The phrase went on to define imperial America: "what is good for General Motors is good for the United States," John Foster Dulles said, meaning that diplomacy and the U.S. national interest were embedded with the global expansion of U.S. firms. But after this week's Chapter 11 filing, what is good for General Motors may not necessarily be good for the United States. But it may be for Mexico.
What General Motors needs is to scrap old plants, shrug off costly labor contracts and hefty pensions, and sail on to a new start. But what the United States needs is to protect jobs and incomes for scores of families related to the giant automaker.
Company managers are appointed to maximize profits for its shareholders, but in this case it's a little bit different. GM's largest shareholder maximization goal may not be profits, but employment, despite of what Barack Obama says about the criteria to be used by GM's new managing board.
Because if GM really wants to become a contender again, it has what it takes south of the Rio Grande: a partner with 105 million people, with lower labor costs, ample infrastructure to ship exports abroad and flexible labor regulation.
Cities such as Silao, Ramos Arizpe, Saltillo, Toluca and San Luis Potosí already host some of GM's vanguard facilities in the world.
Mexican GM plants assemble mostly four-cylinder vehicles and may be set up to manufacture hybrid and ecology friendly cars, such as the one required by the new U.S. government blueprint. Mexican plants, for GM, are among the lowest cost and most efficient plants in the conglomerates.
The easiest way out for GM is to move as much of its production capacity as it can down to Mexico. But that's easier said than done. What would U.S. taxpayers say the moment they find out that their taxes used to bail out GM are being used to ship jobs, not cars, south, that they are paying taxes so that their precious few jobs are GM ... G(one) to M(exico)?
Economically, Mexico has long been part of the U.S. Sunbelt. Swaths of northern Mexico are closely intertwined with Texas, California or Arizona rather than with Mexico City, and the extensive presence of U.S. manufacturers in this region has created a labor force that fits well with the needs of U.S. global companies besieged by global competitors.
But it takes two to tango.
The need for GM of moving even larger segments of its production capacity to Mexico will not translate into effective new capacity building in Mexico if our government does not take an active stance in these circumstances.
There are so many things Mexico can offer the new GM and the Obama administration to boost the chances of the automakers staying alive. But the big questions are: How will domestic U.S. politics play into the equation, and how aggressive are Mexican officials willing to be in order to take advantage of this historic situation?
So far the Mexican response has been muted. Economic officials have been looking at developments at arm's length, and my impression is that they think that market forces alone will fix things out.
It was not market forces that forced GM into bankruptcies and ended propping $30 bln into GM. It was not market forces that bailed out troubled U.S. banks with taxpayers' money. We need to help GM on this. What is good for GM is good for Mexico. The fate of GM and that of the Mexican economy are so interdependent that the strategy of survival should be outlined jointly by the two parties.