By on March 31, 2009

Ousted GM CEO Rick Wagoner is being posthumously hoisted onto a cross by Michigan’s Governor Granholm and the Detroit News, which is running a piece today entitled “GM Workers Upset That Wagoner Became Sacrificial Lamb.” Huh? Better him than them, right? “Here we got past all the bad media, all that fury during congressional hearings, and now they want him to resign,” says UAW Local 599 (Flint) Chair, Terry Everman. “It’s really a setback, because you don’t know what new direction GM will take.” And it’s not just the uncertainty that has workers in a kerfuffle over the Wagoner pink slip. “It just didn’t seem appropriate for the administration, rather than the board, to dictate,” says OnStar Manager, Bryan Bateman. “I think Rick was a sacrificial lamb in all this. I think he took one for the company.” Except that Red Ink Rick should have been dumped years ago, and the irresponsible board members that kept him around have been canned by Obama as well. Oh, yeah, and GM turned its fate over to the feds the second it took public bailout money. But, hey, one man’s sacrificial lamb is another man’s tasty entrée. To (you guessed it) more government intervention on behalf of the General. Of course.

But the best indication that it will take more than Wagoner’s head on a platter to turn around Detroit’s insular self-importance comes courtesy of the DetN‘s apologist advocacy group du jour. “Fighting Against International Restrictions; Industry and Manufacturing Advocacy Group for public Education,” or “Fair Image” runs a website that puports to tell “The Truth About American Manufacturing And Trade Policy.” And the site’s editor is the perfect foil for the DetN‘s brand of soft propaganda. “Washington just denied that government trade and energy policy had anything to do with the mess we are in, and replaced it with the head of Rick Wagoner,” says FI’s Chris Vitale. “It re-enforces this public image that it’s all the companies’ and workers’ fault. But the (federal government) just washed their hands of any responsibility for its unfair trade policies that created this environment.” Just think: instead of firing Rick Wagoner we could have just come up with a suite of protectionist policies to further insulate GM from foreign competition. Because loaning money to the General just isn’t enough.

Get the latest TTAC e-Newsletter!

56 Comments on “Bailout Watch 477: Sacrificial Lamb, Anyone?...”


  • avatar
    Pch101

    “It re-enforces this public image that it’s all the companies’ and workers’ fault. But the (federal government) just washed their hands of any responsibility for its unfair trade policies that created this environment.”

    I must agree. If they could only prevent the nations of Ohio and Kentucky from exporting all of those Accords and Camrys, then GM would be able to sell more of those Aveos built in the western state of South Korea. Or something like that.

  • avatar
    bluecon

    That is how National Socialism works. The government makes the decisions.

  • avatar
    Stein X Leikanger

    Rick Wagoner had to go because of the discrepancy between what he told Congress at the end of last year, and what’s happened since. The complete disconnect between their “sales will begin picking up” and the crater they’ve dug for themselves can’t be ignored.

    We’ll know as the March numbers are released.

  • avatar
    Richard Chen

    William Holstein had a cow about Wagoner’s departure in a NYT op-ed.

    Mr. Obama has not only failed to understand these contributions, he has also deprived G.M. of Mr. Wagoner’s presence on the board. Much of Mr. Wagoner’s knowledge and experience could simply be lost. With Mr. Lutz also about to retire, the two executives most responsible for G.M.’s transformation are gone.

  • avatar
    fincar1

    It’s good that Wagoner is out, but bad that the government had to force his ouster.

  • avatar
    no_slushbox

    The US has never had significant fair trade issues in the auto sector. The Japanese have a strong presence in the US market because the Detroit automakers gave it to them by building horrible cars.

    Where the US is at a disadvantage is with capital/ownership restrictions.

    How many Japanese automakers did the US buy during Japans lost decade? None, Ford had, at the high point, 33% of Mazda. That is the maximum allowed. GM had single digit interests in some small players.

    Do you have a US venture capital company that has noticed a undercapitalized Chinese automaker with a lot of potential? The Chinese will NOT let you buy it.

    Yet all US assets are open to 100% acquisition at fire sale prices whenever the US has an economic downturn.

    If the US had ownership restrictions (like China, Japan and Europe with regard to non EU countries) then the Detroit automakers could be liquidated and reborn, in the US, as better companies.

    However, without ownership restrictions the Detroit automakers will simply become distributorships for Chinese cars, since, right now, Chinese companies, backed by the Chinese government, will be the highest bidders.

    Instead of allowing the Detroit automakers to be liquidated and saying “sorry China, you can’t bid”, we are borrowing from China to keep the failed Detroit automakers afloat.

    Under perverted US economic logic restricting foreign entities from bidding on liquidated Detroit automaker assets would be more “socialist” than artificially preventing those liquidations with tens of billions in government aid.

  • avatar
    George Keller

    I can understand why the UAW is unhappy with Wagoner’s departure. Who else would have rolled over for those contract settlements during the last decade?

  • avatar
    no_slushbox

    George Keller:

    Seriously, Ron Gettelfinger’s pictures of Rick Wagoner with a transvestite prostitute from Windsor sure aren’t worth what they used to be.

