic is currently the second best-selling car in its North American segment) has its roots in South Korea, which has provided the company with much of its small car product development over the past decade. Location in Asia and what were low labor costs helped GM grow sales in China and other emerging markets. That was then. Today GM’s labor cost per vehicle in Korea is $1,133, according to information GM Korea provided to their labor union. That figure is almost 70% higher than the $677 average for the rest of GM’s international operations. Korean labor costs per vehicle are now about what it costs GM to build a car in Russia or Spain, ”the lower end of the scale of what GM considers as a high-cost country”, a Reuters’ source within GM said.

Labor compensation per employee went up 119% in South Korea in the decade from 2000 to 2009, compared to 40% in the U.S. and 27% in Europe. Rising labor costs in South Korea even prompted GM CEO Dan Akerson to raise the issue with Republic of Korea president Park Geun-hye when she was on a state visit to Washington D.C. earlier this year.

Other car companies operating in South Korea have experienced labor unrest. Union delegates at Hyundai Motor Co. voted to strike the automaker just last Friday, with a full member vote on whether to walk out or not scheduled to take place this Wednesday. GM, Hyundai and others with Korean production are also concerned about a legal case before the South Korean supreme court involving the meaning of “regular wage”. The decision would affect how overtime and pension payments are calculated. GM sources say it is potentially the biggest threat to that country’s industrial competitiveness and that a decision in favor of the union would raise GM Korea’s labor costs by at least 10%.

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100 Comments on “As Korean Labor Costs Rise GM Builds Capacity in China, Moves R&D Work On Compacts To Detroit...”


  • avatar
    doctor olds

    GM is strong today, was already planning more “in-sourcing” of Engineering to North America before I retired in ’08. They don’t have to stay in Korea, with lots of other options around the world.

    The Korean union leaders do their constituents no favor, leading them down the path of the hostess twinkie.

    • 0 avatar
      Pig_Iron

      I see GM ever more under the Chinese Communist sphere of influence, corrupting its American capitalist values, and using the profits to build ever larger MIRV ICBMs to be launched from colossal nuclear subs so China can preemptively vaporize us in our sleep. I, for one, don’t think GM should be allowed to climb into bed with the bloating festering corpse of Mao Zedong and aid the enemy with his evil plans. I remember those paid the ultimate price in the fight to free South Korea from his tyranny.

      • 0 avatar
        morbo

        Have they corrupted us, or did our capitalism corrupt them?

        Besides, China will never hurt the US (intentionally). It’s where they store all their second homes and children (attending college) and wives and mistresses and money.

        • 0 avatar
          PrincipalDan

          morbo +1, they’re in bed with us. If we get the flu, they get the flu.

          • 0 avatar
            DeadWeight

            Government Motors
            Gangju Motors
            Guangdong Motors
            Guacamole Motors (oh come on; even the Bob Eager “like a rock” Chevy/GMC pickups are hecho en Mexico)

          • 0 avatar
            DeadWeight

            Government Motors
            Gangju Motors
            Guangdong Motors
            Guacamole Motors (oh come on; even the Bob Seger “like a rock” Chevy/GMC pickups are hecho en Mexico)

      • 0 avatar
        tuffjuff

        @Pig_Iron

        What?

      • 0 avatar
        doctor olds

        GM is solidly and securely headquartered in Detroit, Michigan.

        China is important has great volume and growth prospects, but the model mix and 50/50 split of revenues required by the Chinese for every foreign carmaker make it a pipsqueak compared to GMNA.

        North American sales account for the vast majority of GM’s revenue and profits and is the greatest profit center even for Toyota,btw.

        • 0 avatar
          28-Cars-Later

          Until Detroit is sold or destroyed, of course. Omnicorp is looking to make bids…

          Not to be too snarky your point is well received that GM has a strong commitment to North America and I agree. I don’t see them closing up shop in NA or completely moving HQ to Asia at this point.

          • 0 avatar
            doctor olds

            @28-cars-later- Despite the political rhetoric, “Detroit” the city is far from synonymous with “Detroit” meaning the US automakers.

            Interesting that comments focus on the impact in China, rather than the more significant return of “gold collar” knowledge jobs to America. The tide is turning, baby steps, for sure, but the trend is likely to continue.

            It is also somewhat of a leap to assume Chinese capacity increases are not primarily intended for Chinese market production. They are the fastest growing in the world.

            The Chinese are opening another new power plant EVERY DAY (maybe ONLY 363/year.) Their economy has fantastic growth potential and GM wants to capitalize on the business opportunity.

          • 0 avatar
            28-Cars-Later

            China should be interesting to watch in coming years.

    • 0 avatar
      billfrombuckhead

      We’re constantly propagandized on car blogs about the evil UAW and now this? What’s next? Chinese unions?

      • 0 avatar
        doctor olds

        @billfrombuckhead- We certainly are awash in propaganda! There are some unions around the world whose militancy exceeds that of the UAW at its founding, and make them look like schoolboys, by comparison today.

        A natural effect, since union leaders are chosen politically, is their tendency to propagandize, “a chicken in every pot”, “evil, overpaid CEOs”, you name it.

        The leaders do their members no service if they drive the companies out of business, or offshore- bankruptcy in the case of Hostess, GM, others.

        I put huge responsibility on the UAW leadership for their failure to come to terms with the business reality- their contracts created costs that were clearly unsustainable. I also commend Ron Gettlefinger for agreeing to the contract of 2007 that allows new life for the American companies in America and respect his courage to take that stand to his own political detriment.

        There are at least two sides to most stories.

        • 0 avatar
          billfrombuckhead

          American competitiveness is crippled by lack of national socialized healthcare like most of the rest of the advanced world has. Americans need a better deal on pensions as well, something that helps the workers and the companies, instead of just Wall Street, our real rulers.

          • 0 avatar
            doctor olds

            That is a theory contradicted by empirical facts- political propaganda.

