General Motors—a leader in American business for a century; at one time the largest company in the history of U.S. capitalism, the largest private employer in the world, and the epitome of the multinational corporation. At its peak, GM had well above 50 percent market share for car and truck sales in the United States, and was the world leader.
General Motors began losing ground, especially to Japanese carmakers. After years of steady decline, the slump in car sales caused by the current recession added to GM’s woes. In the early months of 2009, GM received, along with Chrysler, billions of dollars in “bailout” funds from the U.S. government. But it wasn’t enough. On June 1, strapped by debt, the troubled automaker decided to seek bankruptcy protection. GM became the second of Detroit’s Big Three to declare bankruptcy this year, and the largest industrial company in U.S. history to go under.
The bankruptcy proceedings lasted a mere 40 days, and a new “reinvented” General Motors emerged on July 10. The new company maintains the old GM’s best assets (Chevrolet, Cadillac, Buick, and GMC trucks), will operate with reduced labor costs, and has had some $40 billion of its debts wiped out. The most significant change is that the U.S. Treasury now owns a huge stake in the company; co-owners include the governments of Canada and Ontario and a healthcare trust company for retired union workers.
Related Links
- GM Exits Bankruptcy
Reuters article covers the emergence of General Motors from bankruptcy after 40 days.
(Source: Reuters, July 10, 2009) - The 10 Largest U.S. Bankruptcies: General Motors
This CNNMoney article describes the historic scale of GM’s bankruptcy filing in June 2009.
(Source: CNN, June 1, 2009)
One problem you may want to look at is that GM, basuece of their troubles, expect to close almost 50% of their GM car sales and service locations. Where will you get your GM serviced if this happens? Will there be GM service locations near you, or will you have to drive far to find one? And 50% closings means a LOT of service centers will be gone soon! Bankruptcy may also affect future quality issues on new cars, as money for GM will no longer be flowing like water. And that usually equates to poorer quality vehicles manufactured.
What you are conveniently levaing out is that GM has so much debt and unfunded liabilities that the company could easily be liquidated and head right to Chapter 7.Creditors get quite uncooperative when they feel there is no chance of EVER getting a return on their investment.Like it or not, that is the kind of fit that hits the shan when your company credit rating and bond ratings are both junk from credit rating services.Can’t borrow money? Ooops.