The Death of GM and Soon Ford

11/12/2005

Paul Munnis

Last winter and spring we were bombarded with news that Detroit was moving its automotive design, middle management, and service functions all to India propelled by cheap labor. We were told how much cheaper it is to do business there, a clear swipe at America, its workforce, and the social contract that we Americans have forged between business and labor. It was all communicated in an arrogant and “up-yours America,” frame of reference and tone. Okay, we heard ‘ya. We got it.

Thomas J. Freidman was busy writing his book: “The Earth is Flat,” and telling fellow Americans that cheap labor is going to overtake the world and that we have to downsize America to accommodate it. We are all supposed to give up health care, pay raises, and pension benefits in order to be more like Bangladesh.

Freidman didn’t spend time talking about currencies or something called “Purchase Price Parity” that is used to adjust the exchange rates of foreign currencies and which Bush has been asleep at the switch over for some five years now. As the Chinese Yuan is revalued upwards by 40% and brought back into international balance, much of the labor advantage evaporates and there is no need for America to become a third-world nation in order to compete with China. Damn, there goes another neo-con myth, burst like a bubble in the bright sunlight of truth. 

Like most Americans I was listening to Lou Dobbs and saying “right, this job drain is just awful.” Time however has left me reflecting more on what it all means to me as an American and what my real relationship is with Detroit these days.

I have been a “buy American,” auto buyer since the late 1960’s when the disinvestment by Peugot in our American market happened. Since then I have bought American cars exclusively. Presently I drive a “made in America” Saturn by GM.

The quiet buyers mind shift that has occurred is that both Ford and GM have moved off my list of dealerships to visit. They have become invisible, a nuisance to be avoided. I’m thinking that if these guys want to morph into becoming West-Indian and Chinese business well then good luck to them, I hope they get good fortune cookies. I’m just not doing business with them anymore and I don’t even watch their ads.

Aside from the fact that GM and Ford have not produced efficient designs for the new millennium, models reflecting the reality of higher gas prices, I can also see that they have reneged on their promises to increase gas mileage and fuel economy. They have been content to take so-so cars, park them just to the rear of the truly advanced and high quality cars and then price them a tad lower to entice me into buying their cars by using a “Buy American,” theme-song. But that is no longer sufficient for the American market especially when they are proving to be poor and irresponsible corporate citizens.

I hasten to add that cars that are not made in America are also off my shopping list. My attitude is that if you want to sell your iron in America then you need to make it here - period. I am far from ready for a $400 China made roller-skate fabricated by exploited workers and used to intimidate American workers into becoming third world subsistence laborers and maintained by sing-song workers manning phones on a VoIP circuit. Take your iron and shove it Detroit.

In fact with respect to China I am now taking the approach that if it’s going to be sold in America then it must be made in America. China companies can work out of America, they can hire American workers and they can pay American taxes. That is fair trade. This worked okay for Toyota who is now considered by the AFL/CIO to be an “American Car Company” and there is no reason that this shouldn’t become the preferred international automotive trading model and made a mainstay of American trade policy. Call it a blow to globalization.

So, Detroit can move its operations to India and sell their cars to West-Indians because this American has dropped them like a hot potato. I really don’t care if GM goes belly-up because it will create a vacuum that others will be pleased to fill. They will be able to purchase plant and facility in Detroit for a big discount meaning cheaper American made cars. A lot of skilled American workers will be pleased to work for them if they create a proper social contract for workers and their families.

There is another economic factor ignored by Detroit. It’s called the “hidden hand,” and it’s a thought process that buyers use to optimize their purchasing. Attached to the “hidden hand” is a “brain” computing what is in the buyers overall best interest. Taking care of GM and FORD is no longer in my best interest because they offer no value-add in either product or industrial presence. They don’t even pay American taxes anymore. I’m forced to carry them and to subsidize them. I can’t afford it any more.

Good Bye GM – it was nice to know ‘ya.

So long FORD, see ‘ya on the West-Indian byways to Pakistan.

Somebody please put Bush and Chaney in the back of an SUV and drive off into the sunset.

“Buckle Up There Good Buddy.”