"GM Dead Within Weeks"

[TimBud]

From Topgear.com:

This week it looks like we’ll see whether the American car industry will be thrown a lifeline. GM, Ford and Chrysler want $25billion in soft loans. If Congress doesn’t agree to hand over the dough immediately, GM will very possibly go insolvent in early January. And shut down. Holy cow. Think of the consequences.

Momentous weeks of lobbying and political posturing in America are coming to a head. The Big Three say they are responsible for one in 10 American jobs - either through direct employment, or their suppliers or dealers. As well as a similar proportion of pensions and healthcare. There’s no NHS there, remember, so corporations pay their employees’ health insurance. And if corporations die, it’s jeopardised. Gulp.

It’s GM that is the big worry. Chrysler is smaller. Ford made big borrowings two years ago to put cash in the bank for rainy days like these. But in the absence of either a bail-out or a miracle, GM will simply shut its doors within months or weeks.

Essentially then, the US government is held at ransom. Hardcore Republicans argue they’re being asked to bail out an industry that’s simply uncompetitive.

But realists of all political persuasions point out that losing all those jobs will cause a massive hole in tax revenue. And an even bigger bill in providing at least some sort of safety net in benefits. And finally, the risk of a general slump by putting such a hole in an already critically battered national economy.

Estimates for all those potential costs to the US Treasury vary, but they’re always in the hundreds of billions.

In other words, viewed purely short-term, net-net it’ll be cheaper to save Detroit than let it die.

Of course it isn’t that simple. As the Big Three let market share slip through their fingers these past years, they’ve thrown hundreds of thousands of line workers out of a job. But the United Auto Workers has done a good job of protecting their benefits as part of redundancies. So some politicians are questioning a bail-out on the grounds it would give ex-assembly workers a better future than your average American Joe.

Then there’s the question of whether these companies deserve saving. Again the right-wingers argue that if they are rescued then the same will happen time and again. In fact it has happened before, with the Chrysler rescue of 1979.

They also point out that this $25bn is in addition to a different $25bn already agreed, which will be loaned to Detroit to fund economies in fuel consumption. The Japanese and Germans building and selling cars in America are well on course to meet those consumption targets without help.

This argument is backed by the West- and East-Coast chattering classes. The New York Times’s big-shot op-ed columnist Thomas Friedman went so far as to suggest GM’s management should be fired wholesale and Steve Jobs brought in to run the company for a year. ‘I bet it wouldn’t take him much longer than that to come up with the GM iCar.’

Even the most ardent admirer of Apple - or even Toyota, darling of the Friedman tendency - would say, if they knew the first thing about the car industry, that Friedman is talking is utter cobblers here. But that sort of thing sums up the mood: GM, Ford and Chrysler have been broken for years and deserve to be finished off.

Not so fast. Chrysler is probably unfixable, yes. But Ford and also GM were on a well-documented upward path before the general economy went so sour so fast. Their transformation strategies are simple to state, hard to perform. They’re aiming for greater efficiency, more flexibility, and lastly - crucially - better smaller cars.

They were getting there. But the credit crunch exposed the fact that they hadn’t fully turned-around and were still vulnerable. The credit -crunch started by myopic, greedy banks which are getting bailed out, let’s not forget.

The Detroit of today is getting punished for what Detroit was yesterday. At times over the past decades the Big Three’s bosses have been lazy and dumb and they’ve given pointless vehicles to their workers to build and their dealers to sell.

They over-relied on cheaply made big SUVs in the cheap fuel era. But they had to, because that was the way to make the fastest return for the shareholders at quarterly results time. Short sighted management is almost non-optional in the American capital system. European and Japanese shareholders look for longer-term results backed by solid investment.

To be literal, it’s a long time since GM, Ford and Chrysler actually were the Biggest Three. Their declining market share has put them in an impossible bind. They as they reduce their numbers of workers, each remaining employee has to pay the pensions and benefits and healthcare costs of more and more of his or her retired and redundant ex-colleagues.

Toyota, Honda, Nissan, BMW, Mercedes and the rest, with their far newer American factories, have a younger healthier workforce who don’t demand such an overhead of social care. Not yet anyway.

It’s a tragic irony that if GM goes down, one of the great problems of the car industry will be solved. It’s chronic over-capacity - too many expensive factories across the industry, too many workers. The remaining firms will be able to ramp up production to replace lost GM sales, and run their plants more efficiently. But what a sudden, catastrophic price for GM factory towns everywhere.

 

 

More discussion here

[KoenigseggBG]

Daaammmnnnnn...I couldn`t care less...:D

[Fridge Magnet Rabbit]

Daaammmnnnnn...I couldn`t care less...:D

dont you get it? if GM die...there will be huge huge huge consequences...

Thats Ford, Chrysler, Vauxhall/Opel and all the other companies dieing...the consequences in America could spread all over the world, with the current economy in its current state, who knows what could happen.

