While GM, Ford and Chrysler put the squeeze on the taxpayer’s elected (and appointed) representatives, their shift of investment out of the U.S. and into other countries continues apace. This morning, for example, the Associated Press reports on the grand opening of General Motors newest $300mfactory… in St. Petersburg, Russia. “This plant is GM’s first in Russia, where demand for cheap, well-built cars has exploded amid a decade-long economic boom.” Similarly, last month GM opening it’s second factory in India and launched a new $250 million Shanghai, China R&D palace. For the life of me, I do not understand how GM executives can continue to pay themselves outrageous sums of money, shut down American factories, put development programs into the deep-freeze, toss American workers on the ash-heap, invest the company’s dwindling resources everywhere else AND demand financial bailouts from American taxpayers. Oh yeah, and don’t forget that bit about blaming American customers for un-patriotic buying decisions. Speaker Pelosi, are you paying attention? Can someone please tell her from whence cometh the Chevrolet Aveo?
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“cheap, well-built cars”.
Yep. That just about says it all. Good luck with those fine automobiles, Comrades!
Market-wise, investment in Russia makes eminent sense.
– Russia has no serious domestic car company (Moskvich, anyone?)
– Russia has a ravenous appetite for cars
– Russians have money now
– The Germans are doing it, the Chinese are doing it
– If an international auto exec doesn’t think about going into Russia, he should be fired.
The downside is that Russia has the nasty tendency of fornicating foreign firms over (think BP etc.) after they have dropped their money there. And the business climate is a bit, well, interesting (think bullet-proof vest.)
Like it or not, a car exec’s main mission is not to provide jobs. It’s making money for his stockholders. Because of THAT, let’s send the whole Detroit BOD to Russia to do hard labor there.
PS: Due to market over-saturation in the US, Western Europe and Japan, any serious growth must come from the BRIC countries. Brazil, Russia, India, China. Methinks, whoever coined that term had his priorities backward. In my humble estimation, it’s CRIB – a much better acronym for emerging markets anyway.
Maybe Mark of Excellence doesn’t really fit GM anymore, but how about “Better Than A Lada“?
Bertel Schmitt :
Market-wise, investment in Russia makes eminent sense.
It only makes sense if you convince yourself that Russia recognizes personal and capitalistic property rights.
Look at just a few of the things they’ve done in recent years; for example, the invasion of Georgia, and the nationalization of their biggest oil producer, Yukos. Putin’s henchmen simply jailed the upper management and just took over the company.
I can see it now. We bailout GM. GM uses that money to buy or build factories in countries unfriendly to free markets and/or unfriendly to the US.
Those countries simply take over GM Russia or GM Venezuela or GM fill-in-the-blank, and they get a free factory in the deal!
We’re such fools if we allow this to happen.
This is a good reason to buy domestic. The profits go to Moscow, and all of us should want **that** to happen.
@Zoomzoom: I pointed to your point in the paragraph “The downside”
Bertel Schmitt: “Russia has a ravenous appetite for cars.”
Quite right. When my brother came out of a concert hall and found in the parking lot only some broken window glass remained of his seven-series BMW, the Antwerp cops said the car was probably already on a ship bound for Russia.
Not to be a party pooper or anything, but isn’t Russia still in the midst of a financial crisis? The RTS index is where it was 3 years ago, after dropping over 60% in the last 6 months?
Ooooh, investing in growing markets that support your products and your bottom line, just like every other automaker in the entire world does. How awful.
Unlike every other country in the world we also don’t support our home teams, so we are in effect driving them out just as much as expanding markets abroad support them.
@50merc: Ah, Antwerp. Don’t remind me. I had a quick Coke (as in Coca-Cola) with my friend at his hotel in Amsterdam. Back to the parking lot after 30 minutes, my A8 was gone. Probably on the same ship. The Amsterdam cops were likewise sympathetic. All hotels were booked solid. They offered me an overnight stay in a cell (I kid you not.) WTF, I said, and took a taxi to Duesseldorf. €600 … chump change compared to what I just had lost.
Ooooh, investing in growing markets that support your products and your bottom line, just like every other automaker in the entire world does. How awful
It’s not awful, just hypocritical.
If folks are going to wave the stars and stripes in support of Detroit, then they should be a tad miffed that GM is going to use what little money it has to cut jobs in the US while adding them abroad.
