A successful Opel in Europe, a successful Buick in China, and a natural for the U.S. So why are we against an Opel reorganization?
The National Taxpayers Union (NTU) is urging European governments to reject GM’s request for funding its reorganization of Opel.
This presumably will hasten GM’s demise and increase the chance that taxpayers will loose their entire investment in GM. The latest criticism comes at a time when GM is showing some signs, albeit small ones, of regaining momentum.
The conservative NTU was also an opponent of the original auto bailout plans, and — as a vocal proponent of the “Let GM Fail” ideology, NTU then went on to excoriate GM’s 60-day money back guarantee program, which is actually increasing consideration, sales and contributing positively to the bottom line.
Now NTU Vice President for Policy and Communications Pete Sepp is offering the following comments regarding GM’s Opel restructuring decision. GM’s latest plan has GM retaining Opel instead of selling it off and losing control of vital engineering and design resources.
“In order to do that, GM has requested $4.43 billion in taxpayer bailouts from European governments, including Germany, Poland, the U.K., and Spain. Incredibly, Opel already has $2.23 billion in loans from the German government to keep it afloat,” Sepp claimed.
Well, not quite, Sepp. First off, these are all loans. Back in late May, the German government provided a bridge loan to Opel, which at the time was within days of running out of operating cash. Opel still owes the government about €900 million of €1.5 billion advanced but improvements in its operations and an increase in sales have allowed GM to pay some back already.
Secondly, GM has not publicly revealed its revised plan, which is being discussed with European governments this week and next, but it will likely involve more loan guarantees.
In other areas, Sepp mirrors rigid conservative ideology, which would rather see GM fail, than succeed.
“Now we learn that GM may spend some of the $50 billion in U.S. taxpayers’ money to prop up this European car company. And this isn’t the first time GM has created jobs overseas since the bailout. In recent months, GM has announced investments of $1.2 billion in Mexico, $293 million in China, and $413 million in Korea. All this while GM plans to lay off 21,000 U.S. workers this year,” Sepp said.
Well, not really.
First off, money in a multi-national company is fungible, so figuring exactly where it goes and from whence it came, is difficult.
However, the real issue here is precisely that GM is a multi-national giant with strong, growing operations outside of the U.S. – particularly in Asia. That is why the decision was made by the Obama Administration to restructure GM, to preserve what was feasible in the U.S. – and that meant job cuts, and to keep it as a major player in the global automobile business.
The U.S. is the only industrialized nation in the world without a formal government agency to protect and create jobs. All other nations do this, which is why I’m betting that the European national governments in countries where Opel operates will come forth with loan guarantees.
“It’s all well and good when a U.S.-based company decides to do business in other countries. It’s a choice that managers and stockholders make every day. But did American taxpayers, who were forced to become shareholders in GM, really sign up to pay for all these overseas activities? Did anyone ask them?” Sepp concluded.
It has been stated repeatedly by the Administration that it is not going to interfere in operational decisions, such as the Opel one. Isn’t it time to move on and let the GM Board run the company?
A recent Congressional Study says that it’s doubtful the Federal loans to GM and to Chrysler will ever be repaid. Maybe, but that remains to be seen. The U.S. Treasury forced business plans of both companies that has them at break-even levels in the current depressed sales environment. As global economies improve, so will the prospects of both companies, especially GM, which is global in scope.
Of course, in NTU’s illogical ideology, if GM fails, then taxpayers will incur a huge loss. So our taxes will have to increase to cover the unpaid debt. If GM succeeds, taxpayers will win. And there’s precedent here. Taxpayers made money on the previous Chrysler loan guarantees.