Apr 30, 2007
Toyota sold more vehicles worldwide in the first 3 months of this year than did General Motors. The Detroit news media reacted with shock and awe.
GM “reacted” by coincidentally filing its executive compensation report. CEO Wagoner got 10.2 million dollars in 2006, Vice-chairman Lutz got 8.4 million. The Detroit Free Press estimated that this was DOUBLE what Wagoner and Lutz got in 2005!
If anyone is worried about Toyota’s performance, it’s not GM. In fact their strategy for several years has been to cut back on production of smaller, lower-profit vehicles – the vehicles that are the specialty of Toyota. Vice-Chairman Lutz said earlier this year: “It’s better to sell four million vehicles at $5,000 profit than five million at no profit.”
Of course GM doesn’t ever make “no profit.”
It’s profit and more profit that drives GM decisions. And these days, they make their money faster in financial wheelings and dealings than in production of useful items – such as, for instance, safe affordable economical transportation!
Never mind that the money they amass for their financial whirls comes first and foremost from selling goods produced by GM workers, and from the concessions and cutbacks in jobs, wages, hours and benefits these workers have given up. GM’s 2006 production of 9.1 million vehicles and its record 2006 revenues of 207 billion dollars is an indication.
But “in the business environment in which we operate,” investing in useful production does not generate the largestpercentage of profits per dollar. GM does as does every other large profitable corporation these days. They move the money they make out of the productive sectors and into buying, selling and deal-making in the financial sectors.
GM uses its financial arm, GMAC, to construct an enormous financial and real estate empire. In l982, a GMAC subsidiary started a home mortgage unit that is now the U.S.’s seventh largest originator of home mortgages AND the third largest seller of mortgage-backed securities. The dealings of these two units alone involve some 235 BILLION dollars!
In l999, another GMAC unit paid 1.8 billion dollars for the Bank of New York’s commercial finance unit, moving GM into commercial real estate. There is also the GMAC Insurance Group, which owns eight property and casualty companies. There is truly no way to assess GM’s true wealth!
These financial dealings assure that GM can shift money made in production into financial speculation, while GM’s accountants show “losses” year after year in the automotive sector. GM can still pay fantastically large salaries to chief executives, pay large dividends to shareholders, and put money into plans to buy back its own stock!
Thus, the sacrifices of auto workers, under the delusion that GM and other companies are “in trouble,” do nothing more than feed the endless wheelings and dealings of a tiny group of investors skilled in making mountains of paper money.
Workers don’t need to feed these bloated parasites any longer!