The latest example of greed in America doesn't reside within any major American company and their relentless focus on their bottom line but rather with an individual by the name of Kirk Kerkorian. Mr Kerkorian is perfectly willing to turn GM into a "general merger" of American and foreign companies just to get a big enough bump in the stock price so he can sell his shares. The 89 year-old investor, who owns 9.9 percent of General Motors, has proposed GM hook up with French-owned Renault, which owns 44 percent of Japan's Nissan. The proposed alliance could allow Renault and Nissan to buy as much as 20 percent of General Motors.

Mr. Kerkorian had the unfortunate experience of buying his GM shares when it was priced at over $30 per share. Even though GM's stock has improved markedly over the last few months, it appears that a gradual, measured turnaround isn't good enough for him. You'd think that slow and steady would be better than fast and fragile when you're talking about a huge American company that funds increasingly expensive health care for 1.1 million employees, retirees, and their family members.

But before I even delve into the reasons why a merger with a French-Japanese company that is owned 15 percent by the French government is a horrible idea, allow me to explain why the path GM is currently on is the right path and should not be disrupted.

General Motors has significantly improved efficiency in their assembly operations. According to the 2006 edition of the Harbour Report on North American productivity for auto factories, GM only takes 41 minutes longer than Honda to assemble the average model. In 1998, that gap was 14.62 hours. Taking into account that GM relies more heavily on larger models than Honda, it's entirely possible that this gap is because many of their models simply take longer to assemble. GM is also the most efficient of the Detroit automakers, even if you count German-owned Chrysler as an American automaker, which they aren't.

In addition to GM having the highest U.S. market share of any automaker, the company has made huge strides overseas. GM passed Germany's Volkswagen last year to become China's biggest selling automaker, posting 21 percent growth even as China took measures to cool their economy. Even Ford doubled its sales to China for the first half of this year and has also doubled its sales in Brazil, where its Ecosport SUV has garnered an amazing 80 percent of the SUV market there.

Although rising gas prices have cooled sales of large SUVs, GM has seen the smallest sales drops compared to the competition. According to a Wall Street Journal article on July 14, 2006, the sales of the Chevy Suburban dropped 24 percent during the first half of this year. But sales for the Toyota Sequoia fell 30 percent, Jeep Grand Cherokee sales fell 32 percent, Ford Expedition sales fell 29 percent, and sales of the Dodge Durango dropped 37 percent.

Now, onto why the Renault/Nissan combination is a bad bet for an investment-style takeover as far as GM is concerned. Despite Nissan's Chief Executive, Carlos Ghosn's, celebration last year over boosting the company's sales by a million plus vehicles, the Wall Street Journal reports that no one at Nissan is celebrating these days. Sales in Canada are down 32 percent compared to April 2005, and exports from home-country Japan are down 18 percent.

None of this should overshadow Nissan's missteps in the United States. Business Week reported that their pipeline of fresh American-market vehicles has "dried up." April 2006 sales were down 1.7 percent from April 2005, and the re-design of the all-important number two seller Sentra was called "ugly" by several of those who commented on autoblog.com. Even though it was prior to Mr. Ghosn arriving on the scene, the company lost $6.5 billion in their near-bankruptcy year of 1999 when they also accumulated $20 billion in debt. More recently, over 1,300 of their staffers have quit over their decision to relocate their U.S. subsidiary headquarters from Los Angeles, California to Nashville, Tennessee.

Quality problems have plagued their Canton, Mississippi truck and minivan plant. Even anti-American auto industry publication Consumer Reports says Nissan's large SUVs are some of the worst autos available in reliability ratings. And on July 25, 2006, the day of this writing, Nissan reported operating income dropped 26 percent while sales in the U.S. and Japan fell by double-digit margins. Is this a company with which GM should engage in attempting to facilitate a short-sighted, greed-based turnaround initiated by an overly-impatient investor? Hardly.

