So GM's share price closes the day at $14.75, down 6.7 percent. The new historic low came in response to the news [reported here] that GM is going to borrow $10b to stay afloat. And yet tomorrow morning, GM CEO Rick Wagoner will report to work at RenCen and continue to do whatever it is he does to collect his $15.7m annual pay package. Obviously, I'm not surprised by this turn of events. Nor will I be surprised when Chrysler files for Chapter 11, or GM scores tens of billions of dollars in federal loan guarantees, tax incentives and good old-fashioned hand-outs. Or when Ford cries foul and makes sure it gets a piece of your tax money. But the thing that really amazes me: how long it's taken for the American media to wake up to the fact that our very own automakers have been going belly-up. This even as the carmakers have pulled the rug from under our feet, exporting our manufacturing base to Mexico, Canada, South Korea, etc. Or have they? What of all the transplants building cars in the U.S., presumably at a profit? More to the point, why should we reward companies that can make U.S. manufacturing work at the expense of those that can't? Ultimately, we can't.
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Just for reference purposes, this is TTAC’s 305th podcast.
[reported here] – has no link. Unless, of course, I missed the TTAC article on said borrowings.
I’ge got 173 podcasts, but then I’m only counting discussions and interviews, not “audio recordings of articles” that was the beginning.
In the early ’80 the supposedly “laissez faire” Regan admin. agreed to impose voluntary import quotas on Japanese cars. It cost consumers about $5 billon, and that was when a billion dollars was a lot of money :-)
The Japanese responded by setting up factories here (though I’m not claiming this was the only reason) Unintended consequences and all that.
We have an American auto industry – Toyota, Honda, etc.
The U.S. traded its manufacturing base for access to Canadian oil and gas resources. America’s current difficulties would be much worse without that access.
“We have an American auto industry – Toyota, Honda, etc.”
Some would say the difference is that now, things like profits go out of this country. And I, for one considered this to be valid and tried to stay American and, still do. The problem with that is when you look at what the “leadership” of the Detroit Companies are doing it’s hard, anymore, have a mind to support that.
So, here we are on the precipice of a brave new world. God help us all.
How do you figure that by buying ‘American,’ profits are staying in the country? Last I checked, the Not So Big Anymore 3 aren’t making any profit. By buying ‘Asian’ you’re supporting workers who work hard, make good products, and have job security without the union sucking money from their paychecks. Hell, in 10 years, the ‘American’ auto workers will need someplace to work – might as well help Hyundai, Honda, and Toyota build the factories now.
Profits benefit shareholders, and all of the big global carmakers (except Chrysler) are public companies. Their shareholders are all over the world.
If (or when to TTAC) Chrysler, Ford and GM collapse and are allowed to completely do so we would all be sharing the pain just the same (or moreso) than if the government gives them loans to get back on their feet.
It’s hard to believe people really think foreign automakers aren’t taking money out of this country back home by selling their wares here (whether they assemble them here or not) here.
Last I checked all those profits made by GM selling in Asia and Europe come home and disappear into the black hole of losses from their business here at home. If all of that foreign money was staying abroad they would be in even worse condition.
It goes both ways and any business that operates internationally is in the business of bringing it’s profits back home to bolster itself and of course reinvest in areas that may yield even more profits for home, wherever that investment may be.
Screw you, GM. You’re not getting any of my tax money!! Actually, you probably will, but I’m going to be very unhappy about it!
And buying transplants means more Japan invests more factories and development centers here. If they sell more vehicles in America, they’ll expand and add tons of cash here especially since the dollar is weak.
I do not consider myself as paying taxes, distribution of money is not up to me for the most part. I just consider taxes distribution, not my money being taken.
Well GM may get some of that money, and I think its only a little of the money the Gov. uses somewhat poorly. I do not think it bothers me to much. I want better use of money, but I can take care of myself. That is what matters most.
Trishield, while profits find their way back to the home country (and in a global corporation, get invested back into the company/shareholders), building and material costs profit the country of production. A car built in America uses predominantly American parts and is built with American labor. Since material and labor costs usually outweigh profit, a car built in America by a foreign automaker helps the country more than an Big 3 car built elsewhere (and there are plenty of them).
Also, GM is shutting down plants, putting Americans out of work, and importing vehicles while the imports are creating jobs and building cars here.
I’m not saying GM is totally un-American and a Big 3 car built in the US is definitely the best option, but there is significant gray-area on what constitutes an American car. Does buying a G8 or Astra help the US more than buying an Accord? I say no.
A Polo is by no means cheap nor cheerful.
Cheapish maybe, but not great value…
Cheerful??? Grey plastics, grey seats, numb handling, numb engines, boring design. Yawn.
It’s a very old model that has been updated GM style a couple of times, but really can’t compete against Peugeot 207s, Renault Clios, Fiat Grande Puntos etc (Not a fan of French cars, but those small cars they do well and FIAT obviously does too).
Even the ‘budget brand’ Skoda Fabia and new SEAT Ibiza are way more desirable (but also, not really cheaper) than the Polo. In fact, they are already on the chassis the next Polo will have.
VW is making mistake after mistake lately. They can make nice cars but they don’t give those VW badges. They’re only surviving on Audi and probably Skoda…