GM’s closing of the Janesville plant

The Wisconsin blogland is full of hysterical statements regarding this closing. The left and the right are both in a contest to lay blame. Presidential candidate Barack Obama has already blamed President George Bush. Wisconsin Governor Jim Doyle has made a rapid response to the site to take a little camera time.

My take? Pfft.

You see, my dad’s retired GM out of the OKC plant, which is long since closed as well. Granted, the OKC plant was twice whacked by tornadoes (the last one dad was in scared me for about an hour because we couldn’t find him), but still, GM decided it was cheaper to close the plant. And the OKC plant was new, not the infrastructure hungry version from Janesville that was built in 1919.

While it’s sad that a community is losing such a large employer, it pays to know a couple of things: 1) as GM employees, these people heard the plant was closing about every other week for the last 20 years. That’s the way plant life works. The rumors and job insecurity drive the employment; 2) The unions will cushion the blow. Ironically, they’ve also kept the rumors going over the years to manage the members’ emotions and leadership votes.

Some of the employees will transfer out. Some may retire early; others will draw unemployment. Some will double dip taking the last money from the GM position while picking up whatever alternate arrangement they’ve already made. That happens a lot as many plant workers have planned ahead over the years.

What should really be of notice is how the state failed to plan for this inevitable news. Lest no one forget, the state bureaubrats gave GM $10 million over the last few years in hug money. Instead of handing the automaker $10 million that walks away, that kind of an investment could have long paid back in the community for economic development. Better yet, the state could have NOT taxed that money and encouraged other businesses to locate in Janesville benefiting from a lower tax burden.

There wasn’t even a crystal ball needed to predict this news. See through the politicians’ falsetto arias this week as they seek to capitalize on someone else’s misfortune.

PS – Can someone tell me why the state keeps handing grant money to corporations that either cut and run or spend it on flagpoles?

Comments

  1. The SUV represents everything the Left hates but Doyle laments the closing of the plant and will bring “good” jobs to the tax and regulatory hell of WI. The Left has blocked any effort to increase the energy supply in meaningful ways for decades and are now blaming Bush ! I’m ROFL !

  2. I’m past ROFL and well into disgust.

  3. Kathryn says:

    And the manufacturers have blocked efforts to increase fuel efficiency, while the Right said the market will take care of it. Looks like the market has spoken.

    This industry is like a water balloon–squeeze one side or the other, something will bulge. There’s plenty of blame to go around, but probably not one perfect solution; the variables are always in flux.

  4. Kathryn said something about extremism flourishing when things go bad a few posts back. The same goes for blame.

    As history repeats itself in American foreign and domestic boondoggles, a Manifest Destiny incarnate rears it’s ugly head once again.

    Cindy, while your assessment (and blame) of the state is correct, maybe GM should try not to be 10+ years behind in innovation and market pulse in order to keep their operations running. Just a thought.

    In a room of pointed fingers, the only one to blame is yourself.

  5. GM sold cars and trucks and made money for their shareholders a good part of those 10+ years, so I don’t think they’re really that far behind.

  6. Kathryn says:

    GM makes money when the market embraces vehicles that GM makes well–large, smooth rolling, sedans and trucks. Their image problem in the 1980’s was because their 1970’s vehicles were of poor quality, and ugly too. That was the decade of high priced fuel and quick-fixes to improve fuel economy. Nobody liked the 70’s cars, and GM paid for them for the next decade. The 90’s were good for big vehicles and GM made money. That company doesn’t turn on a dime. Guess what is coming up….

  7. Cathy, to answer your question, the state keeps handing companies like GM money because it wants to keep businesses here. To be honest, it’s a “damned if you do, damned if you don’t” type situation. If lawmakers don’t give GM handouts they’re blasted as being anti-business, and if they do give handouts only to see that company shutter its plant, they’re criticized for giving too many handouts.

  8. Zaphod Beeblebrox says:

    For those who want to gripe about GM being “behind the times”, answer this question.

    Q: Which automaker most recently (i.e. in the last 18 months) opened a new vehicle manufacturing plant to make large pickups and SUV’s?

    A: Toyota (Tundra plant in San Antonio, TX)

    Gee, by that standard, guess they’re not too smart either…

    Seriously, GM’s main problem was the idiotic crew of “brand managers” they hired from Procter & Gamble in the mid-to-late 90’s. These guys didn’t know the car industry at all, but thought they knew marketing. They’re the ones who pretty much gave up on competitive smaller vehicles – their mantra was, if there’s not large profit potential behind it, let’s not invest in it. Whoops…

    BTW GM is not immune to gas mileage decreasing. Most mid-90’s cars got better mileage than their current models – from all manufacturers. This is primarily related to:

    a) horsepower – in the mid 90’s you’d be hard-pressed to find a family sedan with 140-160 hp. Today’s models regularly are in the 260-300 hp range for V6’s.
    b) luxury/amenities – power everything comes with a cost in efficienty (weight).
    c) safety standards – add in all of the head/side curtain airbags, crumple zones, et. al. and you’ll find that most modern cars are 300+ lbs heavier than their previous generations (not factoring in the increasing waistlines of Americans 🙂

  9. Man, that was well said. Everything comes at a price.

    I had a post half written earlier along those lines, but it sounded too preachy so I erased it. You did a better job.

  10. Doyle’s babbling on the news was disgusting. This guy has the charisma of a tree stump! He seemed to be accusing GM of being irresponsible and almost criminal for making a capitalist business decision. That is the problem with government careerists like Doyle that don’t know how to confront financial problems by cutting costs. GM did the only thing they could do and it is a responsible action. They sure won’t be putting a new line into an old dilapitated facility. Would you recommend breast implants for a 90 year old woman?