Barack Obama touts General Motors as his success story. But this week’s news of a 41 percent drop in profits tells another tale.
I was in Germany this June as GM planned its Opel restructuring, and the General rightly points to its sagging European operation as the problem—even as its U.S. and Chinese units continued to post strong numbers. But the good numbers in the U.S. and China should hardly come as comfort for Americans, because the Obama Administration’s goal is to make America more like Europe.
That is, Opel is suffering because it is a victim of Western Europe’s anti-business, Obama-like policies.
Opel reported an operating loss of $361 million in the face of a deepening European debt crisis that is a harbinger of Obama’s own mounting debt debacle. With debt dragging the EU into another recession, Opel faces a difficult restructuring made more perilous by powerful European unions that foreshadow Obama’s own Big Labor vision. Because unions are dictating European labor law (NLRB anyone?), GM has been unable to close a plant in Europe since World War II—despite red-ink-gushing excess capacity.
And don’t forget an economy run by the Green Church. “Somehow,” Obama Energy guru Steven Chu once famously said, “we have to figure out how to boost the price of gasoline to the levels in Europe.” Well, European gas prices are now at a stratospheric $8 a gallon, making profit margins tight for Euro-automakers that are selling low-margin gas sippers. Furthermore, the automakers are straining under Europe’s own version of CAFE regulations that impose strict limitations on carbon dioxide emissions.
In North America, where SUVs and big sedans still bring big profit margins, GM reported an operating profit of nearly $2 billion. But there are signs that the U.S. economy is slowing, too—a result of Obama’s Euro-like regulatory and tax policies. Sales at both GM and Ford fell in the month of July as the manufacturing sector faltered. Companies continue to sit on cash and resist hiring for fear of the January tax cliff and the costs of Obamacare.
That’s the European way. Is Opel GM’s—and America’s—future?