GM's steady rate of decline

by Michaella, July 23, 2009 at 2:09pm

The New York Times has done a special report on GM's rise to power and unfortunate downfall.  The icon of United States capitalism had to beg for government bailout money to save the failing company.  A car dealer described GM as  "a debtor in possession under Chapter 11."  The article says:

"The company will also have to shed 21,000 union workers and close 12 to 20 factories, steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor.

Forty percent of the company’s 6,000 dealers will close, the workers' union will be forced to finance half of its $20 billion health care fund with stock of uncertain value in the restructured G.M., and bondholders, including many retirees, will be forced to take stock worth 10 cents for every dollar they lent the company."

Lawrence H. Summers, head of the National Economic Council warns the government that unlike bailouts from the past and current banking bailout, the automobile crisis is a case of bad management.  "There was no argument that they were solvent, no argument they could meet their obligations."  There is no evidence that the bailout money will help GM become a more sustainable automobile company.   The Obama adminstration was provided with two choices to help GM get on the road to recovery: "a laissez-faire, uncontrolled bankruptcy, which would have had an enormous cost," or a "controlled process," in which the goal was to make sure that the auto companies not only restructured, but were not overburdened with debt. "

Perhaps in addition to bailout money, GM is in need of better management and an open ear to public suggestions regarding providing transportation in a socially and environmentally responsible manner.  After all, US government own 60% of GM's stocks while Canada owns 12%.  The public voice deserves to be heard regarding GM's new direction.

The article also features an  interactive timeline of events and a bar graph displayed below regarding GM's vehicle production from the 1960's to 2008.

Watch the youtube video below which focuses on GM bankruptcy filing and their mission to have a fresh new start.

decline of GM

GM vehicle production

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