  • avatar
    psarhjinian

    Ousted GM CEO Rick Wagoner is being posthumously hoisted onto a cross by Michigan’s Governor Granholm and the Detroit News, which is running a piece today entitled “GM Workers Upset That Wagoner Became Sacrificial Lamb.”

    I’m very disturbed by the way the media—all of it—is handling this. They’re patently horrified that Wagoner was ousted, and they really think he was the right guy for the job, and that things were turning around, and that it’s so unfair for him to be fired (well, if you can call a twenty-million payout “fired”) from the company he worked his whole life for. I saw more critical analysis of Katsuaki Watanabe’s resignation.

    No mention of FIAT, the slide in marketshare, the failure to develop a sustainable business model, the failure to develop a product mix that’s not “all our eggs in one basket”, the slit-your-throat incentive structure, etc, etc.

    And they say Steve Jobs has a reality distortion field…

  • avatar
    psarhjinian

    How many Japanese automakers did the US buy during Japans lost decade?

    Isuzu. Sort of.

    Ford’s stake in Mazda looks like genius by comparison. Of course, so did Ford’s acquisition of Volvo next to GM’s ____ing of Saab.

  • avatar
    rochskier

    psar,

    I’m not entirely surprised the media is going soft on Wagoner. He had that magic acronym “CEO” by his name long enough for them to consider him a “Master of the Universe,” even if he worked in Detroit instead of Manhattan.

    The current media apparatus will never offer a critical assessment of a “Master of the Universe,” since they are loathe to give us little people any inkling that members of the CEO class are not infallible. If they began to undermine faith in the CEO class, us proles might get other crazy ideas and start questioning the alleged “free market” system.

  • avatar
    Dave

    Rick being canned sent a message – no-one is safe, deliver or get out and let a more competent (or desperate) person have a go. Maybe it’s just enough to shake up all those just below VP or Exec VP or whatever other fancy title they have, enough to actually craft a plan that stands some chance of turning this organisation round.

    After all, Rick and his pals had how many years to try and fix the machine?

    How could they have stood by all these years and not tried something, anything to at least halt the crash? These are meant to be smart people. I guess they really believed that they’re too big to fail.

  • avatar
    ExtraO

    So Obama showed he’s got some cojones (I offer no hypothesis as to his judgement), and & Michigan & Detroit show they are still living in river country. IMHO every CEO at a firm that has received bailout bucks ought to get the same treatment, at a minimum.

  • avatar
    no_slushbox

    psarhjinian:

    Yeah, it looks like that did hit 49% at the peak, and of course there is the Renault-Nissan partnership. From quick internet research I cannot tell if Japan has “liberalized” its ownership restrictions or simply made exceptions.

    My main point is that ownership restrictions would possibly be much better than bailouts at ensuring that the US retains a domestically owned auto industry.

  • avatar
    AGR

    GM would have to be very naive to believe for an instant that trying to access public/taxpayer’s money was going to ensure “business as usual”.

    The outgoing administration that gave GM the initial funds kicked the can to the incoming administration, everyone knew that or should have know.

    The incoming administration takes a hard look, does not like what it sees and sends a strong message. At least its respecting or showing some respect for public/taxpayer’s money.

    If any of the stakeholders in Detroit did not see the freight train coming at them…they were either in denial or quite naive.

    Who is the sacrificial lamb when a corporation uses public/taxpayer’s money? With no clear direction/path to refunding the money?

  • avatar
    gslippy

    I didn’t know GM had gotten past all the bad media.

    Rick shouldn’t have been fired by Mr. Obama; he should have been fired by the Board of Directors.

    Yes, Rick is a sacrificial lamb. But it’s beginning to sound like the Task Force actually sees beyond the politics and is aware of the dire business straits GM is in.

    As PCH101 says, it’s funny how people want to blame the government’s trade and energy policies for GM’s problems, especially since they are the only company producing vehicles in the US (!). By the way, if the US government was to blame, you’d expect to see GM thriving in the numerous other countries in which it operates. But they aren’t, and you don’t.

  • avatar
    geeber

    no_slushbox: Where the US is at a disadvantage is with capital/ownership restrictions.

    How many Japanese automakers did the US buy during Japans lost decade? None, Ford had, at the high point, 33% of Mazda. That is the maximum allowed.

    Under Japanese law, a 33 percent stake in a corporation gives the owner of that stake control of the corporation. Ford controlled Mazda when it owned 33 percent of the company.

  • avatar
    jerry weber

    When the Wall Street crowd crows that yes Wagoner should have been fired, but only by the board of directors, we have to ask what board? The dirty little secret is that most American major corporations do not have a board of “directors”. They rather have a group of cheer leaders, hired by the CEO to protect his backside. The generation of the super hero business leader ala Jack Welch of GE has hopefully finally come to an end. WE now must trust that after the bankers couldn’t keep the money in the bank, the new leaders of industry will actually want a board of “directors” with inependence and power to actually “direct” the company. What the critics need is not a return to the past, but rather a return to balance and competence as spelled out in virtually every corporation’s bylaws.

