A Los Angeles Times op-ed by Navarro I published this Sunday, December 11 revealed how Coda Automotive of Los Angeles is importing a Chinese Car as “gliders” (see below) and batteries to assemble a vehicle they ironically refer to as “All American” in a video interview. Read our piece there if you haven’t yet and if you’re a stickler for details, here is a lot more background on Coda’s Chinese invasion and here is a good start. (Note the many hyperlinks to sources on the details of this ruse.)
What’s a “Glider” and what about that motor they say is American?
You’ll notice its nearly impossible to find the word “China” on the Coda website (dig deep into the press releases or FAQs) but that is where most of the vehicle comes from. Their marketing literature (we picked up at the LA Autoshow) never mentions it. While clearly a lot less than proud of their Chinese connection, Coda casually remarks in the FAQ on manufacturing that their “Glider is produced overseas.” “Glider” sure doesn’t sound like much of a part, right?
An automotive “glider” is actually the bulk of a car’s structural components. While the total parts list can vary a bit the glider usually includes the chassis, the axels, the body panels, and probably the glass, wheels, rims, and tires too. So it’s basically everything except the “drivetrain” which is the car’s motor and transmission.
Now, it is very important to understand that in an electric car the motor and transmission are much simpler and hence significantly less valuable components than they are in an internal combustion car. A large gasoline engine could contribute $5,000 and the transmission $2,000 to the price of a car. Whereas an electric motor is a much smaller item which could cost less than a thousand dollars. The transmission for an electric car is also a much simpler device as electric motors generally provides both high torque and high RPMs without as many gear changes. Consequently a lot more jobs are created in building a V6 motor at a Ford factory in Michigan than building a simpler electric motor and transmission.
What about that battery plant in Ohio?
The real value in an electric car comes from the batteries, which cost thousands of dollars. If American converts to an electric car economy it is critical we capture both the jobs and profits from battery production by having it done by American firms on American soil. Once again, Coda is again importing the batteries from China.
Worse yet, in the guise of “creating” jobs Coda is sneaking their Chinese battery partner, Lishen of Tianjin, into the U.S. in the form of a joint partnership, where it appears the Chinese will own 60% and Coda 40%. To ad insult to injury our LA Times piece notes this JV is applying for a $500Billion Department of Energy loan as well as a pile of money from the unwitting taxpayers of the State of Ohio and City of Columbus. For over half a billion dollars this venture is supposed to “create up to 1,000” jobs. That’s $500,000 per job (or a lot more if this deal goes the way of Solyndra). Why not just throw money out of a helicopter? This is also a very ironic set of circumstances since much of those federal dollars are surely borrowed from the Chinese in the first place.
America has lost MILLIONS OF JOBS and over 50,000 factories in the last ten years! Most of these have gone to a predatory China. Getting 250 jobs selling a stealthy Chinese car or 1,000 making batteries for the Chinese-Coda joint venture is insulting to the desperate American worker. It’s like tossing a biscuit to a dog after you’ve beat it in to submission. That is not a cause for celebration, but rather a national embarrassment.
Details on the source of Coda’s Chinese glider and the NORINCO ARMS connection:
Our piece also reveals that Coda’s “new” car is actually the six year old Saibao III being imported from China’s Hafei Motor Co, a firm owned by a Communist Party controlled Sate Owned weapons manufacturing conglomerate that is tied to an arms exporter with some very bad history.
China’s web of party-state-corporations is particularly confusing in the military supply chain. The state owned firm that owns Coda’s car supplier (Hafei) is China South Industries Group (CSG) which was formed out of a state weapons firm, China North Industries Group Corporation (CNCG) also know as NORINCO(G). The Arms dealer called NORINCO is 50% owned by CSG and CNCG and has been one of the worst players on the global stage for years. See http://www.uscc.gov/researchpapers/2009/DGIReportonPRCDefenseIndustry–FinalVersion_withUSCCseal_02Nov2009_2_.pdf Page 29.
Missile tech to Iran: US state dept leveled sanctions on Norinco for this in 2003. Source: US Dept. of State
A determination has been made that five Chinese and one North
Korean entities have engaged in activities that require the imposition
of measures pursuant to Section 3 of the Iran Nonproliferation Act of
2000, which provides for penalties on entities for the transfer to Iran
of equipment and technology controlled under multilateral export
control lists (Missile Technology Control Regime . . . .
China North Industries Corporation (NORINCO) (China) and any
successor, sub-unit, or subsidiary thereof;
AK’s to US gangs: customs caught the shipment and Norinco was blocked from US market in 2001 (lifted in 2008). Source: USCC
NORINCO’s integration into global markets is not always benign. From 2001 to 2007 the United States imposed sanctions on NORINCO imports after a U.S. Customs sting operation revealed a deal to smuggle 2,000 Chinese-government-made AK-47s into the U.S. It was the largest arms seizure in U.S. history.
Grenades to Zimbabwe: Source NTI
In March 2000, NORINCO sold US $65.9 million in arms to the Zimbabwe government. The types of arms that were transferred included rocket anti-personnel shells, grenades for assault rifles, and hand grenades. Tanks and tank ammunition may also have been included in the sale. NORINCO is a major exporter of small arms.
Grenades to Darfur: Source Amnesty International
Arms made by the Chinese company, Norinco, have been seen in the hands of fighters for the United Front for Democratic Change (Front uni pour le changement démocratique au Tchad, FUC). Members of the group were photographed carrying QLZ87 35mm automatic grenade launchers outside the town of El Geneina in Western Darfur, Sudan
Who would do this to America?
Coda’s CEO Phil Murtaugh is the former head of GM’s China division and has raised more than $300 million from banks such as Morgan Stanley and well-connected private investors that include former Clinton White House Chief of Staff Mack McLarty and former Goldman Sachs CEO Henry Paulson. John Bryson, recently appointed by President Obama as Commerce Secretary of the United States – because the previous Com Sec, Gary Locke, has been sent to CHINA as ambassador – was previously on Coda’s board of directors. Now before McLarty and Paulson suggest they had “no idea” about the source of their product or the way it is marketed, note that they are also listed on the Coda website as being official advisors to Coda rather than merely inactive investors.
To add insult to injury, California politicians from governor Brown to LA Mayor Villaraigosa have been easily duped by this ploy and have lined up for photo ops and to brag about the petty 200 or so jobs “created.”
Greg Autry is the co-author of Death by China. He teaches macroeconomics at the Merage School of Business, UC Irvine. He writes and speaks on China, space, economics, investing, and business strategy. For more information, please visit http://www.deathbychina.com and follow the author on Facebook and Twitter.