The future of General Motors

Discussion in 'Economics' started by Rona1d, Dec 9, 2008.

  1. Rona1d


    In the midst of the media's intense coverage of the 3 automaker's hearing with the congress, senate, and house, lies a clear cut choice.

    For this example, i will only use GM.

    option one for GM: Declare bankruptcy and restructure it's company. In order to compete with european car makers, and with the difference in labor costs beetween europe asia and United states, GM has to have a stunningly efficient and well structured company, which it obviosly doesn't have right now.

    But, according the mr. Wagoner, The public is less likely to buy an automobile from a car maker that went bankrupt then from ...well one that didn't.

    Option 2 for GM: The gov't gives them the loan, and they fight through 2009 with bad UAW agreements and terrible structuring.

    My opinion is that eventually GM will go bankrupt anyway, and therefore bankruptcy now is the best choice.

    I look forward to your contradictions
  2. Bankruptcy, sell for 10-20 cents on the dollar, say no to unions, hire back whatever workers needed and continue to re-structure.

    Lower oil prices will help them sell cars but their costs have to come down.
  3. 4XQs


    I thought this was glaringly obvious: There is NO way GM can continue for more than 1-2 months even if the first rescue package is approved. It's like pissing in your pants outside in a snow storm - good for five minutes, then it gets even worse.
  4. it isn't just the unions. They also need to jettison a bunch of dealers.

    A properly structured bankruptcy makes more sense:

    - get rid of the union largesse

    - get rid of paying retiree healthcare.

    - get rid of unprofitable dealers en masse.

    - shut down unprofitable or superfluous factories

    - combine or shed a couple of divisions (like, do we need GMC AND Chevy trucks?)

    Start fresh
  5. GM China is profitable.

    Imo, this speaks volumes.
  6. The UAW needs to go first and foremost.
  7. Once the govt starts controlling their every move they'll probably start producting something like this in a few years - - -

    Yeah thats Putin alongside it. They were designed so that you could fix them yourself. - - -

    Good for exercise (you could push them) and for job skills (auto mechanics) - - -

    Hmmm - - wonder how well theyll compete against Toyota ? :confused:
  8. Chrysler will be gone is six months. GM will be a shadow of what it is now after they go BK before the spring thaw. What's being talked about now is too little, too late. Ford will come out bloody, but the strongest of the 3.
    What it's been this year, 2,000,000+ jobs lost? 2009 will triple that. Some tough times ahead for the working man. The banks will be OK though. That God for that, eh? Wall Street will rise again and all will be well. Gotta' save them blue bloods. And all that money will trickle down. Really, it will. You can believe them. Honesty and integrity is their mantra.
  9. Maybe something called a 'cram down' that works like this.

    US Gov't summarily erases existing shareholders revalued existing debt to 50% of face value. Gov't recapitalizes with X-bil dollars and takes 100% of new shares. Legacy pension liabilities are nationalized. Unions are coerced to make concessions. A CEO is appointed, with $200k base compensation, and contingent, incentive compensation wholly comprised of new shares. A new board is appointed, again with compensation wholly contingent in new shares. Of course 'green' mandates as well.

    It's already too late for gradualism. It will be interesting if Obama's 'fierce urgency of now' extends to dealing with the automakers.
  10. Rona1d


    thx for commenting guys. I'm sure the congress will give them the bailout, whether it's the beset thing to do or not is still undecided?
    #10     Dec 10, 2008