If GM does move, where will it go?
By Jason Buckland, Sympatico / MSN Finance
On the list of “bonehead decisions made with zero foresight,” the $625 million General Motors purchase of a downtown, glass-towered headquarter building in Detroit last year might rank somewhere between April’s Air Force One photo op and Al Pacino choosing to star in movies after 1999.
Not only does the timing of the buy seem a little, uh, poor looking back, but it comes across as that much worse for the auto maker following CEO Fritz Henderson’s claim that GM is actually open to moving its headquarters out of the Motor City.
Now, you can take his refusal to ensure his company will remain in Detroit as a cautious PR move, but there’s at least an intriguing case being made that GM could actually bolt from its Michigan home.
For one thing – like its good friend Chrysler – GM will almost certainly file for bankruptcy soon, likely in the next two weeks.
On top of the $15.4 billion in bailout cash it got from the U.S. feds, the company has said it will also need another $2.6 billion in May and $9 billion more for the remainder of the year.
Henderson wisely downplayed any sentiment that GM has already discussed moving internally (it’s called Detroit home since 1996), but a major flaw in his rebuilding strategy is what appears to be fuelling speculation the auto maker could leave.
GM says, in order to make the company’s profits more viable, it would like to increase vehicle imports from its plants in Mexico and Korea because it’s more cost-effective.
Well, yeah, but that comes to the obvious chagrin of the auto workers’ unions, which rightfully point out such a move would completely contradict the “job-saving intent of the U.S. government’s support for the automaker,” according to CNBC. This would be like taking 20 bucks from your grandma to mow her lawn, then making your wide-eyed little brother do it for five and pocketing the difference while you play Pac-Man or something. Not exactly the way the deal was supposed to work.
So, as a result of GM’s shaky future, a game of “Where to?” has popped up already.
Peter Cohan of Dailyfinance.com thinks GM could ship its headquarters off to Brazil or China, but even mentions Canada as a dark horse candidate.
While we hope the auto maker doesn’t have to pick up its roots (at least, my lord, for the sake of the poor, good people of Detroit), it is amazing that I’m even writing an article like this in 2009.
Would a rumour that GM might flee Michigan - the home of the automobile - be able to gain even a scrap of momentum five, even two years ago? Isn’t General Motors about as American as something can get? Crazy how things change.
Posted by: jojo | May 12, 2021 9:01:33 AM
who cares where it moves, it will be dead soon..it is dying of a slow death as we speak. The company has selfdestructed itself due to greed and poor product. It will be nice to see it go.
Posted by: JAW | May 12, 2021 9:30:42 AM
Chrysler has a few floors vacant at there head quarters in Windsor across from Detroit they can have that ?????
Posted by: Mr.Dave | May 12, 2021 10:15:34 AM
Well, I don't think Canada is such a Dark Horse. Given that Oshawa Assembly has been one of their best operations...and the beautiful Office Building that they have there as well on Colonel Sam Drive...and the fact that Sam McLaughlin (Buick) began it all and lived in Oshawa...it's a huge contender! I don't believe that GM will ever die either. GM was doing just fine until our Governments and Financial Institutions(Banks, Investment and Insurance) perpetuated the collapse of the economy. The US and Canada will never let GM die. They employ too many people and pay too much tax overall. The USA and Canada...in fact, the World...could be very different places today were it not for the tanks and various war-time vehicles manufactured by GM for World War I and II. GM still makes Locomotives and Military Vehicles. Wake up kids, we're not talking about an upstart, 30 yr. old car company here! We're talking about the Heartbeat of America.
Posted by: Sir Richard | May 12, 2021 10:15:49 AM
Sad but no surprise. Maybe now we will see an entrepeneur set up an auto plant in Canada just as we had some 70 years ago (remember McGlaughlin in Oshawa?) and build a vehicle that the driver wants; stands up to our harsh climate, summer and winter, stays on the road during winter storms, (does anyone know what the acronym FORD means... Frequently On the Roadside and Dead), starts the first time at the turn of the key, has very good trade-in value and equally importantly has properly trained dealerships to deal with replacement parts and good, competent maintenance service.
Who cares what happens to GM anyway?
Posted by: Meako | May 12, 2021 11:09:00 AM
Sir Richard....it's people like you that cannot understand the ripple effect this will have on the economy in North America. Automobiles are like everything else in this world, they can break down, this is why they have warranties to protect the consumer.
