GM is running out of money and may not have enough cash to continue running its business. They’ve burned through $6.8 billion in the last quarter and will exhaust their reserves by the end of 2008 without government intervention or a significant increase in auto sales. Which sounds more likely to you?
CNN says:
Dave Cole, chairman of Michigan think-tank the Center for Automotive Research, said the chances that GM would be forced to file for bankruptcy were high unless Congress takes almost immediate action to bail out the industry.
“This is not something that can go on and be dealt with in the next year, it needs to be dealt with in the next few weeks,” said Cole. “When your cash is gone, you’re gone.”
GM: Almost out of cash [CNN]
(AP Photo/Paul Sancya, File)
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Circuit city isn’t getting bailed out.
and neither did compusa which i worked for. I this it is all retarded. Bail out all companies. or none. well bailing them all out would be stupid……….
@fleebailey33:
To be fair, the fall of CompUSA or Circuit City doesn’t/didn’t threaten to decimate the economy.
Let it die already. It had years and years to correct problems EVERYONE knew about, and they didn’t.
I believe this is called poetic justice…Did anyone else see “Roger and Me”?
What goes around comes around.
While I am I admittedly taking a controversial stance, GM needs some form of a bailout, even if it is letting them fail gradually. Letting it crash and burn would create a prolonged recession versus at limited one.
There is no material difference between state socialism (which is not a bad thing) and a bailout.
Obama’s election marked a new era. If he can turn this Sh*t sandwich, into anything less, I applaud the results.
@chese79: If the government gives an industry some money, then it should set conditions, too.
Just giving out free money = executives 80K hunting trips.
I believe that if GM goes under all those pensions start getting paid by the US Taxpayer. So the taxpayer is going to pay the pensions one way or another. Also, now is a good time for the federal government to force US automakers to build safe but energy efficient cars. If GM wants taxpayer money, then it needs to help ween us off the foreign oil tit. Frankly, I don’t want a Japanese or worse, Chinese, company indirectly setting US energy policy by deciding what cars we can and can’t drive in this country. We’ve already seen that outsourcing certain military parts to China results in “unexpected” scarcity or massive price increases once the US makers are gone.
@johnfrombrooklyn: Funny, Toyota has been making fuel-efficient cars, for ages!
So this is = lower demand for gas = lower prices on gas
@Meltdown: Even funnier: my ’98 Escort got 30 city/40 highway. My ’02 Focus gets about 25/35. The US automakers are obviously capable of building a fuel-efficient sedan, so I don’t even know why they’ve been whining so much about increased standards. Just, you know, shut up and do it.
GM SHOULD file for bankruptcy protection. Just because you’re bankrupt, doesn’t mean you’re out of business. Bankruptcy allows you to start over, to renogotiate some of those contracts which were killing you.
Yes, the common shareholders are pretty much guaranteed to be wiped out. That’s the risk you assume when you buy common stock.
But I didn’t buy any GM stock. Why should I be responsible for bailing them out?
On the other hand, you could bail out GM and the rest of the US Auto industry. And you’ll have a perpetual money suck from then on.
To hell with GM and all American car companies for that matter. Perhaps if they made quality cars that not only ran well and were reliable but were also safe and got good gas mileage without sacrificing performance then people would buy them. Japanese companies have been doing these things for like 15 years so whats the deal?
@parad0x360: seconded
@Canino: @Canino: Amen. GM and Ford cannot compete with Toyota and Honda because of the unions. GM and Ford could build identical cars to Toyota and Honda but would still go bankrupt because they would have to charge an additional $1,600 per car because of union legacy costs.
@anthonyhasp: @Canino: The union has nothing to do with a rapidly falling market share for ALL the three US based auto companies. Which one of those three made an effort to produce mid to small size cars that people were going to want. Honda, Toyota and Nissan all see beyond the current quarter, and think long-term. To show the incompetence of Ford Motor, the past CEO was the same guy who runs the Detroit Lions who have failed miserably for 50 years since their family has owned it.
The auto companies could have developed an all electric car, but they couldn’t produce them crappy enough to take away all the ancillary business like oil changes, brake pads etc to make it worthwhile. Why shouldn;t we let them fail and those companies that produce what consumers want will survive.
Detroit has been laying people off en masse since the 1980s. If GM closes its doors, SOMEONE will buy the plants or the equipment.
But, it’s not going to happen. Bush is looking for something positive to do before he leaves, and saving GM is a decent feather in any President’s cap.