  • avatar
    carguy

    The difference between successful companies like Apple, IBM, Microsoft, GE and Intel and basket cases like GM and Chrysler, is competent management.

    If GM was to have any chance then Wagoner needed to go. Since the board wasn’t going to do it the WH did and they had every right to do it. They represent the taxpayers who have invested billions in GM and who now get a say in how the company is run.

  • avatar
    mel23

    I’d like to see someone interview Maryann Keller. In her book written twenty or so years ago, she blasted the CEOs for doing the same shit they’ve done since then with the same results; i.e. lost market share and money. Yes the free trade policies contributed, but the D3 started out owning the game and blew it and blew it and continue to blow it. Does anyone believe GM can sell the Volt for 40k? Fiat? Saturn has lost money every damn year of its existence save one yet it’s getting the axe only because it’s forced on them. Wagoner isn’t a sacrificial lamb; he’s an incompetent, arrogant con man who’s continued the destruction of a great company and damaged the lives of tens of thousands of lives because he felt entitled to a job he can’t do.

    If the Feds had left this bastard in charge, the money would absolutely have been wasted. How the hell could GM present a ‘plan’ to a lender that included the Volt as an element in their recovery? That alone should have been grounds for kicking him out. I am relieved these guys saw through that jerk.

    I don’t know what’s with Granholm on this stuff. She’s an intelligent woman who has to know better. I guess there’s some reason she feels she can’t tell the truth here. Getting rid of Wagoner isn’t about sacrifice; it’s about taking the first ESSENTIAL step in fixing this mess.

  • avatar
    no_slushbox

    geeber:

    Ford did not have a “controlling” interest in Mazda because of Japanese law, they had a controlling interest because nobody else owned more shares than them. If someone else had owned 45% they would have had the controlling interest.

    The point is that Japanese ownership restrictions prevented Ford from taking complete ownership of Mazda, unlike what Ford did with Jaguar, Aston Martin, Land Rover and the Volvo Car Corporation.

  • avatar
    psarhjinian

    The current media apparatus will never offer a critical assessment of a “Master of the Universe,” since they are loathe to give us little people any inkling that members of the CEO class are not infallible.

    I don’t think it’s that, again because they’ve taken a strip off otherwise successful executives for other failures. I think it’s that the idea of the government exercising control over private industry outside of the realm of the courts or securities regulators scares the bejeezus out of big media.

    Especially when they’re hurting so badly and may, themselves, start reaching for the begging bowl.

  • avatar
    psarhjinian

    I don’t know what’s with Granholm on this stuff. She’s an intelligent woman who has to know better. I guess there’s some reason she feels she can’t tell the truth here.

    The reason she’s not keen on the canning of Wagoner is the same reason that Ron Gettlefinger and Ken Lewenza aren’t Wagoner is on “their team”, where “their team” is people who want to ensure the status quo. Wagoner was Cheerleader Number One when it came to getting bridge loans.

    What’s stupid, if you’re Granholm and Gettelfinger, is that Wagoner’s way to profitability would hurt them just as badly, if not moreso, than a bankruptcy. He would have cut and cut and cut until GM was little more than a reseller for Daewoo, Michigan and the UAW go hang.

  • avatar
    Lokki

    “The point is that Japanese ownership restrictions prevented Ford from taking complete ownership of Mazda, unlike what Ford did with Jaguar, Aston Martin, Land Rover and the Volvo Car Corporation.”

    And this stopped them from doing exactly what that would have been to the greater benefit of Ford?

    You’re not going to tell me with a straight face that this kept them from from making Madza the kind of success that Ford made out of Jaguar, Volvo, and Land Rover, are you?

    Anyhow, back to Rick’s fate… It’s good that he’s gone, but the fact that GM didn’t oust him themselves means that everyone there has drunk too much of the Koolaid to be saved…. GM WILL go bankrupt and will probably be totally gone (in the form we know GM today) in 5 years.

  • avatar
    Dave M.

    I don’t know what’s with Granholm on this stuff. She’s an intelligent woman who has to know better.

    After the last 2-3 years of watching Michigan swirl around the bowl, I have to disagree with this statement. As far as getting anything “done”, Lansing has become completely disfunctional. Detroit (ie the Domestic 3) becoming lost in the forest 20-30 years was only the beginning…the travails of Detroit continue to this day. It is sad during the passing of the baton… but it appears Detroit no longer matters. Such is the march of time and change.

  • avatar
    geeber

    no_slushbox: Ford did not have a “controlling” interest in Mazda because of Japanese law, they had a controlling interest because nobody else owned more shares than them. If someone else had owned 45% they would have had the controlling interest.

    No, under Japanese law, a 33.9 percent stake in a company is enough to give the owner of that stake a controlling interest. There was no need for Ford to own more of the company in order to control it. Because Ford had control of Mazda, it installed Henry Wallace as president – the first non-Japanese head of a major Japanese auto company.

    No_slushbox: The point is that Japanese ownership restrictions prevented Ford from taking complete ownership of Mazda, unlike what Ford did with Jaguar, Aston Martin, Land Rover and the Volvo Car Corporation.

