My favorite online columnist Andrew Leonard wrote a post about GM selling their steering unit Nexteer Automotive to a Chinese SOE Pacific Century Motors, right after GM worked out a salary reduction deal with the union for this plant.
One commenter on the article noted her fury for all the management waste, greed, and incompetence which led to the fall of Nexter, which (from the commenter) used to be a Delphi company. Now I wonder, what will the new company be like with a Chinese SOE owner? Here are my predictions:
1. As the management team of Nexter will not change, they will be just as improperly mismanaged as before, only now the workers will make less money and be more pissed-off.
PCM said it planned to leave intact Nexteer’s management team, led by Bob Remenar, its president, and respect the company’s five-year labour agreement with the United Auto Workers Union.
2. The Chinese partner will take technology to China. However, most of that technology amounts to project specific modifications which will not really help the PCM make more, better products.
3. The Chinese partner will not close down the factory nor operations in America. Besides the bad press (Communist SOE lays off American Workers!), this is just not their strategy. The stakeholders on the Chinese side are investing in platforms to protect their business should the US become more protectionist.
4. The SOE partner will manage Nexter very loosely, in a hands-off way. They will realize they know nothing about managing a factory in America. However, the share-holders of PCM are basically the municipal government of Beijing and some other SOE groups. Like other SOE shareholders, they will manage the factory in a very “bottom line” manner, with strong pressure to make tight financial goals. This, combined with communication problems with the new shareholders, quite possibly will force out the current management team. Which may be a good thing for the workers.
Anyway, this is how I see this will play out. Anyone have different predictions?
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