The future of GM

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

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  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. My opinion is that if it is marketed properly, a BK for any one of the Big 3 is not a killer of their business but the savior.

    As long as people are assured that they can get parts and service it won't be that bad.

    Look at airlines - they go in/out of BK all the time. People still fly on them. Most of them eventually get acquired or they actually fix their mess.

    If you have a car company like Yugo, that was a foreign turd to begin with, then of course it will kill the business.

    But I'm pretty sure that the US public wouldn't abandon the US automakers because they are in a restructuring bankrupcy. We have all seen them losing money forever. They probably should have gone BK 10 or 20 years ago.

    The US automakers have an unprecendented chance to break the UAW's death grip and get themselves back to fiscal sanity and competitiveness.

    The only ones who will ultimately object are the Union entitlement junkies that want to get paid $45/hr. to turn screws.

    Just my .02
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