Car fans need to wake up, and realize that most of these automakers are multinational corporations that are not loyal to one flag. If they are free to do business as they see fit, then I as a consumer am free to do business as I see fit and buy what I want based upon my needs, not their sales targets.
Loyalty is supposed to be a two-way street. But in the case of the auto companies, it’s clearly a one-way road. It’s the loyal buyers who buy domestic at all cost who are going against traffic.
GM just can’t catch a frigging break can it?
It opens a 300m factory in a country whose wealth is based on oil… just as oil bottoms out. Good luck selling cars there now.
But hey that 300m could have kept GM alive for another 4.5 days!
My problem isn’t that GM is investing in growth markets. It is that GM somehow has the money to do so AND is asking for a US government rescue at the same time which frosts me. I am also rip snorting mad about the huge pay packages Detroit’s band of management geniuses continues to give itself, while at the same time crying poor to workers and the government alike.
I had a friend who worked for a nuclear firm that was taken over by GE. That was the first time I heard the phrase “Neutron Jack” referring to their lionized (in the financial press) chairman Jack Welch whose penchant for taking over companies and firing everyone in sight was at the time widely praised. “Twelve months later the buildings are still standing but the people are all gone, just like a neutron bomb had gone off.” Sure enough, within twelve months he and his division were smoke.
In his honor ( and for everyone who has to suffer through gross mismanagement ), I would like to propose “Matchstick” Rick Wagoner for 2008’s first Neutron Jack Award for the audacity of burning once mighty GM to the ground and then pouring gasoline over the ashes and doing it again.
$300m factory in Russia? I hope they know you don’t own anything in Russia, you’re just kind of leasing it for awhile. Ask Shell or BP.
Then again, if you’re an investor in a bank in the States its kind of looking the same way in certain respects.
Either way, its the holidays and Ricky and the gang I am sure are thinking….BONUS TIME! I wonder how they’ll justify it this time around? It would seem pretty stupid to bonus yourself right now the common-sense person would say.
But think about it, Ricky and the gang know that by this time next year GM isn’t going to be here or its going to be the People’s Republic of GMT900’s n’Things, and they won’t have full control over the coffers anymore (kinda like Saddam running Iraq, but with no-fly zones). This year is their final chance for the carcass-nibble fetish they seem to have every year. Anyone wanna take bets on the bonus amount and justification? Sounds kinda like fun to me at this point.
I’m not philosophically opposed to GM investing in foreign markets, but let’s face it, Russia is a spectacular implosion waiting to happen, and we won’t have to wait long. That is one sick, sick country that been running on steroids lately thanks to overpriced oil, but their supply of steroids has run out and they are deeply screwed. This is all completely aside from whatever offers-GM-can’t-refuse that will shoved up their ass by Czar Putin or the mob.
OTOH, if you want to be loyal to companies that are proud to invest in America, by all means do so and give a cheer to companies with names like Toyota, Honda, Hyundai, Kia, BMW, Volkswagen, etc.
The car markets in Japan, Europe and North America are all mature and are currently retrenching, not growing.
OTOH, China, India and Latin America are the fastest growing auto markets in the world. Russia, too, has seen market growth. It makes sense to be active in those markets.
It’s interesting that the same folks who tell us that we shouldn’t care if GM folds because we can buy made in America Toyotas and Hondas object when GM tries to expand globally.
Bertel Schmitt :
@Zoomzoom: I pointed to your point in the paragraph “The downside”
Yes you did, but I felt that you weren’t direct enough in your choice of words.
It’s interesting that the same folks who tell us that we shouldn’t care if GM folds because we can buy made in America Toyotas and Hondas object when GM tries to expand globally.
If the defense of Detroit is allegedly a patriotic act, then why aren’t the patriots upset when GM expands its business by exporting production out of the US?
Since these products are so marvelous and wonderful, GM should be shipping Cobalts and Malibus to the Russkies, and relocating its Korean operations to the US so that American workers get the production jobs.
The appeals to apple pie, Mom and country fall flat when the trend is clearly moving toward less US production from Detroit. The jobs being created in the US auto industry are being created by transplants, not by the supposed “home team” that shows little interest in supporting the fans.
It’s interesting that the same folks who tell us that we shouldn’t care if GM folds because we can buy made in America Toyotas and Hondas object when GM tries to expand globally.