            Following is a link to a graph that shows how US GDP growth has outpaced those illustrious socialist economies.

            The EU has added countries to achieve virtually identical output from 500Million as the United States generates with 300Million people. And our economy is dampened by the socialist direction of the current administration, as a matter of fact.
            http://wwws4.eea.europa.eu/data-and-maps/figures/growth-of-gdp-per-capita/growth-of-gdp-per-capita/image_large

            Rational decision making relies on letting the data tell you what is real, not politicians.

          • 0 avatar
            Big Al from Oz

            @billfrombuckhead
            Move to Australia we have all of those things.

            But, the unions didn’t do it. The people did.

            You see there is a significant difference between the people of the USA and the UAW.

            The UAW has cost the US 100′s of billions of dollars.

            How? By only feathering your nest and running Detroit (Big 3) into the ground.

            All of this came at the expense of the US public, the voters. What value have you given them.

          • 0 avatar
            billfrombuckhead

            Unions are people too.

            GDP might grow but it didn’t help the average American, all these GDP increases went to the 1% of the 1%.

            CHECK OUT THESE CHARTS!
            http://www.motherjones.com/politics/2011/06/speedup-americans-working-harder-charts

        • 0 avatar
          billfrombuckhead

          Hostess went out because of too many leveraged buyouts that incurred huge unsustainable debt that vulture capitalists ran up so thye could steal ca$h out of the company. Tastycake is union and they’re doing fine, maybe because they have better products but the union hasn’t crippled them.

          American CEO’s are paid way more than other nation’s CEO’s and most don’t deserve anything close to their compensation.

          Meanwhile American’s wage and benefits haven’t increased since the 70′s when union representation went downhill. At least in Europe the quality of life and social mobility went up. Sadly America now has less social mobility than even the UK!

        • 0 avatar

          It was Samuel Gompers, the founder of the American Federation of Labor, the father of the U.S. labor movement, who said that the worst sin that capital can commit against labor is to fail to turn a profit.

          The problem is that many people have internalized the labor theory of value that Marx championed. Somehow more is owed to those from whom a business buys labor than to those from whom a business buys raw materials, paper clips or anything else they need to run a business.

          What gives things value is not labor but rather ideas. It’s the idea that leverages the value of the labor. You could apply the same amount labor to another idea and not make a penny. It’s the quality of ideas, not labor that gives things value.

          Right now the City of Detroit is bankrupt, in great part due to pension obligations owed to city employees and retirees. Some say that what assets the city has should be sold off to pay those obligations, not bond holders or other creditors. I’m told that those people are owed the money because it’s deferred payment, they “earned” it. So I ask those who would favor pensions over other debts, did not the office supply company that sold paper clips to the city government earn the money they are owed? Do the children of office supply vendors need less food than those of AFSCME members?

          • 0 avatar
            mik101

            I agree with everything you said, but I just want to add one thing.

            The viewpoint changes as you go down the chain. The labour was already paid for the work they did making those paperclips. That money may be borrowed to pay them, but it is seen as borrowed from rich people that didn’t really need the money. The whole thing is circular. It’s easier not to see the pain of a faceless organization (such as the example paperclip company), because their labor isn’t sitting waiting to get paid. They have already been paid, even if it was with borrowed cash.
            So I suspect the masses see it as: labour got paid, pensions should get paid, banks and rich folks are out money, but they have more or the government will bail them out.
            Class-warefare seems to be the popular phrase.
            Ultimately it’s all screwed up and either one side ends up happy, or both sides end up disappointed.

  • avatar
    Kenmore

    Who cares? We’ll never regain any manufacturing jobs out of it.

    It’s decent jobs for dummies that provide the tax base for schools, roads, cops and ambulances.

    • 0 avatar
      Superdessucke

      What are you talking about? We’re raising more dummies than China, Korea, or any other possible manufacturing country combined, and taking 20 million more in from Mexico from good measure. Look at our inner city schools in places like Detroit or Chicago!

      That should be a new mantra for America to attract these types of jobs here. Thoughts?

  • avatar
    lowsodium

    Using the 1970′s Union playbook. Hope that works out for them.

  • avatar
    28-Cars-Later

    “Labor compensation per employee went up 119% in South Korea in the decade from 2000 to 2009, compared to 40% in the U.S. and 27% in Europe. ”

    Sounds like the Korean employees are going to talk themselves right out of a job.

    • 0 avatar
      Kenmore

      It’s always the porcine union leadership ruining things for the rank and file, just like with me and the USW way back when.

      The workers just want them to STFU and let them keep their jobs.

    • 0 avatar
      Superdessucke

      Since they are effectively a developing country, their % increase over an extended period like that will be > than wage increases in already fully developed nations. Egads what’s next? Environmental standards? Eeek!

      • 0 avatar
        wmba

        Don’t know what cave you’ve been hibernating in. Seriously, South Korea has the 13th largest economy in the world according to the CIA . It is a fully developed country.

        • 0 avatar
          TMA1

          I wish the US was as underdeveloped as South Korea!

        • 0 avatar
          billfrombuckhead

          South Korea is in most ways more technologically advanced than the US, hell we’re behind France in telecommunication. South Korea has the fastest internet in the world. Many of these developing nations can easily pass the USA by going around legacy technologies and monopolies. Companies like ATT, Comcast, Koch Brothers stand in the way of technological developement.

          BTW, in case you didn’t know it, ad hominem attacks actually hurt your arguments.

          • 0 avatar
            Superdessucke

            Oh lighten up. I wasn’t attacking 28-Exploited-Workers-Later. In any case, South Korea may be highly advanced in some ways, but on many labor issues, which is what we are discussing here, they are still behind. Their average salary, while not Third World, is still almost 20,000 usd lower than Detroit despite the increases. And back to point, China is about 16,000 below South Korea. Eventually, there will be upward movement there too. That’s already happening in fact. I don’t think GM will find much relief long term.

