Even After Bailout, GM and Chrysler Invest Billions Abroad
9:00 AM, Nov 5, 2012 • By EDWARD NIEDERMEYER
Since the bailout, GM alone has invested $450 million in a new plant in Argentina, over $1 billion in a new plant in Wuhan, China, $500 million for two new plants in Brazil, $200 million for an engine plant in Thailand, $540 million for an engine plant in Mexico, another $420 million for new vehicle production in Mexico, and $150 million for a new plant in Indonesia. Additionally, GM has promised another $1 billion for new production in Russia, it has signed over millions in battery and other electric car technology to Chinese partners in exchange for a joint development center in China (PATAC), and has increased annual global sourcing of India-made parts from $500 million to $1 billion.
In Europe, where GM has lost $16.4 billion since 1999, and now faces the same overcapacity issues that contributed to bankruptcy, it has closed only one plant (where it paid workers around $200,000 each in severance) and is now giving raises to German workers. This list is by no means comprehensive, but the message is clear: Having cut American jobs to the bone before and during the bailout, GM is now lavishing investment on everyone else, undercutting any expectation of increased American auto exports.
Chrysler may not be pulling Jeep production out of Ohio, as Mr. Romney apparently believed, but neither is it discussing exporting Jeeps from Ohio to the growth market of China. In fact, while Chinese-built Jeeps would likely be sold in China, Chrysler's parent firm Fiat is reportedly "keen" to produce Jeep and Chrysler models in Italy, for export to the U.S. So not only are America's bailed-out automakers not turning the U.S. into an auto exporting powerhouse as promised, they're actually working to increase the number of cars America imports, and working against the president's auto bailout promises.
But then they aren't alone; even the president seems to be working against his own vow to boost automotive employment by growing exports. In response to President Obama's tariffs on Chinese tires, China recently imposed new import tariffs on American-made SUVs, meaning a Jeep Grand Cherokee that costs around $28,000 in the U.S. costs closer to $85,000 in China. How many buyers does Chrysler expect to find at that price? The president's trade policy makes US exports to China less competitive than they would be otherwise, a fact that is without doubt driving Chrysler to invest in new Chinese Jeep production. Moreover, Volkswagen recently decided to locate production for new vehicles in Mexico as opposed to the U.S. because President Obama did not pursue a Free Trade Agreement with the European Union. Coincidentally, President Obama's Korean Free Trade Agreement has failed to deliver any noticeable improvement in sales of American-made cars.
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