April 11, 2013

Horse 1462 - What's Good For General Motors Is Good For General Motors

General Motors' decision to sack 500 workers in Australia, despite the more than A$2bn worth of subsidies thrown at them over the past decade, despite Holden being the only profitable division during the height of the Global Financial Crisis and GM's own Chapter 11 bankruptcy woes, smacks of a corporation which is ungrateful. Then again being a corporation, in its rather overpaid opinion, its bottom line is the only thing that matters and so it would only argue that it was only acting in the interests of its shareholders, or increasingly, the board of directors, so the concept of being grateful must be an alien one.
Especially considering that the few remaining GM "workers" in the United States have been recently handed a "loyalty bonus" (94% went to upper management), its easy to see just where GM's loyalties lie; it ain't here.

Mike Devereux, Holden managing director among other reasons said that the strong Australian Dollar and currency devaluations overseas were mainly to blame:
“Importantly, the currency plays being made by other countries mean that were are not competing on a level playing field, not even in our own backyard.
While Holden has made significant productivity gains and will continue to do that, we are witnessing a structural shift in the market not just for cars but for anyone or any company that makes things in this country."
- Mike Devereux, 8th Apr 2013.

Never mind the fact that General Motors often shift millions of dollars worth of currency in a day to their own ends. China and Russia also have been buying up Australian Dollars in an effort to harden up the currency so that their markets can compete overseas. Coincidentally, the Cruze is built in both Saint Petersburg in Russia and in Shenyang, Liaoning Province in China.
The Cruze in particular is a "global" car; that is, it is sold in many markets all over the world and parts can be manufactured in equally as many factories all over the world; one such factory is in San Luis Potosí, Mexico. What's curious is that as long ago as 2003, General Motors was being looked into by Human Rights Watch (web: http://www.hrw.org/) and made an explicit statement that would not "hire female job applicants found to be pregnant" to avoid "financial liabilities imposed by the Mexican social security system". Helpfully, the Mexican government has expanded the use of "maquiladoras" or what the UN likes to call Export Processing Zones, inside which, factories are able to negotiate special conditions to avoid paying such annoyances as taxation and avoid paying as much in wages than they would do outside the Zone.
In a maquiladora, workers across Mexico can be paid as little as $1285 a year and thanks to NAFTA, their produce can be shipped into the United States without tarrif. Owing to the quirks of Australian trade law, their work can even be included as Australian local content.
Australian car workers like the few industrial workers still left in the country, find themselves competing for wages against women and girls in their early 20s and in some cases as young as 14. They do not receive anything as extravagant as overtime, holiday pay, sick pay and if they get injured on the job, they may as well be living on the moon for all the assistance they'll get.
General Motors' once proud promise that a worker in their factory could earn enough to support a family of four and buy a pick-up truck or car within a year, rings oh so hollow now, with many workers in Mexico and migrant workers in countries like Poland barely being able to afford rent and seven meals a week after working hundred plus hour weeks per week. Of course you could shut assembly plants down but equally when GM can ship in parts to make front consoles and even ship a whole factory into Laos in just 22 days, they can just as easily ship it back out again to some other accommodating country.

Unfortunately as a company, treating people and nations with disdain is part of their history. General Motors is at least partly responsible for the dismantling of a lot of public transport systems across America. They along with Firestone Tyre, Standard Oil, Phillips Conoco, Mack Trucks, and the Federal Engineering Corporation bought more than 100 tram and trolley-bus networks in 45 cities. Following an anti-trust case in 1949, GM in particular was convicted and then fined the utterly pathetic sum of $5000; the then treasurer of GM, a Mr  H.C. Grossman was fined the princely and immensely burdensome sum of $1 for his actions.
If that wasn't bad enough, just seven years later, their former CEO Charles Erwin Wilson persuaded Eisenhower to build the world's biggest system of expressways so that his shiny new cars could use them; then went back to GM. The phrase "what's good for General Motors is good for the country" also originated around this time.
So forgive my cynicism at a company which being too big to fail, coerced the supposedly biggest and most powerful nation on earth to bail it out, and after being paid more than $275m by in bonuses (mainly to upper management) in another country, sacks Australian workers and yet still demands to be given handouts. Just who is the Australian Government subsidizing anyway? My tax dollars are going overseas to fund the profligacy and extravagance of clearly incompetent management, that's who.


"The current approach, and quite frankly the approach of past governments both Liberal and Labor, has been to not restrict the commercial decisions of the company.
Our current agreement with the federal government does not include minimum employment levels. (The assistance) is designed to generate the capacity to build things ... and jobs flow from that.
There are no guarantees in life, I don't know how many cars Australians will buy in 2016"
- Mike Devereux, via the Herald-Sun, 10th Apr 2013

Holden themselves have refused to guarantee the future of people's job in this country, so as far as I'm concerned, I don't see why any Federal Government should continue to bottle feed the poor ickle baby.
I'm actually seriously wondering if It might be more cost effective for the Australian Government to simply order Holden to leave forever, then to pay all the workers on full salaries. I suspect that in terms of raw dollars spent, it would still be cheaper than giving Holden hand outs. Of course the downside is that there wouldn't be Australian produced motor cars but considering that apart from the Commodore which is more than likely going to be axed in 2016 anyway and the Cruze, the entire of Holden's line up is already fully imported, so we won't miss much.

That also comes off the back of GM, promising to invest more than €4bn in Opel in Europe, who would also be building parts for GM cars like Holden in Export Processing Zones such as Gliwice in Poland and the same factory in  Saint Petersburg where the Cruze is built:

Rüsselsheim.  The General Motors (GM) Board of Directors used its meeting in Rüsselsheim to underscore its commitment to Opel and Germany. This commitment was also manifested in the approval of a comprehensive investment program: GM will invest 4 billion euros in Germany and Europe through 2016.

- GM, 10th Apr 2013.

It's just "business" isn't it? It's still a pity that we're paying for it.

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