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Who is Really Being Subsidized?

George Will has his journalistic turban in a wad over the suggestion that Congress should give, loan, whatever money to GM and Ford, while being a consultant ot the Japanese Auto Manufacturers.

I began teaching in San Antonio five years ago when the now completed road to the Toyota plant was an already worn out two lane 'road to nowhere' but to   a few substandard Mobil  homes for folks who clearly were not particularly interested in anyone knowing their exact location. Drive down that road today, wow, what a difference. Marvel at the re done overpass at Zarzmora and Loop 410. Ponder the re done service roads on both sides of Loop 410.  This is no accident.

Even the Dem leaders of San Antonio gave Republican Governor Rick Perry high marks for his 'help' In getting Toyota here.  No doubt several cities vied for that 'privilege.'  As always reality has not matched the vision as the employees are employed but no product is coming off the line. Toyota made the seem mistake as GM and Ford, bet on big. Now their Tundras sit unsold on dealer lots and the billion dollar plant is an all too sudden reminder than things can change quickly.

My point is that there is no way of tallying ALL the subsidies given all the Japanese manufacturers who are now across the southern US.  Without that number is it is near impossible to put the request form GM in perspective.  GM got nothing in terms of tax breaks for its Arlington plant which does exactly the same thing as the Toyota plant in San Antonio, make big SUVS and trucks that sit unsold. Yet Toyota got all sorts of tax breaks and capital improvements such as roads for locating here. GM sits landlocked and cannot get any break for the thousands employed at its plant.

Funny George did not mention that….

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3 responses to “Who is Really Being Subsidized?”

  1. jolene bear Avatar
    jolene bear

    Well, maybe if American businesses were given all the perks like Japaneese businesses they would be doing better!

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  2. Tina C Avatar
    Tina C

    I have never, thank goodness, had the opportunity to be an accountant for a major manufacturer, but with working in public accounting for so many years I’ve seen scaled down models of all sorts of businesses. In order for businesses to stay competitive and up to date technology wise, it takes money. The bigger the business, the more money it takes. With the rising gas prices, go-green movement, etc, etc, these plants not only are having to keep up with technology, they are having to sink vast amounts into creating new technology AND re-tooling their plants at the same time. This is not a cheap undertaking – if you cannot re-tool equipment X to fit the new technology, then it would need replaced – can you re-sell old? maybe not, then what – scrap $1m piece of eqt and buy/build new technology that costs even more because it’s “new” technology? My thought would be that unless you have tons of money lying around, which none of these companies do, that it would be a very difficult proposition. Can’t borrow the money from any banks right now, not sure how the capital lease business is going, but it must be tight too, so what do you do? Keep building the 5 mpg super sized trucks and hope they sell? These companies have to find some way to hurdle this barrel – and since govt is responible for the barrels costing so much right now (let’s take vacation instead of voting on drilling among other brillant moves over the last 10-15 years….) – why not ask them for help?
    As for San Antonio & Toyota – long time natives have seen this woeing by the politicans (i.e. local govt) many times over the years. Two of the biggest were Sea World (with broken promises on both sides of the table) and the Alamo Dome (still waiting on a pro team to move into it)…

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  3. Dennis Elam Avatar
    Dennis Elam

    Tina
    Good analysis, your explanation pretty well explains what happened to American Motors as everyone else re tooled for front wheel drive, moving the entire powertrain to the front of the car to make more room in the rest of the car. AMC simply did not have the money and so produced memories like the Gremlin and the Pacer (the first wide small car, one of their regular secans with a cut down wheelbase. No money for fwd or ohc four cylinder engnes, chrysler bought amc kept jeep and the rest of the product line was toast. To a degree this happened to Studebaker and Packard before that.
    I do not know whether Toyota could convert its just completed pickup plant to make a Prius, they probably don’t either….
    DLE

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