By on July 24, 2009

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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36 Comments on “Ask the Best and Brightest: Should GM Buy Domestic?...”


  • avatar
    TexN

    Robert,
    My guess is that most folks with a brain saw through all of the B.S. about jobs right from the start. The backlash against GM and Chrysler has started and will continue for the foreseeable future, but it is primarily based on the bailout not on their sourcing decisions. The “leadership” of these companies have been motivated by greed and self-preservation alone. The hypocrisy of taking taxpayer money and then sourcing from other countries is the icing on this cake made of crap.
    Tex

  • avatar
    menno

    Given that our current way of life revolves solely around money and the monied folk, and their like, then, no. Sadly, not.

    Let’s face it. Chrysler was essentially handed over to Italians with taxpayer funds, screwing over American bondholders. GM is not really so different, it’s just that the cronies of the regime in place happen to be Americans, or some of them are.

    We the people are nothing more than serfs to these people. Never mind their words; look at their ACTIONS.

    Isn’t it 2010 yet? I can’t make it any clearer than this; when thousandiares go to Washington and return home 30-40 years later from “serving the public” as millionaires, that’s called “normal politics”. Is that what hundreds of thousands of Americans gave their lives to defend? It wasn’t supposed to be this way…

    Yet despite a 4% approval rating in the last CONgress, we the people simply elected more of the same….

    I guess we deserve exactly the government we get. And we therefore deserve exactly the treatment we get and the lack of jobs we get and the theft of our 401k’s that we get, too.

  • avatar
    Wolven

    Well RF, I for one, am glad you’re finally jumping on this. As you said, all the rhetoric (B.S.) crying for the “loans” was that the U.S. couldn’t possibly handle the loss of all those jobs if GM had to close its plants. So what is the FIRST thing GM does with it’s new found billions? Closes, oh, what’s the percentage? of it’s U.S. plants and gets rid of, how many?, U.S. employees.

    Now it’s eliminating its U.S. suppliers and THOSE U.S. jobs. Ain’t it nice to know that our taxes are going to those Russian and African mining companies though?

    All those billions of dollars are NOT saving U.S. jobs. But they ARE adding to the tax burden of all those newly unemployed Americans.

    The sheeple are being fleeced and then hung with woolen ropes made from their own fleece… and they’re STILL too stupid to catch on.

  • avatar
    BDB

    “Fifty-billion dollars.”

    Or about 167 dollars/person.

  • avatar
    carguy

    I am not in favor of any of the auto bailouts but if GM has any chance of survival then they need to be able to run their company in the most efficient manner possible. If that means sourcing from overseas then so be it.

  • avatar
    BDB

    I can’t make it any clearer than this; when thousandiares go to Washington and return home 30-40 years later from “serving the public” as millionaires

    Many Senators and Congressman are millionaires before being elected (this is almost become a requirement because of our screwed up way of financing elections, actually), and others become millionaires after retiring from the Senate, but just going to Congress won’t make you stinking rich until you retire and get paid for speaking gigs and lobbying.

    The salary of a Congressman and Senator is around $170k/year, nothing to sneeze at but a far cry from millionaire!

  • avatar
    shaker

    People bitched about the gov’t “takeover” of the auto industry…

    Our ‘socialistic’ government did its best supporting HUGE capitalistic icons so that the wheels of this country would not grind to a halt, thus resulting in millions standing in line for Campbell’s (R) chicken noodle soup.

    Now, these ‘icons’ are acting like they’re supposed to, worshiping the bottom line and making decisions on their own, without micromanagement from the gov’t.

    And people bitch.

  • avatar
    Bunter1

    Interesting, I work for a firm that supplies equipment to Stillwater Mining.

    Frankly it wouldn’t hurt to have some orders right now. We have laid off a lot of people but being small we won’t get any bailout.

    I don’t need another reason to not buy GM products but it is nice to have more ammo when dealing with mouthy in-laws that have “Buy GM” tattooed on their souls.

