GM Takes $40B Bailout Money Sends Jobs Overseas

2009-10-21T07:57:00.000-07:00

Breaking News - By James Rickman, SVS

The story of General Motors will go down in capitalist history as yet another example of accelerating transfers of wealth from the United States into emerging markets. General Motors filed bankruptcy owing creditors over $80 billion, the U.S. government pledged sixty percent ownership about $50 billion of the failed company using taxpayer funded bailout money. And even after selling both Opel and Hummer units plus shutting down Saturn laying off more than 70,000 U.S. workers total - it still benefits from the largest U.S. taxpayer bailout in history. Despite it all, GM continues announcing huge investments in foreign markets outside of the United States.

For example, instead of reinvesting domestically, GM spokespersons have announced, “we must follow the money...” by establishing its new GM China Science Lab Headquarters in Shanghai and the $293 million commercial vehicle manufacturing plant in Harbin, China – one of several joint ventures with major Chinese automaker FAW Group.

During the last twelve months, GM has moved out of the U.S. rapidly announcing it will invest $1 billion in GM Brazil by developing a new class of vehicle to be manufactured in South America. Similarly, GM India launched the Chevrolet Cruze, Opel and joint development ventures with Bangalore-based Reva Electric Car Company. All told GM plans employing tens of thousands of workers outside the United States.

In fact, GM once the world’s largest corporation has announced plans to manufacture vehicles for the entire U.S. market in overseas manufacturing plants leaving less than 33 facilities in the U.S. by 2011. Additionally, the company plans to cut over 20% of its remaining salaried U.S. workforce by the end of the year, including around 35% of its executive employees.

Buzz on the street is at least, General Electric (GE), Boeing (BA), Caterpillar (CAT), Stanley Works (SWK) and other companies have the decency to make attempts at adding middle class jobs in America during historic economic crisis.

The Federal Troubled Asset Relief Program (TARP) committee has released reports that billions of auto-industry taxpayer bailout money spent has failed. Further, TARP states that $23 billion will likely never to be repaid by the auto industry. The Cash-for-Clunkers $3 billion loan program also failed essentially dumping auto inventories of 700,000 units - mostly oil-gasoline dependent vehicles averaging only 24.9 MPG including 40% sold light trucks (Edmunds Automotive Network Program Analysis). Alternatively, new hybrid and advanced diesel cars offer 40 MPG, significantly cleaner burning – smarter choices.

The artificial Cash-for-Clunkers program temporarily increased volumes but did nothing to address the long-term U.S. strategic challenges such as energy independence or consumer credit crunches reflected by September declines with GM sales falling (-45%), Chrysler (- 42%) and Ford (-5%). In fact, auto sales began dropping off as soon as the Cash for Clunkers program ended August 25, 2009.

According to Edmunds.com auto sales for September barely reached a SAAR of 8.9 million, down (-23%) the lowest this year, also reflected by the U.S Dept. of Commerce (MRTS Report, September 2009). Today, GM holds less than 12% of the global auto market share, employing less than 23,000 workers in the America, reports USA Today AP.

Many argue - who can fault GM for taking the bailout money billions then moving jobs overseas for cheaper labor costs and growing emerging market returns. GM’s sales in China totaled 1,292,549 units for nine months, which represented an increase of 55.6% from 2008 - a new record for the period. GM and its Chinese joint ventures ended September 2009 with an estimated Asian market share of 13.4%. Likewise, GM Brazil recorded growth by selling 580,000 vehicles 2008 – another record. For August 2009, auto sales in India increased over 25% plus.

It appears now that GM is no longer receiving the sweet deal of continued U.S. taxpayer bailout money, despite the 100 years of U.S. middle class worker back breaking loyalty since its beginning in 1908 - GM has drastically shifted employment and technology developments investing heavily overseas. This is a clear decision signaling long-term accelerating commitments by companies like GM to move aggressively beyond the United States.

GM is now completely focused on battling to control new emerging growth markets (China, India, Brazil etc) with heavy global competition from the likes of Volkswagen (VLKAY.PK), Nissan (NSANY), Ford (F), Toyota (TM), Honda (HMC), Hyundai (HYMLF.PK), Fiat-Chrysler (FIATY.PK) and Tata Motors (TTM).

One has to wonder were it leaves the U.S. middle class taxpayers owning 60% of a struggling bankrupt GM company. Ordinary American workers are left now facing over $9.1 Trillion national deficits (Federal Reserve - August 25, 2009 statement). Alarmingly sobering numbers given the 17% unemployed and part-time underemployment rates (U6 data U.S. Census Bureau), and healthcare costs over $2.2 Trillion annually spiraling out of control (Kaiser Foundation Analysis).

Go figure – if GM and future companies are enabled by the government to freely with few limitations or employment benchmarks to migrate overseas it will continue the massive transfer of wealth and hundreds of thousands of American jobs despite these same companies receiving billions of U.S. taxpayer bailout dollars (example as oil prices rise look for the U.S. airlines industry to seek bailout money).

Integrity, trust and moral compass were once respected worldwide as part of the unique U.S. entrepreneur’s mystic so many years ago. However such virtues it appears as corporations scramble to survive maybe long forgotten. Still others argue from a corporate investment point of view, we should remain focused on immediate equity returns, after all what else really matters.

Heck as long as corporations such as General Motors are financially satisfied today, why not profits only. Perhaps, the American people’s bewilderment is best summed up in one word – Capitalism!

About The Writer - CEO
As the founding director of SVS, LLC (Hillsboro, Oregon USA); Mr. Rickman has over 30-years of entrepreneurial success. A noted new media writer/web developer - founding member of Artel Software, Lumisys/IMAGRAPH Corp., AVID Technologies and Interactive MicroSystems, Inc. Recognized as expert in sustainable (wind, solar, biofuel, hydro, electric energy, clean water, agricultural, healthcare, consumer retail sales/marketing, technology) industries, financial, technical analysis and R&D strategies. Mr Rickman is a sought after published evangelist - innovative thinker recognized worldwide including COMDEX (Consumer Electronics), Asian Institute of Technology, United Nations Sustainable Global Development, ChinaInvestor News, SiloBreaker, BusinessWeek, Forbes, WSJ, FT.com, Seeking Alpha Global Financial News and the (NAB) National Association of Broadcasters. Mr. Rickman holds advanced business and technical degrees. For more information call (503) 621-4953 or visit www.sustainablevirtualbiz.com

General Motors $40B Bailout Sends Jobs Overseas

GM Takes $40B Bailout Money Sends Jobs Overseas