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Millions in gov't subsidies, a major bailout in 2009 that saved their company, non-stop threats of closure and ongoing clawbacks of manufacturing. And in the e

Millions in gov't subsidies, a major bailout in 2009 that saved their company, non-stop threats of closure and ongoing clawbacks of manufacturing. And in the end... up and out. Obviously it is GM's prerogative and can do as they please but it is time for politicians to stop falling for the folly. Just like your stocks and mutual funds - diversify your industries and don't rely on one big player.

walrus01 8y ago
The North American auto industry essentially held the Canadian and US governments for ransom in the 2008-2009 financial crisis, "bail us out or we'll go belly up completely, and look how many people will be unemployed!".
- WrtCdEvrydy 8y ago
  We should have let it happen. That money could have been funneled into social services instead of propping up industries. You played and lost, you don't get my tax dollars.
  - walrus01 8y ago
    Yes, agreed. They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. Maybe 1/3 to 1/2 of the workforce could have been re-hired, the government bailout money could be spent on retraining and supporting the remaining 2/3 to 1/2 of the workforce.
    - sonnyblarney 8y ago
      "They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. " It's very unlikely. A) Plants are tooled for a specific car, often to platforms that are company specific. B) There is a reason GM is shutting it down, and other companies are probably in the same set of circumstances. C) Do you think company A wants to buy company B's powerful Union? Uhhh, no! It's not entirely rocket science to train people to make cars.
      - amyjess 8y ago
        I'll point you to what happened to MG Rover. Company went bankrupt, a Chinese company bought the assets, and now they make and sell cars in the UK.
        fredoralive 8y ago
        The current MG ceased assembly in the UK a couple of years ago. As it involved laying off 25 people, it seems like it was a rather token effort in he first place. https://www.bbc.co.uk/news/uk-england-birmingham-37449289 https://www.bbc.co.uk/news/uk-england-birmingham-37449289
        amyjess 8y ago
        Ack, I didn't know they closed the Longbridge plant. That's pretty sad. Thanks for letting me know.
        sonnyblarney 8y ago
        They bought the car company, not a factory. A car company, like 'Jaguar' (similar story) has assets.
  - sonnyblarney 8y ago
    "have been funneled into social services" Thos jobs pay for the social services of many, and if GM and Ford went kaput, it would wipe out the governments ability to pay for those services. Now - I'm not saying it's the right thing to subsidize, but in a 'subsidize or collapse' situation, that is the reality. A corporation has many stakeholders: execs, staff, buyers, suppliers, investors, debtors, and then all the ancillary people who benefit independently - they're all in a power struggle to share in the surpluses. If a company is facing legit collapse, and the investors are truly willing to bite the bullet, it's because they don't think their is incentive there for them. The surpluses generated may actually be going into the other entities in the power equation: just because investors own the profits does not mean that profits represent the big chunk of surpluses. My ex-neighbour was a long-tim plant worker, he earned quite a lot, granted he was senior - those are in fact plumb jobs that often pay way above others when you factor healthcare, retirement etc.. Also consider low turnover - most people change jobs every few years and lose a few months pay. When you work in an auto plant, for a bank, for the government etc. the stability factor is a real economic benefit you can calculate. It's hard to tell if companies are bluffing or not, but in many cases they are not - and it illustrates really where the surpluses are and it's not with them. There's a big Boeing 777 business case that's used in B-School for accounting, and it basically demonstrates that the project is kind of a loser for them, and they should not invest. But the government came along with incentives, making it worthwhile. It's not a paradox, it's just a lesson in who profits from what and how.
    - amanaplanacanal 8y ago
      Err... I believe Ford didn't want the bailout money. Not sure why you tossed them in here. I am totally in favor of letting bankruptcy courts do the job they are best at. All those assets don't just go away, they are put to better use.
      - sonnyblarney 8y ago
        Ford is just an example of a 'big company' that might go bankrupt. A bailout/subsidy for a company is different than a bankruptcy situation. You can be assured that in a bankruptcy, the factory will probably close, and it's workers laid off. It doesn't matter i some assets are sold off, significant economic activity will dissapear in almost all cases. It's usually better for the economy for a company to survive than not.
  - AngryData 8y ago
    I agree, likely we would have had a few smaller splinter companies from it but I don't see that as a bad thing in anyway except for those handful of people who were at the very top of the managerial/administrative pyramid.
- s4vi0r 8y ago
  And instead of taking the opportunity to nationalize them, our useless neoliberal leaders instead went "uhh okay lol heres some money pls don't do that thing we all know you'll do".
  - linksnapzz 8y ago
    Setting aside the complexities of two nations trying to nationalize the same company...the most recent example of an anglophone government taking over its carmakers (UK) isn’t exactly an encouraging precedent...
- masonic 8y ago
  ... so a Ford made in Mexico could better compete against a Hyundai made in Alabama.
- thoughtexplorer 8y ago
