News.com Excerpt:But, if they really believed what they were saying, the worst decision they could make is shutting down these strategically located plants in the United States. Here’s at least one reason why: It’s called reverse globalization.
“We at GM don't think this is a spike or temporary shift; we believe that it is, by and large, permanent,'' Mr Wagoner said at a press conference ahead of GM's annual shareholder meeting in Wilmington, Delaware.
Granted, the most notable effect of reverse globalization is that China – and others – have concluded that rather than lending to US firms at low rates so US firms can invest overseas, China would be better off just doing their own business investments themselves right here in America. All of those foreign investors buying up U.S. brand businesses, utilities, ports and anything else they can get their hands on, are practicing reverse globalization.
But the high global cost of oil is having a further leveling effect on business investment start-up initiatives and trends.
Supply Chain Network:This is why I believe GM will be making a mistake if they finally exit Janesville. If they build a product consumers will buy, closing down the plant because of high oil prices doesn’t make sense, particularly with the skyrocketing cost to transport their product within the continental U.S. market.
For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America, say chief economist Jeff Rubin and senior economist Benjamin Tal. If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue.
Supply Chain Network:
“In a world of triple-digit oil prices, distance costs money,” they say in a paper released Tuesday. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”
They’ve got the factory, and they’ve got the world class workers, rail system and infrastructure all set up.
If GM has their thinking caps on straight, they would reverse the recent announcement regarding the four plants in North America. Particularly if they really believe their own words, that high oil prices are permanent.
But something tells me it was never about the high oil prices, workers wages or benefits. Exiting operations is a sure sign that it's all about ensuring returns for the investors in the short term, and a business in decline in the long term. If GM finally leaves, they will have not only betrayed America, they will have betrayed the most basic business fundamentals for sustaining profitability, they will have betrayed themselves. GM will probably go down as the worst managed international corporation in the history of the world.
18 comments:
The free markets have a better chance to reverse globalization. For GM, there is no hope.
Dear Louis
I just got this from the Rotary Gardens - can you help publize it?
Subject: Janesville Farmer's Market location
The JFM is going to be located at the upper parking lot of the Courthouse until further notice (when the water recedes, the street is cleaned and reopened).
If you could help to get this info out I would greatly appreciate it!!
Thanks for all of your help! Teri
The only things that can guarantee jobs are customers wanting to buy your product or service. No union contract, government regulation, or high hopes can do it. I am leaving GM after 40 years and am one of the lucky ones. The consumer has chosen a preference for foreign and non union vehicles without regard for CURRENT quality, economy, or price (go to Madison and ask why they stick their nose up at American workers and products). Yet I have never heard one politician (except Ross Perot in 1992) urge us to help ourselves by buying American. If GM had the toal market share of 10 or 20 years ago, a new product would come to Janesville just like before. This time we had the wrong product at the wrong time with the wrong company.
Rich, I won't argue this one. But once things shake out, SOMEBODY will be buying vehicles in the heartland of America, and those vehicles will HAVE to built here or nearby in order to compete in the new localized economy. Other than forced conservation, this could be the silver lining to $200 and up oil. A return to basics. JOBS!! HERE!! Instead of THERE!!
If GM will produce battery hybrids that get at least 35 MPG people will buy American - but if GM dose it it will be in Mexico or with scabs in the US.
The Unions are organizing for illegal immigrants right not to have their SS cards checked -they signed on to the lawsuit to prevent mandatory SScard checks. What did that tell you Rick?
Rick ought to understand that the corporate bosses and the corporate Unions and the corporate Democratic party have sold out workers like you.
For too long workers have let the left and organized crime run the Union -- now Unions do not even pretend to represent citizen workers - they buy you off so you won't scream when they export your job to Mexico or hire illegals who will do it for 10 dollars an hour.
When it happened to the construction industry and the IT industry people said I don't want to get involved. Now - it is everyone in the WORKING class.
Yet we still keep electing the wealthy to run our lives. Have you ever tried to get an appointment with Kohl or actually get Feinberg to do something that would benefit workers?
It is all talk Rick and we bought it to our loss now. If they smile and say they are for the workers we ignore their voting them self raises and their great medical plan while 40% of us have no medical insurance at all. You demanded nothing from them because like was good for you - you voted to raise property taxes so school could build football fields. Never thought about the old people losing their homes to property taxes. Well now you will see how it feels to be at the mercy of those who circle like vultures to take your last dime.
And now the sheep will elect the Chosen One because he makes the prettiest promises of them all. Why look at the record and experience when you have a pretty celebrity compared to an older demanding accomplished woman?
When we overpopulate the people lose control - order fails and the exploiters and thugs take over. Good Luck Organizing - I wish you well but if it ever looks like you will succeed, big money will step in and crush you. All they do is spread money around, get on your board and start hiring your staff. Thus, the peoples voices become co-opted.
