Friday, December 19, 2008

Bush Gives Bailout Dollars To Big 3 As They Move Jobs To Mexico

Saying he can't stand by and watch the American auto industry go bankrupt, President Bush is offering the Big 3 automakers more than $17 billion in TARP funds appropriated for the bailout of the banking industry in the form of loans. What you didn't hear President Bush or the lawmakers who are pushing for this bailout discuss was how these same automakers are increasing their investments in Mexico as they divest here. That's right. While U.S. automakers close more plants in the U.S., they are expanding their investment south of the border where workers earn about $3 an hour. Some pertinent facts from Bloomberg News:

The Detroit-based company and competitors such as Ford Motor Co. shifted more manufacturing to Mexico this year to capitalize on wages less than an eighth of those in the U.S. and factories that make fuel-efficient models. Through November, Mexican plants turned out 5 percent more vehicles than a year earlier, versus an estimated decline of 30 percent in the U.S. . . .

GM, for instance, has invested $3.6 billion in Mexico in the last three years. Its auto and light truck production there rose 28 percent in November, the national car industry association said on Dec. 9.

The company said total output in North America, including Mexico, fell 32 percent for the same month to 249,000 vehicles. GM declined to break out its Mexican production.

Ford spent $1.2 billion in 2005 to increase output in Hermosillo of its mid-size Fusion sedan. Production in Mexico from January to November rose 1.5 percent, while it fell 26 percent in the U.S. and 9 percent in Canada, it said.

Chrysler is building a $570 million factory near Saltillo, Coahuila, that will produce 440,000 engines a year, said Manuel Duarte, a Mexico City-based spokesman. It has canceled one of its two work shifts at a light truck plant there, Duarte said . . .

The wave of investment helped Mexico expand its production to more than 2 million cars in 2007 from 1.54 million in 2003. Mexican car output is forecast to rise to 3 million units by 2015, Magliano said.

Over the same period, the U.S. industry has gone in reverse, dropping 12 percent to 10.54 million vehicles last year from 11.92 million in 2003, according to CSM Worldwide. The seasonally adjusted annual rate through November plummeted to 8.71 million cars and light trucks, CSM Worldwide said in a Dec. 15 statement.


Anonymous said...

President Bush does the first thing in 8 years that isn't totally bogus and you boo him?

Both of my grandfathers worked for GM, these companies remain the one job where one income can raise a family, lift them out of poverty, and provide enough for the children of that family to give them an education, it is the only part of the "Real America" if there ever was such a thing that is kind of left.

I suppose that you figure that banks, which create nothing but debt slavery and worthless paper that serves as money deserve the other $686.1 Billion?

Or how about the Southern Republicans that subsidized foreign car makers like Honda to the tune of $3.2 Billion in their states and used the Big 3 Bailout as an excuse to break the living wage the unions provide?

I'll tell you what, when Wal-Mart, which is the largest employer and the richest company in America today, agrees to a social contract with America and offers anything resembling non-poverty level wages, and anything resembling health insurance for their 1.5 million hourly workers, and stops telling their employees to get on food stamps and Medicaid, I'll be just as mad about the bailout of GM as you are, until then, I stand by the fact that GM, Ford, and Chrysler are our only hope.

Downtown Indy said...

Tonight's news had a report about Morgan Stanley handing out $10.3B in executive bonuses this week, after getting $10B in bailout money.

Yeah, we're fixing the problems handing out money.

Anonymous said...

Downtown Indy: Now they declare bankruptcy and get bought up by a big bank looking to dodge taxes.

What have we learned?

Maybe the $10 billion that Morgan Stanley got would have been better off paying the American workers of GM and Chrysler to build American cars at the 70 plants they just idled, not counting their suppliers?

Just a hunch.

Mike Kole said...

Cthulhu- I boo this because none of these industries, not the automakers, and not the financial institutions should be bailed out. It sends the message to all that they need not fix their fundamental flaws, which are great. Just go ahead, screw up as a way of business, and we'll take money from everyone and give it to you, letting you make you profits private, and your losses public.

What Ford, GM, and Chrysler represent is a clinging to the technology of the past. Frankly, I think it's pretty sad to have so many people take the years of their youth and turn it into nothing in particular by way of their education such that their best hope is a job that requires repetitive tasking. What a waste of an education and potential.

We should be more forward thinking as a nation, striving to be better educated, working towards the technologies of the future, which are the ones that pay the best. If you observe the history of enterprise, you will notice that the newest technologies pay workers the best, until they are surpassed by yet other technologies. Steel and auto manufacturing supplanted textiles, and in turn have been supplanted by communications and computers. The one exception being health care, but as a matter of public policy, we may kill that soon enough.

But legacy costs are contributing to the destruction of the automakers just as sure as they did with steel, and as sure as they will crush our governments at all levels. No enterprise can pay people substantial portions of what they once earned and continued benefits in exchange for being retired without it creating a killing drag on them. Just wait til you see what it does to our city governments across the USA.

Concerned Taxpayer said...

Maybe if UNION workers didn't feel like they all deserved $30-40/hour, full dental benefits, full medical benefits, full eye benefits, paid while on strike, election days off so they can bus all the poor, uneducated voters to vote democrat, etc. etc. etc.

Downtown Indy said...

The auto companies have been getting bailed out in various ways for years. For instance, when they were mandated to certain CAFE specifications (going back perhaps 30 years or so), they whined about it being too hard until they got Congress to back off. More than once. Gee, do you think if they'd had their feet held to the fire maybe, just MAYBE, they'd be in better shape today?

Anonymous said...

Both of my grandfathers worked for GM, these companies remain the one job where one income can raise a family, lift them out of poverty, and provide enough for the children of that family to give them an education, it is the only part of the "Real America" if there ever was such a thing that is kind of left.

Funny, my parents made no where near UAW wages, yet they managed to buy a home, raise three kids, and send us to college (thou we had to pay for some of it, which I don't see an issue with that). I would say their combined income was $70Kish for years until they actually got additional education to get paid a little more by moving up the ladder.


I'm not particularly a fan of Bush, but I think he did the right thing (considering the pile of manure he is in at the moment).

The leader we deserve would have stomped up and down (or done whatever it took) to prevent this pile we're in.

What is troubling to me is that in the back of my mind, I think powers behind him orchestrated the economic conditions we face today, in order to bring about global control of banking.

...maybe I'm wrong.

Anonymous said...

Well, if you want to talk about a waste of public money, I'd say saving the banks was an unalloyed act of crony capitalism.

The auto makers are genuinely building things that people need, and thanks to NAFTA and CAFTA and the WTO, they have to compete with countries where there are no environmental protection, worker safety, or wage and hour laws.

The Wal-Mart effect is having an effect on cars now, people are not buying quality, they're buying things you can't pronounce that were built in Mexico, China, Vietnam, and Korea cause they're dirt cheap.

This "free trade" should be repealed, it's a ploy by other countries that are sucking our blood out, the only people that like it are die hard Republicans and investment bankers.