  Too bad we didn't call their bluff, and especially that of the banks, and put the bailouts into infrastructure or new industry to replace those jobs and put us in a better position for the long term.
chongli 8y ago
Government's justification for bailing out companies like GM is to ostensibly save jobs. Diversification is great for your economic portfolio but it's not so easy for workers. Telling a laid-off auto worker to switch industries is not a very fair thing to do. It's far easier to move capital around to different industries. Not so easy to transfer your skills between them.
- 3pt14159 8y ago
  I bitched about it at the time, but the bailouts worked. They saved jobs for ten years, stabilized economies in free fall, and made the governments involved a profit. Ten years of employment is nothing to sneeze at. Plenty of baby boomers hit retirement in that time. Frankly I'm glad GM is moving out now while the recession still hasn't hit.
- thoughtexplorer 8y ago
  > Telling a laid-off auto worker to switch industries is not a very fair thing to do. But we do that all the time and with good reason. Blockbuster employees and coal miners for example. At some point the jobs no longer make sense.
  - raverbashing 8y ago
    You're right, except then they support destructive politicians that says the reason they don't have a job in coal anymore is because of "scapegoat of the day" (global warming lies? the EU? Immigrants? not killing puppies?)
  - jammygit 8y ago
    "At some point the jobs no longer make sense." Blockbuster disappeared because the technology it was built upon became obsolete. It also didn't require specialized labour skills - the employees just took their retail experience across the street. This just seems like a different kind of situation to me. Automotive isn't going anywhere, GM just couldn't perform. edit: I'm reading some other comments about drive trains and EVs & reduced manufacturing requirements due to it. That's interesting. Maybe I should read about this more
deleted 8y ago
[deleted]
i_feel_great 8y ago
This happened in Australia with Toyota, Ford, Holden (GM), and I think before all that, Nissan and Mitsubishi. Also in New Zealand with Mazda/Ford, (edit: Toyota in Thames) at least in my lifetime. Subsidies have never worked. It seems in the end these companies never paid net taxes and the workers lost their jobs anyway. Subsidies are a scam.
- Judgmentality 8y ago
  > Subsidies have never worked. I'm skeptical of this, but I don't know that it's wrong. I'm only making this comment in hopes of somebody else more knowledgeable responding to it (either for or against - really I am just curious if subsidies work).
  - sheepmullet 8y ago
    > I'm skeptical of this, but I don't know that it's wrong. It depends on what you mean by “worked”. 1) Have they allowed a slower and more humane shift of workers to other more competitive industries? Yes. The GM bailout is a great example. 2) Have they helped keep certain skill sets in a country? Yes. Undoubtably. Is this important? I think so but there are opposing arguments. It can take decades to build up an industry from scratch vs a few years to pivot into a related industry. Think of how long it would take Germany to swap its automotive engineers and factories to producing tanks vs how long it would take a services based country to start producing tanks. 3) Have they lead to the revitalization of an industry? This ones a lot more murky and it all depends on what time frame you are looking at and what you think the future will hold. There are certainly examples of it working between first world countries for limited time periods (a decade or two).
nopinsight 8y ago
It should have long been clear that mass manufacturing in high-wage countries cannot sustainably support as many jobs as it used to be, given low international shipping costs and increasing domestic automation. The subsidies should be spent to retrain the workers for hard-to-export and costly-to-automate jobs like electricians, plumbers, etc instead. Part of the funds should support their cost of living during the reskilling period as well.
sonnyblarney 8y ago
"diversify your industries and don't rely on one big player." Not only easier said than done, it's basically I think the hardest thing to do in governance in business. The reason subsidies exist is because everything flows from these 'tentpole' industries, it's hard to underestimate. Canada overall has become less diversified in the last 30 years, and less able to build more sophisticated products, which is not good. There are a host of reasons.
BurningFrog 8y ago
I'm as opposed to subsidizing individual industries or companies as anyone. Then again, nothing is forever, and the fact that a single factory closes after a decade doesn't exactly disprove the whole model. That is bound to happen in any industry, subsidized or bailed out or not.
stickfigure 8y ago
What does this have to do with subsidies? Did Canada pay GM to locate this plant? It doesn't seem like it, it dates back to the 80s.
notatoad 8y ago
>diversify your industries and don't rely on one big player. Isn't this what the subsidies are all about? If you want diverse industries to move to your region, you need some incentive to attract them.
rpiguy 8y ago
Politicians aren't falling for anything. They are buying political points to help their next election and keep money in their donors' pockets. It is a shell game. They will bail out another group in the future, rinse and repeat. It is easy to throw shade at politicians, I am sure there were some that genuinely wanted to preserve jobs for the long haul, but sadly they are a minority.

walrus01 8y ago

The North American auto industry essentially held the Canadian and US governments for ransom in the 2008-2009 financial crisis, "bail us out or we'll go belly up completely, and look how many people will be unemployed!".

