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The ”credibility gap” at the new General Motors seems to be growing a lot faster than the pile of old cars GM has absorbed in the cash-for-clunkers program.
Last week, we reported in this space that GM’s much-ballyhooed announcement that its Chevy Volt has received an incredible 230 mpg fuel economy ranking shriveled under close inspection. The new electric car can only achieve this standard if you don’t drive it more than 40 miles. Drive a couple of hundred miles in the Volt and you get about 60 mpg.
This week comes news that GM appears to be executing a sloppy U-turn on its recent promise to the United Auto Workers union that it would re-open a shuttered U.S. plant to produce a new sub-compact vehicle, called Spark, which GM originally had planned to build in China.
When GM was bailed out earlier this year in a bankruptcy restructuring that made the U.S. government and the UAW majority shareholders in the ailing auto giant, it generally was assumed that preserving U.S. automotive manufacturing jobs would be a top priority at the ”new” GM. But the ink was barely dry on the restructuring plan when GM created an uproar in May by announcing it planned to produce up to 51,000 of its new Chevrolet Spark sub-compacts in China under the auspices of its Chinese joint venture, Shanghai GM, starting in 2011.
Predictably, the UAW was not amused. The autoworkers union demanded that its new ”subsidiary” change course, and quickly. In June, GM told the Beijing Times it had decided not to import small vehicles from China but instead would make the new sub-compacts in the U.S. The new mini Spark would replace the Chevy Aveo subcompact, currently produced in South Korea.
So jobs that might have been shipped to China and jobs currently sited in South Korea will move to the U.S., and a boarded-up Rust Belt factory will re-emerge as a 21st century manufacturing jewel. UAW members will keep getting paychecks and everybody lives happily ever after, right?
Unfortunately for GM, one of its top execs apparently did not get the memo.
According to a report this week in the Wall Street Journal, Nick Reilly, GM’s newly installed executive vice president of international operations, told a media briefing in San Paulo, Brazil, that GM is planning to build a sub-compact that it will sell for $4,000, going head-to-head with the $2,500 mini that Tata Motors is producing in India. Then he dropped this little bombshell on the UAW:
”We are looking at lower-cost vehicles, but do not know yet where they will be made, though most likely in Asia,” Reilly said.
Here’s the rubbing salt in the wound part: Mr. Reilly, formerly head of GM’s Asia business, told the press gathering that in his new position he will be based in Shanghai. And, just for good measure, he said GM plans to expand its production of micro-minivans in China.
So the company that used to be the world’s largest carmaker, now owned by U.S. taxpayers and U.S. autoworkers, is talking out of both sides of its grille on the subject of where its auto manufacturing jobs will be located. Is it any wonder that car salesmen still outrank undertakers, indicted public officials and Wall Street bonus babies in annual surveys of ”least admired” people?
Memo to GM from U.S. taxpayers: We own you. Bring the jobs home or you’re fired.