I would like to know what business you are in, and how you feel you are so superior. Have you never made a mistake in your life, or are you perfect?
So, to answer your question, "who cares what happens to GM". We all should care, not just for GM, but for all the North American Companies that support "Our" people with jobs, and support "Our" communities so that "Our" kids, etc. have funding, etc. to play sports, schooling, etc.
Keep this in mind when you say, "who cares what happens to GM".
Posted by: Johnston | May 12, 2021 11:21:08 AM
Moving Out !!- What a surprise. What the heck do people think they are doing with our BAILOUT money. They are setting up over seas, downsizing big-time in Canada and the U.S.. They are not just using our money for that, but, also have us looking after there pensions etc..
Where has all the money gone - Sounds good only when you sing it.
Posted by: Vince | May 12, 2021 11:25:47 AM
I really hope that GM and Chrysler somehow survive and reemerge as stronger and better companies. I never really thought foreign manufacturers have our best interests at heart. They just see us as market opportunities for their bottom line. Nor do they really understand why or how we like our "American Iron".
Hopefully the BIG 3 can pull it off, reinvent themselves and make us proud to own some of their product.
Posted by: Rick Greenhorn | May 12, 2021 11:50:41 AM
If GM or any other company want to do all their production in Mexico, maybe they should sell their cars there only. If they want to sell in USA or Canada, make the product here too. I am sick of the shoddy workmanship from Mexico & China--who want s their crap. All they are is underpaid and taken advantage of and too stupid to see it.
Posted by: Sueton | May 12, 2021 11:55:59 AM
GM has the money for a move? Bailout...isn't that a commitment to survival, so I'm assuming they will stay in the US. I see : Change the address...get a new union in...hire some management from Toyota...simple. You see it all the time in Canada..it's called restructuring..eliminate high management wage and union in one fell swoop. For the individual it's as simple as "do you want to earn a living or not."
Posted by: louie | May 12, 2021 11:58:52 AM
richard first i would never call you sir and second you better be carefull what you whish for it may come back and bite you...i am a gm retired employe and i have more than surely paid more taxes than you and still pay my share of taxes to care for all the dead beats out there ...
Posted by: WS | May 12, 2021 12:06:08 PM
I own Pontiac Montana 2002 - piece of crap - one thing brakes after another (I do the maintenance) - no surprise to me GM will vanish
Posted by: Mike | May 12, 2021 12:42:56 PM
So many GM products over the last couple of decades and so much grief. From trim falling off to the infamous piston slap making my brand new truck sound like a diesel. And now waiting for a door solenoid so i can actually use my remote unlock but having to wait 2 months for it (2009 Sierra) and a fuel door that couldn't open in the winter without scratching my new paint??
I have always tried to support north american products but applaud asian vehicles that are trying to mimick north american vehicles and actually made the mistake of surpassing the quality of workmanship and design in a lot of respects.
Due to GM's denial of problems and passing the buck, we now have a new Honda Accord and I will be letting my lease on my Sierra finish and will be moving over to Toyota with their Tundra. It is sad moment but a long time coming.
It's to bad that GM's management has allowed it to come to this but being North America, the dollar always outweighs good decision making!!
Posted by: 95dram | May 12, 2021 12:45:54 PM
GM earned a good name years ago . They had a good solid product and had the best on the market . Lately they have been selling the highest priced garbage out there . You are the weakest link , GOODBYE .
Posted by: Accter | May 12, 2021 12:50:46 PM
Interesting concept but I really doubt GM would locate outside of the U.S as the government wouldn't bail them out if they did. I think the idea is more in line with Walmart (read below).
In the early 1900's Woolworth became one of the largest retailers in the U.S. For their headquarters they built the Woolworth building on prime real estate and made it one of the tallest buildings in the world (almost most expensive). Subsequently Woolworth failed.
In the 1970's Sears became one of the largest retailers in the U.S. For their headquarters they built the Sears Tower on prime real estate and made it one of the tallest buildings in the world (almost most expensive). Subsequently Sears failed.
In the 1990's Walmart became one of the largest retailers in the U.S. They built a single story high building in the rural U.S to head their empire. As yet their model seems to be working better than their ancestors. That GM would suggest that they take a page from Walmart's book seems fairly reasonable to me.
