General Motors is in the process of closing its weakest brands like Pontiac and Saturn. It is selling its money-losing European operations, and it is ending its relationship with almost a quarter of its dealers.
For some time, GM's most valuable assets have been its fast-growing business in China and its often-profitable operations in Latin America. The bankrupt company has had the sense to try to hang on to those, knowing that they may be critical to the firm's turnaround and future earnings.
According to The Wall Street Journal, GM is already in the process of investing $2.5 billion in its Latin America operations by expanding manufacturing there.
The news shows the power of the Chapter 11 process. While American dealers are cut off at the knees by losing their GM franchises, the company's profitable operations overseas remain intact. This raises an interesting dilemma for the Administration and taxpayers. Why fund a company that will be cutting tens of thousand of jobs in the U.S. while supporting job creation in Latin America and China?
GM's move to retain some foreign divisions may make financial sense, but it is part of a program that will eventually create employment outside the U.S. while destroying jobs in America. What a way to use tax dollars.
Douglas A. McIntyre is an editor at 24/7 Wall St.