It’s actually very easy to explain:
* GM investing in Russia while scaling back US production is, effectively, a transfer of dollars out of the US. They might get a few bucks in profist back, but those profits end up going into the sinkhole that is GM’s cash flow, if they aren’t absorbed by GM Russia first.
* Toyota et al investing cash into the US is a net influx of cash into the American economy. Even with the profits going back to Japan, the bulk of the money of the product’s MSRP stays here.
Put it this way: if GM was an American company in name only–that is, no production or design facilities on American soil, but still headquartered in Detroit–and turning a profit, would that be better than Toyota having actual plants in North America?
Hint: the answer is no.
The best situation you can hope for, in net terms, is for an automaker to set up shop in the US and export the product. Failing that, they should be physically assembling here from a maximum amount of local content. Way back after that, yes, a Chevy Aveo is probably oh-so-slightly better for the American economy than a Kia Rio is.
Good for GM to go build cars for Russians in Russia. Honda and Toyota and others are doing it here too.
I am surprised with the amount of misinformed anti-Russian fear mongering on this board.
Russia’s government might have used strong arm tactics with foreign ENERGY investors but this is related to the fact that the modern Russian government is obsessed with controlling the world through the energy and the lucrative revenue that comes with this. In addition, even Russia’s own citizens KNOW and disapprove that in the 90s a lot of state energy resources were transferred to the private sector, including the foreign investors, through the back room deals where a few well-connected oligarchs got a whole bunch of state energy assets literally for nothing. So, what’s happening in Russia’s energy sector today is simply payback time and has nothing to do with foreign investments in non-energy sectors of Russian economy.
Likewise, the claims that the August war was a Russian aggression against Georgia are 100% B.S. The true details on that whole affair are emerging only now. For example, take a look at yesterdays NYT article:
http://www.nytimes.com/2008/11/07/world/europe/07georgia.html?bl&ex=1226206800&en=ee78c130ae60871f&ei=5087
I’m not philosophically opposed to GM investing in foreign markets, but let’s face it, Russia is a spectacular implosion waiting to happen, and we won’t have to wait long. That is one sick, sick country that been running on steroids lately thanks to overpriced oil, but their supply of steroids has run out and they are deeply screwed.
Oh puhlease. This is another fine example of typical anti-Russian fear mongering. You think Russia will go broke because of falling oil prices? Think again. It can live on $30 oil just fine. In fact, when the prices went above $30 Russian government had already so much cash they didn’t know what to do with that they setup this whole “stabilization fund” that’s funded with a special tax whenever oil is sold above $30 (right now they had just under half trillion of hard cash in that fund). I for one believe that oil prices are indeed driven by demand and supply. To see Russia implode, you need to see oil prices go down to $30 for a while, which can happen only if the entire world economy is in a deep recession. I don’t see how people like you will continue gloating when your own country will be in the middle of an epic recession. (I guess it will give some relief: “Look, our economy is an epic shithole, but look, Russia is imploding too!”).
@Jacob
Are you serious? Most of their “original” oligarchs escaped to London. Former colonels from KGB are overtaking what they haven’t “bought” and killing those who have any inkling on resistance. Have you heard of chemical element called Polonium? Remember why it became notorious? You think you can buy it in your local 7/11 or Walgreen? Who is misinformed?
@psarhjinian
GM should may globally, but I really don’t want to pay for it with my tax dollars. Honda and Toyota cars, that I own, are made in the US by US work force. Do you think there is difference between building cars in Russia and enhancing their standard of living or in US?
Neither Toyota, Honda, Nissa or Hyundai cost us federal tax dollars.
A lot of anti-Russian feelings here. Russia has SERIOUS flaws, but what I read here is just xenophobic.
The Georigans invaded Ossetia first. Ossetic people are not related to Georigans at all, and have no interest in being a part of their country. I personally am not a big fan of the Ossetian administration(The ethnically cleansed Ossetia of ethnic Ingush in 1992) but all the want is to be reunited with their bretheren in the north. Wouldn’t you?
The Ossetian attack was just a pretext so Georiga can re-take Abhkazia, a nation who absolutely despises the Georigan state. Georiga refuses to hold an independence referendum Regarding this brave nation, because they know the Abhkaz will vote overwelmingly for independence.
