General Motors To Go Bankrupt Again? ... and should we let it this time?
drdos1943
2012/09/09 02:40:21
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Thirty years ago, General Motors claimed 48% of the United States market. Today, the company can claim 18%, and that figure is stable, but would be even lower if the government, with out tax dollars, did not buy thousands of their vehicles.
General motors has over one million employees. About half of those jobs are not in the United States.
The stimulus "saving" of GM was a temporary band-aid. Most of the money went to
bolster the underfunded union pensions and benefits. Not much went to
the company except to build a Chevy Volt plant, which can now be added
to government failures. Very few, if any, of the union issues, which led to GM's
demise were addressed.
GM stock is now selling for a little over $21/share. It needs to be
selling for over $53/share to pay us taxpayers back the billions it owes
us. If the economy does not substantially improve, expect GM either to
file for bankruptcy or to ask for another stimulus in the very near
future.... but, of course, not before the election. The embarrassment to
the Obama administration would be irreparable.
General motors has over one million employees. About half of those jobs are not in the United States.
The stimulus "saving" of GM was a temporary band-aid. Most of the money went to
bolster the underfunded union pensions and benefits. Not much went to
the company except to build a Chevy Volt plant, which can now be added
to government failures. Very few, if any, of the union issues, which led to GM's
demise were addressed.
GM stock is now selling for a little over $21/share. It needs to be
selling for over $53/share to pay us taxpayers back the billions it owes
us. If the economy does not substantially improve, expect GM either to
file for bankruptcy or to ask for another stimulus in the very near
future.... but, of course, not before the election. The embarrassment to
the Obama administration would be irreparable.
Top Opinion
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Tee Quake 2012/09/09 02:46:47We should let GM go bankrupt and reorganize.
+8Let them fail. This too big to fail malarkey is no more than political doublespeak when it comes to huge union employers who are the Democrat's life blood. They're not too big to fail; they're too important to the Democrat's retaining control, politically.
"DBRS, Canada’s largest credit rating agency, upgraded GM to BBB (low) from BB (high), citing its robust financial profile due to a strong balance sheet, with low debt, and solid earnings performance over the past two and a half years. DBRS also upgraded Ford Motor to BBB (low), putting both U.S. automakers into investment grade territory."
“The Company’s progress in its core North American market has been impressive amid industry conditions that, while improving, remain below historical norms. The strong results of GM’s North American operations (GMNA) incorporate higher volumes and firmer pricing that are not only a function of moderately improving industry conditions, but also reflect GM’s success in introducing new vehicle models, most of which have been well received in the marketplace and are attaining higher pricing and segment share vis-à-vis their predecessors.”
"GM’s geographic diversification, including China, is a strength, adding that a lackluster performance in South America is due to a relatively old product line and changing government policies that have affected trade patterns as well as access to foreign currency. GM is in the process of rolling out a...
"DBRS, Canada’s largest credit rating agency, upgraded GM to BBB (low) from BB (high), citing its robust financial profile due to a strong balance sheet, with low debt, and solid earnings performance over the past two and a half years. DBRS also upgraded Ford Motor to BBB (low), putting both U.S. automakers into investment grade territory."
“The Company’s progress in its core North American market has been impressive amid industry conditions that, while improving, remain below historical norms. The strong results of GM’s North American operations (GMNA) incorporate higher volumes and firmer pricing that are not only a function of moderately improving industry conditions, but also reflect GM’s success in introducing new vehicle models, most of which have been well received in the marketplace and are attaining higher pricing and segment share vis-à-vis their predecessors.”
"GM’s geographic diversification, including China, is a strength, adding that a lackluster performance in South America is due to a relatively old product line and changing government policies that have affected trade patterns as well as access to foreign currency. GM is in the process of rolling out a more modern lineup in South America."
"While GM initially benefited by dumping many of its obligations in bankruptcy, DBRS said, “GM has proved successful in upholding its balance sheet (and even strengthening it considerably further)."
http://www.forbes.com/sites/j...
I drive a Nissan Altima that get's 34mpg highway (actually more) and about 28mpg city. It was built in Smyrna, Tennessee with just about all parts made in the U.S.A. and built by American labor. I've owned Cadillacs and even more expensive vehicles; and in many respects, I like this car better ... and Nissan's service has been exemplary. ... no I am not affiliated with Nissan. My wife drives a Ford fusion.
