Rick Wagoner, CEO of GM, used today’s Wall Street Journal to whine about the unfair conditions that poor GM has to work under.
First, GM claims it was too kind to employees with pensions and health benefits because GM is such a socially responsible company. Wrong. GM isn’t more socially responsible than any German or Japanese auto company.
Both Japan and Germany still have real lifetime employment.
Second, Germany has a ....
Second, Germany has a national health care system so the German car manufacturers have an economic advantage in that regard. Wrong. The same isn’t true for Japanese auto companies because Japan doesn’t have national health care, so the argument fails. Even worse, German taxes on corporate business more than offset the health care subsidies.
Third, Wagoner claims that the Japanese play the Yen to help their auto
industry. How is this possible? The Yen has gone from 138 to 80 per
dollar and back too 118 over the past decade, up and down and up, and
the Japanese car makers keep increasing market share, regardless of the
Yen-dollar rate. Wagoner isn’t thinking.
Wagoner claims that GM is a smart car maker and is doing well in
China. The successful GM car in China is the Buick. It is dead
everywhere else in the world. The Buick is bought by officials as the
Big Chinese Bureaucrat’s special car. The Buick is subsidized by the
Chinese government, in effect. Mitsubishi had the bureaucrat market in
Japan and now Mitsubishi Motors is gone because bureaucrats are a tiny
market.
Today, the value of GM stock is so low you can buy one dollars worth of stock and be entitled to ten dollars in auto sales revenue. Trouble is, GM has committed that ten dollars in revenue to more than ten dollars in expenses … with no future relief in sight.