Thursday, November 27, 2008

Chinese Want To Buy the Big 3 Automakers

Chinese Want To Buy the Big 3 Automakers
Jane Hamsher
Huffington Post
Thursday, Nov 20, 2008

It appears that the Chinese car makers SAIC and Dongfeng have plans to acquire the Big 3:

A take-over of a large overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.

At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.

All the Shock Doctrine fanatics cheering to drive the the Big 3 into bankruptcy “restructuring” (like Mitt Romney, who can kiss future hopes of electoral victory in Michigan goodbye) might want to think about the implications of this.

Of course the same legislators clamouring for bankruptcy could block the sale. (This assumes they have the fortitude to stare down the Chinese, who currently hold a whopping portion of US debt, and deny them something they really want). But in doing so, and at the same time refusing a bridge loan to the automakers, they are basically legislating the destruction of the Big 3. They will be forcing them to stiff all their creditors and stockholders and tear up their union contracts by refusing to let the “free market” they love to bang on about step in and assume the company’s legitimate debts. Or were all those insufferable lectures about “personal responsibility” when the bankruptcy bill was going through just so much claptrap?

Because selling the company would be far preferable to the Big 3 and those who are dependent on them than Chapter 7. But long-term it would not be without peril for the US. As one FDL commener noted:

With no big three making cars what to stop Toyota and Honda from moving the plants to Mexico where costs are really low. Its only the threat of being shut out of the American market that keeps the Japanese building cars here. If we no longer have cars made in America by American companies we will have no choice but to buy their cars no matter where they are made.
I know long-term thinking isn’t his forte. But as Richard Shelby is salivating at the prospect of yet another BMW SUV plant in his right-to-work state, it might be something for him to consider.

1 comment:

Anonymous said...

They did this to themselves. We allowed them to do this to themselves. Then we fly to meetings in a leer jet to beg for a handout. What an utter gross sense of entitlement these guys seem to have. This is no easy situation. If you had say, a store that had bad management and ran the store in the ground, would you hand them a chunk of money and business as usual. No, first thing you would do is bring in new blood. What a mess our country is in. There is no easy answer. We bail out everybody and his brother and one major aspect to all of this is the role was the historically high price of gas this past year. That one aspect alone did more damage to our economy and society alone. Jobs and homes have been lost at a record rate as a direct result of the high fuel prices. Production and shipping costs were passed on to the consumer in every imaginable product from food to our utility bills. We cut back because we had less to spend. That resulted in even more jobs lost. We need to take some of these billions and first bail America out of its dependence on foreign oil. Yes gas prices are low. NO they are not going to stay low. OPEC is planning to cut production further and will continue to do so until they get prices back up where they want them to be. While we are doing the happy dance around the pumps we are totally missing the next chapter in our dependence on foreign oil. Someone said in an article yesterday it is rather like trying to talk to someone standing in the pouring rain under an umbrella about a possible upcoming drought. How true. America has tunnel vision. And short term memory loss when it comes to oil and our dependence on it and their control over us. They have us over a barrel literally and they know it. When will we all get that? We need to get on with utilizing alternative energy. Jeff Wilson has a new book out called The Manhattan Project of 2009 Energy Independence NOW. Very interesting and insightful. I just think too little attention is given to the oil prices last year and their role in all of our economic woes. And PS, that story in the news about them cramming into their smallest car made to drive this time and leave the jet behind. Darnit, I forgot to watch Saturday Night Live, bet they had fun whth that one.

Happy Thanksgiving everybody. I hope our next one will spent in a calmer country that has ironed some of these financial problems out!