This is madness! I think I’ll run up debt and horribly mis-manage my life, then when times comes to pay up, I’ll ask to be bailed out! Will that work?
Jeeze, let all these places go out of business, give them money now and later they will be asking again, this time for twice as much.
Be irresponsible, pay the price, it’s that simple.
Hey! Why doesn’t Exxon Mobil fund the bailout? They seem to have record profits.
Let it all crash and burn. Stupid business decisions should not be rewarded.
They’ve burned through a lot of money while knowing that their products were crap and people weren’t going to want what they were making. How exactly is getting money from me going to change that? It’s like the banks. I don’t see them doing much other than going on spa retreats they shouldn’t be going on and buying each other up.
There is no easy solution, but the government cannot let GM go under. Period. You think the economy’s bad now? Let GM go under. One in ten jobs are connected to the auto industry in the US. One in three in Michigan.
Here is a comment left on a Detroit based radio show that sums of the problems of GM nicely and pretty much addresses every single comment to this post.
You can find the full thread here: [www.wdetfm.org]
“In Defense of the Auto Industry:
Recently I have been hearing from the national media, including NPR, that the auto industry is having its current problems because it refused to “go green.,” or does not produce quality cars. This view is totally myopic.
It is not the auto industry’s fault the speculators falsely drove the price of oil to $144 per barrel using leveraged deals…
It is not the auto industry’s fault that the banking and insurance industry destroyed the credit market with criminal loans and credit default swaps….
It is not the Auto industries fault because it wants its employees to have health care …
It is not the auto industry’s fault the price of health care shot through the roof…
The media may not realize it, but QUALITY cost money…and the $1800 in per vehicle health care costs put the US auto industry at a disadvantage.
I have worked for a long time with the UAW. While in years past, the attitude of the UAW workers has been terrible- these problems have quickly evaporated. Everyone seems to be working together now …
Hopefully, people will realize that America can not survive selling by each other insurance on lawsuits and large cups of coffee… We need manufacturing.
Without inexpensive energy we will have no manufacturing in Michigan…It takes energy to make steel from dirt – it takes energy to make plastic from oil – it takes energy to make cars from steel -
If we tax carbon too high – the production jobs will go to where the carbon is cheap …. China
As much as it might not be politically correct to say … the laws of physics do not allow the use of alternative energy for car production. It is simply impossible to run an auto plant on solar or wind – can’t be done- the energy density simply is not there.”
@JosephineinDetroit:
You’re right. Quality costs money- and if American car companies made quality cars, they probably wouldn’t be going bankrupt.
Back in 1970 I sold slide rules. HP put me out of business with a calculator. Did Washington bail me out? Huh Did they? Noooooo. So I invented the AIDS virus to get even.
Hey now would be a great time to release a car styled after something we produced 40 years ago, and let’s throw a giant 400 horsepower v-8 in it since gas is so cheap, and… hey wait a minute…
Bye Bye GM, it’s been a good ride huh? Oh…not so much.
So let’s just say people quit buying new cars. they still have to get around, so they keep their old cars longer. This makes more jobs for car repair. Remember when every gas station had mechanics? Those days will come back. The people who built cars can start repairing them.
Now, people not burdenend by monthly car payments will have that money to spend elsewhere. The loss of car manufacturing in the economy won’t mean people won’t be spending that money elsewhere.
I’ve seen towns go down when the businesses that supported them go away, and it isn’t pretty, but like the Wall Street bailout I hope to heck that the govt puts in adequate (unlike wall street) oversight on the funds.
GM needs to fail, no more bailing out private companies with taxpayer money.
History does repeat itself. Didn’t the American auto companies go through this scenario when we had the oil embargo in the 70′s? Most of their product line consists of vehicles the size of tanks and the manufacturers always act shocked when the price of oil skyrockets and people no longer want to spend half their paycheck to fill their tank. These are the same companies that became upset when the government tried to raise CAFE standards to ensure that the vehicles produced here get 30 miles to the gallon or better. Enough is Enough! I hope that if we do decide to bailout the auto industry that we also make them accept higher fuel mileage standards. I can say without a doubt that although gas is reasonable now IT WILL go way up in the not to distant future.
So just let them go bankrupt the airline industry does it every few years and they survive. Let them go bankrupt wipe their debts layoff some workers. Rebrand and start with a new product line that people actually want.