          • 0 avatar
            Silvy_nonsense

            “hell we’re behind France in telecommunication. South Korea has the fastest internet in the world.”

            So what? You’re trying to make it look like, for example, Italy is superior to the U.S. in vehicle technology because the latest Ferrari is faster and “better” than the Corvette Stingray. If you’ve got a Corvette, you’re not suffering, even if your neighbor does happen to own something faster. In telecom the U.S. is doing just fine.

            Developing and implementing a national broadband plan is easy when your entire country is about the size of Indiana, as South Korea is.

          • 0 avatar

            ” ad hominem attacks actually hurt your arguments.”

            Says the man who uses “Koch brothers” as a shibboleth, a pair of convenient boogeymen.

            What makes you think that the human beings who make up a labor union are any more saintly than those who make up a corporate board? People are people. Those with power and influence will use that power and influence, Captain Renault.

            While I’m sure that the Koch brothers know how to wield influence, they are libertarians (they even support same sex marriage, now doesn’t that blow your presupposing mind?). Philosophically, they are less inclined towards crony capitalism than the current Democratic power structure.

            Enron can only steal from as many marks as they can find. Unless they have the help of government, which can steal from everyone.

            As for monopolies, those can only exist with big government. It’s government that protects monopolies from competition. Look at how entrenched businesses like taxi companies and brick & mortar restaurants, working hand in glove with politicians and bureaucrats to keep competitors like jitney services and food trucks illegal.

            Those legacy technologies and monopolies are there because of government, not in spite of it. In a free market, competitors would arise.

            Meanwhile, if businesses told the government the things that this administration is doing (‘we’re going to arbitrarily ignore that part of the law because it’s politically inconvenient before midterm congressional elections”) business would be criminally prosecuted.

            Meanwhile, we are still paying Lois Lerner for an extended vacation while she thumbs her nose at Congress and the American people.

      • 0 avatar
        Big Al from Oz

        @Superdessucke
        I don’t think they are developing their country.

        They are as advanced as any other Western nation.

        There views on labour and how to use tactics to gain what they want by essentially bullying will give them what they deserve in the end.

        The Korean auto workers are quite militant, just like the UAW. Bullies.

        Maybe the Korean auto workers should look at how the UAW went wrong in the US and not emulate them.

    • 0 avatar
      bd2

      That no. is a bit misleading as a good part of it is due to currency valuations.

      2000 was shortly after the Asian financial crisis where the Korean won had plummeted in value, but since then the won as appreciated.

      Nonetheless, Korean auto unions’ propensity to strike/work stop has really hurt automakers; don’t think there has been a year that Hyundai hasn’t experienced a strike or work stoppage at some point over the past decade and a half.

      Another reason why it would behoove Hyundai to build another plant in NA.

  • avatar
    schmitt trigger

    It is a given, that once a low-cost country becomes more industrialized, and that both its standard of living increase and the actual costs of industrialization become apparent, that there will be upward wage pressures.

    Multi-nationals will then do what they have always done…move down the food chain. People’s Republic of Zimbabwe….here we go!

    • 0 avatar
      Kenmore

      I for one embrace global jihad because it keeps huge swaths of the planet too unstable for the multinationals to transfer there and pay workers with opium and slave women. Or boys.

  • avatar
    Superdessucke

    Them Chinese will unionize or certainly demand more wages. They too will “talk” themselves out of a job. Imagine, someone wanting a living wage. The nerve!

    • 0 avatar
      28-Cars-Later

      That “union yes living wage” stuff only works when your the big dog and can economically dictate to the rest of the world. When you lose this, which we in the US have, the rest of the world decides it too wants to live at the same higher standard. So they undercut the developed world because they have overabundance of cheap labor. The whole paradigm of yesteryear simply no longer works. Now its every man for himself in this multi-polar world.

      • 0 avatar
        billfrombuckhead

        Spoken like an apologist for the 1 percent of the 1 percent. One of these days unions will go multinational.

        The rightwing answer to everything.”Get someone besides myself to work harder for less money”.

        • 0 avatar
          SayMyName

          And you sound like someone whose resentment of the upper classes and outdated ideological view are clouding his grasp of the bigger picture.

          The United States is not making the rules anymore – and those who are have an overabundance of easily-replaceable workers. Unions simply have no place in that model.

          • 0 avatar
            28-Cars-Later

            Exactly.

          • 0 avatar
            highdesertcat

            When Toyota was hounded for the SUA debacle by the likes of the USDOT, Ray LaHood, the US Congress, and the relentless onslaught of the UAW to organize and unionize the Toyota work force, I had hoped that Toyota would do what GM is doing now; pack up all their toys and in the case of Toyota, move “South of the Border Down Mexico Way.”

            So GM in South Korea will be doing what Toyota in the US did not choose to do.

            I actually applaud GM for doing this: if anyone gives you any sh!t, you pack up your toys and go where you are welcomed.

            For instance, I think that European unions have learned their lesson through fear and would be much more willing today and in the future to see things from GM Management’s point of view.

            Do I think that GM should give them a second chance? No way!

            Bring the jobs home to America and know that the UAW has learned their lesson in humility.

          • 0 avatar
            billfrombuckhead

            Who makes the rules? The Tsar found out he didn’t make the rules anymore. Khaddafi found out he didn’t make the rules anymore.

            My dad had a good union job making specialized tools the company tried moving it to the non union south and failed on 3 attempts because the workers skills and education sucked. His job eventually did move overseas but not to some low wage utopia but to the most unionized nation on the planet, Germany. The company said they moved there because they still make things. The decadent Harvard business school management models is that making money in the short run is more important than making products. The problem isn’t with the workers, it’s with the degenerate manager class.

            BTW, I’ve worked for commissions or profits for my entire adult life. I know that I make more money if more people can afford what I sell.