My stance has more to do with the fact that French-owned Renault owns 44 percent of Nissan. It also has to do with the fact that Renault is 15 percent government-owned and not necessarily that it's the French government. Americans should balk at any government ownership of an American company, including U.S. government ownership. This same argument should be employed to support airline carriers that use Boeing rather than partially European government-owned Airbus.

Properly designed and strategic government intervention in industry is acceptable to correct the imperfections of the market, but government ownership is not. Government ownership of private industry distorts otherwise more straightforward diplomatic relations between countries, including trade and foreign policy concerns. The American taxpayer funded U.S. government should represent American strategic industries like Boeing during WTO disputes against unfair European subsidies for Airbus, but government ownership of private industries should be avoided. And allowing a strategic American company like General Motors to fall under even minimal foreign government ownership should be rejected outright.

As it turns out, President Bush is no help concerning the issue of foreign ownership of strategic American industries. According to a July 14, 2006, article in the Wall Street Journal, Mr. Bush applauded foreign investment in American-owned firms saying, "I have no problem with foreign capital buying U.S. companies." Bush is even encouraging foreign companies to become owners of our domestic airlines. Democrat Senator Barack Obama of Illinois seems to have a better take on the issue saying, "When you start seeing GM getting into big trouble and the prospect of mergers or buyouts...foreigners, it stirs up anxiety that our relative position in the global economy is slipping."

The United States certainly isn't the first country whose home-based companies have questioned the impact of foreign investment. Businesses in China are pressuring Beijing, which doesn't deny its policies should benefit its own people, to crack down on foreign takeovers. Executive President, Xiang Wenbo, of Sanya Group, China's biggest private manufacturer of construction equipment, is upset that China's largest maker of cranes is about to allow Washington private equity firm Carlyle Group to take an 85 percent stake in the company. Angry that other Chinese companies are falling into the hands of foreigners, he says, "We are selling our signature enterprises to foreigners" and wonders "Are we losing our minds?"

GM CEO, Rick Wagoner, is right to view the proposed 20 percent foreign stake in the company he currently heads as "hostile." The stability of large American companies like GM is essential for a more stable global economy, although I'm sure the fans of foreign cars and foreign investment would have you believe the reverse. That American companies like GM must allow foreign investment for the rest of the world to be stable.

But as you might guess, even if GM did not allow the Renault/Nissan combination to invest in the company, it's not going to cause foreigners to stop wanting to invest in the United States. And even though Beijing has now set up a commission to combat monopolies and drafted rules to limit foreign stakes in many industrial sectors, it's not going to keep non-Chinese companies from wanting to invest in China. Xiang Wenbo says he doesn't want the Chinese economy to "be affected by factors outside our control."

But GM may be affected by factors outside of its control if it allows sizeable foreign ownership in the company. Among the supposed advantages of this type of merger is the idea of cost-savings through parts sharing between similar models of the involved companies. But since GM has the second highest domestic parts content of any automaker, this vision may dilute that percentage and turn away car buyers who consider patriotism among the factors that determine their purchases.

According to Jim Doyle of the Level Field Institute, whose website, www.levelfieldinstitute.com, lists the domestic parts content of every model sold in the U.S. from Acura to Volvo, what you drive still drives America. Once you see the list of domestic parts content for American and foreign cars alike, you'll see that GM and Ford have higher domestic parts percentages on average than any of their competitors.

Using figures for 2004 automobiles, General Motors had a total average domestic parts content of 80.1 percent, the second highest of any automaker, including all GM-owned nameplates like Saab. Seven models came in at 90 percent, with most in the 70 percent and 80 percent range. Ford came in number one when it comes to using domestic parts in their vehicles, scoring an average 87.5 percent, which was dragged down by formerly foreign-owned nameplates like Volvo and Jaguar that have historically used more foreign parts. German-owned DaimlerChrysler came in third with 78 percent, dragged down by Mercedes vehicles that have zero domestic content in most vehicles. Popular American media darling Toyota came in at 42.9 percent, Honda came in at 52.8 percent, and Nissan came in at 43.7 percent. BMW averaged 10.6 percent, Hyundai (which includes Kia) averaged 3.1 percent, and Suzuki averaged 5 percent.