Sorry for all the typos - i have untreated glaucoma and a lot gets by me until I see it larger - but you can see what I mean
Lou:
I thought this piece was very thoughtful. And seguing off that, I think we are all in a great deal of trouble. "Next year" is becoming a worrisome term.
Bob Keith
cooldadiomedia.com
For once I am Speechless!
Because of me Rich? I didn't mean to be offensive - just have been through a lot of eye opening events.
No offense taken by any means. You cover a lot of bases and my thought process is different. I think in terms of big picture concepts and then apply them to detail issues one base at a time. It is in no way surperior to your thought process and experiences, only different. Politicaly I am a middle of the road zealot. People on both sides sometimes consider that lukewarm and lacking in passion. I passionately disagree with that view. Take Care. You have my best wishes.
Thanks for your kind wishes Rich - It may not seem like it, but I am also a passionate Centrist person although totally committed to class war on the side of the working class.
I feel betrayed by both the left and the right who I see as having corporate global interests opposed to working class citizens.
After Hillary's defeat I am most enraged at the DNC and the party bosses who could not even restore the Equal Pay Act and now warn me we will lose reproductive rights if I do not vote for another democrat I don't believe in.
As if they ever ever gave the people any rights we did not organize to take.
In regard to this post - I mean isn't it obvious that this all will be rebuilt with a cheaper labor source, I mean Duh? But the Union has failed you because they are in bed with the bosses.
Lately, I have been asking my friends to think about a new 3rd party for Center Democrats to represent working class interests. No caucuses, no republicans voting in our primaries, no bosses handing out votes to people who did not win them, no delegates but majority rule.
I want the Clintons to organize such a party. We could use the next 4 years to vote a platform. A party controlled by the base instead of the bosses. A party organized to actually work to implement the platform through its elected officials instead of personality cult built around wealth, power and false promises.
Now I respectfully part company with you. I believe the free market ultimately decides things whatever the political system or who is in power. That is what happened with GM whether I like it or not. My greatest frustration is with those liberals who talk the talk about supporting American workers but refuse to walk their talk. I expect rich Republicans to buy Mercedes and Lexus. However, the sad statistic is that liberal Democrats are fifty percent more likely than conservative Republicans to buy foreign or non-union. Sorry if I am a broken record on the subject. I don't feel betrayed by the UAW as they became a big picture irrelevancy a long time ago. My problem with them is not that the UAW got in bed with GM - I believe that relationship was appropriate. I believe the UAW and the majority of the membership came to believe they were like a corporation in themselves. We became fixated on protecting the status quo of those with seniority on the floor and power in the union. That manifested itself in the two tier wage and benefit agreement. GM was only interested in saving money and again, like it or not, incompetent management has made that increasingly necessary. GM could save just as much if for example everyone took a five dollar (maybe more-maybe less) an hour pay cut. That would have meant the type of shared sacrifice by all that built the union. Instead we choose to sell out the next generation of workers. That decision is on the balance sheet of the UAW alone in my view. The notion of mutual sacrafice to the ulitimate benefit of all has been lost in our nation, be it in national defense, the labor movement, or whatever.
But IF we are the free market, then we've chosen to buy imports and sellout the next generation. THAT is the prerogative of the free market OR liberals? My point here is I'll be all for free markets IF I ever live to see them.
What good is sacrifice if it does not include ALL GM employees, from the CEO on down. They could all take a 20% unconditional pay cut! Every single one of them. Who would argue with that? Why does this almost NEVER HAPPEN in any company? They'd sooner move to China, sell-out of file bankruptcy.
It's the same story here with the Janesville economic summit. Here, we have the same corporate type business people, low wage conservatives and tax cutters who are sitting idly by, NOW, not in some future beyond, and watch 2,500 jobs paying $50,000+ a year slip on by. They're OK with it because in their eyes, those workers never deserved the wages and benefits they received. Yet, these folks are challenging YOU and ME, to step up to the plate to help THEM find solutions. They stand in front of a captive audience of 175 attendees and promote their own causes and take credit for the miniscule economic and social diversity that barely exists in Janesville. And they use "focus forward" subterfuge on an unsuspecting people because it's easier to talk the talk for future plans, Much harder to deal with the NOW.
I agree totally with both of you except for:
Louis,"take credit for the minuscule economic and social diversity that barely exists in Janesville"
Are you talking about illegal immigrant scab labor? Because you know where you can put that diversity. I think we have all the diversity we can handle - you need to get out more. Try the Mercy emergency room or the job center or the food stamp office. Are you talking about legal green cards to take the few crummy jobs left or to hire doctors, nurses and CNAs who do not speak English? Or are you talking about more Chicago gang members to spray paint their signs on my mother’s house or the Old Fashion Bakery down the street from the new Mexican bakery? I cannot afford more diversity since the Janesville police, DA and City Council say it is up to us to pay to remove the damage from this wonderful diversity and BTW do it in 60 days or we will do it and put it on the property taxes you already can’t pay.