          • 0 avatar
            highdesertcat

            Unions are a necessary evil in some parts of the US but when they become stifling or threaten the existence of their employers, they should be excised like the cancer that they are.

            Failing that, the company/employer should packup their sh!t and get the hell out of Dodge (City, that is)

            My dad was a union man and I grew up in a Democrat household. But even my dad had enough of the destruction and ill-will that unions sowed and found a job with Federal Civil Service where he had the option to not join the union.

            He was a much happier man after that and didn’t have to pay no f’n union dues.

          • 0 avatar
            28-Cars-Later

            Seriously man please read some history and do some critical thinking before making blanket statements.

            Gadaffi along with his mentor Nasser were *always* pawns of Moscow. When the West decided to come after Momar, Putin sold him down the river probably because he outlived his usefulness. The reasoning for it is certainly up for debate anything between stealing control of his oil to making an example of him, to building a massive aquifer, to NOT giving up control of his central bank to Satanists. But at no time were you told the God’s honest truth about what happened in that op. Gadaffi was always dictator and violently suppressed his people for decades, but all of the sudden the West needs to step in? Funny the same “West” ignored the same popular uprising in Iran in 2009, the same “West” that turns a blind eye to North Korea and Israeli civil suppression. Gadaffi was set up hook line and sinker just like Mubarak. Not defending the actions of these monsters, they certainly deserved to be ousted, but merely pointing out the facts.

            The Tsar is another much more complicated story. His story is best told by his own diaries but is also summed up nicely in Nicholas and Alexandra by Massey. Off the top of my head he was coronated too young at roughly 26 to run the complex autocracy that was the Russian Empire as his father died relatively young (49 or 50) and his grandfather was long dead being assassinated in 1881. His mother manipulated him over his reign and he married a German princess during a time of political posturing with a strong German empire and she was never popular among the people.

            He did two things very wrong early in his reign even prior to Rasputin and WWI:

            1904: War with Japan and subsequent humiliation at the Battle of Tshuima (sp?)

            -This exposed how behind the times the Russians were from a standpoint of military strength.

            1905: First revolution and half-assed attempt at Duma.

            -Nicholas handled this whole episode poorly upsetting both his supports among the peasants who same him as “father” and the hardline elements of his family and government.
            -His Duma was all for show but it allowed those in it to begin to openly criticize him, unthinkable even ten years earlier.
            -Nicholas turned inward toward his mother and wife during this time, and began to show his immaturity. His advisers began to take advantage of him, and the autocracy began to show cracks in its facade. Russian gov’t at that time required a strong central leader, failing that it could not function properly.

            I would argue Nicholas could have recovered if he handled 1905 better and eventually became a constitutional monarch, but instead he was murdered by Bolshevik terrorists sent by Lenin in 1918 deep in the heart of Russia. Your homework is to read up on Lenin, Trotsky, and Stalin: who were they, who backed them prior to coming to Russia in 1917, why did they overthrown Kernesky the legitimate post Nicolas leader, and what were the role of the Western powers in the Russian Civil War.

            I don’t know much about your family or union shops, but from what I read in other countries the union has a vested interest in success along with the company and is willing to work as a partner. If a union is unwilling to do so, I have no sympathy for them if management moves away. Comparing living standards in the US post 1950 to the conditions in Tsarist Russia in order to make a pro union argument is simply absurd.

          • 0 avatar
            billfrombuckhead

            Efficiency is the new fascism. God forbid the needs of the many stand in the way of some Galtian superhero needing the lowest possible wages for his worldwide empire.

            It is quite a rhetorical accomplishment that the people fighting for better wages and conditions are the bad guys and the capitalist leader that is squeezing every penny out of poor exploited workers is some hero.
            Unions are far from perfect and well paid capitalist pundits pick apart their every failure and create false narratives they blast through their media echo chambers like the disaster in Detroit which is more about demographics and racism than anything else. Unions are better than any other alternatives. There is much criticism of the UAW across the automotive blogosphere as if if they’re some sort of American economic disease and not a group of our fellow citizens legitimately fighting for their fair share but this labor action in South Korea is further evidence that is world issue of historic wealth inequality. The wealth needs to be spread around or there will be consequences. China, India, Brasil and even the backwards American south will eventually rebel. Workers of the world unite, Wall Street gets more than it’s fair share and you deserve your fair share whether you’re in Asia, Detroit, the EU or the next hellhole the insatiable globalists want to exploit.

            God forbid paying workers their fair share or at least living up to previous pension commitments should keep Blankfein from buying more Manhattan real estate or Ellison can’t pay the 100′s of millions to buy the America’s cup victory or the Koch brothers can’t buy another governor.

        • 0 avatar
          28-Cars-Later

          Doubtful. Even if you see more of that activity in a place like China, as long as there is a populace group or country looking for growth someone will step in and undercut them.

          • 0 avatar
            doctor olds

            Yeah, you’d have a phobia against something that was killing you too.

            As for “who makes the rules?”
            Economic rules arise from human nature and the scarcity of resources that means every human can not be infinitely wealthy.

            All attempts by politicians to violate those rules is doomed to fail. History is replete with examples.

          • 0 avatar
            billfrombuckhead

            Yeah like India,
            Maruti imposes lockout at India plant as riot probe continues

            Read more: http://www.autonews.com/article/20120722/OEM/307229987/maruti-imposes-lockout-at-india-plant-as-riot-probe-continues#ixzz2bsR4XUdP

            Why Indian Farmers Are Fighting Tata’s Nano
            To lure the automaker, West Bengal seized small farms to give Tata nearly 1,000 acres—and so far it has rejected compromise proposals

            On a highway lined with policemen, in front of protestors armed with anger, one of India’s most charismatic politicians has the crowd enthralled. “We who have so little, have so little greed,” yells Mamata Banerjee, a firebrand leader who is leading protests here against a new factory for Tata Motors (TTM), part of the powerful conglomerate the Tata Group (BusinessWeek.com, 8/25/08). Banerjee throws a rhetorical barb at the group’s chairman, Ratan Tata, scion of a family that brought Western-style industrialization to India. “You, Mr. Tata, why are you so greedy?”

            http://www.businessweek.com/stories/2008-08-27/why-indian-farmers-are-fighting-tatas-nanobusinessweek-business-news-stock-market-and-financial-advice

            I’m not advocating riots, killing or bringing back the guillotine but those that don’t learn the lessons of history are doomed to repeat them. Maybe the 1% of the 1% can escape to Elysium or maybe they can’t.

