Fair game.

For once I am compelled to defend GM. As a former senior manager from a different Big Three firm, I find defending my long-time competitor to be counterintuitive. However, your May 16, 2005 article "Global Motors" requires a rebuttal. The general theme of the article is that GM colludes with the government, and then uses advantages gained there-from to ship plants and jobs overseas. I believe this perception is grossly misleading.

First of all, GM is a private corporation that has the right to pursue all legal avenues to produce profits to sustain itself. Seeking subsidies in whatever form available is not collusion, it is good business. For example, state governments regularly give tax breaks to companies to get them to set up business in their states, including GM and all its competitors. Foreign governments also give tax breaks and other subsidies to American companies to encourage them to bring technology and set up businesses to employ their people.

Secondly, when markets overseas reach a sustainable critical mass, economics dictate that building factories in those locations and selling locally is better for the corporate bottom line than exporting products from the U.S. Hence, factories have been built and sustained by the Big Three in Canada, Mexico, Europe, Brazil, Argentina, Venezuela, Japan (before 1950), Taiwan, Australia, and most recently, Thailand, India, and China. Japanese and European automakers also began to follow this trend about 25 years ago, when they began building factories in the U.S.

Contrary to your implication, the above strategy does not diminish industry vehicle production levels or jobs in the U.S. Only a small fraction of the vehicles sold in North America today are imported. The issue for GM is that they are losing market share in the U.S., and other U.S. manufacturers, like Toyota, are gaining share. The reasons for this are many, but it's not for lack of effort by GM. Several factors contribute, such as high union costs (versus non-union foreign-based competitors), high cost of U.S. health care, industry overcapacity, and higher relative subsidies by foreign governments of their companies. The diminishing number of U.S. automotive workers since the 1980s has not been caused by outsourcing. It is principally due to the incredible strides achieved in productivity in one of the world's most competitive industries.

While I agree with your assessment that we have too many government subsidies, our efforts as Americans should be to pressure our political leaders to get government out of the way and let the private sector work, not to blame valid private sector companies who are the real generators of wealth for this nation. Remember that cars made by American workers in a Toyota plant in Tennessee and sold in Chicago are also American products. That's capitalism at work.

WILLIAM WILCOX

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