Vice President Joe Biden mentioned today on Face the Nation that GM is once again “the biggest company in the world.” Good, I was worried.
I think GM is the largest automaker again. I don’t know about being the largest company.
At one point in history I think GM was the largest company. But not now. It’s now back on top as the largest auto manufacturer. The top companies today are almost all oil companies. And you have to wonder why we give them a $20B/yr tax break.
I’d verify that through .gov sources before believing Joe Biden. Biden has a history of discombobulating the facts. DOL data might be more credible.
There’s no point in arguing about or even stating whether or not its the “largest” company. There’s no single measure for company size. # of employees? Gross revenues? Net profits? Total assets? …
“[X] is the largest company” is not unlike saying “Today is the nicest day of the year”
The largest company in the world in terms of market capitalization is Apple! The largest oil company in terms of market capitalization is EXXON. However, it is only 1/5 the size of the largest government owned oil company, Saudi Aramco.
All Joe Biden has to do is read Business Week every now and then and not shoot his mouth off. What he meant was that due to the Tsunami in Japan, Toyota temporarily lost its position as the largest car company to GM. And GM sold more vehicles in the last 12 months than Toyota.
The largest food company is Nestle, headquartered in Vevy, Switserland. The largest retailer is Walmart. The world’s largest grocery chain is Carrefour of France.
Biden is just hyping GM to get the stock value up so the govt can sell more shares.
Excellent insight JT. That and he’s following the official “this was a wonderful thing” line.
“Biden is just hyping GM to get the stock value up so the govt can sell more shares.”
I’m not sure that this was what he was actually trying to do, but…if that was what he was trying to do…this is bad for the US government…how?
In case you had forgotten, the idea is to “buy low, sell high”. (It certainly works for me!)
Whether you agree or disagree with the government’s original purchase of those GM shares, I hope you realize that it most definitely benefits the US Treasury (and, as a result, all taxpayers) if those shares are sold at the highest possible price.
Or…would you prefer that the government sell those shares at a loss, or at a much lower profit point?
How would that benefit any of us?
I’d rather the gummint had never bought them. Wake me when they hit $55 a share and feed me a cherry pie to celebrate breaking even.
I’d rather the government had never bought them, either… but the lack of private capital meant that or lose a LOT more jobs.
Fortunately, according to the US Center for Automotive Research, the government has actually already done better than break even when you consider additional taxes collected from higher employment and the unemployment benefit payments that were avoided.
Funny how people can justify giving hundreds of millions of dollars to Toyota to build a plant in Mississippi, because “the taxes collected from the employees and suppliers will more than offset the tax breaks and subsidies to Toyota”, yet refuse to apply the same logic to GM, where the additional taxes collected from employees and suppliers have more than offset the losses the government would record if they sold all their remaining shares today.
@eraser1998 .Funny how people can justify giving hundreds of millions of dollars to Toyota to build a plant in Mississippi, because “the taxes collected from the employees and suppliers will more than offset the tax breaks and subsidies to Toyota”, yet refuse to apply the same logic to GM,
Big difference…that was state money. NOT federal money. When it’s my money being used for this…then I’ll complain about it. I would be totally against NH giving Toyota a $300 million dollar incentive package to build a plant here in NH. I could care less what Mississippi does with their money.
Eraser, in order for the theory of massive job losses avoided to be accurate, the closing of GM would have had to have caused also a large change in the overall size of the market.
There were some 7.8M cars sold last year. There would have been 7.8 million cars sold even if GM had gone under. The difference would have been that they would have been sold by other, better run manufactureres. Companies that make doors would have made the same number of doors, but for different manufacturers. Companies that make hinges would have made the same number of hinges, but for different manufacturers. Etc., etc. The total number of cars not made by GM would NOT have meant that those suppliers making parts for them would have all closed their doors. The secondary and tertiary impact would not have been what was predicted by the advocates of the bailout.
GM for many years, decades even, operated their factories at maximum efficiency and pushed the cars into the marketplace with discounts and rebates. But the market is no longer that elastic. When the economy soured, GM was left with parking lots full of unsold inventory. The market demand determines the level of activity in the industry, not the volume produced. And market demand would have been the same even if GM had gone under.
That’s my story and I’m stickin’ to it.
By the way, we’ve danced this dance before.
@MikeInNH - I’d wager that NH is doing the same thing, just not with the auto industry.
I’d wager that NH is doing the same thing, just not with the auto industry.
I don’t know too much on the state level. NH is a very conservative state. I do know of a new Arena in Manchester (Verizon Center) that was funded partly by tax-payers money. I wasn’t living in Manchester at the time, but I would have voted against it if I was.
I’m more for what Mississippi did then the GM bailout. The Toyota plant in MS directly effected the economy in that state. I’m with MB on this…GM has mismanaged their company for decades…and now they are asking the tax payers to pay for that mismanagement. If GM was run the way Toyota was run I’d be less against the bail-out…although I’m still against any type of bailout.
@the same mountainbike -
What’s missing in your analysis, though, is that the mix of vehicles sold would have likely shifted significantly towards a heavier weight on imported vehicles, as only Chrysler had a higher % of their sales being vehicles made in the US, whereas Toyota, Honda, etc, were considerably lower. Same thing with average % domestic content. The only way to prevent significant losses would have been for nearly all the sales of GM to shift to Ford and Chrysler AND have those companies suddenly need a lot of white collar workers (not likely - the Fusion was already developed, and they didn’t need people developing the Malibu to come on board to help).
So you have significant job losses in the US (not worldwide - there your theory is correct), which would further depress the US economy and lower sales.
If Ford and Chrysler were truely manufactured in the U.S. and Toyota, Honda, and the others were manufactured outside the U.S., you’d be right. But none of this is true. Suppliers for all companies are global, many are the same, and final manufacturing facilities are located all over the globe. Much of GM and Ford product is assembled in facililties in Mexico, Canada, and even Korea (“branded” models). Much of Toyota, Honda, and other so-called “foreign” product is assembled in the U.S.
The concept of “domestic” and “foreign” vehicles simply doesn’t hold up anymore. The industry is the one industry that truely is global.
@the same mountain bike
True, supplies are global - but less than half of all Toyotas sold in the US are assembled in the US. Their % domestic content is around 45% on average last I ran the numbers.
By contrast, about 70% of all domestic vehicles sold in the US are assembled in the US, with about 70% domestic content on average.
In addition, the domestic makers export a lot of vehicles from the US - the same cannot be said of the import brands, who export only a very small number of vehicles.
I surely wouldn’t consider final assembly the end-all to what’s considered domestic.
Either way…it’s still not a good argument for bailing out GM. Besides the precedent it’s setting (get too big to fail and the government will bail you out)…GM has mismanaged their company for years. So instead of being punished for extreme gross mismanagement…they get rewarded for it. Sorry…but I have a problem with MY tax dollars going toward that.
We’ve had long debates about this subject before, and neither of us has swayed the other. My guess is that this debate will end the same way. I stand by my beliefs that
- were GM not bailed out, the size of the market would have remained the same and the subteir manufacturers weould have stayed in business. Every million sedans needs four doors, every door needs two hinges. No matter whether they’re being made for Honda or GM.
I’ll also add that foreign auto manufacturers have been moving more and more operations to the US to avod the risk that varying exchange rates put on the value of their work in process.
I also happen to believe that this bailout was an improper use of tax dollars, a bad financial decision, and politically rather than economically motivated.
I stand by my statements.