It’s official and GM has no one to blame but itself … and the Federal Government. But check out the video for the kicker to this story.
Yes, GM’s poor planning and onerous labor agreements turned the auto giant into a beggar with the Government more than willing to take control … but the Government helped put GM in this sorry state as well …. with it’s long list of unfunded mandates including CAFE standards and fuel emissions and labor requirements and … well you get the idea, making cars far more expensive to own an operate than might otherwise have been necessary.
The President has said he does not want to operate a car company … but make no mistake what he says and what he does are two different things. This company is all his and the Wall Street Journal makes it very clear it will run this company as only a government can. Politics.
The Administration’s concessions to the UAW also restrict the company’s ability to import smaller, more fuel-efficient cars that it already makes overseas. UAW President Ron Gettelfinger boasted on PBS’s “NewsHour” last week that “we, quite frankly, put pressure on the White House, the [auto] task force, the corporation” to bar small-car imports from overseas. GM is also selling its Opel operation in Europe as part of this restructuring, and the Washington Post reports that one of Treasury’s sale conditions is that Opel’s new owners must stay out of the U.S., and even out of China, where GM’s business is strong.
This is raw trade protectionism. It is also textbook cartel behavior and would be an antitrust violation if practiced by a business. But the benefits for GM are illusory because the import limits mean the company will have to spend even more to retool its domestic plants to make the little green cars that President Obama and Congress are demanding. No one knows if Americans will buy such cars, even if GM can make them competitively in the U.S.
The Administration promises to wield a light ownership hand, but it’s only a matter of time before Congress starts to micromanage GM’s business judgments. Every decision to close a plant will be second-guessed, much like a military base-closing. And what about buying parts from foreign suppliers? Will those also be banned when Mr. Gettelfinger demands it, even if the costs are lower? GM’s managers and directors will have one eye on enhancing shareholder value, but the other on pleasing their political minders in Washington.
Of course the one thing it can’t control is the consumer … or can it. From this weekend’s Cavuto on Business.
Update: and here’s the ultimate game stopper in this nonsense.