    Ford didn’t need to buy the entire company, because it controlled Mazda as it was.

    Ford used Mazda platforms, drivetrains, engineering resources and quality control procedures to improve its other products.

    Why buy the entire company when you can get complete control with a 33.9 percent stake?

  • avatar
    no_slushbox

    Lokki:

    Dude, I really don’t care about Mazda and Ford, so I don’t know who you are arguing with.

    The only reason I mentioned the Ford/Mazda situation is because it is an example of foreign ownership restrictions that other countries do have and that the US probably should have.

    The government is spending billions of dollars to save GM and Chrysler from being liquidated, because if they were liquidated they would be bought by foreign entities and the US would no longer have a domestically owned auto industry.

    Instead, the US could have let GM and Chrysler be liquidated, and ensured that the US retains a domestically owned auto industry, with no taxpayer money, by simply prohibiting foreign entities from buying up the assets.

    If GM and Chrysler were liquidated right now American investors would bid on their assets, they just wouldn’t be able to bid as much as government backed Chinese companies.

    Those ownership restrictions are common in other countries, and already exist in the US for things like airlines and agricultural land.

  • avatar
    Richard Chen

    @mel23: link here

    “It should have happened years ago,” said Mary Ann Keller, a longtime auto analyst who has been unrelentingly critical of G.M. for, in her words, “being perpetually two years behind the curve.”

    “It must have come as shock to their management, because when you think about it, the government never said no to them before,” Ms. Keller said. “When G.M. complained about the Japanese, the government got ‘voluntary restraints’ on car imports. When G.M. said it would be hurt by fuel efficiency standards, the standards were usually watered down.”

  • avatar
    Lokki

    The government is spending billions of dollars to save GM and Chrysler from being liquidated, because if they were liquidated they would be bought by foreign entities and the US would no longer have a domestically owned auto industry.

    The government is spending billions of dollars to save GM and Chrysler from being liquidated, because the UAW pumped a ton of money into Democratic Party election coffers over the years.

    There. Fixed it for ya.

  • avatar
    no_slushbox

    geeber:

    This has nothing to do with Ford and Mazda.

    My point is that the US could have ensured a domestically owned auto industry by allowing Gm and Chrysler to be liquidated, but simply prohibiting foreign entities from bidding on the liquidated assets of GM and Chrysler.

    But you keep arguing with me so apparently you are a bailout proponent.

    Lokki:

    I am no UAW fan, at all, but if you think this is just about the UAW you are wrong.

    GM is going to be put through Chapter 11, and Chrysler likely given to FIAT. That is not for the UAW. It is to prevent the pennies on the dollar foreign ownership of GM’s assets that would occur with liquidation, and to keep Chrysler out of Chinese hands.

    Free trade is good.

    Massive give aways of US manufacturing assets to foreign entities because of a US financial/liquidity crisis? Not good.

    Japanese and Korean automakers had to work incredibly hard to establish themselves in the US. I expect Chinese automakers to work just as hard, not to buy turnkey American brands at massive discounts because of the major financial downturn.

    But I also hate the bailouts.

    Ownership restrictions are my solution.

    Let US investors (who would NOT be the high bidders right now against Chinese government subsidized Chinese firms) profit from the creative destruction.

  • avatar
    wytshus

    After the last 2-3 years of watching Michigan swirl around the bowl, I have to disagree with this statement. As far as getting anything “done”, Lansing has become completely disfunctional. Detroit (ie the Domestic 3) becoming lost in the forest 20-30 years was only the beginning…the travails of Detroit continue to this day. It is sad during the passing of the baton… but it appears Detroit no longer matters. Such is the march of time and change.

    +1 internets, sir….

    The funniest part of the interview was when the commentator referred to Jennifer as a “fiscal hawk”. And she didn’t even crack a smile!

    May you live in interesting times….

  • avatar
    Pch101

    My point is that the US could have ensured a domestically owned auto industry by allowing Gm and Chrysler to be liquidated, but simply prohibiting foreign entities from bidding on the liquidated assets of GM and Chrysler.

    That assumes that there are American enterprises that would actually want and could buy GM or Chrysler.

    One of the reasons for pushing the Fiat deal is because there is no domestic alternative. Auto manufacturing is a specialized industry, so there are few potential buyers. You could probably count the eligible pool on your hands, with none of your fingers or thumbs representing a US interest.

    I suspect that the federal government is going to be spending the next 60 days quietly shopping GM around, just as they would shop around a bank after an FDIC (or discreetly prior to) takeover. The feds don’t really want to own this company, they’re just trying to prevent an economic hit and to get our money back. I doubt that we’ll be getting our money back, but we may be able to soften the blow. Finding a buyer won’t be easy, though.

  • avatar
    Gunit

    Well the government policies were part of the problem; cheap money, huge tax credits for gas guzzling SUV’s and Hummers, trillion dollar wars to control oil supplying countries. But somehow other companies managed to grow market share and improve their product, so it doesn’t excuse them.

