Made in China: Hummer, Volvo, and Saab

GM has sold its Hummer name to China in an effort to trim some of the fat that has been dragging the company down and caused its bankruptcy earlier this year.  The Chinese are also looking at getting their hands on Volvo and Saab, both car manufacturers have indicated that they would be willing to consider offers as soon as early November.  This certainly represents a shift from the norm, but what does it mean for the global economy, and, more importantly, what could it mean for the average American consumer?

The idea of Hummers being built in China lends even more irony to the gluttonous image that has come to fall on the manufacturer.  But a closer look at the situation and reveals some very interesting and very telling facts that may not be as easy to digest as the news that the manufacturer will be heading overseas.  US production jobs, union jobs, and manufacturing jobs, especially those in the auto industry have all but disappeared from the US mainland.  Other countries like China now have the infrastructure and labor capital to easily produce what the US once did and more.  The Chinese will be able to produce Hummers for likely half the cost, with millions of people looking for jobs and willing to do whatever is necessary to drive China’s newfound obsession with consumerism.  Think America, circa 1993.  Things were booming and the manufacturing and production jobs weren’t quite cut out of the US picture yet.  This is China today, and they stand poised to overtake the US as the global economic production leader.

Volvo and Saab are both being considered by Chinese companies, which would provide new homes for these manufacturers in a land where labor resources are cheap and plentiful.  It’s tough to say whether or not the quality will be severely affected by the moves, but the cost and ultimately the sticker price will certainly look different.  The great role reversal is beginning to occur.  Those countries with enough human capital and enough desire to advance their economies are beginning to outpace the once great imperialist nations and economies of the world.  The UK is no stranger to the outsourcing of millions of jobs.  That country hardly produces anything anymore, and its economy is on the edge of a cliff because of that fact.

The only way for the US and other countries like the UK to dig themselves out from under this manufacturing and production job fiasco is to begin to produce goods once more.  A technological renaissance is necessary to create the factory jobs that once helped the US thrive against its Asian rivals.  In fact, for the better part of the 20th Century, the US had no real automobile manufacturing competition from Asia.  The notion that China is now going to feed American products back to American consumers is quite unsettling, and the long-term economic implications are quite profound.  Sure it is compelling to think that a company like Hummer is in Chinese hands now, but that company’s sale and move overseas is just one example in a long list of examples of the outsourcing of solid consumer goods from the US over the past decade and a half.