    Cheerio,

    Bunter

  • avatar
    Bunter1

    I’m not saying they shouldn’t be efficient BTW.
    Buy where you want GM.

    (Actually, they should just give back the loot and go away.)

    Just saying that GM’s PR department, the Gov’t and ALL of their fans can now officially shut-up about “buying American”.

    When I buy a car I too will look at the best, most efficient, plan for my family.

    Thanks for the inspiration GM!

    With all my heart,

    Bunter

  • avatar
    rnc

    Closing those plants and letting go of those employees (who received a severence package on the most part that the average american couldn’t imagine/nor expect recieving when being laid off) was the only way to save the companies.

    The idea was not to destroy a large piece of middle america during the one time in the last 50 years that it could not handle it. It’s not just the jobs its the huge amount of taxes paid (there isn’t just income taxes, you know sales tax and property tax) that support communities. The reality is that just enough was done to give these companies a chance if managed correctly going forward.

    All of you who have bitched about socialism and now it seems that’s what you want “this money should have been used to save jobs, forget about profitabilty”, which is it?

    In terms of offshoring, that boat sailed about 40 years ago and it alittle to late for it to come home. I mean do you buy single stitch crap polyester american made clothes? Seems to me that americans sure do love the benefits of offshoring (spending alot less for alot nicer things) then bitch about the consequences, if your going to bitch about it, then live it. The reality is (once again I’m going to use the phrase) “average americans” don’t give a bleep about were something comes from they just want it to be nice, that’s what companies have to do.

    In terms of politicians people don’t really seem to care about that either, they just want to not pay the taxes that are actually necessary to pay for the infrastructure or services they don’t want reduced either.

    I don’t really like any of the above anymore than the other commentors do, buts it’s reality and that’s what GM has to deal with (for along time they didn’t providing jobs and benefits that weren’t sustainable, while making up the difference with the quality of thier products)

  • avatar
    johnthacker

    Michigan Representative Debbie Stabenow

    Senator, actually, FWIW, since 2000.

  • avatar
    thalter

    The answer to this question depends largely on your view of GM’s chances.

    If you think they have have a chance of being successful, then by all means GM should buy their services and supplies from whomever can provide the best product at the best price, regardless of location. The government (and by extension us) will get our money back in the form of eventual profits and IPO.

    If, on the other hand you think GM is doomed to fail, then truly our best hope of recovering any part of our investment is to plow Government Motors funds back into the coffers of a domestic supplier base.

  • avatar
    Kurt.

    IF GM built cars people actually wanted (not rebadged Daewoos) and IF it would restore GM to being a profitable company and a leader is the free world and IF anyone really gave a rats ass…

    …but GM doesn’t, it won’t, and they don’t. GM will die a slow death and take our tax money with them.

    Sucks to be an American today.

  • avatar
    Wolven

    BDB : “The salary of a Congressman and Senator is around $170k/year…”

    And that’s why folks that are already millionaires spend MILLIONS of their own money to buy into office? Would seem like a losing proposition, wouldn’t it? And yet they come out MILLIONS richer than when they went in… and they somehow did it on only $170kyear.

    Fortunately, the majority of highschool graduates can’t calculate change due on a purchase, much less figure out that $170k x 4 years in office can’t possibly make you a millionaire…

    The most expensive education in the world, and damn well worth it! (If you’re a democrat)

  • avatar
    BDB

    And that’s why folks that are already millionaires spend MILLIONS of their own money to buy into office? Would seem like a losing proposition, wouldn’t it?

    It might be a losing financial proposition (at least short term) but they figure its worth it for the prestige/influence that comes with being a member of congress. Or they’re bored and want to try something else. Or they really, really DO want to serve the public. I don’t know, but a millionaire has many easier routes of making more money than running for public office!

