McClaughry: GM’s small car layoff

By John McClaughry

Ten years ago the federal government spent nearly $50 billion to bail out General Motors, and especially the United Auto Workers pension fund. After some repayments, Uncle Sam was still out $11 billion. A large part of GM’s financial woes stemmed from overburdensome union contracts, unfunded retirement benefits and subpar craftsmanship. Ten years later, the bailed-out company, nicknamed Government Motors, is laying off 14,000 workers in North America, including eliminating more than 8,000 white-collar jobs and closing five plants, four in the U.S. and one in Canada.

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The Chevy Volt

It’s ironic that one of the GM models due for termination is the electric Chevy Volt. GM got into Volt production not because customers were clamoring for small electric cars, but because the Obama administration decided that small, electric cars were the answer to the menace of climate change. That was not a market-driven decision but a political one, based in large part on the massive taxpayer-subsidized rebates of up to $7,500 per car.

In 2012, President Obama drove a Volt in a brief public appearance and said boldly, “When I’m not president anymore, I’ll buy one and drive it myself.” I can’t find any evidence that this has come about. Obama also signed the hood of a Chevy Cruze and called it “the car of the future.” That model, too, went on the GM chopping block, because people wouldn’t buy what GM was pressured to sell.

John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/NAParish
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One thought on “McClaughry: GM’s small car layoff

  1. GM and their union agreements were a disaster waiting to happen. The industry called them “compliance” cars and they were required to meet government mandates and fleet CAFE requirements.
    Toyota built a special plant for hybrids and never produced one Prius. They changed the plant to produce trucks to meet demand and increase profits.
    All the market penetration bragging is phony based on mandate, government purchases and buyer subsidies. Even in Germany, after banning old diesels in some cities, sales are still 50% gasoline, 45% diesel and 6% hybrid. Some of the dreamers better read “The Road to Serfdom”. We will need absolute control by the masters to achieve what the worlds population will not accept.

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