• Aug 16th 2012 at 4:01PM
  • 40
A message to Bob Lutz, former General Motors vice chairman, and proponent of the Chevrolet Volt and Via Motors' plug-in electric vehicles. Regarding your guest column in Forbes lambasting the federal government for granting battery maker A123 Systems a Department of Energy grant and allowing a Chinese company to step in as an A123 investor/owner: Get over it!

While A123 Systems is in a desperate situation with financial losses related to the Fisker Karma – which keeps having problems – when it comes to federal financial support and making deals with Chinese investors, there are a few things you left out. For example: your own management role at General Motors when the federal government executed a large ownership stake investment and required GM to strip down the dealership network. Whether or not the feds should stay out of corporate bailouts or grant DOE grants and loans to greentech companies may be worthwhile to debate, but it is unavoidably part of the landscape these days, for better or worse.

Another irony is your criticism of A123 for cutting a deal with Chinese auto parts company Wanxiang since you say doing business with the Chinese government and corporations is bad for U.S. business and autonomy. You write: "If we can't get our act together soon, the country will 'go Chinese' company by company, institution by institution, industry after industry. There will be no need for a military conflict against an overwhelmingly superior force: the Chinese will simply buy the country, a little piece at a time."

The U.S. is no longer the sole dominant force in global economics and military prowess. I think this is just another aspect of seeing the global auto industry, and the global economy, as it really is. Chinese automaker Geely Group stepped in when Ford stepped out in 2010, and Ford and General Motors have partnerships with Chinese manufacturers selling products to the rapidly growing China auto market. There's also the part about global automakers setting up production facilities in China and selling their own products in the market.

Whether or not A123 Systems survives, the federal grant and Chinese investment do seem to be pretty logical in the context of what's been happening lately. There might even be a few positives to this situation, such as accessing a larger investment pool and market for green vehicles and technologies, as well as forging more peaceful relations with China.


