GM's Woes

I have been teaching at Brock University in St. Catharines for almost four months now. The one thing that I have learned working it St. Catharines is that the auto industry is everywhere. Autoworkers are the heart and soul of the community. Their kids go the university, they dominate labour meetings and their wages fuel the local service economy. So all of this being true, it is safe to say that yesterday was a dreary day for St. Catharines and Oshawa.

As most of you know, yesterday General Motors announced the layoff of 3,900 workers in Canada, combined with another 26,100 workers in the United States and Mexico. How depressing. You can read more here. (although Olive's analysis is somewhat limited, it is a good overview) Of course, as the news sinks in, I suspect that shock will turn to anger and hard questions will have to be asked: why is GM closing its most productive North American plant in Oshawa? Why are they upping production on SUVs and Trucks and not looking to expand their share in small autos rather than simply cutting production costs? Why is GM in such a mess and where is the government in all of this? Savage has posted to his Blog arguing that the cuts are reflective of domestic purchasing power, maintaining that GM’s follies are reflective of competition from foreign auto makers, especially (although he doesn’t say) Japanese cars. I responded, somewhat off the cuff, by saying the problem may be deeper than that, and was subsequently smacked by an anonymous commentator. Perhaps I deserved it. I don’t pretend to have all the answer to GMs woos. I certainly can’t stand up and say that I have never bought a Japanese car (I have).

So is this the problem? Perhaps. But it is also just as plausible that GM dug itself into this position by making some really strategically poor decisions in the past. They have been contracting out, selling off divisions and closing down plants throughout the past two decades, all in the name of efficiency. Along comes an efficient plant and the company closes it as a cost cutting measure. At the same time, according the Globe and Mail, the company argues that it will continue paying large dividend shares to investors, saying they have suffered enough! I wonder why the same logic doesn’t apply to its own workers? Meanwhile, the Canadian government sits back and does nothing, maintaining that this is a private sector initiative and beyond their control. And besides, they will say, we have given GM millions in corporate subsidies over the years, so what more could you expect? We expect allot more Mr. Prime Minister, of course that would require admitting that this is indeed a political (and not simply a private sector) problem.

I’m not sure what the answers are. Is a buy Canadian campaign the answer? Didn’t the government abandon that strategy when it jumped on board the free trade ship in the 1980s? Nationalizing the industry and banning foreign imports? Or taxing foreign imports to protect domestic industry? All of these are plausible solutions which would take significant political savvy. Of course that would mean challenging these large companies, rather than just placating them, as the Liberals have done in the past. Meanwhile, I have to rethink this auto purchase, as I can’t help but feel somewhat guilty…