The Tsunami, Not The Government, Saved General Motors
Interesting Hans Bader piece at OpenMarket.org:
General Motors never would have recovered as it did if not for the massive Japanese earthquake and Tsunami that devastated its rivals, such as Toyota. The tsunami so crippled Toyota that GM could regain market share despite the Obama administration leaving GM's uncompetitive, inefficient work rules and high labor costs largely intact.General Motors also benefited from another factor that has often been overlooked: the massive Thai floods in 2011, which inundated and shut down Japanese car-parts factories in Thailand for many months, crippling Japanese automakers' global supply chains. On Dec. 8, Toyota "cut its profit forecast by more than half after Thailand's worst floods in almost 70 years disrupted output of Camry and Prius vehicles." The World Bank estimates the floods did $45 billion in damage to the Thai economy and left half its factories under water for substantial periods. By harming Japanese automakers, the Thai floods gave a huge boost to their competitor, General Motors, enabling it to survive despite the Obama administration's costly coddling of the UAW union in the bailout, which threatens the automaker with future losses in the billions.
GM also benefited from good luck -- primarily the huge safety issues and recalls that befell Toyota in 2010. This helped GM and Ford move forward at a time when overall auto sales were rising rapidly. As The New York Times noted in March 2010 "Toyota Motor, estimating that it lost 18,000 sales in the United States last month while its chief competitors enjoyed big gains, introduced incentives Tuesday as it tried to restore consumers' confidence in its vehicles after three big recalls," as the company "acknowledged that the recalls had hurt Toyota's ability to attract new buyers." Toyota rebounded after it turned out its vehicles were safe, and that crashes of Toyota vehicles were the result of driver error, except for one crash that resulted from a dealer improperly installing a floor mat.
For a brief time, natural disasters so damaged the Japanese automakers that GM once again became the world's number one automaker. But when the Japanese companies recovered, Toyota once again surpassed GM as the world's biggest automaker.
Luckily for Toyota, it's back to bad business as usual at GM. More about this in Hans' piece.
It's fun taunting Amy for what she's wrong about, but her blogging calls to mind a term of admiration Kaus once used for Reynold's broad interests: "catholic."
Crid [Cridcomment at Gmail] at October 15, 2012 2:38 PM
"GM also benefited from good luck -- primarily the huge safety issues and recalls that befell Toyota in 2010."
Not sure I'd call it luck. More a very rare, defect, turned into a political caused media circus/ smear machine.
If the gov't hadn't taken over GM and put all that political capitol in it, the recall would have ben 10th page news.
Joe J at October 15, 2012 3:05 PM
Amy Alkon
https://www.advicegoddess.com/archives/2012/10/the-tsunami-not.html#comment-3382976">comment from Crid [Cridcomment at Gmail]Thanks, Cridster.
Amy Alkon
at October 15, 2012 3:19 PM
(Guys— This shit makes her crazy.)
CridComment@gmail.com at October 15, 2012 5:33 PM
Yes, I will believe OBL is dead, even without seeing pictures of him with a bullet in his brain. I don't think the SEALs would let Obama lie about it.
As for GM being alive, they are not. GM is a zombie. If GM had gone through normal bankruptcy they might have come out the other side with low debt and a decent chance of recovery. As it stands they were supported by the government and dumped a large chunk of the debt on the U.S. public in the form the buying the worthless stock.
Right now the GM stock on the market is trading at $24.48. The break even for the U.S. tax payer is around $51 a share.
Then look at the white collar workers GM is fucking?
GM is going to go bankrupt again. It is a matter of when.
Jim P. at October 15, 2012 7:32 PM
Jim, I've read about the Delphi white-collar workers too, and I agree that what happened there was nothing short of government-sponsored piracy.
The interesting thing is that the brand that probably benefitted most from the tsunami disruptions was not GM but Nissan. They source a lot more of their parts in the U.S., so they were not effected as much as Toyota and Honda were. It elevated the Altima for a while to the second-best selling car model in North America. And Nissan took a lot of the windfall and invested it in developing new models.
GM only competes effectively in the truck and large SUV segments, and to an extent in the luxury sedan segment. They've been kept alive in the small and intermediate car segments for a long time by fleet sales, but governments can't afford to buy large fleets anymore, and the rental car companies are turning to Japanese models due to customer complaints. GM needs to trim back to:
Chevy -- trucks and commercial vehicles
GMC -- large trucks and SUVs
Cadillac -- luxury sedans
Cousin Dave at October 16, 2012 6:45 AM
I don't care whether CD knows what he's talking about or not:. GM should do what he says they should do. It's his money on the line at the this point too.
Crid [Cridcomment at Gmail] at October 16, 2012 8:10 AM
Osama bin Laden is dead and the United Auto Workers Union is alive.
FIFY.
Which is why the non-union Delphi employees got their pensions dumped. Which is why the preferred stock holders got screwed by the 2009 restructuring, and why certain dealerships were liquidated.
Next up: Congress will pass a law mandating that citizens purchase GM products? hey, it's for the unions!
I R A Darth Aggie at October 16, 2012 8:12 AM
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