        • 0 avatar
          doctor olds

          @billfrombuckhead- Are you really calling for a dictatorship of the proletariat?

          It seems that has been tried repeatedly and unsuccessfully, as is inevitable because it defies human nature.

          Capitalism has created the most wealth for the most people of any system ever devised by men. Far from perfect, it is founded on the hard reality that people will work hard to earn rewards for their own benefit. Conversely, if people work hard, and their rewards are shared with those who contribute little or nothing, they will stop working hard. That is the failing aspect of socialist systems.

          It is just that simple, philosophically. If you don’t like the pay of an unskilled labor job, improve yourself to develop a skill that an employer wants to pay you for.

          • 0 avatar
            28-Cars-Later

            I’m not sure what he’s hoping for, but anyone who is looking for such an outcome should study history and the people behind the first attempt at such a thing, and more importantly who was initially backing them.

          • 0 avatar
            highdesertcat

            billfrombuckhead lacks initiative to make his own way, based on his comments in various threads that I have read.

            He/she/it would not have made it in the days of America’s pioneers.

          • 0 avatar
            SayMyName

            Holy sh!t, I actually agree with DocOlds on something. Probably shouldn’t make a habit of it.

          • 0 avatar
            SayMyName

            “He/she/it would not have made it in the days of America’s pioneers.”

            To be fair, hdc, few of us would. One inevitable consequence of an increasingly opulent society is the erosion of any notion of ‘survival of the fittest.’

          • 0 avatar
            billfrombuckhead

            Capitalism creates a lot of wealth for rich people, without unions and the threat of unions they wouldn’t have shared it.

            Economies need balance, a combination of capitalism and socialism like the European countries with their higher quality of life have. Yes, extreme communism fails but so does unregulated capitalism also fail. Many of today’s low information Faux watching American’s just don’t get the balance thing, they never studied Epicurus or Taoism, just Rush, Sean and Ayn Rand.

          • 0 avatar
            highdesertcat

            SayMyName, I understand completely. My dad was a union man and at first he liked how his union paved the way for him.

            And at first he didn’t mind paying the dues either figuring it was all part of the cost of doing business.

            But after a while the union rule of “one man for every job” became a disruption to the normal flow of work, holding up progress on the job until that one particular man could arrive to do that one specific job.

            Back in the days of the pioneers, we didn’t have unions. People got a fair day’s pay for a fair day’s labor.

            And speaking as the son of a post-WWII Portuguese immigrant to the US, I can tell you life was not easy for a dark-skinned European immigrant, often mistaken for a light-skinned negro, in the days following WWII.

            So for my dad at that time, the union-way was the way to go.

            But if his union had not cleared the way for him to get a job, he would have struggled on as he had done before he joined the union, going from job to job, and doing manual labor in his off-hours trying to rake in a little extra cash, while my mom raised the kids and spent the money frugally.

            And maybe that’s the difference that distinguishes the down-trodden destitute immigrants who come to America, from the fat, lazy and overpaid opulent union members.

            I know of no one who answered the call of, “Give me your tired, your poor, your huddled masses…..” to become so opulent as to forget their past and where they came from.

            And so, with the South Koreans giving GM a hard time, I think it is great that GM is going to pull the plug on these ingrates. Let them find their own way.

            I do admit that I wished Toyota had moved their plants South of the Border when SOME Americans acted like ungrateful b@stards during the SUA debacle without respect to everything Toyota had already done for America.

            I’ve got four younger brothers who became millionaires in their own right selling Toyota products, among others.

            And there were no unions involved in their dealerships.

      • 0 avatar
        Superdessucke

        I believe I was talking about Chinese unionization. Since they have a lock on manufacturing many things, and an increasing lock on our forward thinking auto industry, they will have the power to force that yes union wage stuff. How long before they realise that? My guess is not too much longer, and they will be aided by international thinking unions.

        • 0 avatar
          billfrombuckhead

          If people got a fair days wage for a fair days work, unions wouldn’t have come about.

          American who have these Ayn Rand romantic libertarian visions of unlimited supplies of foreign labor are going to be surprised going forward. it’s not just South Korea, China or India. Look at Brasil, one of the fastest growing economies, yet they’re having massive demonstrations.

          When the time comes, the people who you defend won’t let you on Elysium.

          • 0 avatar
            highdesertcat

            billfrombuckhead, “a fair days wage for a fair days work” differs between what a worker thinks they need to get paid and what the employer is willing to pay.

            To wit: UAW members believe that they need to get paid as much as their CEOs do because they value themselves higher than the actual brains behind the organization.

            I’ve hired a number of workers to help me get my work done and achieve my objectives, and if they qualify I ask a new hire, “How much do you need to get paid?”

            Usually, most of them tell me “whatever the going rate is”. But some, vastly undervalue their skill just to get the job at which point I tell them, I’ll pay you $xxx for the job, which is often more than the going rate.

            But what most union members fail to realize is that behind their take-home pay is an enormous amount of money the employer has to pay to the government, et al, for the privilege of hiring that individual.

            I get around all that extra employment expense by hiring these people in as self-employed contractors. The better they work, the more money they get to take home.

            But that can’t ever happen with union intervention — their philosophy is to bleed the employer until the employer is dead.

            In America people are free to choose where they want to work and for what amount of money they want to work.

