I had never thought of being a GM stockholder. Not through personal investment but as an American citizen,we are now all quasi-stock holders of General Motors which declared bankruptcy Monday. How did we get to this point and so quickly? Anyone who still thinks we are just in a recession should immediately go out and buy a new Chrysler product... oh,sorry,I mean Fiat. Actually the decline started over 20 years ago but going over the edge seemed to happen so rapidly. Something like $8b in assets and $16b in debt! For those of you with GM,Chrysler or even Ford(still liquid) subsidiaries in your respective countries,I wish you good luck. The restructuring may be necessary but it will be painful with global repercussions. A.J.
Al, I think it's more like $80B in assets and $180B in debt - that's quite a leverage ratio. Can you imagine what the debt service is on $180B??? No wonder GM is going under between the debt service and retiree/legacy/union costs.
It's a matter of weak leadership. Instead of taking on the tough issues and negotiations the weak leaders of GM (not just the CEO but also the Board and other senior mgmt) just conceeded. They conceeded too much to the unions - I'm sorry but a guy who hasn't graduated from high school can be making $90,000+/yr. on the shop floor with a full pension and lifetime medical at 40 (after 20 years on the job), that's not right. That's not a competitive labor rate in the global economy. A Chinese or Indian or Latin American worker makes 1/4 that on a fully loaded basis so how do you expect GM to compete? And agreeing to pay GM workers when they're not on the job? What dip sheit CEO agreed to that (as was agreed in 2000)?? Rick Wagoner agreed to that to avoid a strike because a strike would negatively affect the stock price in the short term which in turn would have had an immediate effect upon VP/C-level stock-based pay (can't have that, oh no!). The pussy (and the Board) should have had the backbone to take it on head first and have it out (ie. an extended strike) rather than make piece meal concessions all along the way. The cumulative weight of these concessions amounts to a significant burden upon the expense structure of the company.
Here's another one - what dip sheit agreed to a compulsory put option with Fiat to the tune of $2B? Again, Rick did. GM had to pay $2B to get out of it. $2B wasted. Any fresh MBA grad/accountant could have seen that coming a mile off.
No doubt unions have a valid existence but the UAW went too far and just plain shot themselves in the foot. Same as the Machinists Union did with Boeing - now Boeing subcontracts almost all of the components in a new plane to 3rd parties overseas rather than produce them on the shop floor with overpriced union labor.
The reality is that we live in a truly global economy and have done so for the last 10-20 years. It's real simple - if you can't compete with global pricing standards then you're not going to be in business for long. Better to get your business organized to compete with global pricing than waste a bunch of time kicking and screaming and whining about unfairly low labor costs abroad. Shut up and get on with it.
Oh, and all that talk by senior GM execs and Board members along the lines of "we're confident that GM will emerge a stronger company and be well equipped to compete in the 21st century".....what the f? These guys are the guys that f'd it up in the first place. They're OBVIOUSLY not equipped to make such assessments and express such unfounded confidence given the company performance under their (poor) leadership. If I was them I'd be so ashamed of myself and my performance that I'd want to go crawl under a rock in Mexico and hide for the next 10 years.
That said, there are a lot of good and decent and hard working people that work for GM in the rank and file - they shouldn't be suffering the unfortunate consequences of a bunch of screw ups and poor leadership in the C-suite and Board room. But they are.