  • avatar
    menno

    Given that General Motors has not really been an American company for some 8 decades – but instead has been a global conglomerate company – just exactly why did we Americans bother “bailing it out”?

    A pal of mine at work refuses to buy non-American “brand” cars, and just got a Chevrolet HHR. He calls it an American car, despite it being manufactured in Mexico.

    I maintain that my wife’s Hyundai Sonata, manufactured (including the engine) in Montgomery, Alabama is more an American car than his Chevrolet.

    He claims that location of the HQ is what counts. That’s where the profits go. I counter that any profits (good luck with that, GM…) go to STOCKHOLDERS and stock of American companies is not held solely by Americans any more than Hyundai stock is solely held by South Koreans.

    What does everyone here think?

  • avatar
    BDB

    A pal of mine at work refuses to buy non-American “brand” cars, and just got a Chevrolet HHR.

    Where was it designed and engineered? There is more to cars than assembly or parts content.

    I’d really rather not see America become like Mexico where were a low-cost dumping ground to assemble cars foreigners design and engineer. I think we can do better than that.

    EDIT: I will also point out, as I always do, that the “transplant” factories likely wouldn’t exist without government policies such as import quotas and tariffs put in place during the Reagan administration.

  • avatar
    EEGeek

    I’m confused about the Old GM/New GM and where this fits in. The article says that the Bankruptcy court allowed GM to drop the MN company. But didn’t “New GM” already emerge from bankruptcy? Wouldn’t production contracts fall to the New GM, which is supposed to actually produce and sell vehicles, while the Old GM mops up whatever assets & liabilities that New GM didn’t want?

    Can someone who understands corporate bankruptcy law help me out here?

  • avatar
    thalter

    menno:

    The profits argument is a well-established as a red herring:

    1. First of all, for GM and Chrysler, there haven’t been any profits recently, are no profits, nor are there likely to be any soon (if ever). End of argument.

    2. Last I checked, anyone can buy stock in Honda, Toyota, or Hyundai. In fact, anyone with money in an global mutual fund or 401k may already be investing in one or more foreign automakers. In this case, the profits come back to the good ol’ US of A.

  • avatar
    impreza_13

    “GM’s giga-suckle” <—- genius! :)

  • avatar
    cmcmail

    Who is going to buy new GM stock when it becomes available? The way the last shareholders (owners) were treated, 1% of the new company (15% or more for the UAW, who took paychecks each week) you would have to be nuts to invest personally, and a criminal to invest for others. Think of the downward pressure when the UAW and the Gov. try to move their stock.

  • avatar
    George B

    Probably doesn’t matter if GM buys domestic. If it’s not too expensive to maintain multiple suppliers, I would like to see them buying the majority of their platinum and palladium from whoever is less expensive, but keep some business with the currently more expensive domestic supplier. The competition helps make sure the current low bidder doesn’t jack up their price in the future.

  • avatar
    indi500fan

    I would suggest that anyone whose Senator or Rep voted for the bailout contact them. See if the govt can provide a picture of the 50 yr old UAW retiree that their taxes have helped “adopt” to the tune of $3200/month and silver plated VEBA benefits.

  • avatar
    thalter

    Sorry Da Coyote, but GM went bankrupt all on their own, without any help from the gubment.

  • avatar
    rnc

    cmcmail :

    They (shareholders) received 0% of the new company, however that’s how bankruptcy works (except for a few cases), the shareholders are wiped out. They take the greatest risk and can achieve the highest return, i.e. people who bought Ford stock at $1.02/share and sold it today.

    If? GM makes it to a point where they issue stock again I imagine alot of people will line up to purchase it as those considerations will be priced into the listing.

  • avatar
    jkross22

    GM, like most corporations based in the US, have no allegiance to the US. They have an allegiance to profits and their shareholders. Everything else is secondary.

    GM lost its soul a long time ago, so believing that they ‘ought’ to be spending money here in the good ‘ol US of A is a joke. Is there a steel union left to demand that they need their share of GM’s bailout?