            If GM, or anyone else, doesn’t give them the pay and benefits they think they are worth, they are free to pack up and seek work elsewhere.

            OTOH, I bet the South Korean government is kicking itself for letting this situation get to this point, because it relies heavily on its national investment in its industry for its revenue.

          • 0 avatar

            “When the time comes, the people who you defend won’t let you on Elysium.”

            I prefer to base my opinions on reality, not fiction. I’ve known some rich people and I’ve known some poor people. Neither group seems to be made of saints. I do know that all of the wealthy people that I’ve known, and I don’t have a problem making the statement categorical, all of the wealthy people that I have known give away very substantial sums of money to philanthropic causes.

            How dare they decide how to use their money wisely when Billfrombuckhead wants to seize it and spend as *he* sees fit?

            I would not be writing this were it not for the rich people who subsidized the schools, public and private, that I attended, the hospitals where I’ve been treated, the places where I’ve worshipped.

            It’s you that separates us into the proles, plebians and patricians (with Democratic grandees at the top of the heap, some animals are more equal than others, doncha know?). The Torah teaches that a judge should guard himself from favoring either a rich man or a poor man.

            You want us to believe that wealthy people are evil and poor people are saints.

            People are people.

          • 0 avatar
            RobertRyan

            @Billfrombuckhead
            Correct the various workers will start demanding better pay. It is happening everywhere in the 3rd World and to a lesser extent in the 4th.

          • 0 avatar
            highdesertcat

            “You want us to believe that wealthy people are evil and poor people are saints.”

            I believe that those are the sentiments of envy and jealousy.

            However, since I am the son of dirt-poor European immigrants and have had to work for everything I have today, I have also come to realize that not everyone in society is afforded the same opportunities.

            Many of the nouveau riche of today got that way by inheriting those riches from their dead parents. And those who made it on their own, like Bill Gates and others, did so by having a universally great idea and working hard to perfect it.

            I don’t think that billfrombuckhead realizes that there will always be rich people and there will always be poor people.

            A man gots to know his limitations, and station in life.

            Taking something away from the people who earned it to give to the ones who don’t want to work for it is called redistribution of wealth.

            We’re doing our best to spread America’s wealth around, aren’t we? Money for nuttin’. Foodstamps and cellphones for free!

            How’s that hopey changey thing going for ya? Are you better off today than you were five years ago?

            I’m not. I don’t qualify for any of it.

    • 0 avatar
      Pch1011

      The Chinese already are unionized. It’s difficult to find an auto worker in the world outside of the Southeastern US who isn’t in a union.

      The Korean unions are notably aggressive. Strikes against Hyundai are almost an annual event, including the occasional violent clashes with management.

      GM has a particular phobia for unions, but it seems that the company is increasingly happier dealing with an American or European union than with a Korean one. (The fact that GM’s cars aren’t very popular in Korea isn’t helping, either.)

      • 0 avatar
        Superdessucke

        Highdesertrat obviously has some issues. Anyway, it doesn’t matter what you want or how much you think those “ingrates” should work for low pay and under terrible working conditions. Maybe they should be more grateful, maybe they shouldn’t. I don’t know. But “human nature” says one thing is almost certain — be it for greed or other reasons, Chinese workers will rise up, and eventually our elite will run out of “grateful” people to exploit.

        • 0 avatar
          Pch1011

          It seems that you may have replied to the wrong post.

          Here’s what you’re missing: As Korean wages increase, it becomes easier for its major automakers (Hyundai/Kia and GM) to just bail out. And with the latest US-Korean free trade agreement, it becomes easier to simply built cars in the US and export them back to Korea.

          Globalization puts workers in remote corners in greater competition with one another. The Korean labor movement is a bit behind the times; now, they have to worry about losing their jobs to workers in Michigan, Alabama and Spain.

          (On another note: Can someone please restore my Pch101 account and get my posts out of the spam filter? Thanks.)

        • 0 avatar
          highdesertcat

          Superdessucke, admittedly I do have some issues with bailouts, handouts and nationalization of failed companies in the US, but I did not address this thread.

          China is a totally different ball game from South Korea.

    • 0 avatar

      Doesn’t an employer need to get at least a “living wage” worth of work in exchange for that amount?

      • 0 avatar
        el scotto

        Ronnie, my family owned company paid better than the “going rate” and got guys in union jobs as soon as possible. Insurance, 401k, bonuses. Crazy ain’t it? I got employees with a dog-like sense of loyalty. Those crazy union jobs? Why they had to go through training and get certified and all sorts of crazy stuff like that. But hey, there are some on here who want to hire guys from the parking lot of a home improvement store. I bet they factor water as part of those guys wages.

        • 0 avatar
          doctor olds

          @el scotto- Top pay attracts top people. Smart business practice to hire talent. That’s why Alan Mulally makes $25M.

          My biggest gripe against the UAW was the resistance to efficiency and prohibition on individual rewards.

          In my stint hanging rear shocks,I witnessed a relief-man on the 1970 Toronado final assembly line obviously hustling, though he made it look fairly easy, he was clearly doing more than the rest of the folks along the line. I asked his foreman why? He explained that he had a couple of guys call sick in pretty frequently, happy with 3-4 days pay each week and the relief-man- trained to do every job in the department- was covering three jobs! I thought WOW, and asked if he made more. The reply Sure, 10 cents an hour. Mind you, the base was $3.50/ hour in that time, a pretty good wage when new cars were $1,900. My ’69 442 Convertible listed for $3,200 or so.

          I am not saying that we should have doubled wages and cut staff by 2/3, as the example implied was possible, just that our ability to reward hard work was nil. If you can’t get paid more for working harder, your norm becomes aspiring to and bragging about how you put out less work than the others so you feel higher paid. It burned me up to hear some employees bragging about how they scammed the company and avoided work.

          In fact,most workers were just interested in a good days pay for a good days work, but the cultural attitudes engender by this example were terrible and widespread across the industry.

