James Moore: GM needs to prove worthy of our money
Thursday 05 November 2009
Outlook: So the horse trading begins again. Just a day after the Government pumped a truly obscene amount of taxpayer's cash into two zombie banks, the motor manufacturers are at it with General Motors wanting some financial candy of its own as the price for protecting thousands of British jobs. To be fair, there's good news to report here. The volte face made by GM on the sale of its European operations is infinitely preferable for Vauxhaull car workers in this country when compared to the alternative arrangement.
A Russian bankrolled deal to sell to Canadian car-parts maker Magna would have cost many more jobs in this country. So it's no wonder the unions are crowing and Mandy's got a big smile on his face and a cheque book in his back pocket. They're rather less happy in Germany, where other unions are threatening strike action thanks to the demise of a deal that they believed would be far more favourable to them.
That may be narrow-sighted. A GM Europe cut loose from its parent would have been a smallish player in a landscape dominated by giants. No MG Rover, for sure, and with much better management, but there were big question marks hanging over it.
Of course Magna is cross (and its Russian partner is furious). They're making all the standard noises about consulting lawyers even though they know, deep down, that this won't go anywhere near a court (a move that would be suicidal in the case of Magna anyway given that it is a GM supplier).
What is really important now is how much those jobs will cost to keep. Mandy's smarming and Cheshire cat grins cannot disguise the fact that the taxpayer's pockets that GM will tap are all but empty.
And while we might feel better about propping up a maker of cars we like to drive (if the Astra's sales figures are anything to go by) as opposed to banks which treat us with contempt (just look at the FSA's complaints figures) with loans, grants, tax breaks, its still state aid to industry which ought to stand on its own two feet.
What GM has to do in the long term is prove that it is actually worth our investment in it. The one time basket case has certainly been showing signs of revival, a remarkable turn of events given the headlong charge into a brick wall with the accelerator floored that it had embarked upon when the credit crunch hit.
But it has to show its recovery is sustainable. This is a company, after all, which produced fat gas-guzzling monsters in its home market that did untold damage to the environment and which nobody in their right minds were willing to buy with oil at over $100 a barrel. Regardless of Europe, GM needs to win on the home front and beat the Asian manufacturers its flag-waving, one-time customers have become so fond of.
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