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    • 1 Second Ago
  • 40 Comments
      PR
      • 3 Years Ago
      I'm saying that it is inherent to all forms of government throughout history, it didn't start with the Clinton years. Whenever you get 2 or more people together to make decisions, one person will always attempt to sway the decision to benefit themselves the most. This is human nature. Ayn Rand glorified it (which is the wrong answer) so I'm certain you are familiar with this concept. Governments are nothing but people trying to assert their will. It can be many people down to very few or just one person, but it will always be that way. There is zero chance of a utopia where this doesn't exist, so the best we can do is realize that in the real world this phenomena exists, and deal with it rationally. There is plenty of finger pointing to go around, like pointing at the companies who are asserting their will through the gov't. I blame the companies who abuse the gov't to force their will on everyone else, and I blame the gov't to the extent that it allows this to happen. But you just blame the gov't as if the companies are innocent. In fact in another thread you cheer on companies for asserting their "personhood" to influence the gov't MORE!! Then you argue that the gov't should get out of the way, and let companies proceed without any controls. Frankly, your position is schizophrenic. On one hand you bash the gov't for bowing to corporate demands, and then cheer on the corporations on making their demands.
      PR
      • 3 Years Ago
      Tax deals for businesses to move their headquarters or open stores date back to the 1950's. Federal tax Tariff deals for businesses date back to the 1800's. The Kings of England gave preferential tax status for aristocrats dating back to when Adam Smith wrote about the wealth of nations (and long before then too). Welcome to the real world.
      Grendal
      • 3 Years Ago
      This should be labelled as an "opinion" piece.
        Ford Future
        • 3 Years Ago
        @Grendal
        An "opinion" piece from Forbes, almost always wrong Forbes.
          Ford Future
          • 3 Years Ago
          @Ford Future
          Forbes is like "Seeking Alpha", it's news for suckers, with huckster's attempting to sell their book, their stock portfolio. Their opinion means nothing.
      Rr778
      • 3 Years Ago
      Ever notice journalists can't help themselves when it comes to sending political messages
      Brent
      • 3 Years Ago
      Is this a news article or an editorial?
      Aeroengr
      • 1 Year Ago
      The idea that selling out to China will somehow transform them is delusional. The financial sector likes investing there because it gives them access to a vast pool of slave labor and all of the ill gotten gains which go with it. Not to mention ducking environmental, health and safety regs as well as product liability. Everyone knows what the game is, so stop pretending. Lie to yourselves, but stop insulting the rest of us.
      Peter
      • 3 Years Ago
      China is in ascendancy, and America is not the hegemony it once was. It may not be comfortable, but humility is not necessarily a bad thing or a sign of weakness in a person or a country. There is a new emerging reality which is both threat and opportunity for both countries. GM already has noticed and will soon be selling more cars there than on this side of the pond.
      • 3 Years Ago
      Another irony being that his new found home of VIA relies on A123 for their own energy storage. Hmmmm
      porosavuporo
      • 3 Years Ago
      A123 had a bad product strategy. Once again, there are massive consumer markets for NiMh and NiCD batteries, they could have gone and built a solid business there first - and they had a great start with DeWalt power tools, a perfect match for their technology - durability, fast charge capability, and power density advantage. Instead they chose to go after uncertain yet to exist markets, like EVs and grid energy storage. Surprised that it didnt work out ?
      Scambuster
      • 3 Years Ago
      The problem with some Americans with a bigot mentality is a thorny issue. One the one hand, America is contemptuous of sovereignty and international treaties; has an international monetary policies that export inflation; has dishonest dealing in world trade; disrespects human rights and life in domestic and foreign land; impose economic oppression upon foreign nations that refuse to kowtow to US foreign policies; exports its domestic environmental pollution abroad; trade unfairly with the third world nations; is plagued by corruption, bribery, and illicit sex in DC; wages wars against the health and safety of people in at least four nations; accuses other nations of not playing a level field despite its own Central Bank manipulating the fiat currency; disrespect the freedom of expression and differences of Americans who protest against bailout of Wall St or foreign wars; grants justice according to ability to pay; in fact , everything except being the true America! On the other hand, America exists! Like a large, unwanted and unruly bully. America refuses to play by its own rules, and so far no government of any nation, has been strong enough to say, enough is enough! A sojourn of Asia reads like a propaganda writer Joseph Goebbel demonizing the Jews for Germany's troubles in the late 30s. However, setting policy aside, GM, Ford, IBM, and a host of others are America's better corporations in China. Avoiding the racist, imperialist and superiority attitude of past foreign businessmen in China, these modern and tolerant business have thrived in China even to the point of sustaining its domestic operations in USA. As to GM, AIG and several major Wall St banks owned by the US government that have significant presence in China, they are about as free as any socialist company can be of goverment influence.
        Marcopolo
        • 3 Years Ago
        @Scambuster
        @ Scambuster Your hatred of America has nothing to do with the fact that you work for a PRC company, has it? Like all apologist for totalitarian regimes, you ignore the most basic of fundamental contrasts, you are able to post your anti-US diatribes on the internet (a US invention) because the US encourages freedom of expression. In contrast, the Peoples Republic of China censors the internet ! Sino-phile apologists for the PRC, always play the race card ! Criticism of the Government of the PRC, is not bigotry to toward Chinese people ! Well, except in the PRC itself, where it's considered a criminal offense against the 'people' to criticize the Government or the Communist party, without permission !
        EZEE
        • 3 Years Ago
        @Scambuster