          Olds was a relatively bright spot in this regard even in those days, never having had a local strike in over 100 years of building cars. Lansing has benefitted from this cultural background with GM’s investing in new plants to build Cadillacs and Lambda SUVs while closing others, such as Buick City.

          Knowing of that hundred+ year record, it was disappointing to see the UAW target the Lambda plant to extort(imho) $200 Million out of GM for spun off, American Axle UAW employees just a few years ago. The 107-8 year record was broken, but not due to real local issues but as directed from high in the UAW because they knew lost sales of the hot selling Enclave would put the hurt on GM. They also struck the then hot-selling Malibu. Both cases were about mysterious “health and safety” issues that have never been problems before or since. Odd that they turned up at that time and were resolved with the $200M transfer!

        • 0 avatar
          billfrombuckhead

          Congratulations on being a smart ethical businessman!

      • 0 avatar
        doctor olds

        @Ronnie Schreiber- I love the way you put it! The employer has to make money or will go out of business.

  • avatar
    Dubbed

    So your telling me that in the near possible future from now I can no longer call a GM small car a Daewoo as a derogatory remark.

    I don’t think i will like this future you speak of.

  • avatar
    doctor olds

    yeah those awful “Daewoo” cars (actually global GM Product Development’s location in Korea) -successful, high quality Cruze, Sonic, Verano, Encore…. May be time for a fresh look.

  • avatar
    indi500fan

    Agree with Dr Olds here, LOVE my Cruze, the Daewoo folks did a fine job on that package IMHO.

    Hope the Motown boys and girls do equally well on the next gen Cruze, I’m certainly looking at that as my next potential purchase.

    • 0 avatar
      Acd

      The Korean GM team certainly has a better track record designing small cars than their counterparts in Detroit. Let’s see, the last decent small car GM designed in Detroit was in…..never.

  • avatar
    TMA1

    A few years ago, Cruze was the car that was going to save GM. Now they’re moving development back to the US. So is the next car going to be called Cavalier or Cobalt? Or are they going with something more historical, like Citation? Chevette?

    “…the Korean built Aveo/Sonic is sold in Europe and North America as well.”

    This is the third time in as many weeks that I’ve read this. Isn’t the Sonic sold in the US built in Michigan?

    • 0 avatar
      bd2

      Yes, the Sonic is built in the US (the only domestic US-built subcompact – btw, that’s only b/c the UAW agreed to labor terms which made it profitable for GM to build a subcompact in the US), but GM probably still sources a few Sonics from Korea depending on demand.

    • 0 avatar

      I believe the Orion plant assembles Sonics, using many Korean components. GM Korea produces kits that are assembled elsewhere. A while back there was some news about Sonics making it to dealers without brake pads because the subassembly coming from Korea was not put together properly.

      • 0 avatar
        doctor olds

        @Ronnie Schreiber- Most makers have parts shipped in from all sorts of locations around the world, and Sonic is the current Aveo in other markets. All Sonics are produced in Orion Assembly. Aveo is produced in Korea for their domestic and the European markets.

        The Sonic/Verano plant is within the Orion assembly Plant- 75 acres under roof with “conditioned air”. I mistakenly thought it was 75 “air conditioned” acres for years after visiting the plant when it was built in the ’80s, but learned they actually use chillers not air conditioning. Sonic/Verano production uses less than 1/2 of the facility and they are aggressively working to win more work.

        Orion is an innovative plant in the regard that suppliers actually operate sections of the assembly line. This enables them to have GM tier1 wages, Tier2 wages, and supplier wages.

        btw- capable folks line up for these jobs. Better to have lots of $14-19/hr jobs than zero @ $27/hr.

        GM says the plant is profitable, a dramatic change from the pre-2007 Contract costs.

  • avatar
    Big Al from Oz

    @billfrombuckhead
    It appears you have completed the economics of Karl Marx.

    A fair days pay varies from country to country.

    Just because a person in another country doesn’t earn what you might earn in the US doesn’t mean they aren’t earning a fair days pay.

    Go to a developing nation, even with $5 per hour, I bet your standard of living will increase as compared to living in the US on $5 per hour.

    So just because the UAW can’t compete with another country doesn’t mean their competitors are on a ‘low’ wage.

    We have this problem in Australia, our average wage is over or about $70 000 US per year.

    So should we stop all US vehicle imports? I don’t think so or believe so. I believe in fair trade.

    • 0 avatar
      billfrombuckhead

      Australia never had any economies of scale for building cars or really any mass produced good. Australia is just a resource colony and can’t be compared to actual manufacturing nations. You guys had a boutique car industry for awhile but all your great cars were really just tweaked GM, Ford and Mopar cars. Yeah, you champion “free trade” and I guess I would to if all I had to trade were commodities. Powerful manufacturing nations plan have government oversight whether you can bring yourself to admit or not, it just doesn’t happen. There’s a ministry of manufacturing and ministry of international trade, roads, railroads, manufacturing centers and seaports. Mullaly was bragging the other day about what a good job China does with this. I remember when the state of Alabama had their National Guard grading the land for the Mercedes factory in Tuscaloosa.

      • 0 avatar
        RobertRyan

        @billfrombuckhead
        Much more than commodities , the US Manufacturing sector is only slightly better than Australia’s percentage wise.
        The champion of Manufacturing is Germany that exports a lot more than the US.

        • 0 avatar
          doctor olds

          Some facts: The United States exported $2.2Trillion worth of goods and services in 2012. Germany exported $1.46Trillion, making them the third largest exporter after #1 China and the US, but there is more to consider.

          The EU buys 63% of German exports, which is more like internal “exports” from one state to others within the US.

          If you want to compare just “external” exports Germany doesn’t look so big.
          German exports out of the EU amounted to $540Billion, barely 1/4 of US external exports. Neither method of comparison is perfect.