Grouping automakers by nationality, domestic companies average 78.5 percent (which should be over 80 percent since the Level Field Institute calculates DaimlerChrysler as a domestic automaker), Japanese companies average 44.5 percent, Korean companies average 3.1 percent, and European companies average 6.3 percent (DaimlerChrysler should be averaged in here.)

With numbers like these, it's frustrating to see column after column of editorials praising Honda for building factories in the U.S. while chastising Ford and GM for not adding domestic factories at the same pace. Most of these misleading editorials are just that, misleading. But a July 18, 2006, article in the Wall Street Journal crossed the line by making a claim that is an outright lie saying, "Turning farm fields into factories, that's what Henry Ford used to do. Today, in the heartland, it's being done by Honda--a company that doesn't manufacture imports but builds American-made cars." Not only are innocent readers left with the impression that Japanese car companies like Honda are the primary power behind America's prosperity with their 8 American factories compared to Ford's 35, but also we are now to believe Honda manufactures zero imports!

But what do all the high domestic content percentages overwhelmingly in favor of American companies as detailed by the Level Field Institute mean? They mean that on average, for every car you purchase from American-owned Ford or GM, you employ twice as many American workers in the parts sector than you would had you purchased a Japanese brand. Believe me, I've heard all the arguments as to why we should support Japanese factories in America. "What if my Uncle Bob works at one of these factories?" the question usually goes. The answer is that if you want to support Uncle Bob's Japanese factory in America, you're helping Uncle Bob, but you're hurting Uncle Sam. America should come first.

The Level Field Institute was founded by retired workers from Ford, GM, and Chrysler, so it's easy to see how German-owned Chrysler is considered a Detroit automaker by the group. But particularly puzzling is a comment made by Jason Vines, head of communications for the Chrysler Group, when he said, "I'm a little offended with Toyota's 'We're American' campaign. They're not. They're a Japanese car company. Baseball, hot dogs, and Toyota? Sorry, it doesn't ring a bell." My apologies to Mr. Vines, but "Baseball, hot dogs, and DaimlerChrysler" doesn't ring a bell, either.

I understand that a lot of American workers and retirees in America are now supported by German-owned DaimlerChrysler, but we still have to call a spade a spade. I fail to understand how anyone in good conscience can continue to call DaimlerChrysler a Detroit automaker. If Toyota bought GM, would GM still be a Detroit automaker? If Honda bought Ford, would Ford still be a Detroit automaker? If we could convince Subaru to move its U.S. subsidiary to Detroit, would we have four Detroit automakers? I'm all for playing up America's strength in the marketplace, but only if it's done honestly by labeling all competitors according to their true ownership or nationality.

DaimlerChrysler has even made recent moves to distinguish itself from Detroit with its "AskDrZ.com" ads, seeking to benefit from highlighting Chrysler not as an American company, but as a German-American company. "Dr. Z" is none other than DaimlerChrysler Chief Executive, Dieter Zetsche, who works out of DaimlerChrysler's Stuttgart, Germany headquarters, the same location from which all Chrysler paychecks and pink slips now originate.

Still, however, www.levelfieldinstitute.org is a very useful website for proving that the "Big Two" have the highest domestic parts content of any automaker, including Chrysler, and how Ford and GM directly and indirectly support the most U.S. jobs. The only distortion comes when the Level Field Institute includes Chrysler when determining investment and jobs generated by "American automakers." But even if one were to subtract Chrysler's American contribution and properly count the company as foreign, the combined investment by GM and Ford in America would still best all foreign automakers' combined investment in most instances.

GM CEO, Rick Wagoner, has already met with the would-be foreign investors representing Renault/Nissan, and all are keeping quiet about the meeting. Let's hope it ends there. Wagoner is on the right path to keep America's number one automaker rolling, so let's hope it remains wholly American-owned.

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