Quote:
Originally Posted by davidt1
If GM is doing so well, I wonder why they need bailout from the taxpayers? I say let them take care of themselves since they are doing so well like the other poster said. I don't want to give my tax money to a company that fires American workers and outsources jobs to India.
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GM is not outsourcing those jobs to India. Those are jobs that are created in India to build cars in India for the Indian market. Those cars cannot be imported to the US because the cars built for the Indian market cannot meet the federal requirements for safety etc..
It also does not make sense to manufacture those cars in the US (high labor costs) and import them to India (low labor cost) and then sell them for like $7,000. They would loose even more money with every car they sell.
GM is a global company and outside the US is has been doing pretty well. What is dragging down the company is its North American Operations and the money they make outside the US is not enough to offset the huge losses they are having in the US.
One of the many reasons they are having such losses are those expensive and inflexible union contracts. Their structural costs are out of control and for years for every car ( not truck or SUV because they are more expensive) they built in the US they were loosing money. In 2007 a new union contract was ratified pairing labor costs to the labor costs of transplants (Toyota and Honda US plants). The problem is that those saving will not be felt until 2010. The company was in the middle of a mayor restructuring when the financial crisis hit and what they need is to survive through 2009 until the new savings come into play.
The other resason for the loses is the stigma the US carmakers have. They built lemons in the 70's and 80's and people still remember that, even though the cars they built now are competitive with the foreign brands (That is Ford and GM, Chrysler quality went down hill with Cerberus). Outside the US their cars sell better because they don't have the "history" and the negative perception they have here. But now with the financial crisis hitting the rest of the world car sales are slowing down outside the US too. With the credit market so tight GM now cannot borrow to continue the restructuring and to keep them alive until 2010. Thet is why they are asking the goverment for a Loan.
I'm not saying I support this (the Loan). This is just how I see the situation.