Last year, when we were shopping for a new car for my wife, we looked at the cars in the show room of two GM dealers. On more than one vehicle in the showrooms, the doors and trunk trim didn't line up. We crossed GM off our list.
THAT IS HOW THE FREE MARKET AND CAPITALISM WORKS.
Here is a decent article on some of the issues with GM products vs. other competitive companies.
http://www.forbes.com/sites/l...
"Why is Ford doing better than GM? Essentially, because it is far ahead of GM in reducing its global “platforms.” This means that it’ll be able to assemble more cars on fewer platforms, cutting its manufacturing costs and boosting its efficiency. This has allowed it to re-design its most profitable product, the gas-guzzling, greenhouse-gas emitting F-series pick up trucks that libs hate but American car drivers love. GM’s redesign of its comparable products, GM’s Silverado and GMC Sierra pickups, by contrast, is languishing."
http://reason.com/blog/2012/0...
"Just four years ago, the domestic automakers were paying an average of about $76 an hour in compensation for UAW workers, a full 50 percent more than what “transplant” carmakers paid at the Toyota assembly line in Georgetown, Ky., or the Honda East Liberty, Ohio, plant.
That higher payment averaged out to a cost penalty of more than $500 per vehicle — a significant disadvantage in the hotly competitive auto industry.
Labor costs began to come down when the UAW agreed to make major concessions in 2007 — and the union gave back even more when GM and Chrysler plunged into bankruptcy two years later.
As labor talks began in July [2011] it was believed the Detroit automakers were paying an average of just over $50 an hour — still several dollars higher than at the typical transplant automaker."
http://www.msnbc.msn.com/id/4...
The fact is that they are not selling enough automobiles to stay in business. The question is why? I will have to admit that GM has some decent vehicles out there, although hardly any of them are rated highly by any of the rating organizations. Why? Could it be one of the factors might be that many buyers do not like the idea of buying an expensive commodity from a company in which they do not have confidence?
The new Sonic, the only B-Segment compact car currently being built in the US, is profitable, fun to drive and also getting great reviews:
http://www.caranddriver.com/r...
And the Volt received the highest customer satisfaction rating Consumer Reports has ever had:
http://news.consumerreports.o...
Curious about your statement that GM is not selling enough vehicles to stay in business. That would imply that with the current market share, they would be losing money. Instead, with a streamlined organization, higher quality level and increased transaction prices, GM is definitely on the way to sustained profitability.
Seems like the Wall Street guys are agreeing...
http://seekingalpha.com/artic...
GM is no where near going bankrupt. If you look at strictly stock price, I'd be more worried about Ford who's stock was $12 in January and now is hovering around $9, and they owe the government a big payment on their loan...
"Ford Motor owes the government $5.9 billion it borrowed in June 2009, the same month GM filed for bankruptcy. By Sept. 15, Ford needs to start paying that money back. In a government filing, the carmaker said $577 million is due within the next year, and the full amount must be paid off by June 15, 2022."
http://www.forbes.com/sites/j...
The Cadillac, although a great automobile, has a very limited market.
It is better to sell 1000 items at two dollars each than it is to sell two items for $1000 each. For the former, if you lose a few customers, you are still in business. For the latter, if you lose even one customer, you are out of business.
I do not want GM to go bankrupt or to go out of business; but they are doing something wrong, and no amount of government help is going to save them in the long run...and government help is translated into our help with our tax dollars. Enough is enough.
That is exactly what happened with many of the airline companies.
On the other hand, the decision by the court might be to dissolve the company entirely.
Solyndra,,,
General Motors,,,
Unions,
COMING SOON?
Cites, like the BK ones in California,
THEN WHAT?
States, like California and some more lib run States.
STOP THE HELP PLEASE, or else,
AMERICA WILL NEED A BAILOUT DEFINED, unless we rid ourselves of these progressives, libs, WHAT EVER THEY WANT TO BE CALLED.
INSTEAD of Reorganization ..
SEIZE and sell their assets ..
to pay back FIRST the TAXPAYERS for the WASTE of our resources ..
Let's let free market fill the void
with NEW products
NOT Funded at OUR Taxpayer Expense ..
What's gone wrong with America? If this company isn't producing, let them go under. That's capitalism.
Pathetic.