  • avatar
    no_slushbox

    Pch101:

    There is a business liquidity crisis, but American enterprises/investors would buy at some price.

    My (admittedly somewhat conspiratorial) theory is that the point FIAT deal is simply to slowly kill Chrysler.

    If Chrysler was allowed to liquidate right now Chinese enterprises would buy its brands and get substantial US market share and NHTSA/EPA certified designs, and they would be able to rapidly grow that market share because of their cost structure.

    On the other hand, giving Chrysler to FIAT ensures that Chrysler will slowly die, possibly giving its market share to Ford and GM along the way.

    I think that right now the PTFOA hope for GM is a Chapter 11 where the “good” assets are formed into a new company that has a US IPO, and the bad assets are liquidated.

    The problem with that is if the Cadillac/Chevrolet centric GM that is IPOed as the “good” assets cannot compete against the Saturn distributorship that a Chinese firm buys out of liquidation.

  • avatar
    Pch101

    On the other hand, giving Chrysler to FIAT ensures that Chrysler will slowly die, possibly giving its market share to Ford and GM along the way.

    Not necessarily. Chrysler has something that Fiat wants – a US distribution network. Fiat needs to expand or eventually die, so this represents a potential opportunity for them.

    I have my doubts that Fiat will know any more of what to do with Chrysler or the US market than did Daimler, but the motivation is obvious. The key is that the US government needs to get them to commit to contribute working capital to the firm, otherwise there’s no point in cutting the deal.

    The problem with the sale of the auto companies is more about a lack of talent than a lack of capital. The credit crunch doesn’t help, but it isn’t easy for the inexperienced to jump into the car business. There really aren’t many buyers, even under the best of circumstances. Existing car companies and major parts makers are the most obvious candidates.

  • avatar
    geeber

    no_slushbox,

    I merely pointed out that Ford did not have to buy more than a 33.9 percent interest in Mazda to control it. If Japan allows foreign companies to gain a controlling interest in home-based auto company, it hasn’t entirely protected its industry.

    There is a business liquidity crisis, but American enterprises/investors would buy at some price.

    Isn’t that essentially what happened when Cerberus bought Chrysler? That hasn’t been working out too well. What American organizations have the crucial combination of knowledge and deep pockets necessary to really turn around GM?

  • avatar
    no_slushbox

    geeber:

    I’ve been trying to research the current state of Japanese ownership restrictions and not having much luck, I think that they have liberalized a lot as it has become a first world country. My big concern is the uneven playing field with China regarding ownership.

    My argument is not against the liberalization of capital flow and foreign direct investment. My argument is against vastly uneven terms.

    When China stops subsidizing foreign acquisitions by its companies, stops requiring 50/50 joint ventures with redundant Chinese managers for foreign investment in China, and gets rid of its restrictions on foreign acquisitions of Chinese firms then it will be a different story.

    I think the problem for Cerberus is that it bought Chrysler as it was structured, with the existing UAW contracts and dealer network, and with massive leverage.

    If Cerberus bought Chrysler’s unburdened liquidated assets, and if Cerberus truly wanted to make Chrysler work as a manufacturer, I think it would have had a good shot.

    I think that another American venture capital firm would likely bid on Chrysler’s liquidated assets, but might not be able to out bid government backed Chinese firms.

  • avatar
    superbadd75

    One thing that needs to happen for sure is GM should be “encouraged” to keep more jobs here. If Honda, Toyota, and Nissan (and BMW, and Mercedes, and…) can do it, then good ol’ American GM should be doing it as well.

  • avatar
    Edward Niedermeyer

    I’m confused as to why giving Chrysler to Fiat is better than selling its assets to (per the popular scenarios) the Chinese. I suppose that lifeblood of the politicians, teh jobs, is to blame. But since we’re coming to Jesus on this bailout thing for the second time, let’s please finally agree that saving jobs trades off with the viability of these firms.

  • avatar
    George B

    It was past time for Rick Wagoner to go, but replacing him with another top GM executive suggests to me that the CEO change was done more for appearances than to actually change General Motors. Does anyone expect the new guy to accomplish anything that Rick Wagoner couldn’t? Meet the new boss same as the old boss.

    I could see a Chinese company buying Volvo to get badly needed safety technology plus a brand name associated with crash test performance, but what do they get to manufacture in China if they buy Chrysler? Chinese manufacturing wouldn’t make cars like the Sebring or Caliber suck less and Chrysler doesn’t appear to have significantly better designs in the pipeline.

  • avatar
    davekatz

    Anyone care to color-code the hysterical hyperbole that’s gonna overflow Congress, cable jaw-jaw, the WSJ, and rightoradio when SIAC buys GM?

    Free market. Live by it, die by it. Daymn, we gotta git us some F-22 lovin’!

  • avatar
    FairImage.org

    Well hello TAC readers.

    Imagine my surprise when I logged into web stats and found TWO (2) people had visited the site from a link at TAC. Naturally this piqued my curiosity, so I clicked over to have a looked, only to find myself labeled a “protectionist foil”, for the “for the DetN’s brand of soft propaganda.”

