All day long, I’ve been trying to figure out what to write. Most of the news chum has been pretty dry; there wasn’t much worth comment. But then an article caught my eye:
Schwarzenegger isn’t mourning the loss of Hummer
Now, if you recall, the Governator was a big fan of Hummer a few years ago. Nowadays, he drives a Hummer powered by vegetable oil, while he guides our wonderful state into fiscal ruin. But that’s another topic. Back to Hummer… in the article, Arnie is quoted as saying:
“I feel saddened about the fact that America has so far fallen behind and that Detroit, the big automakers, that make spectacular cars …. somehow have not kept up in the technology. … And I think it is largely because they have been protected by the federal government for too long, rather than the federal government saying, ‘Here are the new standards — 10 years from now, those are the cars that you have to produce.’ ”
This brought to mind an article I saw earlier in the NY Times, about how GM is really an innovative company. They just aren’t innovative in the US. Where do they innovate? India. Brazil. China. Sales increased 10% last year in Brazil, 9% in India and 6% in China. Recent numbers in some areas are even better — GM’s sales in the Asia Pacific region were up 44% in May compared with the year before. Yes, cheap labor has a lot to do with it. But innovation does as well: In China, GM spent years emphasizing fuel economy and affordability. In Brazil, it created flexible-fuel engines that run on ethanol or gasoline, and compact pickup trucks. In India, it is constructing a new tiny car that may be priced to compete with Tata’s $2,500 Nano.
Even if GM doesn’t import the vehicles here, it can import the designs. The constraints of bankruptcy and Federal involvement, as well as the publicity, prevent the imports. But protectionism can backfire. There was a link from Yahoo that noted the reason the Big 3 turned away from cars and to trucks and SUVs was because of tariffs. When we look at automakers and jobs, we need to take the global view: GM has plants outside the use, and foreign-HQed automakers have major plants in the US. I know, I’m rambling from point to point. But that’s how my mind is working today.
Thinking about the tariff issue makes me think of collateral damage. We’ve seen that with the stimulus: the “Buy American” provision in the act are hurting American companies that source to foreign suppliers. We’ve seen that in LA: a poorly written pot dispensory moratorium has resulted in an budding business in pot. The GM bankruptcy will have ancillary effects as well. I’m not talking about dealers: but the already beseiged media and newspapers, who will suffer a significant drop in advertising dollars.
I don’t know where I’m going here (hmmm, just like GM). But I do know that if the American HQ’d companies are to be successful reinventions, we need to look at the global business. We also need to encourage the foreign companies to invest and build plants and manufacturing here in America. That’s how we reinvigorate our economy successfully.