        Ignoring, of course, 100 million dead during various purges, cultural revolutions, great leaps forward, and other things where they did not need to negotiate, because it was all done in the name of the people (hi spec!).... Now let's all not question Scambuster's patriotism....that would be wrong!
      • 3 Years Ago
      As the article is about Bob Lutz, former GM vice chairman and a column in Forbes lambasting the federal government for granting battery maker A123 Systems a DoE grant and allowing a Chinese company to step in as an A123 investor/owner, now here's another Forbes column which go even further: Forbes - "General Motors Is Headed For Bankruptcy -- Again" It basically says this: "President Obama is proud of his bailout of General Motors.  That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market. Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company.  It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday.  This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion. Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share... It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling.  It would be too embarrassing politically.  Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero. GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term..." And then a long explanation why could it easily happen, based on GM's inability to deliver competitive vehicles in general (and especially in the all-important 'D-Segment'): E.g.: "Digging deeper, the picture just gets worse.  Despite its mild hybrid powertrain, which is intended to provide superior fuel economy (at the cost of a higher purchase price and reduced trunk space), the 2013 Malibu Eco delivered the same 26 MPG in Car and Driver’s comparison test as the Passat, the Accord, and the Toyota Camry." And because it cannot really compete with the European / Japanese / Asian carmakers, with GM's loss of market share comes a loss of relative cost-competitiveness, thus, there is not too much market share that GM can lose before it would no longer have the resources to attempt to recover... You can read the whole story here: http://www.forbes.com/sites/louiswoodhill/2012/08/15/general-motors-is-headed-for-bankruptcy-again/ Maybe the next U.S. company to be acquired by China is General Motors itself? Who knows.
        • 3 Years Ago
        @PR Some of the newest headlines (what the article is actually discussing): Forbes - "As Market Takes Off, GM's Share Hits A 90-Year Low" Bloomberg - "GM Sees New Models Staging Rebound From 90-Year U.S. Low" Simply put: GM's U.S. market share recently hit a 90-Year low (all the way back to 1922). But the most interesting article is the following (as it answers the question in my initial post):: Yahoo News - "General Motors Makes Headway in China; Special Report by Leading Financial e-Letter Investment Contrarians" This article also states: "In the U.S., GM’s market share fell to 17.5% in the first quarter, the lowest U.S. share in about 90 years." But here's the most interesting part: "...GM could turn out to be a buy low/sell high opportunity, according to Leong. There are numerous ways to play the Chinese auto sector, concludes Leong, suggesting investors buy an auto company, like GM, with exposure to China." http://m.yahoo.com/w/legobpengine/news/general-motors-makes-headway-china-special-report-leading-110027118.html?orig_host_hdr=news.yahoo.com&.intl=US&.lang=en-US Ooops, maybe I wasn't far from the reality with my 'poetic' question: "Maybe the next U.S. company to be acquired by China is General Motors itself?" Looks like Chinese investors are indeed seriously thinking about this option. Wow!
        PR
        • 3 Years Ago
        I guess that Forbes writer didn't read the story about GM being back to number one in the world in global sales by this other writer also at Forbes: http://www.forbes.com/sites/michelinemaynard/2012/01/19/gm-is-back-in-the-auto-sales-drivers-seat/
          DB
          • 3 Years Ago
          @PR
          Why would it matter if the author read that article? It's ancient history. Toyota has been #1 in world-wide sales for all of 2012. With a 300,000 units lead 6 months into the year, its seems fairly certain that Toyota will the #1 automaker in the world yet again. http://www.forbes.com/sites/michelinemaynard/2012/05/22/toyota-pushes-past-gm-again-to-become-the-worlds-no-1-carmaker/
          PR
          • 3 Years Ago
          @PR
          DB -- Because the article said GM "cannot really compete with the European / Japanese / Asian carmakers" and talks about "GM's loss of market share". When in reality GM has regained market share since 2008, and is out selling every single European car maker, and is in heated combat with Toyota for the top slot. Do you see the huge gap between the claims made, and reality? The fact that Toyota is a bit ahead between the two companies competing head to head for the number 1 spot actually confirms that GM is in the competition for number 1, which is a position that a whole lot of car companies would love to be in. If this author had read this story, he clearly wouldn't have made those claims.
          DB
          • 3 Years Ago
          @PR
          Comparing sales in sales in 2012 vs 2008 is dishonest. 2008 is ancient history. In 2008 GM had lost $40 billion and had already been read last rights. GM has had 3 changes in management since then. Why not compare sales from 1944 with 2008? GM’s European sales would look great! GM is not competing for number 1. It’s fighting for number 2. As of May, Toyota was 310,000 units ahead of GM. This is a significant lead. Whereas GM was only 120,000 units ahead of VW. Now consider the fact that GM includes the sales of minority own partner in its totals, while Toyota and VW do not. According to the WSJ, VW not GM was #1 in 2011. http://online.wsj.com/article/SB10001424052970204616504577171031057829416.html GM is not "out selling every single European car maker". VW, Peugeot, and Renault all outsell GM as companies amd VW, Ford, and Renalt all outsell Opel as brands: http://blog.thomsonreuters.com/wp-content/uploads/2012/03/cars-europe.jpg Also to Dave's comments, Toyota is significantly more profitable that GM: http://content.usatoday.com/communities/driveon/post/2012/08/toyota-big-profits-sales-booming-earthquake-camry/1
          DaveMart
          • 3 Years Ago
          @PR
          Sales are not profits, and they are what count.
      Giza Plateau
      • 3 Years Ago
      The guilty party would seem to be A123 who mysteriously generate big losses on a popular product sold at high price. Often refusing to sell their product might not have been the best decision either.
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