Explain the Difference
Is there any difference between Hugo Chavez and Barack Obama in terms of how they approach the auto industry? "Make the kind of cars I thing you should, or the government will take you over."
Mr. Chavez said his socialist government is going to apply strict quotas regarding the number and types of vehicles auto makers can produce. The president also ordered his trade minister, Eduardo Saman, to inspect the Toyota plant, saying it may not be making enough "rustic vehicles," a style of all-terrain vehicle that is much-needed in Venezuela's countryside, where they are often converted into minibuses.
"They'll have to fulfill [the quotas], and if not, they can get out," Mr. Chavez said during a televised address. "We'll bring in another company."
He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it. "We'll take it, we'll expropriate it, we'll pay them what it's worth and immediately call on the Chinese," Mr. Chavez said. Chinese companies, he said, are willing to make vehicles made for the countryside.
It seems like Venezuelan workers want the same deal Obama gave the UAW:
Venezuela's auto sector is in tatters amid recurring labor problems that have led to a lack of productivity. Analysts say many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with that status.
By the way, this seems like a suckers play -- please put more valuable stuff in your store window so when we break in there is more to steal:
Mr. Chavez said late Wednesday the Japanese auto maker needs to transfer more new technologies and manufacturing methods from headquarters to its local unit in Venezuela.
While Mr. Chavez directed most of his criticism at Toyota, he said other auto assemblers, including Fiat SpA and General Motors, are also guilty of not sharing technology from abroad with their Venezuelan units.
The left often seems to imply that the US government is too eager to shed blood to protect American industry overseas, but in point of fact American industry has had to live with the reality for decades that foreign governments often steal billions of dollars in American-owned assets with barely a peep being heard from the US government. For example, there is really no such thing as a Saudi or Libyan or Venezuelan or even Mexican oil industry - those are just assets paid for and built by private Western concerns and then stolen by local governments.
Stan:
"please put more valuable stuff in your store window so when we break in there is more to steal"
Exactly. And then he'll say the resulting lack of investment in Venezuela is bourgeois oppression.
December 24, 2009, 6:09 pmCT_Yankee:
It should be standard practice to build some form of self destruct sequence into the buildings and equipment in suspect countries. Let the machine dump it't oil and run until siezing up, then apply overvoltage to the circuit boards and ignight the buildings. After one or two of your charred rubble sites get nationalized, the socialists might hesitate on the next.
December 24, 2009, 6:12 pmRoy:
Brilliant. Hugo has found how to reduce Venezuela's carbon footprint.
December 24, 2009, 6:42 pmed:
Well, one obvious difference is that the US Government bailed out the Detroit automakers and is now the major owner of GM. So in this case it really does make some sense that the govt calls the shots. It's probably a bad idea for practical reasons, but it's not so outrageous as you suggest.
December 24, 2009, 8:01 pmMichael:
Toyota is smart enough to get out. GM? Their 5 to 10 years behind the technology curve. Fiat? Chavez has about as much chance of Italy bailing out Fiat in Venezuela as Obama has of Italy bailing out Chrysler.
December 24, 2009, 10:20 pmMJ:
Those who forget the lessons of history are doomed to repeat it. Nationalization of the auto industry has not been the key to innovation and prosperity in the U.S. and there is no reason to believe it will work for Venezuela.
And good luck attracting investment after you expropriate the assets of another foreign firm. The Chinese know where their bread is buttered, which is why they "buy American".
Setting quotas and centrally planning production in the Venezuelan agricultural sector has resulted in periodic food shortages and a flourishing black market. I'm sure it'll work wonders for the auto industry.
December 24, 2009, 11:29 pmRob:
Somebody needs to pull a "Francisco d'Anconia copper mine" in Venezuela!
December 25, 2009, 8:00 amRuss:
Absolutely correct about US Gov not doing anything. I'm an american running a honduran fishing company. The nicaraguans illegaly came in to Honduran waters and stole my boat. The US embassy in Tegucigalpa did nothing to help, even though I GPS proof of where my boat was. The same embassy that supported Zelaya. The same embassy that has spent US taxpayer money bringing 'hope dancers' and 'positive rappers' from the US here to perform.
December 25, 2009, 8:10 amperlhaqr:
Rob: My thought exactly. I wonder how hard it is to burn down a car manufactory.
December 25, 2009, 8:18 amJohn:
Someone gave me a book of Al Capp's Fearless Fosdick strips and this reminds me of the poisoned beans story where F.F., seeking to protect the citizens against accidentally eating the only can of poisoned beans, shoots everyone with an opened can of beans thru the head in order to protect them. Finally, he eats the beans himself, but being F.F. survives the experience. One can only hope Sheriff Joe is not as durable. He is certainly not as funny. John Looney
December 25, 2009, 1:32 pmElamBend:
Nationalization, it worked for the British Car Industry.
December 25, 2009, 6:20 pmMesa Econoguy:
Did British Leyland ever build a good car?
December 25, 2009, 7:57 pmDrTorch:
Great insights.
I hope Toyota is smart enough to get out.
Rob, I would suggest it's more like Dagny's handling of the RR for the San Sebastian Mines: pull out everything of value. Leave the equivalent of 19th C wood burning steam engines. (Hey, I just finished reading the book, so it's all fresh to me!)
December 26, 2009, 8:48 amKen:
Rob and perlhaqr: Perzackly.
"He said if the inspection shows Toyota isn’t producing what he thinks it should and isn’t transferring technology, the government may consider taking over its plant and have a Chinese company operate it. 'We’ll take it, we’ll expropriate it, we’ll pay them what it’s worth and immediately call on the Chinese,' Mr. Chavez said."
And the Chinese can put out the fire and sift through the rubble. Heck, if it was my plant I'd turn that sucker into a Superfund site and THEN burn it.
December 26, 2009, 7:00 pmrxc:
It is one thing to tell the automakers what to make - it is another to get the people to buy the product. I guess Obama could figure out a way to make the preferred cars so inexpensive that they would be irresitable, but I would think this might cause other problems. Or he could tax all the non-complying vehicles, which is what the French do, and then everyone would have to produce the same thing, but I think the populace might not take this very well. The French are not happy about it, either, but they have been beaten into submission quite a bit already, and they are not allowed to own guns. But then, they have demonstrated that they can be quite "harsh" in dealing with former rulers...
December 27, 2009, 6:18 amMJ:
‘We’ll take it, we’ll expropriate it, we’ll pay them what it’s worth and immediately call on the Chinese,’ Mr. Chavez said.â€
Also, remember how socialist states like Venezuela determine "what it's worth". Toyota would be lucky to get anything out of the deal in such a "buyout".
December 28, 2009, 3:47 pm