In a letter to Rep. Barney Frank and Sen. Chris Dodd today, Ralph Nader warned that GM is planning on using the government bailout and bankruptcy to eventually move production to China, so that they can import cars back into the US market. The result will be that the government will pay to keep GM alive, and help job growth in China.
Nader wrote, “Among the most worrisome components in the restructuring plan is the willingness to sacrifice U.S. manufacturing, and permit GM to increase manufacturing overseas for export back into the United States. Recent news reports indicate that the company will rely increasingly on overseas plants to make cars for sale in the United States, with cars made in low-wage countries like Mexico rising from 15 to 23 percent of GM sales in the United States. For the first time, GM plans emerged to export cars from China to the United States, in what may be a harbinger of the company’s future business model; although the company has stated after negative publicity that it will not export from China, there is no evidence that it is abandoning the business model of outsourcing production for the U.S. market, and questions remain about how binding is the recent commitment not to export to the United States from China.”
He asked, “What is the point of the U.S. government bailing out GM if not to respond to the political considerations of preserving jobs, communities, manufacturing capacity and directing the mismanaged company to an ecologically sustainable future? Will the U.S. Congress abdicate its responsibilities while such plans are finalized by the delegated task force? Such a willful abdication would contrast starkly with the dutiful legislative hearings and legislation regarding the Chrysler bailout in 1979.”
Nader urged Congress to hold hearings, and not allow the Obama administration to rush through GM’s bankruptcy. He said that Congress needs to avoid the reckless mistakes of the Wall Street bailout. I think it is almost a given that the way GM becomes competitive is by lowering the cost of labor by shipping jobs to China, or some other cheap labor market.
It does the American people no good to save the auto industry only to see it relocate to lower cost labor markets. There will be many media stories and outrages after the outsourcing occurs, but remember we had a chance to do something about this before it happened, and chose to do nothing. Once the auto industry is gone, it will be the final nail the coffin of the American manufacturing sector.