What Is More American than GM?

It’s still true: General Motors symbolizes America, but hardly in the way it used to. The company announced its sales in China were up 67 percent, an amazing figure. GM sold 1.8 million vehicles in China last year, which should top its dismal U.S. sales in 2010. And there is further news that its sales in India should increase by 43 percent this year, as the Chevrolet Beat (right) becomes a “key pillar” in the company’s Indian growth.

India and China have become very important to GM, as the U.S. market declines and the company’s fortunes are seen to be more than ever focused on foreign shores. Growth is predicted to slow somewhat in China next year, even as government tax policies encourage small-car sales and government purchases of cars increase.

So it’s conceivable, even likely, that GM will soon earn more abroad than it does at home. As the U.S. economy continues to suffer from trade imbalances with China in particular, the auto industry will indeed become captive to foreign markets, just as other U.S. industries have. Ford does much of its business abroad, and Chrysler is now in the hands of Fiat.

And Detroit, more than anyplace, suffers the consequences. Today’s Washington Post talks of how the auto industry collapse has left Detroit residents “trapped, without work, in houses they can’t sell, in neighborhoods where they fear for their safety.” Even as a poll shows 63 percent optimistic that their situations will get better, Michigan could be the harbinger of worse times to come for every area of the U.S. One policy-maker says,

Some think that it is just the auto industry, but the same dynamics that have undercut the auto and manufacturing industries of Michigan are also undercutting the high-tech labs in Silicon Valley and they’re also undercutting medical services in Pittsburgh.

Though 7 out of 10 Detroiters are counting on a comeback in the car industry, the only growth prospects are in China and India. As the industry downsizes at home and moves abroad, there is tremendous pain in Detroit as a workforce whose skills are no longer in demand is forced to retrain at a time when there’s no money for retraining and not yet any viable industries to retrain for. Add to this the racial divide—a largely black city and white suburbs—with no confidence that government can help, and you have a recipe for incipient disaster.

Our economy is more out of whack than many realize. Could the car companies do more to ease the pain of unemployment in Detroit? What’s your opinion?

—jgoods

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