GM Bailout to help finance Russian investment!
Ian Brockwell
December 13, 2008
Whilst one can perhaps accept the logic of bailing out a company (with US taxpayer´s money) whose survival could help the US economy and employment statistics, you have to question whether General Motors qualify for such help.
Despite talk of GM facing bankruptcy and making redundancies, they have recently invested $300 million in a flexible assembly plant in St. Petersburg, Russia. The plant will add 70,000 units of capacity to more than 100,000 already available to GM at joint venture and partner facilities in the country.
GME President Carl-Peter Forster said at the opening in November that the plant "underlines GM´s strong commitment to Russia," and "This new plant will cement our position as the number one non-domestic manufacturer in Russia, a high-volume growth market with outstanding potential."
This new plant is obviously a good deal for Russia and you can´t blame them for trying to boost their economy, they should have done more deals like this in the past. Russia is a great place for investors, especially the auto industry, and GM have seen sales increase 44 percent this year, grabbing an 11 percent market share in Russia.
Although it makes sense to invest in a country where sales are increasing, should the US taxpayer´s have to fund this deal? What about all the unsold vehicles sitting in the US at the moment (worth millions of dollars), couldn´t these have been imported into Russia at a reduced rate to help the cash flow? Why should companies like Woolworth (and others) sell their stock at reduced rates to raise cash, while GM sit on theirs and beg for government handouts?
The whole point of a business is to supply the customers with a product they want, at a price they can afford. If this fails to happen a company needs to either produce less, or sell what they are making at a price that attracts sales (or sell their stock in a country that has buyers). Why should a company be given government help (funded by US taxpayers) when it has not exhausted all its options and would choose to use that money in a way that will not benefit the people who gave it?
We are entering difficult times, and whilst the workforce at GM (and other companies in a similar position) would not welcome a reduction in salary, this has to be a better option than losing their jobs completely. Unfortunately, many companies are already reducing the number of employees they have, but many seem reluctant to apply these cuts to high level management, or consider a smaller profit on the products they produce.
As usual, when such a crisis appears, it is a good excuse to reduce the workforce and expect those who remain to work even harder for the same money. Once again the public lose, regardless of the outcome. Companies like these (and banks) make good money from us when there is no crisis, and then expect us to pay again when it goes bad. Sadly, this "win-win" situation does not apply to every company, only those in the right circles. The "small guy" who has spent all his life building up a business has to accept a different fate.
If there is no benefit in buying "American" anymore, it might be cheaper in the long term to buy foreign products and put these greedy companies (who don´t appreciate your loyalty) out of business! But seeing as the US is almost owned by other countries (because of all the debts), maybe you have been doing that already?
Despite talk of GM facing bankruptcy and making redundancies, they have recently invested $300 million in a flexible assembly plant in St. Petersburg, Russia. The plant will add 70,000 units of capacity to more than 100,000 already available to GM at joint venture and partner facilities in the country.
GME President Carl-Peter Forster said at the opening in November that the plant "underlines GM´s strong commitment to Russia," and "This new plant will cement our position as the number one non-domestic manufacturer in Russia, a high-volume growth market with outstanding potential."This new plant is obviously a good deal for Russia and you can´t blame them for trying to boost their economy, they should have done more deals like this in the past. Russia is a great place for investors, especially the auto industry, and GM have seen sales increase 44 percent this year, grabbing an 11 percent market share in Russia.
Although it makes sense to invest in a country where sales are increasing, should the US taxpayer´s have to fund this deal? What about all the unsold vehicles sitting in the US at the moment (worth millions of dollars), couldn´t these have been imported into Russia at a reduced rate to help the cash flow? Why should companies like Woolworth (and others) sell their stock at reduced rates to raise cash, while GM sit on theirs and beg for government handouts?
The whole point of a business is to supply the customers with a product they want, at a price they can afford. If this fails to happen a company needs to either produce less, or sell what they are making at a price that attracts sales (or sell their stock in a country that has buyers). Why should a company be given government help (funded by US taxpayers) when it has not exhausted all its options and would choose to use that money in a way that will not benefit the people who gave it?
We are entering difficult times, and whilst the workforce at GM (and other companies in a similar position) would not welcome a reduction in salary, this has to be a better option than losing their jobs completely. Unfortunately, many companies are already reducing the number of employees they have, but many seem reluctant to apply these cuts to high level management, or consider a smaller profit on the products they produce.
As usual, when such a crisis appears, it is a good excuse to reduce the workforce and expect those who remain to work even harder for the same money. Once again the public lose, regardless of the outcome. Companies like these (and banks) make good money from us when there is no crisis, and then expect us to pay again when it goes bad. Sadly, this "win-win" situation does not apply to every company, only those in the right circles. The "small guy" who has spent all his life building up a business has to accept a different fate.
If there is no benefit in buying "American" anymore, it might be cheaper in the long term to buy foreign products and put these greedy companies (who don´t appreciate your loyalty) out of business! But seeing as the US is almost owned by other countries (because of all the debts), maybe you have been doing that already?
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