Yesterday's "Tube Talk" e-newsletter discussed the possibility of General Motors' Chinese partner, SAIC, investing in GM's initial public offering of stock. The two companies have produced cars together in China for a decade and announced plans in December to sell low-cost vehicles in India.
Some in the U.S. are not all that excited at the prospect of a Chinese company potentially owning a chunk of GM, now sometimes referred to as Government Motors since the $50 billion taxpayer bailout. (Repaying the bailout could take years, IPO notwithstanding.)
Conservative columnists like Robert Laurie — whose michiganview.com article was quoted in "Tube Talk" — took advantage of SAIC's possible investment to ridicule the Obama Administration for entertaining the possibility: "Irony doesn’t get any richer than this. The same Obama administration that bailed out General Motors at the instruction of protectionist, China-fearing, Democratic-boss Big Labor, may now sell a stake in GM to … China's top automaker.
"Obama, who famously said that he doesn't want to be in the automotive business, wants to get out of the messy venture by selling GM to whatever 'geography' will pony up the cash, regardless of that region's strategic relationship to the United States.
"The Treasury Department claims that emphasis will be placed on finding "North American investors," but it's going to be a hard sell. Since most U.S. investors currently view GM as a long-term loser, it may be hard to overcome their skepticism — particularly while the extent of future federal and union involvement remains unknown. So, the Obama administration has apparently decided that the best hope for our debtor nation lies with the foreign power that currently holds our purse strings.
"Under the current administration, the United States debt has ballooned to a staggering 13.5 trillion dollars, with the lion's share held by China. Perhaps, in selling one of the Big Three to a Chinese government-controlled company, President Obama has finally found a way to start paying it back. And UAW — a 17 percent owner in GM's future — might learn how China is its salvation," Laurie concluded.
Following Laurie's remarks, "Tube Talk" asked its readers for their opinions about a SAIC investment in GM. From past experience — eight years writing about timely topics and asking fabricators' opinions — I expected some readers to be up in arms at the mere suggestion that a Chinese company could become a significant stakeholder in a company as important to the U.S. economy as GM. I imagine there are some in this camp, but for whatever reason, they chose not to vent. Instead, my in-box was filled — for the most part — with well-thought out responses from fabricators who don't appear to be all that upset about the possibility.
For example, a reader from a company that makes industrial sifters wrote: "I believe that Mr. Laurie is letting his bias get in the way of looking at the issue objectively. So I think a few points need to be made:
- Mr. Laurie takes issue with the Obama administration over the size of the debt, but if he will remember $5 trillion of national debt came from the Bush Administration which gave tax reductions and then proceeded to fight two wars on borrowed money. The Obama administration spending came while trying to deal with the effects of the recession.
- As for China holding the lion's share of the debt, the latest figures show that a little over $4 trillion is held by foreign sources and of that $846 billion is held by China.
- Another point — GM is an international company and the United States presently owns about 61 percent of the company, however Mr. Dan Akerson of GM has said that over the next several years that GM will repay the bailout money and in essence restore GM to private ownership. That would mean that other interests all over the world could potentially be the new shareholders. I do not believe that this is unusual for an international company with operations in China and a new potential market in India. My own company is international and has business interests and shareholders from all over the world.
- Finally, even though I did not agree with the decision to bail out GM, I believe during the worst of the recession it did save jobs, and the taxpayers will, it looks like, get the money they invested back, while GM is getting stronger; this is definitely a time to be more hopeful about our future and that of GM."
A reader from a company that makes tube fabrication equipment wrote: “I am not in favor of SAIC or a Chinese company holding a large percentage of any stake of any American company, but I do have to view this in light of what is best for our economic future. Again, I'm not in favor of any foreign company or country holding a large percentage of any stake of any American company. We should be in control of our future, not a foreign influence. However, as we have seen with this economic downturn, this is a global economy, not an American economy. We all need to view how one [country's] economic benefit becomes an international economic benefit.
"At the same time, our government needs to divest the stock it holds in GM and Chrysler and needs to do it in an efficient and economical way. They won't be able to please everyone. However, it needs to be done and very soon. As a side note, how many foreign governments own portions of the auto industry within their own countries? Before they start calling us out, they need to divest themselves."
Speaking of calling someone out … a reader who works for a company that provides equipment for the energy sector conveyed his opinion about Laurie's comments and the newsletter in 11 words: "Skip the right wing demagoguery and stick to welding and fabrication.” Sorry, John. Didn't mean to step on your left-wingtips, but all of us who helped foot the bill for the GM bailout have a vested interest in following this story. That includes welders and fabricators who deserve an opportunity to express their opinions. I plan on continuing to give them these opportunities.
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