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Tuesday, 4 December 2018

GM Lay-Offs Extremely Depressing

I don't know if these are the stirrings of a tide that is to turn against Trump. It probably may not though, as his steadfast supporters haven't exactly been those who take thoughtful deliberation over emotion.

General Motors make a lot of cars, albeit not always well. They own a lot of brands. They diversify their operations and they certainly diversify their product.


Most of their American operations is based in the midwest, specifically in Michigan and Ohio. If you have ever lived in the US or met any midwesterners, you would know that these places are called the rust belt, i.e. there used to be quite a bit of industrial activity in the past, but that has largely waned - mostly because the jobs went east.

As Robert Reich writes in the Guardian:

Last week GM announced it would cut about 14,000 jobs in the politically vital swing states of Michigan and Ohio.

This doesn’t quite square with the giant $1.5tn tax cut Trump and the Republicans in Congress enacted last December. Its official rationale was to help big corporations make more investments in America and thereby create more jobs. Trump then told Ohio residents “don’t sell your homes”, because lost auto-making jobs “are all coming back”.

GM got a nice windfall from the tax cut. The company has already saved more than $150m this year, according to GM’s latest financial report. But many of those Ohio residents probably should have sold their homes.

What did GM do with the money that they got from the tax cut and the wages they do not have to pay anymore? They bought back their own shares!! - this is frequently done to boost the share price.

Reich continues:

In 2010, when GM emerged from the bailout and went public again, it boasted to Wall Street that it was making 43% of its cars in places where labor cost less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.

So this year, when the costs of producing many of its cars in Ohio and Detroit got too high (due in part to Trump’s tariffs on foreign steel), GM simply decided to shift more production to Mexico in order to boost profits.

In light of GM’s decision, Trump is also demanding the company close one of its plants in China. But this raises a second reality of shareholder-first global capitalism that has apparently been lost on Trump: GM doesn’t make many cars in China for export to the United States. Almost all of the cars it makes in China are for sale there.

In fact, GM is now making and selling more cars in China than it does in the United States. “China is playing a key role in the company’s strategy,” says GM’s CEO, Mary Barra.

Even as Trump has escalated his trade war with China, GM has invested in state-of-the-art electrification, autonomous vehicles and ride-sharing technologies there.

I don't know what to say. America is shooting itself in the foot on a rather consistent basis.

There's a part of me that agrees with Robert Reich. The emphasis on keeping shareholders happy while depressing workers' wages is wrong.

But I lived and worked in the US as an engineer for 5 years. During that time, I was always looking to prove my worth (yes, I know, typical Malaysian inferiority complex) and add value to whatever I was doing.

The unfortunate part was that my American co-workers were less keen on going the extra mile. It was always assumed that they were entitled to the job they had and the key thing was to keep to themselves what they knew, lest someone steal their job from them.

The problem with that is, this sort of defensiveness suppresses innovation. It only encourages complacency. Americans think that their nation is (or once was) successful because they are inherently successful people.

It may not be quite so obvious to the average joe, but if you think carefully, this is White Supremacy 101. This is also something that Malaysians are frankly unable to understand and digest because they have been shafted over by Malaysian politicians too many times.

From their perspective (and understandably so), the brown guy is every bit as bad as the white one.

American Exceptionalism is actually a new way of expressing white supremacy, which is why when Trump dog-whistled, they came running.

This is also why they are comfortable sharing technology with the Chinese, because deep in their hearts, they cannot come to believe that the Chinese would have equivalent ability to take over the industry, learn their skill better than themselves and one day have economic and socio-political dominion in the world.

I don't know why Chinese people like American cars. I have never owned one - preferring Japanese cars myself, having owned two of them in my lifetime.

Perhaps it's because Chinese have been deprived of Western culture having lived under the heavy-handed rule of Communism for so long. Maybe American cars, which in my personal opinion, are neither aesthetically appealing nor exceptional in performance, are a symbol of freedom to the Chinese.

One day the Chinese will acquire a sense of entitlement and superiority, just like the Americans today. It's the circle of life, after all.

But for now, they are slowly but surely plodding ahead, and the Americans, once the people who were gung-ho to achieve anything, are blissfully oblivious.

Update:
Trump’s Broken Promise to General Motors | The Daily Show

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