    Does this soft-propaganda include today’s Detroit News 3-column editorial from Safe Climate Campaign that trashes GM for planning to build only 50,000 Volts while it also builds 500,000 pickups annually? I’d love to find the link to this laughably bad attack on domestic industry, but I don’t think it exists electronically.

    But am I a protectionist? I don’t know… How about if I cut/paste something from the website:

    We Are Not “Protectionists”. We recognize the value of fair trade. The problem is, that’s never really existed outside of North America. The largest and most valuable markets in the world have long histories of protectionism to this very day. Asian and European governments have shown no reluctance to nurturing their manufacturing industry, while the United States tends to be the least involved with private industry.

    North-American made products are restricted by law in the case of developing markets like China, a system of “value added” taxation in Europe, complex restrictions in Japan, and threats of tax-audit in Korea! We are confident that products from North America will win consumers throughout the world, if given a fair chance.

    In a nutshell, our position on trade is simply making people aware of why North America isn’t much of an exporter… Even by the vaunted Japanese or Koreans. Can tell me how many Asian transplants build compact cars in the US? (The answer is one, the newly opened Honda Civic plant in Indiana.) So no, freeing up trade won’t produce a flood of exported Camry’s and Accords, they’re still subject to an additional $7-8000 in taxation on labor (including shipping) when they arrive in Europe. Anecdotally, I’d love to tell you how many US grey-market pickups head for Europe without warranty, financing and dealer support. I wonder if those numbers would rise if taxation weren’t an issue?

    But then again, we’re not just about trade policy. Perhaps if the sole visitor from RI who spent exactly one minute viewing only the “Trade with Europe” page had surfed around a bit, you’d know (TAC has a RI contact number, correct? 8:27 AM sounds about right time wise for bloggers)

    …and for the record, it’s NOT that I’m in the Rick Wagoner fan club, (although GM was doing pretty well in markets outside North America since he made them a priority) it’s just that the symbolic firing of Wagoner without a review of Washington policy proves that “O” is just listening to his insiders who still think Detroit is hiding a 200-MPG carburetor, and that we killed Jeff Bridges (I mean Preston Tucker). In fact, I’ve heard most of the research was farmed out to the Center for Auto Research… Is that the one with the failed AMC president, or the one with the underachieving son of an old GM boss? I mix them up sometimes.

    If you’d like to poke holes in what I’ve written about CAFE and trade policy, and how it affects US vehicle mix you’re welcome to reply to this blog posting over at my website. Bring your sources.

  • avatar
    FairImage.org

    Oh yeah… This guy is pretty smart:

    (Sorry if that comes out like junk, I’m no XHTML expert, and this antiquated reply box offers no preview, and I don’t have time to fool with it.)

    I’ve been trying to research the current state of Japanese ownership restrictions and not having much luck, I think that they have liberalized a lot as it has become a first world country. My big concern is the uneven playing field with China regarding ownership.

    My argument is not against the liberalization of capital flow and foreign direct investment. My argument is against vastly uneven terms.

    When China stops subsidizing foreign acquisitions by its companies, stops requiring 50/50 joint ventures with redundant Chinese managers for foreign investment in China, and gets rid of its restrictions on foreign acquisitions of Chinese firms then it will be a different story.

    ————

    I Have some info about Japanese ownership restrictions on my page titled “Trade with Japan”. Another author for the site is working on one for China, but he has been behind lately.

  • avatar
    John Horner

    When will more people wake up to the reality that GM’s board was largely HANDPICKED BY WAGONER. The theory says that boards are supposed to represent stockholders, but everyone far enough inside the corporate world knows that is a convenient fiction.

    If ever a board should have fired the CEO, GM’s should have fired Rick … but they never did and never would have. On the other hand, GM board members who consistently rub management the wrong way get pushed out. Ross Perot.

  • avatar
    mel23

    @Richard Chen.

    Thanks for the link.

    Looking ahead a month, I expect to see April numbers for GM way down compared to the dismal recent performance. So then Obama will be bashed for mismanaging GM, and ‘proving’ that gbmnt can’t do the bang up job of private enterprise.

    This stuff happens all the time without government involvement. A BoD stands by as the company circles the drain finally stirred to act bringing in a new turnaround whiz at the last moment, but too late as it often turns out. But this time it’ll be the Fed’s fault for replacing Wagoner just when his vast experience and carefully crafted plans were about to show results. Yep, the Volt and Camaro would have done what the SSR and Solstice could not do even when combined with the genius of bringing in the Aveo and G8 from foreign GM facilities.

    And when this is all over, the health care the UAW people thought, or at least hoped, they had will be gone, and those who put Corker where he is will smile, satisfied that they have beaten down the UAW at last and finally put the stake in he union heart. So the take away will be that the unions killed the great GM. Without the huge payouts ‘extorted’ by the unions, GM could have put even more money on the hoods of the stuff they couldn’t sell on the merits of the product. No question, unions killed GM and they’ll kill America if we don’t stamp them out for good.

