GM using U.S. bailout to build in Brazil
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| Mon, 02-02-2009 - 6:38pm |
It looks like GM is going to use U.S. bailout funds to help build in Brazil.
http://www.laht.com/article.asp?CategoryId=12396&ArticleId=320909
General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program
By Russ Dallen
Latin American Herald Tribune staff
SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.
According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."
"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.
Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.
GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.
For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.
The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.
This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

Did you see this video about Ford's factory in Brazil?
http://info.detnews.com/video/index.cfm?id=1189
Found link at the bottom of the article you posted.
Why aren't US
I couldn't find the date on the original article. I strongly suspect it's from last year.
Bailout Watch 237: GM Denies Brazil Bailout Story (Nov. 2008)
http://www.thetruthaboutcars.com/bailout-watch-237-gm-denies-brazil-bailout-story/
When Autoblog caught wind of the Latin American Herald Tribune story quoting GM Brazil’s CEO as saying GM would invest $1b worth of US bailout money in Brazilian operations, they knew there was something weird about the story. Ya think? The original LAHT story paraphrases (rather than directly quoting) GM Brazil’s Jaime Ardila as saying GM’s $1b investment would come from bailout bucks, lending some credence to the official GM position that “something got lost in translation.” But even if the LAHT’s translation was completely accurate, GM would have denied this story up and down. Investing American tax dollars in the developing world? Perish the thought. For one thing, there is no bailout. Yet. If Ardila did say that bailout bucks were going to Brazil, he was way off the reservation, and endangering the still-slim odds of a bailout happening. In any case, we will know what the bailout bucks will be spent on when GM submits their plans for the money to congress on December 2. And don’t bet on seeing a billion dollar line-item for Brazilian investment, for the obvious political reasons. But as an international company that has been supported for years by its overseas units, GM will have to finesse its bailout plan to appeal to congress’s national interests. With nothing but cuts in sight for GM’s North American operations, the General will have to rely ever more heavily on profits from its growth markets abroad to achieve the “viability” congress wants to see. Unfortunately, that viability trades off directly with the bailout’s other goal, which is saving American jobs. Such are the dangers of national bailouts of multinational corporations.
GM not sending any bailout money to Brazilian operation (Nov. 2008)
http://www.autoblog.com/2008/11/22/gm-not-sending-any-bailout-money-to-brazilian-operation/
A story has surfaced on the Latin American Herald Tribune (a publication we hadn't previously heard of) stating that General Motors was planning to invest $1 billion in it's Brazilian operations to update its South American products. So far, that part of the story is true. However, that's where the truth apparently ends. The story goes on to say that GM plans to use money obtained from the proposed government bailout package to pay for the Brazilian investment.
We contacted General Motors to check on the story and spokesman Richard James replied, "I don't know if something got lost in translation but Jaime Ardila, President of GM Brazil did NOT say that funding for GMB projects would come from the US financial aid package. GM Brazil has $1 billion in investments that have already been approved but they will be financed by our Brazilian operations through local sources."
Just as Opel (GM's German division) is going to the German government for assistance, GM Brazil-Mercosur is raising capital in that country. During the congressional hearings this week, CEO Rick Wagoner also indicated that GM operations in different regions are each funding projects locally in response to a question about a recent expansion in Russia. It appears that any money that GM gets from the US government will stay here.
I don't think it's that black and white. I think that some funds will somehow appear wherever they crucially need it. Grant it that the bulk might stay at the designated target area, but not all actions are always in line with plans... especially with so many people involved in these big companies. They'll find some way to transfer funds from one account to the other...