What's What

GM Under Foreign Control Not Farfetched

By SARAH KARUSH Associated Press Writer
© 2006 The Associated Press

DETROIT — It's been said that what's good for General Motors is good for the country. But with a proposal now on the table to link the world's largest automaker with Japan's Nissan and France's Renault, the question arises: which country?

Billionaire Kirk Kerkorian, who owns 9.9 percent of GM's shares, is proposing that Renault SA and Nissan Motor Co. each buy stakes in General Motors Corp. and add the American industrial icon to their existing alliance. On Friday, GM's board of directors voted to pursue "exploratory discussions" with Renault and Nissan.


The idea of foreign companies exerting control over GM doesn't sit well with some U.S. politicians, union leaders and admirers of the company. Their discomfort is compounded by the fact that the French state holds 15 percent of Renault.

"I'm in favor of Michigan winning. I'm in favor of jobs coming here and the concern is, that if it's controlled by businesses on another continent or other continents, that we may end up on the losing end," Gov. Jennifer Granholm told reporters Wednesday in Lansing. "I don't know that to be the fact. Maybe it will make us stronger. But that's certainly my concern."

GM was founded in 1908 by Flint businessman William Durant, who built the company through a series of acquisitions, beginning with the Buick Motor Co. and Olds Motor Works. Later, legendary chairman Alfred P. Sloan pioneered many fundamental ideas of modern corporate management and marketing.

During World War II, GM converted all of its production to the war effort, turning out planes, trucks, tanks, guns, shells and other military equipment.

In 1953, President Eisenhower named GM head Charles E. Wilson secretary of defense. At his Senate confirmation hearing, Wilson was asked about whether his loyalty to the automaker could create a possible conflict of interest. "I cannot conceive of one because for years I thought that what was good for our country was good for General Motors, and vice versa," he answered. A simplified version of the quote became ingrained in the nation's collective memory.

Early on, GM had a global presence, establishing an export division in 1911 and a plant in Argentina in 1925.

David L. Lewis, a former GM speechwriter and a professor of business history at the University of Michigan, recalled the pride he felt working for the company from 1959 to 1965.

"General Motors was at one time not only No. 1, but in such a big way. It was Gulliver among the Lilliputians," Lewis said. "People used to say all the time that something else would be 'the General Motors of.' It was a yardstick."

Lewis said he was saddened by the prospect of a tie-up, though he acknowledged it might not be bad for the company and its shareholders.

United Auto Workers President Ron Gettelfinger said the idea would be bad news for workers. "We're seeing a further erosion of good jobs in the country should this come about," he told WJR-AM on Friday.

But Jim Graham, president of UAW Local 1112 in Lordstown, Ohio, said he was trying to take a pragmatic view.

"In the global market that we've been thrust into I guess the more alliances you have the better off you are," he said.

But on the emotional level, Graham, who represents workers at a plant that makes the Chevrolet Cobalt, said the idea was hard to accept after years of urging people to buy American.

Beyond symbolism, it probably doesn't make much difference what country GM's owners are from, said Charles Ballard, an economics professor at Michigan State University.

If sacrificing an all-American identity could help restore GM's financial health, "which would you rather have? Which is better for GM workers and GM stockholders?" Ballard said.

Asked to respond to concerns about foreign ownership, U.S. Senator Carl Levin said Thursday: "We own a British car company, don't we? Doesn't Ford own Jaguar? Who owns Chrysler?"

But Levin told reporters in Southfield that he lacked information to comment directly on the proposal.

Chrysler Corp.'s 1998 marriage with Daimler-Benz AG was billed as a merger of equals, but critics say the German company simply swallowed the American one.

If something similar were to happen to GM, Ford Motor Co. could claim the title of only remaining U.S. automaker.

Currently both companies trumpet their American identity in advertising, for example, with the Chevrolet slogan "An American Revolution."

Ballard said GM would want to do some careful market research on consumer reaction to an alliance before charging ahead. But he added: "At some level, everybody knows that all these companies are international."

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Associated Press writers Kathy Barks Hoffman in Lansing, Mich., and David Runk in Southfield, Mich., contributed to this report.

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