WrtCdEvrydy 8y ago
We should have let it happen. That money could have been funneled into social services instead of propping up industries. You played and lost, you don't get my tax dollars.
- walrus01 8y ago
  Yes, agreed. They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. Maybe 1/3 to 1/2 of the workforce could have been re-hired, the government bailout money could be spent on retraining and supporting the remaining 2/3 to 1/2 of the workforce.
  - sonnyblarney 8y ago
    "They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. " It's very unlikely. A) Plants are tooled for a specific car, often to platforms that are company specific. B) There is a reason GM is shutting it down, and other companies are probably in the same set of circumstances. C) Do you think company A wants to buy company B's powerful Union? Uhhh, no! It's not entirely rocket science to train people to make cars.
    - amyjess 8y ago
      I'll point you to what happened to MG Rover. Company went bankrupt, a Chinese company bought the assets, and now they make and sell cars in the UK.
      - fredoralive 8y ago
        The current MG ceased assembly in the UK a couple of years ago. As it involved laying off 25 people, it seems like it was a rather token effort in he first place. https://www.bbc.co.uk/news/uk-england-birmingham-37449289 https://www.bbc.co.uk/news/uk-england-birmingham-37449289
        amyjess 8y ago
        Ack, I didn't know they closed the Longbridge plant. That's pretty sad. Thanks for letting me know.
      - sonnyblarney 8y ago
        They bought the car company, not a factory. A car company, like 'Jaguar' (similar story) has assets.
- sonnyblarney 8y ago
  "have been funneled into social services" Thos jobs pay for the social services of many, and if GM and Ford went kaput, it would wipe out the governments ability to pay for those services. Now - I'm not saying it's the right thing to subsidize, but in a 'subsidize or collapse' situation, that is the reality. A corporation has many stakeholders: execs, staff, buyers, suppliers, investors, debtors, and then all the ancillary people who benefit independently - they're all in a power struggle to share in the surpluses. If a company is facing legit collapse, and the investors are truly willing to bite the bullet, it's because they don't think their is incentive there for them. The surpluses generated may actually be going into the other entities in the power equation: just because investors own the profits does not mean that profits represent the big chunk of surpluses. My ex-neighbour was a long-tim plant worker, he earned quite a lot, granted he was senior - those are in fact plumb jobs that often pay way above others when you factor healthcare, retirement etc.. Also consider low turnover - most people change jobs every few years and lose a few months pay. When you work in an auto plant, for a bank, for the government etc. the stability factor is a real economic benefit you can calculate. It's hard to tell if companies are bluffing or not, but in many cases they are not - and it illustrates really where the surpluses are and it's not with them. There's a big Boeing 777 business case that's used in B-School for accounting, and it basically demonstrates that the project is kind of a loser for them, and they should not invest. But the government came along with incentives, making it worthwhile. It's not a paradox, it's just a lesson in who profits from what and how.
  - amanaplanacanal 8y ago
    Err... I believe Ford didn't want the bailout money. Not sure why you tossed them in here. I am totally in favor of letting bankruptcy courts do the job they are best at. All those assets don't just go away, they are put to better use.
    - sonnyblarney 8y ago
      Ford is just an example of a 'big company' that might go bankrupt. A bailout/subsidy for a company is different than a bankruptcy situation. You can be assured that in a bankruptcy, the factory will probably close, and it's workers laid off. It doesn't matter i some assets are sold off, significant economic activity will dissapear in almost all cases. It's usually better for the economy for a company to survive than not.
- AngryData 8y ago
  I agree, likely we would have had a few smaller splinter companies from it but I don't see that as a bad thing in anyway except for those handful of people who were at the very top of the managerial/administrative pyramid.
s4vi0r 8y ago
And instead of taking the opportunity to nationalize them, our useless neoliberal leaders instead went "uhh okay lol heres some money pls don't do that thing we all know you'll do".
- linksnapzz 8y ago
  Setting aside the complexities of two nations trying to nationalize the same company...the most recent example of an anglophone government taking over its carmakers (UK) isn’t exactly an encouraging precedent...
masonic 8y ago
... so a Ford made in Mexico could better compete against a Hyundai made in Alabama.
thoughtexplorer 8y ago
Too bad we didn't call their bluff, and especially that of the banks, and put the bailouts into infrastructure or new industry to replace those jobs and put us in a better position for the long term.

chongli 8y ago

Government's justification for bailing out companies like GM is to ostensibly save jobs. Diversification is great for your economic portfolio but it's not so easy for workers. Telling a laid-off auto worker to switch industries is not a very fair thing to do. It's far easier to move capital around to different industries. Not so easy to transfer your skills between them.