    The auto mess is just a piece of this multiple train wreck that our economy and society have become with the downward momentum yet to be checked. What we need are lower taxes, less money wasted on public education and more on defense and space exploration.

  • avatar
    p00ch

    FairImage.org :

    “We recognize the value of fair trade. The problem is, that’s never really existed outside of North America.”

    True, European and Asian markets often place heavy restrictions on imported cars. However, I don’t think this would have made much difference for the Detroit 3. Their product mix is not a good fit outside of North America. “Midsize” sedans with 3.5-ish litre engines are the norm here but are not popular in other countries for a number of reasons: fuel prices, road/parking space, emissions, etc. No need to even mention the crossovers or SUVs, which would never sell in meaningful numbers abroad. So, even if all trade restrictions were lifted, I doubt that this would be any more than a slight bump in overseas sales.

  • avatar
    don1967

    Hoisted on a cross so soon before Easter? They better put a bigger rock in front of the cave this time.

    Oops… too soon?

  • avatar
    FairImage.org

    Pooch:

    Real quick.. (I’m a lazy autoworker who must be on the job at 6AM)…

    Granted current product mix isn’t right for Europe/Asia, but why would they develop one knowing it’ll be shut out? That’s a chicken vs. egg problem.

    Early imports were a joke on American roads, (and just a “slight bump” in sales but they began to adapt to our market… You assume we wouldn’t do the same?

    That is all for this late night… Let’s talk on my blog

  • avatar
    Pch101

    our position on trade is simply making people aware of why North America isn’t much of an exporter

    Er, the United States is the world’s third largest exporter. In 2007, US exports exceeded $1.1 trillion, about 69%, or about $470 billion, greater than (evil, nasty) Japan.

    Add in the other NAFTA zone countries of Mexico ($272 billion) and Canada ($431 billion), and you end up with the world’s largest export bloc, with exports more than 50% greater than China’s, 270% higher than Japan’s, and even larger than the EU.

    Furthermore, the pace of US export growth is not particularly lacking. US exports doubled between 1998 and 2008, and increased ten fold from 1978, so the growth rate is well above the inflation rate.

    (So you’re already off to a bad start. If that’s an indication of the quality of research, I wouldn’t have spent more than a minute on the site, either.)

    The US does not run trade deficits because it has no exports – clearly, it is a leading exporter. Rather, it is because we have a voracious appetite for imports.

    Can tell me how many Asian transplants build compact cars in the US? (The answer is one, the newly opened Honda Civic plant in Indiana.)

    Not quite sure what that has to do with anything, but you obviously forgot the Corolla.

    If the implication is that Detroit products are routinely shut out of other markets, then you clearly don’t understand the car industry. GM and Ford have maintained a local market strategy for decades – build different cars for different markets in the region in which they are sold.

    Detroit did not design its business model to export cars to Europe, but instead to build them in Germany, the UK, Australia, Brazil, etc. close to where they are consumed. If you don’t like the end result, namely a lack of US car exports, then blame them for sticking to that strategy.

    it’s NOT that I’m in the Rick Wagoner fan club, (although GM was doing pretty well in markets outside North America since he made them a priority) it’s just that the symbolic firing of Wagoner without a review of Washington policy proves that “O” is just listening to his insiders who still think Detroit is hiding a 200-MPG carburetor

    It should be pretty obvious that Wagoner was booted because of his incompetence, and because the auto task force realizes that there is no chance of a GM turnaround if he continues to destroy the company. The fact that the Board didn’t boot him a long, long time ago shows that they have more than a few problems of their own.

    http://www.nationmaster.com/graph/eco_exp-economy-exports
    http://www.census.gov/foreign-trade/statistics/historical/gands.txt

  • avatar
    p00ch

    There is no reason for Detroit to export North American cars to other markets as they would be competing with their own local subsidiaries, such as Opel or Daewoo. The Japanese adapted to our market by setting up shop in North America and tailoring cars to our “tastes”. In similar fashion, GM and Ford are very active worldwide through transplants or local brands. They seem to get around the tariff/taxation hurdles just fine.

  • avatar
    probert

    Thank you pch101 for some sanity here.

    It may interest some of the xenophobes here that the reason the Japanese started building cars in the US is that as their market share grew – the Big 3 – bastions of free market ideology – cried to the government that they were dumping cars and if they had to build them here they couldn’t compete.

    So the Japanese were forced to build a percentage of their cars here. The results were so successful that they made it their global strategy.

    Another Darwin Award moment.

    And while I’m at it, one question I’ve had is,”Why do so many people on this site – who purportedly love cars – hate the people who make them?”

    Did these things just appear magically out of someone’s butt. They were made by the people many of you take pleasure in trashing.

    And while I’m feeling frisky – The absurd claims of “national socialism” and big govt. intruding on your lives (a bit egotistical I think – If Bush proved anything it’s that you really don’t matter) consider oh lets say – the highways you drive on, the electrical grid you tap into, the airports you fly into, the medicare and medicaid that keeps your mom smiling, and – yes- the internet your writing this bunk on (and yes Al Gore was critical in its implementation), the US Postal service….. To name but a few of your intrusions.