    GM spins the buy American line the same way Wal-Mart does. It’s all a big lie. There are plenty of ignorant people who eat this up, but as George Carlin said, It’s bullshit and it’s bad for you.

  • avatar
    tom

    This shows again, that bail-outs suck…

    Financially, GM’s responsibility towards the taxpayers is to produce great products and to make as much profit as possible, and if this means getting your platinum from abroad, then so be it.

    Politically, GM’s responsibility is to buy American, no matter the quality or the costs.

    These two responsibilities are probably quite often at odds with each other. The problem is that there will be a backlash no matter what. If GM doesn’t make money, the taxpayers will be angry because they basically threw good money after bad, if GM is looking for better deals, the taxpayers will also be angry, because their money goes abroad (at least in their perception).

    It’s a lose-lose situation…no matter what GM does, everybody loses. Although it has to be said, that if there is a chance to become profitable, then GM has to take it. It’s better for everybody should GM earn money than for GM to support domestic jobs. Because otherwise, all you’re doing is to create make work jobs that are gone as soon as the government stops handing out taxpayers money. Secondly, it could be regarded as protectionism, and if that catches on, we’ll really slide into another big depression.

    So yeah, better to buy your platinum abroad, but it still won’t work…at least I don’t see how it could…

  • avatar
    wsn

    menno :
    July 24th, 2009 at 12:52 pm

    He claims that location of the HQ is what counts. That’s where the profits go. I counter that any profits (good luck with that, GM…) go to STOCKHOLDERS and stock of American companies is not held solely by Americans any more than Hyundai stock is solely held by South Koreans.

    What does everyone here think?

    ———————————————

    LOL. The irony is that the profit didn’t actually go to Detroit. Because there wasn’t any profit.

    Even during the supposedly “profitable” days, the profit was barely enough to cover the interest on the loans.

    Simple solution: let Obama spare $200B and buy out Toyota + Honda + Hyundai. Better value than GM @ $50B+much more to come.

  • avatar
    charly

    @Farago, do you include Canada in “buy American” or is it strictly USA?

  • avatar
    allythom

    @tom

    here here, well put.

    The question is whether GM is now simply an extension of the government, there to dole out corporate welfare to US companies irrespective of value for money? Or is GM still a serious business (I use the term somewhat loosely) with an obligation to maximize profit for its owners, like any other, non government bailed out, manufacturer of goods?

    Which opposing driver wins out ? I’d guess neither and that we end up with some hated, unprofitable abomination that rots and festers until it finally gets sold off at a massive loss. British Leyland style.

    Bailouts do suck and this one should certainly never have happened. True story: I actually emailed President Obama before he was elected, asking that, in the fairly likely event of him becoming President, he not bailout Detroit. He never listens to any of my suggestions though…

  • avatar
    benders

    Since the “loans” were sold to the public as the only way to save the jobs dependent on GM and Chrysler, I say yes, GM has an obligation to buy American.

  • avatar
    50merc

    jkross22: “GM, like most corporations based in the US, … [has] an allegiance to profits and their shareholders. Everything else is secondary.”

    Well, in GM’s case, the evidence is to the contrary. GM has been screwing its shareholders for many years. It paid dividends when there were no profits, which essentially amounted to devouring itself — like ripping boards off the house and tossing them into the fireplace to keep warm.

    And there were no profits because GM’s board of bystanders (I love that jibe) and senior management wouldn’t face reality and make tough decisions for the company’s long-term health as they were needed. Managers lived sumptuously and the UAW continued to live in a fool’s paradise, but the company got sicker and in the end shareholders were left with nothing.

    As for me, BDB, I want my $167 back. I had better uses for that money.

  • avatar
    PeteMoran

    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.

  • avatar
    IGB

    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.

  • avatar
    Campisi

    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?

  • avatar
    Mike Kelley

    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.

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