Posts tagged with: general motors

Blog author: jballor
posted by on Tuesday, June 14, 2011

There’s a saying that when goods cross borders, armies don’t (it’s the correlative to the observation attributed to Bastiat: “If goods cannot cross borders, armies will.”). The point is that trade tends to bring people together who might otherwise have cause to be hostile. One of the themes at Acton University, which begins in just a few hours, is globalization and various Christian responses. That’s sure to be the case again this year, as we have just about 70 countries represented among the various participants.

It’s within this context that I want to pass along a noteworthy story I heard yesterday on our statewide public radio station, Michigan Radio. It focuses on what automaker General Motors did when faced with parts shortages following the Fukushima earthquake.

GM added a local Japan-based “War Room” to its response, focusing on solving problems on the ground to get the supply-chain back up and running. As Tracy Samilton reports, “Once the suppliers became convinced GM wasn’t there to dump them, they were awfully happy for their customer’s help. Whatever GM could do, it did. One supplier ran out of a special form of hydrogen peroxide. GM found another source for it and shipped it in from Korea. The company hired trucks.”

So when you have companies with global reach across borders and global supply chains to match, you get a different kind of “War Room,” those focused on putting “the links of the Japanese supply chain back together, often just in time to keep an assembly line from shutting down.”

As Samilton summarizes the lessons of the parts crisis, “People involved in the effort say they grew as human beings, grew closer to each other, met people in the company they might never have known. It was tough. But War Room veterans are keen to point out that they’re not the heroes of this story.”

Ron Mills, head of engineering at GM’s Tech Center, puts it this way,

“We all worked really hard here, but at the end of the day, I did go home, right? And I ate well, and people in Japan could not do that. They had to work hard and also go back and try to find food and clothing and shelter for them and their families and which – I was just in awe of how hard and how they were able to endure.”

The GM workers were driven both by a sense of self-preservation and need as well as genuine concern for their Japanese partners, a concern that became more concrete and palpable as the invisible hands up the supply chain became increasingly visible.

The Detroit News says the General Motors bankruptcy filing “is a hammer blow for a state that was already on its knees.” In an editorial, the paper calls for an “emergency response” from government and an entirely new orientation to attracting businesses and jobs to the state:

Longer term, Michigan’s entire focus must be on creating a business climate that makes the state attractive for job creators in a wide range of industries. It can’t afford to focus on any one segment in hopes of finding the next Big Three. Its future will depend on making itself irresistible to investors across the spectrum.

This echoes Sam Gregg’s Detroit News commentary “Entrepreneurs Require More Room to Thrive” published on May 12:

Michigan must create an entrepreneur-friendly economy by lowering the cost of doing business for all firms, not just the favored few darlings of the moment. The state’s policymakers have spent decades trying to pick the winners (automation, biotech, green energy) that would rescue the state from its dependency on automotive manufacturing. But policy makers and elected officials do not “create jobs” or industrial sectors — businesses and entrepreneurs do.

Also in today’s News, Oskari Juurikkala writes about the push for greater regulation in financial markets:

Is lighter regulation the solution to economic crises? It depends. Some over-the-counter financial derivatives are practically unregulated, so there is nowhere to cut regulation. It might be more appropriate to cover such clear gaps in existing rules in a principled manner so as not to lead people to the temptation of recklessness.

But a few clear-and-fast rules are often better than numerous rules that are hard to understand — especially if they are poorly enforced, which seems to be the case in financial market regulation.

When designing rules for a game, one must take into account the moral character of the players. But there needs to be adequate variation: General laws designed for crooks will not produce any saints.

Blog author: jballor
posted by on Monday, April 6, 2009

It made headlines last week when General Motors CEO Rick Wagoner was asked to resign by representatives of President Obama. Fritz Henderson, G.M. President, was announced as Wagoner’s successor to the top spot in the troubled car-manufacturer.

Henderson faces a series of directives from the Obama administration intended to retool G.M. As New York Times reporter Bill Vlasic notes, “The government has mandated that at least two-thirds of the debt of bondholders be swapped for G.M. stock, and that half of the retiree trust obligation also be financed with company stock.” If Henderson is unable to meet these demands, then the Obama administration has made it clear that bankruptcy is the alternative.

“We will either do it out of court or we will do it in court,” Mr. Henderson said. “But we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise.” In the sacking of Wagoner and the hands-on approach to forming G.M.’s future the federal government has flexed its muscles, refusing to be a passive partner following the extension of bailout funds to a host of corporations.

Given the precedent this might set, this week’s PBR question is: “Should the government control bailed-out companies?”