My biggest complaint was people that make cars make more money than people that saved lives. I knew one day this was going to bite then in the ass. Its now more than bit them in the ass it bit the whole ass off. Their bleeding to death and they want me to save their live. I say die or your lose a limb if you want to live. In other words you the american auto worker should not be making more than an american nurse.
R
Why bailout a failing company that refuses to change? If they were failing because something beyond their means had changed, then sure, a bailout could be on the table. That isn’t the case though. They knew about gas prices rising for decades and continued to pump out gas-guzzling vehicles. They dug their own grave. Let ‘em die.
No bailout. Our financial system, that has created a fantastic country out of nothing in the last 200 years, is based on the idea of success and failure. Bailing out losers was never written into the constitution. Giving taxpayer money to losing companies delays the inevitable. We have had 12 recessions since 1945. Recessions clean out the system, getting rid of the weak and allowing new businesses to flourish.
So if I own a small business which goes bankrupt due to the economy, the government sits there and watches me fail. But if GM, or for that matter, AIG and several other large corporations fail, government assistance is not really a question of if, but when.
Goodbye GM. Goodbye unions. Goodbye middle-class. Welcome world economy. Welcome capitalism. Welcome ingenuity.
Thiis is not the platform for bias GM product positions. I do think however it is the platform for commentary related to the status qou of the company.
Having said that , GM’s troubles could probably be repaired by implementing a very simple business model.
A previous poster touched on their basic problem . Multiple models. Example. The Suburban and Denali are the same truck. The Suburban is a flagship , nix the Denali and offer the features as options in the Suburban line. Betcha nobody complains.
Yeah, the Silverado is brand and has made a long run. But is it making you money now? If not , let GMC produce the trucks, Chevorlet, stick to what you know , cars.
Pontiac maybe a historical icon, but let’s be real, we are selling Chevies here, nix Pontiac. Keep in mind, I’m not privy to the models profit and los info, but I think everyone get’s the message.
Downsize and green equip new models.
Let GMC solely produce trucks and Chervorlet produce cars. At some point , when you are producing similar products they compete with each other and you wind up robbing Peter to pay Paul.
You’re making multiple efforts to make the same vehicle in most instances.
Henry Ford was on the right track when he offered the model T only in black. Not suggesting GM resort to that extreme, but the multiple models accross the platforms, that’s the problem.
Renegotiate Union agreements. Look at it this way, if there are no jobs , then you don’t have much use for a union now do you?
And last, rehire, management that know from handson experience how the auto production industry works. Trim the fat from production , design and development teams.
These are basics, maybe GM should consider them.
Geo
Whatever type of car I’m shopping for, minivan, econobox, whatever, I can buy American or Japanese and pay comparable prices. I opt for the latter because I need it to last me as long as possible. I’m just a schoolteacher, the single wage earner for a family of four, I can’t blow 15-25K on something that’s not even going to last until I’m done paying for it. For me, it’s Honda or Toyota, and then only models that have a proven track record of reliability. If I believed GM had a model that got 30+ MPG and would last 200K+ miles, I’d buy one.
When are American manufacturing companies going to stop being so short-sighted?
Sometimes it’s darkest right before dawn. I am sorry to hear a lot of people will be out of the job if they close, but that’s what needs to happen.
Bad business parctices brings consequences. Lets hope someone buys them out and builds better cars.
Tough love.
Sink or swim on your own, GM. Maybe start making cars that don’t suck.
I really hate this crap.
The idea of government “bailing out” companies is beyond my comprehension. Funny, I thought the Republicans were against government involvement in business. I guess the problem is that most of the CEO’s and such are Republicans and they have found a great new way to make money off the “common people”.
Funny that for as much as the Republicans talk about how they are pro-business, the economy has traditionally been much stronger under Democratic leadership.
If we are going to bail out anymore companies, they should be treated as extremely high risk borrowers. I would say their credit ratings should be around 300 or so and they want to borrow billions of dollars. Sounds like they’ll default to me. Aren’t high risk loans what started this mess?
GM is the Single largest advertiser in the U.S. spending about $4.5 billion in advertisig in 2005. GMs failure would hurt nascar and possiblly other sporting events and TV in general. I have mixed feelings about a GM or Big Three bailout. Honda and Toyota have 6 factories in the united states and BMW, Hyundia, Subaru, Mercedes have at least factoryin the US. Most of these are in red states and not unionized. The big three are unique in the number of jobs and the concentration in MI, IN, OH which are already hard hit. But If there is a bailout it should be industry wide evenly or relative per job in the US or not at all.