The Georiga war was Georiga’s own doing. I have no Idea why a nation such as The US, which practically invented the modern democratic process, defends a nation such as Georiga.
Sweet… How long before Putin decides Mother Russia should own that factory… and takes it?
@M20E30
I wonder who gives a crap about Ossetians and Abhkazians? No one in America even knows what are you farting about.
Georgia is a pain on Ivan’s ars because they are not ruled by former KGB officers.
Nice to see the Russophiles are almost as vigilant as the Chinese nationalists in quickly trying to rebut any blog comments critical of their mother country.
Jacob & M20E30, care to tell us the history of the word “pogrom”?
“We are leaving Mother Russia
When they come for us
We’ll be gone”
psarhjinian:”Put it this way: if GM was an American company in name only–that is, no production or design facilities on American soil, but still headquartered in Detroit–and turning a profit, would that be better than Toyota having actual plants in North America?”
Maybe that is Waggy’s “turnaround plan”:drive GM into the ground until bankruptcy, shed all obligations and “legacy” costs, UAW participation, dealers and excess brands, pound the last dime out of the suppliers,fire sale all the NA made product, wind down, then cease all NA operations, sell Chevrolets, Buicks and Cadillacs built in So. America,Mexico,India,Korea, China and Russia….
Didn’t he make the comment not too long ago after a previous red ink Quarterly Report that NA wasn’t really critical to GM’s future but that emerging markets like China and India were?
Jacob,
Lack of private property rights and justice isn’t something that can work only in ONE area of society while being defended in others. You either have it, or you are losing what little of it you have (See US healthcare for more info).
Overall, the problem started with over regulation and specifically, with labor regulation. It would be all well and good to let GM do what’s best for GM, and give them our regrets when it doesn’t work out. However, as long as we persist in taking their property willy nilly through labor laws, I don’t see why they shouldn’t ask for government money back.
There were many constituencies at the table with Speaker Pelosi. The only ones not represented were those of us that would rather not have government so involved in managing the economy. Are we really such a small minority that we deserve no representation?
Some folks at GM already have a change of heart and mind:
East Europe car boom could be over, GM says
10:25 AM EST
FRANKFURT (Reuters) – A downturn in car demand is bound to spill over into eastern Europe which has been a stronger growth area than western European, GM Europe President Carl-Peter Forster said in a trade press interview.
“This area used to be a growth area, but not any more,” Forster said in an abstract of an interview which will run in full length on November 10 in Automotive News Europe.
“I would not expect them to be able to decouple themselves from a more difficult situation in Europe,” he said.
The publication said a slowdown was expected in eastern Europe next year due to the tightening of available credits, the collapsing consumer confidence, and the increase used car imports from western Europe.
Europe had so far provided a silver lining for many leading U.S. auto suppliers but the slump that started in the U.S. is spreading to other key markets as the global credit crunch rocks consumer confidence.
M20E30 :
November 7th, 2008 at 3:23 pm
The Georigans invaded Ossetia first.
That’s like saying the US invaded the Confederacy. South Ossetia was/is part of Georgia, not part of Russia.
Now, you can make a good argument that if part of a country wants to break away from the main country, it should be able to. However, no democratic vote on such was ever held in any of the break away territories of Georgia. Plus, if such logic was followed in the 1860’s, there would be a lot less than 50 states in the US today. In fact, under that logic, we might all be speaking German right now, since the CSA certainly would have aligned with Hilter during World War II and probably would have shifted the balance of power enough to allow the Nazis to win.
Back to the actual topic-tariffs on imports of new cars in Russia are quite high. It makes more sense to build a plant there than to import vehicles from the US or elsewhere, especially for non-luxury vehicles. Of course, there’s still the question as how GM has enough money to build a tool shed right now, let alone an auto plant halfway across the planet.
Geotpf,
You gotta be kidding me. You want to back up the nazi-reb connection with ANY sort of logic whatsoever, or is this simply a North=Good, South=Evil snipe.
Landcrusher :
November 8th, 2008 at 5:54 pm
Geotpf,
You gotta be kidding me. You want to back up the nazi-reb connection with ANY sort of logic whatsoever, or is this simply a North=Good, South=Evil snipe.
Hitler = racist. CSA = racist. How’s that?
