What’s up with the General?

Considering abandoning the plant at Oshawa (and thus Canada)?

GM refuses Canada’s billions in auto loans
Automaker’s move ‘shocks’ analyst

Mark C.
Damian adds: meanwhile, down south:

…Ford announced it would bring an electric car to the market by 2011. Chrysler, bleeding so much red ink that it gave away 35% of its equity stake to Fiat for free last week, unveiled three new electrics. And GM — the clear winner of the electric horse-race — rolled out its latest Chevrolet Volt, while also announcing that marketing this $40,000 plug-in with its “extended” driving range of 40 miles by next year is a top priority. The company is planning to build a $30 million battery factory in Michigan — instead of outsourcing production to Asian makers.
Yet until recently, GM was protesting Washington’s green mandates. Vice Chairman Bob Lutz called global warming a “total crock” and declared that hybrids made “no economic sense.” This week, asked by a reporter how a cash-strapped company could afford to build a battery factory, Mr. Lutz responded: “We can’t, but we’re doing it anyway. It’s one of the pieces of our future that we absolutely have to do.”
Why? A study last week by the Boston Consulting Group found that extended-range, all-electric vehicles like the Volt will account for no more than 5% of the North American market by 2020 (assuming last year’s peak oil prices and $7,500 in tax credits for electric car buyers). Hybrids, around for almost a decade, today command less than 2% of the market.
But GM is not counting on market success for its comeback. It has neither the cash reserves nor the brilliant product line needed for that in a down economy, when sales are expected to be 40% lower than two years ago (the lowest volume since the 1973 Arab oil embargo).
GM is counting on the government to stay alive. It could potentially recover all of its investment in the new battery facility from a $335 million state program to bring green jobs to Michigan. This will allow it to impress Pelosi and Co. and perhaps extract more federal taxpayer money. For example, the $825 billion bag of goodies — otherwise known as the stimulus package — that Congress is working on contains $11 billion for electricity infrastructure needed for the wide-scale adoption of electric cars, as well as $2 billion in loans to build “advanced vehicles and battery systems.”
…once the Volt and its sister electrics pile up in showrooms, the government will face this choice: Admit failure and abandon its investments in electrics — or blame the failure on insufficient intervention and redouble efforts to push electric cars. GM is betting that with Democrats in control of both the White House and Congress, Washington will move toward more assistance for auto makers and mandates, such as gas taxes, on consumers.
Republicans, too, are jumping on the fuel-economy bandwagon in the name of energy independence. Sen. Bob Corker of Tennessee — who led the effort to torpedo the auto bailout last year — is a big believer in this cause and was excited by the fuel-efficient cars he saw at the auto show. He said in an interview that some kind of a regime to lower carbon emissions will be imposed in the next 12 to 18 months. “That will go a long way toward aligning the choices of car buyers with national energy priorities,” he said.
The Volt is calculated to position GM as the chief partner in Washington’s emerging green industrial policy. This might keep it in business — but the price will be paid by taxpayers and the car-buying public.

Damian P.
Update: I forgot to mention the CAMI Ingersoll Ont. plant, 50/50 split between GM and Suzuki. And more bad news for Oshawa:

Obama’s Order Is Likely to Tighten Auto Standards


11 thoughts on “What’s up with the General?

  1. “Considering abandoning the plant at Oshawa (and thus Canada)?”
    It wouldn’t surprise me given the quality of GM’s management. The Oshawa plant after all, is GM’s most productive and profitable (it may also be one of the most productive in North America).

  2. “The Oshawa plant after all, is GM’s most productive and profitable”
    GM and the UAW are relying on Uncle Sugar, not competitiveness, for survival. Don’t confuse crony capitalism with the free market.

  3. Bruce – regarding GM’s Oshawa operation:
    “A General Motors of Canada Ltd. assembly plant in Oshawa, Ont., is the most productive auto factory in North America, but Japan-based companies are the most efficient and profitable over all, says an annual study of auto industry productivity.”
    “GM Canada’s Oshawa No. 1 plant, which cranks out Chevrolet Impalas and Monte Carlos, topped the 2005 Harbour Report by using 15.85 hours on average to build vehicles. That moved it ahead of a Nissan Motor Co. Ltd. plant in Tennessee that typically leads the rankings.”
    “It’s the second award for GM Canada and its Oshawa operations in less than a month, following news that the cars built at neighbouring Oshawa No. 2 plant ranked highest in an annual quality survey done by J.D. Power and Associates.”
    Whatever GM’s problems are (i.e. design and quality), the Oshawa plant isn’t the problem.

  4. Actually it could be two reasons – that the us bailout will be bigger if the Mexican and cdn assets are abandoned OR the rules in cda that attach union contracts to the assets in the event of bankruptcy make jettisoning the cdn assets a prudent step.

  5. aa: that is a laughable comment unless you care to back it up with an actual reasoned arguement I will just keep laughing at it.

  6. Mark: That’s my point: “Whatever GM’s problems are (i.e. design and quality), the Oshawa plant isn’t the problem”. If GM gives Oshawa shit to build, you can’t blame Oshawa for building the best shit possible. It’s an assembly plant, the design (or lack thereof) is done elsewhere.

  7. Mark: In addition – with respect to this quote in your link: “The driver agreed and said the front was also too cramped–and that the car had lousy reliability.”:
    I have a Consumers Reports “Best & Worst for 08” auto edition before me; the LaCrosse/Allure has a much better than average reliability record and is recommended by the magazine. Who to believe?

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