3pt14159 8y ago
I bitched about it at the time, but the bailouts worked. They saved jobs for ten years, stabilized economies in free fall, and made the governments involved a profit. Ten years of employment is nothing to sneeze at. Plenty of baby boomers hit retirement in that time. Frankly I'm glad GM is moving out now while the recession still hasn't hit.
thoughtexplorer 8y ago
> Telling a laid-off auto worker to switch industries is not a very fair thing to do. But we do that all the time and with good reason. Blockbuster employees and coal miners for example. At some point the jobs no longer make sense.
- raverbashing 8y ago
  You're right, except then they support destructive politicians that says the reason they don't have a job in coal anymore is because of "scapegoat of the day" (global warming lies? the EU? Immigrants? not killing puppies?)
- jammygit 8y ago
  "At some point the jobs no longer make sense." Blockbuster disappeared because the technology it was built upon became obsolete. It also didn't require specialized labour skills - the employees just took their retail experience across the street. This just seems like a different kind of situation to me. Automotive isn't going anywhere, GM just couldn't perform. edit: I'm reading some other comments about drive trains and EVs & reduced manufacturing requirements due to it. That's interesting. Maybe I should read about this more

deleted 8y ago

[deleted]

i_feel_great 8y ago

This happened in Australia with Toyota, Ford, Holden (GM), and I think before all that, Nissan and Mitsubishi. Also in New Zealand with Mazda/Ford, (edit: Toyota in Thames) at least in my lifetime. Subsidies have never worked. It seems in the end these companies never paid net taxes and the workers lost their jobs anyway. Subsidies are a scam.

Judgmentality 8y ago
> Subsidies have never worked. I'm skeptical of this, but I don't know that it's wrong. I'm only making this comment in hopes of somebody else more knowledgeable responding to it (either for or against - really I am just curious if subsidies work).
- sheepmullet 8y ago
  > I'm skeptical of this, but I don't know that it's wrong. It depends on what you mean by “worked”. 1) Have they allowed a slower and more humane shift of workers to other more competitive industries? Yes. The GM bailout is a great example. 2) Have they helped keep certain skill sets in a country? Yes. Undoubtably. Is this important? I think so but there are opposing arguments. It can take decades to build up an industry from scratch vs a few years to pivot into a related industry. Think of how long it would take Germany to swap its automotive engineers and factories to producing tanks vs how long it would take a services based country to start producing tanks. 3) Have they lead to the revitalization of an industry? This ones a lot more murky and it all depends on what time frame you are looking at and what you think the future will hold. There are certainly examples of it working between first world countries for limited time periods (a decade or two).

nopinsight 8y ago

It should have long been clear that mass manufacturing in high-wage countries cannot sustainably support as many jobs as it used to be, given low international shipping costs and increasing domestic automation. The subsidies should be spent to retrain the workers for hard-to-export and costly-to-automate jobs like electricians, plumbers, etc instead. Part of the funds should support their cost of living during the reskilling period as well.

sonnyblarney 8y ago

"diversify your industries and don't rely on one big player." Not only easier said than done, it's basically I think the hardest thing to do in governance in business. The reason subsidies exist is because everything flows from these 'tentpole' industries, it's hard to underestimate. Canada overall has become less diversified in the last 30 years, and less able to build more sophisticated products, which is not good. There are a host of reasons.

BurningFrog 8y ago

I'm as opposed to subsidizing individual industries or companies as anyone. Then again, nothing is forever, and the fact that a single factory closes after a decade doesn't exactly disprove the whole model. That is bound to happen in any industry, subsidized or bailed out or not.

stickfigure 8y ago

What does this have to do with subsidies? Did Canada pay GM to locate this plant? It doesn't seem like it, it dates back to the 80s.

notatoad 8y ago

>diversify your industries and don't rely on one big player. Isn't this what the subsidies are all about? If you want diverse industries to move to your region, you need some incentive to attract them.

rpiguy 8y ago

Politicians aren't falling for anything. They are buying political points to help their next election and keep money in their donors' pockets. It is a shell game. They will bail out another group in the future, rinse and repeat. It is easy to throw shade at politicians, I am sure there were some that genuinely wanted to preserve jobs for the long haul, but sadly they are a minority.