    Did these things just pop out of someone’s butt too? Was it the hand of God? Nope

    Think OK, and if in doubt do some googling – for the love of Mike.

    OK I’ll stfu now.

  • avatar
    FairImage.org

    For example:

    Er, the United States is the world’s third largest exporter. In 2007, US exports exceeded $1.1 trillion, about 69%, or about $470 billion, greater than (evil, nasty) Japan.

    I didn’t think it would be necessary that I qualified that statement with “finished goods”, not lumber and soybeans. (And if you subtract aerospace from total that it gets a lot smaller.)

    Can tell me how many Asian transplants build compact cars in the US? (The answer is one, the newly opened Honda Civic plant in Indiana.)

    Not quite sure what that has to do with anything, but you obviously forgot the Corolla.

    What it “has to do with” is showing why the transplants don’t commit infrastructure to the production of small cars in the US (a cheaper labor market than much of Europe) while the domestics do (MI, OH and IL)… And no, I haven’t forgotten the Corolla, but have not included it because that plant is also subsidized with a contract order from (evil, nasty) GM.

    There is no reason for Detroit to export North American cars to other markets as they would be competing with their own local subsidiaries, such as Opel or Daewoo.

    Local subsidiaries that are redundant, and would be unneeded if not for local domestic-content requirements from their respective governments. Why must GM fund entirely separate companies in Korea and Germany? It’s not as though we require Hyundai to open a separate design studio, engineering center, purchasing unit, etc. just so they can sell (or assemble) a Sonata in the US.

    However… I’m not in the business of providing (exporting?) content to other websites, so I’d love to finish the debate over at my place. You’re welcome to post on the blog there and you’ll be respected and treated fairly.

    I won’t even question your patriotism, mention WWII or any of that nonsense, although I’ve already been labeled a xenophobe and had my intelligence questioned here for merely stating a point of view contrary to the “norm”.

    Chris

  • avatar
    Luther

    Michigan must allow 8 year-olds to vote…I can’t imagine an adult voting for that laughable little parasite.

  • avatar
    moedaman

    Luther :
    April 1st, 2009 at 6:22 am

    Michigan must allow 8 year-olds to vote…I can’t imagine an adult voting for that laughable little parasite.

    Sadly Michigan has Detroit located in it. A city where the education level and government incompetence that it breeds matches any third world city.

  • avatar
    Pch101

    I didn’t think it would be necessary that I qualified that statement with “finished goods”, not lumber and soybeans.

    As is true with many other western countries, the US’s primary export is travel and tourism. (Money spent by foreign visitors is counted as an export.) It’s a legitimate flow just as much as anything else.

    Previously, you made the claim that “North America isn’t much of an exporter.” That obviously isn’t true. North America is the world’s largest exporter. It’s even (at least for now) larger than China.

    The figures that I cited were for US goods exports. Add in US services, and that number goes up by almost 50%.

    The economics are fairly straightforward – when a country has high labor costs, manufacturing operations have to create some sort of value-added benefit to the customer in order to justify a price premium, which can allow them to hurdle those added costs. If Detroit can’t justify that premium to American customers, who demand steep discounts when buying most of these vehicles, then it’s a stretch to believe that Detroit can dupe others to pay the premium, either. Hence, not a whole lot of exports — you can’t sell people stuff that they don’t want.

    If you’re a disgruntled auto worker who is upset that the US doesn’t export a lot of Chevy Cobalts outside of North America, then blame General Motors for its business strategy and for producing a second-rate offering, not the rest of the world for disliking these vehicles at least as much as Americans do. That car was made for us, which frankly is insulting to the American people.

    What it “has to do with” is showing why the transplants don’t commit infrastructure to the production of small cars in the US

    Honda Civics are built in Canada, which has been part of the US-Canada joint automotive zone for the past four decades. Nissan Sentras are built in Mexico, part of the NAFTA zone where Ford, GM and Chrysler all build vehicles.

    When you get your hackles raised about who’s building vehicles in places such as Hermosillo and Oshawa, then we can talk. Otherwise, you’re not being, er, fair.

  • avatar
    mykeliam

    Can tell me how many Asian transplants build compact cars in the US? (The answer is one, the newly opened Honda Civic plant in Indiana.)
    first Japanese auto plant in America ….in 1982 when the first Honda Accord came off the line. And wasn’t that considered a compact car at the time??The Marysville Motorcycle Plant began operation in 1979, and isn’t that the ultimate compact???

    I respect the opinion, but must ask about the facts

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • dal20402: The sweet spot for me is from the ’76 Seville and the B-bodies through the last of the big cruisers...
  • MitchConner: Those things were everywhere in Silicon Valley around the turn of the century. Good looking car. VW...
  • Corey Lewis: Passat’s got almost nothing to recommend it aside from interior space, and the offset steering...
  • 285exp: Quite a few of them drive farther than that from their homes every year too. I’ve made 5 round trips of over...
  • Kendahl: Compared to IC powered motor vehicles, BEVs are still short on range. I’m considering a Tesla Model 3...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber