As noted in this space a little while ago, the Centre for Automotive Research (CAR) has delivered an epitaph of the government bailouts of General Motors and Chrysler back in 2009.
CAR’s “estimate on the quick public return on the final net investment in GM and Chrysler” is, as far as the U.S. government is concerned, $13.7-billion (U.S.) spent to bail out GM and Chrysler. So “the U.S. government saved or avoided the loss of $105.3-billion in transfer payments and the loss of personal and social insurance tax collections—or 768 per cent of the net investment.
“Additionally, 2.6 million jobs were saved in the U.S. economy in 2009 alone, and $284.4-billion in personal income saved over 2009-2010.”
I’ve already argued the benefits of the bailout, so you won’t get that here. Instead, how about some new facts? What’s startling about the latest CAR report is how concisely it depicts what goes into making cars for the mass market – for you and me.
For instance, the typical intermediate-sized vehicle, such as a Ford Fusion or a Honda Accord, contains approximately 14,000 individual parts. Did you know that of the suppliers who sell parts to GM, 58 per cent also sell parts to Asian manufacturers? Only 51 per cent sell to Ford. And 65 per cent of the suppliers that sell to Asian manufacturers sell to Ford. I could go on, but the point is, the suppliers that sell to Ford and GM and Chrysler sell parts to import brands, too.
Integration. The auto industry in North America, from original equipment manufacturer to parts supplier, is massively integrated. It’s big, it employs millions and some would argue it’s too big to fail.
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