Ask the Best and Brightest: Should GM Buy Domestic?
Fifty billion dollars. That’s how much money the United States taxpayer has plowed into General Motors. Back when this terrifying teat-sucking started, Michigan Representative Debbie Stabenow told the country that the bridge loans (as they were called at the time) were about “jobs, jobs, jobs.” To say the rhetoric justifying/sustaining GM’s giga-suckle has shifted would be like saying Pontiac’s prospects have dimmed. Now it’s all about “returning the taxpayer’s investment.” If that means withdrawing a contract from Stillwater Mining (a Montana outfit that provides New GM with platinum and palladium for catalytic converters) and endangering 1300 American jobs, to paraphrase the GM spokesman on this NPR report, tough shit. Nice thought, but does GM risk a serious consumer/taxpayer backlash as the federally-supported automaker turns its back on the US economy? Apparently not. (Witness the lack of interest in our story about federal stimulus money going to Mexican car factories.) Not yet, anyway. Meanwhile, what’s your take? Does America’s nationalized automaker have any obligation to support US jobs?
[Thanks to PeteMoran for the heads-up.]
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This story piqued my interest (and the referral to RF) because it seems a continuance of the destructive GM practice of nickle'n'dime'ing otherwise valuable suppliers. It's the opposite of the only rational explanation of the purpose of the bailouts; employment security. Obama made the claim and so did the previous disaster. If you take the expansive decision to stuff funds in at the top, then you have to be prepared to make sure the funded don't chop off the trickles just barely keeping people in work.
I think there is a little more to this story. Stillwater is majority owned by Norlisk Nickel, a Russian company. Rah rah rah, USA blah blah blah. Stillwater refused to renegotiate the contract with GM when GM emerged from bankrupcy and GM will continue to buy from Norlisk Nickel's Russian sources which are providing cheaper PGM's. Looks to me more like Norlisk Nickel is shifting operations from Montana to Russia rather than GM forsaking a few US based employees of a Russian company.
If the Stillwater outfit and GM sat down to renegotiate and Stillwater wouldn't budge, why should GM bend over backwards to pay more money?
Stillwater Mining Company is majority-owned by Norilsk Nickel, but the management and workers are all based in Stillwater County and Sweetgrass County, Montana. The contracts with GM and Ford were made for the benefit of all involved. Stillwater's products, platinum and palladium mainly, are thinly-traded compared to, say, gold. Their values can vary dramatically, which is why the car manufacturers wanted a steady supply of the metals with floor and ceiling prices. I don't know if the claim that Stillwater refused to renegotiate is true. I do know, though, that I would hate to be the poor guy in Columbus, Montana trying to peddle Chevys to his main clientele, hard-rock miners. Ford, by the way, is honoring their contracts with the company.