If the CSA continued to exist, their leadership by 1935-1940 would believe in the same sort of theories that Hitler believed in, that white Christians were superior to everybody else. It would only be logical that the two sides would hook up in a world war.
I really don’t think that’s that much of a stretch. Keep in mind, in the real world, the governments of southern states were actively racist until 1965-1970 or so.
Hey!!!!!!!!
Godwin!!!!!!!!!!!!!
1940’s Earth:
France=racist, Britain=racist, Stalin=racist, Northern USA=racist, Canada=Racist, Japan=racist, China=racist.
You REALLY believe that two governments would ACTUALLY build a relationship based on their mutual racist beliefs? Especially when they are not, according to one side at least, the same race?
It’s a serious stretch and ignores most of the facts in favor of popular, Orwellian legends.
Bozoer Rebbe
1. I am not Russian. I am Macedonian.
2. In the 21 years that Georiga had been independent(1918-1921,1991-present), it has started 7 wars. They have attacked Abhkazia 3 times since 1993, and were defeated each time.
3. I am not Pro-Russian in the least bit. Georiga and Russia are both bullies who have harassed smaller minorities in the Caucasus for centuries.
The Russians Flattened Gronzy in 1994 and killed 8% of the Chechen Population. Where were your voices then?
Oh right, they are Muslims(Although most were secular humansists or atheists until very recently). It all makes sense now.
Oh and BTW Geotpf , Abhkazia and Ossetia were both illegally incorperated into the Georigan SSR by Stalin in the 1920’s(The Abhkaz SSR was seperate until 1925). The Soviet regime was illegitamate, and so are the Georigan and Russian states in their current form.
Ask A person in either of those republics whether they consider themselves part of Georiga.
M20E30,
You make a few REALLY faulty points.
Grozny. What is the point to this micro rant -“where were your voices then?” It means nothing. Failure to protest every wrong, or any wrong, does not invalidate other protests of wrongdoing. No one supported the flattening of Grozny outside of Russia that I am aware of.
Muslims. Your claims of racism on the part of others here is both uncalled for, and a distraction from reasoned discourse. If you had a point, it was lost in your invective.
Abhkazia and Ossetia. Quite frankly, I am a bit tired of who invaded who first, and who has a right to be independent, etc. I respect the Abkhazians for fighting for their independence. The Ossetians I am not too sure about, it seems they didn’t really do much, but I may be uninformed. What I don’t respect are countries or people who surrender one day, and then several years later start another war over the exact same issue with or without any new provocations.
As long as we do not make our governments respect some sort of legal secession, then there needs to be some limit on all the violence. One should have to give up the right to revolution at some point, and I think that as soon as one fails to continue the fight from within or abroad then one needs to accept the status quo.
All these people who surrender one day, play along the next, and then rise up years later are simply perpetuating a cycle of endless conflict. There is nothing right or honorable about it.
A people should ensure that they have a very good case for secession, and they should do so by first securing the good will of their neighbors by proving themselves as a just, peaceful and independent people. If a seperatist movement is generally thought to be one which will immediately resort to retribution, then no one should aid their cause or sympathize with their plight.
I support the “right of conquest,” whether it entails countries or cultures fighting and absorbing one another or if it involves firms suppluing goods to the masses.
Winner take all!!!!!!!!!!
Let GM flounder, dissolve, be washed away upon the tide of history as the Hittites and others were carried off in days long gone.
Let Toyota and Honda and perhaps a new American-based firm rise up and take its place among those winning the battle for survival.
At least Toyota and Honda hire a lot of Americans and the conveyances those firms sell within the USA create many subsidary jobs for those servicing and repairing those vehicles.
Maybe the towing industry may suffer a wee bit with a lesser need to haul off broken-down vehicles but Americans still need their vehicles and a decent percentage of the money spent on those Toyotas, Hondas, etc. will recirculate within the USA economy.
And I, for one, would feel better paying for a non-GM vehicle knowing that a few scum coporate higher-ups were not receiving HUGE bloated salaries, perks, bonuses of amounts I can not attain in a life-time of labor nor those “golden parachutes” spread amongst the elite class under the guise of the proverbial free market.
Yes, I do believe the USA is in the throes of class warfare and that is what my life experience and self-education has taught me.
If you don’t like that meet me by the bike rack after school.