[KoenigseggBG]

dont you get it? if GM die...there will be huge huge huge consequences...

Thats Ford, Chrysler, Vauxhall/Opel and all the other companies dieing...the consequences in America could spread all over the world, with the current economy in its current state, who knows what could happen.

Chrysler - hate, Opel - not loving, Ford - love...sooo if Ford survives, nothing else matters...:p

[Nipper]

Sounds like a barrel of laughs is in store for us. :)

[t.]

dont you get it? if GM die...there will be huge huge huge consequences...

Thats Ford, Chrysler, Vauxhall/Opel and all the other companies dieing...

 

Not exactly, Chysler and Ford are not part of GM, the article states Ford as having saved money for such an eventuality. Chysler have been slowly dying for pretty much the whole of my life time. I expect the US state to bail them out. I can't imagine them not doing it.

[ScaR]

GM goes down, say goodbye to holden :( unless bailed out by the chinese lol :pcpunch:

[Baltoman]

ZOMG!!!!!!!!!!!!! NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO I really can't imagine the world without vettes, GTs, stangs, challengers and and VIPERS!!!!!!!!!!!!!!!!!!!!! I hope they figure out something fast!. DEATH FOR ALL YOU HATERS, WHO WILL COMPETE WITH YOUR EURO CARS IF THE TOP 3 AMERICAN MANUFACTURERS DIE HUH? Euro vs Euro = booooooorrrrrrriiiiiiiinnngggggggggggg

[t.]

DEATH FOR ALL YOU HATERS, WHO WILL COMPETE WITH YOUR EURO CARS IF THE TOP 3 AMERICAN MANUFACTURERS DIE HUH? Euro vs Euro = booooooorrrrrrriiiiiiiinnngggggggggggg

 

In Europe it is Europe vs Europe, in fact it's always been that way. The Japanese compete more with us than the American industry does.

 

And you used ZOMG, fail.

[Baltoman]

Nooooooooo. vette vs 911 - Gt vs SLR Mclaren - viper vs gallardo - Ford ka vs Renault Sandero IT'S LEGEND!

 

whats wrong with Zomg?

[t.]

911's are everywhere here the Vette is a similar price and you see next to none of them, aided by GM's decision to not produce it in RHD. I have seen several SLR's not seen a Ford GT. The Ford KA is a production of Ford Europe..

[Baltoman]

Well, they're still compete with each other :/

[Shy Guy]

I guess Chyrsler selling the Viper might be good after all, then it might be the only surviving american car. =D

[Who]

Ford is the only one of the Big 3 I much care for really, and that's only because I love Ford Europe. And even now i'm not that fond of their current lineup with the exception of the sexy new mondeo (BRING BACK THE ESCORT! and take it back to being the sort of car you would expect to see rallying!). Although i do like Volvo and... erm... what does it own now it sold Aston/Jag/LR?

 

Chrysler probably will die, it's EV concepts are too little, too late to change the company image. Their losses here will equate to very little change on the roads. We have a few Jeeps on the road, and very few dodge cars, no change really

 

GM? good ridance. Over here that will mean that Vauxhall goes byebye along with the bloody Corsa! Chevrolet's (Daewoo's) short lived term selling cars finishes and Saab dissapears too, that said I last saw a Saab on the road about 3 years ago, seriously? do they still actually make anything?

[mac_mogul]

Saab makes subarus now, they just call them Saabs.... heh.

GM deserves this, but the people who WORK for GM do not.

The US Gov will undoubtedly bail them out because, well, they have to. A massive wave of unemployment would kill whats left of the US economy and we just can't have that.

[gingervette]

Most people don't think alot into it. See what would be best for GM is to go bankrupt (strange I know coming from a die-hard GM fanboy). If they go bankrupt, then all the unions that have been tearing GM apart all immediately fall apart. Loss of jobs? yes, but GM can hire everyone back because they will have do debt. But most importantly, GM's management has been their biggest downfall, and if they go bankrupt, their management is gone, and I don't think they will be hired back.

 

If they go bankrupt, it will be a new beginning. GM can finally be on top of the world as they used to be, and that's a great thought IMO

[HavockJoker]

Couldn't care less. American cars aren't something i ever cared about. But the Death of the ZR1 and Viper ACR will be catastrophic,

[Who]

Just a thought, but with a dead GM, wont that simply mean that the brands wont disappear, but instead be separated into their own separate segments?

 

Say GM dies, then a private equity firm based in britain, who can't afford to reopen the GM umbrella, may just buy Vauxhall, creating a truly independent company for the first time in what? nearly 100 years.

 

With a couple of factories and a household name, it seems a pretty solid investment.

 

Everything will probably exist, just no longer unified, like how the former British Leyland now sits in BMW (Mini/Triumph/Riley) Tata (Rover, Daimler, Land Rover, Jaguar) and Shanghai Automotive (everything else =/)

[gingervette]

no, they will most likely keep all the brands together