Barack Obama touts General Motors as his success story. But last week’s newsof a 41 percent drop in profits tells another tale.
The General rightly pointed out that its European Opel division dragged the company’s numbers down while its U.S. and Chinese units continued to post strong numbers. But this should hardly come as comfort for Americans as the Obama Administration’s goal is to make America more like Europe.
That is, Opel is suffering because it is a victim of anti-business, Obama-like policies in Western Europe.
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 crisis – now running upwards of 70 percent of GDP and piling up trillion dollar annual deficits. With debt dragging European nations into another recession, Opel faces a difficult restructuring made more perilous by powerful European unions that predict Obama’s Big Labor vision for America. With union rules and regulations embedded in Europe’s laws, GM has been unable to close a plant in Europe since World War 2 – despite red ink-gushing excess capacity.
And don’t forget an economy run by the Green Church. With gas prices at a stratospheric $8 a gallon (“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.”), profit margins are tight for Euro-automakers. Furthermore, they are straining under Europe’s own version of CAFE regulations that impose strict CO2 emissions limitations.
In North America, 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 costs of Obamacare and the January tax cliff.
That’s the European way. Is Opel is the future of American industry?