          Germany does have a much bigger share of its GDP in “exporting”, about 40%.
          US external exports equal 13.9% of GDP.
          German exports outside EU equal about 15% of their GDP, not all that much higher than US external exports.

          Germany’s GDP of $3.6Trillion is a bit smaller than $3.9T total of California, Texas and New York combined, which also have a bit larger population. German PPP GDP is smaller yet. I add this to bring some sense of scale.

          • 0 avatar
            RobertRyan

            DM/DO Correct, per capita Germany exported much more than the US. The US’s manufacturing sector continues to decline. It is roughly the same percentage or slightly higher than Australia’s as GDP. It was 17% in 1980.

  • avatar
    billfrombuckhead

    Funny Germany is the most unionized place on earth.

    Here’s what the CIA factbook says about Australia

    he Australian economy has experienced continuous growth and features low unemployment, contained inflation, very low public debt, and a strong and stable financial system. By 2012, Australia had experienced more than 20 years of continued economic growth, averaging 3.5% a year. Demand for resources and energy from Asia and especially China has grown rapidly, creating a channel for resources investments and growth in commodity exports. The high Australian dollar has hurt the manufacturing sector, while the services sector is the largest part of the Australian economy, accounting for about 70% of GDP and 75% of jobs. Australia was comparatively unaffected by the global financial crisis as the banking system has remained strong and inflation is under control. Australia has benefited from a dramatic surge in its terms of trade in recent years, stemming from rising global commodity prices. Australia is a significant exporter of natural resources, energy, and food. Australia’s abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of coal, iron, copper, gold, natural gas, uranium, and renewable energy sources. A series of major investments, such as the US$40 billion Gorgon Liquid Natural Gas project, will significantly expand the resources sector. Australia is an open market with minimal restrictions on imports of goods and services. The process of opening up has increased productivity, stimulated growth, and made the economy more flexible and dynamic. Australia plays an active role in the World Trade Organization, APEC, the G20, and other trade forums. Australia has bilateral free trade agreements (FTAs) with Chile, Malaysia, New Zealand, Singapore, Thailand, and the US, has a regional FTA with ASEAN and New Zealand, is negotiating agreements with China, India, Indonesia, Japan, and the Republic of Korea, as well as with its Pacific neighbors and the Gulf Cooperation Council countries, and is also working on the Trans-Pacific Partnership Agreement with Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam.

    Commodities, yes. Manufacturing, not so much.

    • 0 avatar
      Pch101

      You have to feel bad for some of the Aussies who post here.

      You see, the previous conservative prime minister John Howard promised them that their auto industry could prosper without subsidies or tariffs to prop it up.

      Of course, that claim turned out to be BS. Unlike the Germans, they are in no position to become a mass exporter of high cost cars. Unlike the Americans, they don’t have a large domestic market that is worth targeting.

      Ford is on record as admitting that it bailed out of Australia because of the removal of the tariff. In the modern era, there is very little reason to manufacture a car in Oz when it can be built somewhere else with better scale and/or lower wages. Their conservative coalition continues to claim that the Aussies can export their way to prosperity; they must have very vivid imaginations to believe that Holden has a chance in hell of competing against the likes of BMW or Volkswagen.

      • 0 avatar
        RobertRyan

        @PCH101,
        You have to feel sorry for uninformed UAW Trolls who get the facts wrong. The Prime Minister concerned was not Conservative, he was Left Wing.
        The US depends on on Foreign owned corporations for all of their non NA exports., no different to Australia. Canada is the only market for
        US Domestics.

      • 0 avatar
        RobertRyan

        @PCH101
        You have to feel sorry for US UAW personnel who get things very very wrong. The PM concerned was left Wing not Conservative.
        Foreign Owned corporations export to non-NA markets. Canada and to much lesser extent Mexico are the two markets for domestics.
        The Percentage of GDP held by US manufacturing is roughly the same as Australia and they are still shedding jobs.

      • 0 avatar
        RobertRyan

        “You have to feel bad for ill informed Americans who post here, the PM Concerned was left Wing not Conservative. He had Union backing to do it..work that out. No he was not John Howard he was Paul Keating, the Labor PM. Conservatives in later did similar things but not to the Automobile Industry that was all Labor.
        Foreign Owned Corporations export from the US to Non-NA countries. The Domestics mainly sell in Canada and Mexico.
        Still the percentage of GDP held by US Automobile Manufacturering is roughly the same as here and the US is still shedding jobs.

      • 0 avatar
        doctor olds

        Holden is nothing more than a GM brand, and a small group of engineers assigned to develop a vehicle selling in the few tens of thousands using North American powertrains.

        Holden is assuredly NOT a car company, as desperate as the aussies are to imagine so.

        • 0 avatar
          RobertRyan

          No, they used to use locally designed powertrains. Holden is a car company, not just a brand.
          What is more unlike Oldsmobile, Pontiac and Saturn they survived the GFC, while those lesser brands faded into obscurity.

          • 0 avatar
            doctor olds

            They do not use much of anything locally designed and are just a brand managed by Americans and Canadians.

            The future for them even developing vehicles designed elsewhere is cloudy, but they are just a brand, not a car company.

            Oldsmobile is gone, but Holden will have to continue current production rates for another 700 years to sell as many. Simple arithmetic, look it up. Meaningless, no doubt.

          • 0 avatar
            RobertRyan

            “The future for them even developing vehicles designed elsewhere is cloudy, but they are just a brand, not a car company. ”

            Sums up GM overall, 90% of its profits come from NA Pickups, when they have a “correction” then the Company is in dire straits. I expect that “correction” is not far away.

  • avatar
    billfrombuckhead

    Maybe Romney can convince Jeep to move to Australia. Especially rightwing politicians will say anything to get the workers to vote against their own interests.

    By the middle of this century when Australia is mined out, it will be a giant retirement colony for the Chinese after the Chinese version of Goldman Sachs engineers an economic collapse.


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