Posted by: Retired GM'er | May 12, 2021 1:10:17 PM
Rebuttal to Mr. Dave's comment dated May 12/09 10:15:34
Mr Dave: You state that GM still makes locomotives and military vehicles. You had better brush up on your facts. GM sold their military division to General Dynamics about 6 years ago and the locomotive business to Greenbrier Investments around 5 years ago. They have been bleeding cash for years at the hands of the former CEO Rick Wagoner and it disgusts me to no end why the board held on to that inept fool for so long. I will probably see the demise of my pension and benefits in the very near future, but as far as GM goes, in my opinion they haven't had a clue for over 25 years. Just look at the cars that they put out in the mid 70's to mid 80's to compete with the flood of imports during the first fuel crisis. Garbage from the ground up (Citation, Vega, etc....) The only thing that will save GM is a housecleaning from the top to the middle. The workers on the shop floor can only work with what they are given and if you give them a pile of crap to assemble then that is what you are offered to purchase.
Posted by: Scooter | May 12, 2021 1:30:34 PM
Retired GM'er...very well put! It's the corporate greed that forces designers to scrimp on designs...going cheap on assemblies, giving the assembler no chance of creating a work of art. The Japanese adopted American right wing statistical philosophies after world war II...philosophies that were laughed at in the US at the time. Look what they have achieved....after years of boardroom greed the company cannot sustain itself under any circumstance. Selling off non core companies is the best they can do?? Moving manufacturing away from the home (and target) markets? How much insult do these morons think we can take?? Piss on GM leadership...they've all but murdered the life blood of the north american economy.
Posted by: chevygirl | May 12, 2021 1:34:41 PM
This is all so sad and frightening. NOBODY realizes the spinoff in the economics of North America if GM fails. And remember, GM is mostly comprised of ordinary, men/women on the street, working for a living the same as you are. The top management may have made some bad decisions, but don't blame the common worker for that. And remember too, that not all workers for GM are/were unionized. There are close to 14,000 salaried workers and retirees in Canada who never belonged to CAW, and they paid into their pension funds every month. So why should they be penalized for the mistakes that a few people in charge in Detroit made? How would you like it if the pension plan that you paid into all your working life was suddenly found to be underfunded, or your company went into bankruptcy and the pension plan was wound up? Think about your neighbour, brother or sister, father, friend. Somebody that you know will be affected by this sad state of affairs.
Posted by: mark | May 12, 2021 1:39:16 PM
the demise of these two companies is a sad thing but comes as no suprise. no vision for the future, poor decision making, and just bad management in general all add up to bad things. i don't like the fact that so many people have to suffer in this situation, but gm needed a wake up call, their management needed a wake up call its unfortunate that the former ceo made such a forturne on running the company into the ground. there was a time that i would only buy gm but then i started realizing that i am paying top dollar for a vehicles that just don't quite make the grade. and many other people started to realize the same thing. and what did gm do? made the same vehicles all over again with different names, retired gm'er said it best: the workers can only work with what they are given. my only hope is that they do what they need to do, keep the ego in check, restructure and build good products that the people want good luck gm
Posted by: anteater | May 12, 2021 1:55:30 PM
hopefully GM and Dodge survive this mess!!and stay in the US or Canada also for head office!!!as far as the GM being a relaible product we run a fleet of GM pickups in the oilfields of saskatchewan and Manitoba and I could not be any happier with the product they build!our trucks are our offices and they perform 12 hours a day 7 days a week.I have yet to be let down by any of these trucks except for self induced damage!!they start in the cold they run all day,through mud and snow and gravel roads ,heat etc etc they are rock solid and I cannot say the same thing for the Toyota trucks out here trying to do the same thing!!plus the parts for the imports are hard to get and very expensive!if my GM does break down I can have the parts over night and truck back on the road the next day,and that is what is important!just think if you office boys had the power shut off to your building for a day how much work could you get done??none hard to make money if you can't work!!same goes for these GM truck time is money and these trucks have yet to let us down!!
Posted by: Chris | May 12, 2021 1:59:36 PM
With the induction of two tier wages in the states, I think the move will be south. It will all depend on which area has the best corporate welfare offer to entice GM to move operations.
It doesn't matter anymore how successful a Canadian plant is or has been. A successful line moved to a lower cost area is better than a successful operation left in a higher cost area. Of course that is obvious but it is the reason that I believe that GM is soon to be totally gone from Canada. They will be taking pensions with them and if even a token amount of GM presence is left in a couple years it will be a drop in the bucket. I also think that they will increase the amount of offshore parts suppliers so even spin off jobs will be gone.
So when all is said and done, GM will issue the statement... " so long and thanks for all the cash" in the not too distant future.