Why Some Americans Will Never Buy a GM Vehicle!

National Legal & Policy Center ^ | June 14, 2012 | Mark Modica



I recently wrote about a boycott of General Motors' products that was contributing to the company losing market share. The Heritage Foundation now has come out with a report that analyzes the wealth redistribution which occurred during the Obama Administration orchestrated GM bankruptcy process. This redistribution saw money taken from US taxpayers and GM bondholders and given to the politically powerful UAW. The unethical behavior at Government Motors, which has been occurring both during and since the bankruptcy process, gives reason enough to those paying attention to eliminate GM vehicles from the many quality choices offered to new car shoppers.

The Heritage Foundation report confirms what I have long expressed, which is that UAW members sacrificed little compared to other, less politically-favored groups. Even the allegedly corrupt and seldom honest ex-car czar, Steve Rattner, is quoted as stating, "We asked all the stakeholders to make very significant sacrifices. We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay." That statement differs from his stance during the GM bankruptcy process when he stated that UAW members deserved to get paid because they made the cars and GM bondholders didn't because they made a bad investment choice. Rattner's previous warped philosophy had no basis in contract law. And for the record, sacrifices weren't "asked for," they were forced.
As little as I respect Rattner, I have to give him credit for being the only member of the Obama Administration or GM who admits that the UAW sacrificed little in the bankruptcy process. While the workers of the UAW deserve to be paid a fair wage, it is totally dishonest to portray the group as having made noble sacrifices to save GM. In fact, the pension plans and benefits that were protected now leave GM with under-funded pension obligations of $25 billion. The higher cost of labor at the company causes GM to operate at lower profit margins than competitors, a fact that Obama-appointed CEO, Dan Akerson, refuses to acknowledge when trying to explain GM's poor stock performance .
The injustice of the GM bailout that cost the taxpayers billions of dollars is enough in itself to boycott GM. What solidifies the negative sentiment is the constant dishonesty and ethical shortcomings at Government Motors as Obama campaigns on the "success" of the bailout. There is now a reliable indicator of how you can tell if GM executives or those in the Obama Administration are lying when they talk about the great success of the company and its political flagship vehicle, the Chevy Volt. That is, their lips move.
The list of questionable ethical behavior at Government Motors is long. The Department of Energy continues to throw good money after bad on its failed green energy initiatives by giving millions of dollars in advisory fees to law firms that cooperated in the GM bankruptcy process. Another $2.7 million of taxpayer money is being handed out to GM to "develop an integrated super-vacuum die casting process using a new magnesium alloy to achieve a 50% energy savings compared to the multi-piece, multi-step, stamping and joining process currently used to manufacture car doors." Why should taxpayers pay for that?
Cronies within GM get their piece of the pie as well. The wife of GM CFO, Dan Ammann, saw her firm awarded a $600,000 contract for an online ad campaign. Even though the SEC was not properly notified of the potential conflict, don't expect a government agency under a president that is campaigning on GM's perceived success to make many waves for the company.
NHTSA has also been criticized for its response to Chevy Volt fires. Regardless of whether or not the fires are evidence of safety issues for the Volt, the agency seemed to forget its obligations to motorists' safety as they were reluctant to publicize news of the fires. They even issued a statement saying the Volt was perfectly safe; before the investigation was complete!
The list goes on. GM's parts supplier, Delphi, had UAW pensions protected while non-union workers lost theirs . Federal funds went to localities so that they could help prop up dismal Chevy Volt sales as false claims of huge demand for the vehicle were made by GM. GM was given huge tax credits enabling them to go years without paying their fair share of taxes . Billions of taxpayer dollars were given to GM's former finance arm, Ally Financial (formerly GMAC) to ensure future funding for GM retail loans and dealership inventories. Promises to back warranty issues for cars sold by "old" GM were broken. Misrepresentations were made that taxpayers were repaid in full. Is it any wonder that those who are aware of these types of misconduct refuse to buy a GM product?
It is a ridiculous defense of GM to say the process had to play out in this manner or the automotive industry would have collapsed. There is no justification for dishonesty, cronyism and political paybacks. If GM wants to appeal to all Americans instead of just to those who condone or are unaware of the bad behavior, they have a long way to go. A removal of the government from GM operations would be a first step as Treasury should not be gambling taxpayer funds by continuing a market-timing strategy for exiting its ownership stake. There are many conflicts arising from a president campaigning on a platform that touts the bailout of GM as the only accomplishment of the Administration, other than the assassination of Bin Laden.
After the government divests its taxpayer-funded stake, management that has been appointed by Obama should be removed. The political undertones of the company have been witnessed as Republicans were blamed for hurting Chevy Volt sales and disproportionate money is spent to market the vehicle, which loses money for shareholders while supporting the failing green agenda of Obama. Akerson should exit with all board members that were appointed by the Administration.
The final closure on the GM bailout debacle will come when there is an admission that certain groups were unfairly treated in the process. An apology is owed to taxpayers, GM bondholders, Delphi non-union retirees and any other group that lost its rights as a result of the unprecedented government intrusion into the auto industry. I wouldn't hold my breath waiting, but until that time I have one thing to say. Car companies other than GM are making some nice vehicles!
Mark Modica is an NLPC Associate Fellow.