And Rich, blaming the people for not buying cars they don't want and cannot afford. That is ridiculous. We want hybrids, and/or safe, dependable cars that get at least 33 mpg which people making two thousand dollars a month can afford - because that is what a lot of us who do not work at manufacturing plants live on. It is the job of the corporations to produce what the people want. It is not our job to subsidize corporate and union arrogance. We buy what we can afford and we cannot afford gas guzzlers costing 20,000 dollars at the start price.
Other than those two things, I do not think you will find many in Janesville who would disagree with either of your excellent posts.
Dreaming, I hope a solar conversion plant takes over the GM facilities to make our homes energy independent of the blood sucking utility companies. Or a hybrid car plant. You know in Europe the Unions buy the closing plants and form worker cooperatives to produce a better product. But it is impossible to conceive of anything like that here, despite the wealth of the Unions.
I remember when the UAW was SOMETHING, my parents striking at Allis Chambers in Milwaukee, beating back the trucks and when AC sold out to Germany, the Unions saving the medical and 1/3 of the pensions. But what was good and seem the right thing then was a loser for the workers in the end.
Louis, I am empty and depressed. I think a depression is coming for US citizens and the smooth talking party boss politicians are corrupted and incompetent and concerned only about their own status. Janesville property taxes are almost $4,000 on homes we cannot sell for even $100,000. Many of us are on fixed incomes. We are on our own with no medical care and no way out. What do you see that could be done to alleviate the coming misery for Janesville?
I wish there was a way to relieve your depression. I have been so blessed in life that I sometimes feel unworthy. Those who statistically live in poverty have a standard of living (cell phones, air conditioning and on and on) far above what I had growing up and I had an easier life than my parents etc. Thus, in an ever changing world I remain an optomist.
Heavens no, I am not about defending CEO pay. However, cutting them to zero would have no real financial effect on the state of GM. We probably need new leadership and less job security for them. UAW workers rarely transfer to the salaried rolls anymore because pay, benefits, and security are less. That has changed and they have given up things. With all our problems I fervently believe that America and the Free Enterprise System are virtually a gift from God. China, India, Japan, Europe would not be where they are today were in not for America. So Darn It - why don't we support ourselves and buy our own stuff. Business doesn't care where it is made but we should. It is our choice and they will follow.
Louis
I am sorry -I realize now you meant economic diversity not imported cheap slave labor.
Like more than one large business. Like Alternative Energy producers (NOT corn ethanol plants )and what else?
Our comfort zone is being methodically dismantled by the same people who insist we must become willing participants in their idea to move forward. It’s not worth getting depressed over, but it certainly is worth fighting for. If you don’t join them, you’re labeled as combative, anti-social, or a rabble-rouser. I’m not talking about Barack Obama here.
For instance, people from Illinois, as close as Rockford enjoy coming to Wisconsin and Janesville because of a perceived small town, country comfort setting. When they come here to visit, they acknowledge running away from the pressures of a pro-growth agenda that tranformed their lives into a living hell. The circular economics of sprawl supported by rocketing real estate taxes supported by more sprawl, trading tax breaks and subsidies to wealthy businesses, rampant retail consumerism, no identity and a personal or family life with no objectives are the costs. This is the same economic development plan we are being force-fed daily here. What is the goal of the growth agenda? To be like New York? Or Chicago? When does it stop expanding? When does it end? The truth THEY won’t tell you is that for a community to SUSTAIN the free market pro-growth plan is, it must never end. But when it does, and it will eventually, it is disasterous. Janesville planners have been heading that way for over twenty years now because it’s the dumb easy way and it’s acceptable.
In short, we are being changed into what everybody else is running away from.
But the diversity I meant was both social and economic diversity. As another example, I'm looking at the pictures of the five finalists for the city manager's job and after reading their biographies, for some reason, diversity doesn't come to mind. I'm not talking about race here either, but these five choices represent the miniscule diversity I meant along with the single-minded pro-growth economic focus of the past twenty years. I would be more interested in the 32 or so applicants they threw away.
But you'd have to ask Forward Janesville what they mean by bringing diversity to Janesville, as they're the ones who are taking credit for it. It might be some of the adversity you've mentioned.
What can be done to alleviate the coming misery in Janesville? Well, that is the $6 million dollar question. Considering how the silent majority are at a severe handicap and the public square is run by the Gazette, Forward Janesville and a compliant city government....not much. It's in the hands of the free markets.
I think the Cullen committee should consider requesting a property tax freeze for Janesville. If GM is gone for good, the city could turn the plant into a resident-owned Janesville Perpetual Energy Company. Start it off with a $20 million dollar worth of federal grant money for solar panels and wind turbines and sell the power back to Alliant in the form of credits on Janesville resident energy bills. That ought to attract businesses/jobs as well. That's just two ideas.
WONDERFUL IDEAS !
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