While most of the discussion today is about whether the Obama administration made the right or wrong choice by ousting GM's Rick Wagoner and demanding a more comprehensive makeover than GM or Chrysler had provided as part of their deal to get taxpayer assistance, Robert Scott over at the Economic Policy Institute had some things to say about how the Big Three should be investing in America.While GM, Ford, and Chrysler production in Mexico increased in 2008, it fell in the United States and Canada. GM has invested $3.6 billion in Mexico in the past three years and is increasing its commitment to Mexican production by having its new Aveo subcompact built there instead of in the United ?States (Black 2008). And the Big Three plan even greater future investments outside of the United States: GM announced plans to invest $1 billion in Brazil (Ortolani 2008), and Chrysler is investing $570 million in a new engine factory near Saltillo in the Mexican state of Coahuila. At the same time, GM and Chrysler are seeking nearly $22 billion in additional restructuring aid from the Obama administration.
This, writes Scott, indicates a clear need for the government to make future taxpaid funding for GM and Chrysler dependent on a restructuring that includes an investment here at home instead of sending those production jobs out of the country.
The problem is that administration's Path to Viability for GM and Chrysler that requires aggressive restructuring also may contribute to further pushing the companies to reduce their U.S. manufacturing footprint and increase their outsourcing off-shoring. That would add more losses to the 369,000 jobs already lost in the auto industry and auto parts makers since December 2007. And when recovery does happen, more U.S. auto jobs would be outside the country than ever before.
As Scott says, "This would conflict with the President?s announced 'commitment to support an auto industry that can help revive modern manufacturing.'"
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