GM quits South Africa as car giants go from a credit fuelled boom to a debt produced bust!

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THE shock decision announced last week that General Motors (GM), the world’s largest car manufacturer, is ending production of vehicles in South Africa is a brutal reminder that the industry, held as the infallible barometer of capitalism’s underlying strength, is on the verge of collapse internationally.

GM has been producing vehicles in South Africa since 1926, and the abrupt closing of its plant puts an end to the Chevrolet brand in Africa and immediately threatens the jobs of the 1,500 workers employed at Port Elizabeth. This is not the only continent or country that GM has pulled out of recently.

Just days before the South African announcement GM stopped selling any cars in India as part of its ‘restructuring plan’. Already it has pulled out completely from Europe with the selling off of its Vauxhall plant at Ellesmere Port in Britain and Opel plants across Europe, having previously ceased car production in Australia.

The South African union NUMSA said: ‘This is the second time that GM is pulling out of South Africa, and as NUMSA we smell a rat. We suspect that the shareholders got a very good deal at the expense of the workers.’

There can be no doubt that the shareholders have made a killing at the expense of South African workers just as they are making a killing out of car workers in Britain, Europe, India and Australia. At the start of this year it was reported that US car makers GM, Chrysler and Ford had produced record sales in 2016, and that shares in GM had shot up by 5.5% and Ford by 4.6%.

This was contrasted with the bankruptcy of GM after the 2008 financial crash when, along with Chrysler, it had to be bailed out by then US president Obama at the cost of $80.7 billion, in effect, nationalised to prevent their collapse. Since that bailout the motor industry has been projected as a fantastic capitalist success story with production levels in the US and the world reaching record heights.

But it is now becoming apparent that this phenomenal growth has been fuelled entirely on debt with sales of new cars being boosted by aggressively pushing people into car loans that they cannot afford. With echoes of the sub-prime mortgage crisis of 2008 – where American workers were force-fed house loans that they couldn’t repay, loans which were then parcelled up as bank assets and traded across the world financial system – so the same is happening today with cars.

More than one million Americans are behind with their car repayments while these sub-prime auto loans have been bundled together and sold as ‘securities’ to investors. The same is happening in Britain where more than 90% of all car sales are made on the basis of loans or leasing – already it is reported that the Bank of England is panicked enough to start looking at what happens if unemployment or interest rates increase and huge numbers of households default on these repayments, precipitating a crash throughout the banking system.

For the giant car companies like GM and Ford all that matters is that the crunch is coming, sales are dramatically falling, and that at all costs their shareholders’ profits – the rat that NUMSA smells – must be preserved by closing down plants across the world and retrenching in the sure knowledge that, when it comes to the industry going over the financial cliff, it will be bailed-out by the taxpayer.

The working class from South Africa to Ellesmere Port will pay in jobs and the entire working class will pay through austerity to keep the bosses and bankers from going under. The only answer for workers in every country is the same. Immediately, unions like NUMSA and the TUC in Britain must demand no closures of any industry.

Every plant and industry threatened with closure must be immediately occupied and these occupations defended by the entire trade union movement. If capitalism cannot produce what is needed then capitalism must be ended through the expropriation of all industry and banks under the control and management of the working class as part of a planned socialist economy. This is the only way forward for the working class internationally.