The Wall Street Journal carries the surprising news that General Motors management might be starting to edge closer to reality: “Speaking at the North American International Auto Show in Detroit, Rick Wagoner, GM’s chairman and chief executive, said the company wants to avoid a Chapter 11 filing, but also said its viability is ‘not 100%’ certain at this point.” Rick backing away from the position that GM hasn’t even thought about C11 is news. “The Treasury Department has said GM must have a plan by March to become ‘viable’ and have ‘positive net value.'” Nobody actually expects GM to have worked out details with bondholders or the UAW before the March deadline. The March deadline was chosen by the current administration as a way to act tough while kicking the can over to the new team, and everyone involved knows it. The UAW says it isn’t clear what is being asked of it and hasn’t started negotiations. Meanwhile, regarding the bondholder negotiations; “GM Chief Operating Officer Frederick ‘Fritz; Henderson suggested Monday that it could be some time before substantive discussions can be held.” So, nothing is really happening with the UAW or the bondholders yet. How about pulling the plug on dead brands?
“At the car show, GM’s top European executive, Carl Peter Forster, said the company must adequately fund Saab before it can sell the money-losing business. The stabilization could take eight weeks, he said.” Say what, they are going to pump cash into Saab to stabilize it and will do so over the next eight weeks, at which time it will be a saleable company? If Saab could be stabilized in eight weeks, why wasn’t it done months ago? Saab is dead, but nobody wants to tell the family the news.
Unfortunately there are still no signs of GM engaging in the kind of Truth and Reconciliation process our own Ken Elias called for so eloquently. PR gambits continue to rule the day at GM.
ANOTHER PLAN DEADLINE! We need some ky.
How many plans/chances is GM to get. LET THEM GO
C11, restructure, retool, rework,
Are we to just keep on giving our tax dollars to these highly educated disciples of the black hole?
I have attend the NAIAS every year since 1990, I am NOT going this year.
GM = mini government
There’s a lot of “dirty dancing” going on here.
So, our money basically kept GM and Chryco going until the 10m/yr 2009 numbers came out?
I guess it’s up to the UAW now to keep both from CH 11/7 —
You don’t need a weatherman to tell you which way the wind is blowing.
Early December 08 . . .
WASHINGTON – General Motors Corp. today submitted a plan to use Federal bridge loans to create a leaner, more competitive company, one that is profitable and self-sustaining for the long term.
The plan, submitted in response to Congressional hearings in November, includes a detailed blueprint for a successful, sustainable General Motors. Building on a product renaissance and comprehensive restructuring that has been under way for several years, the plan calls for:
Tell us the reeeest of the story Paul Harvey.
Isn’t it odd that the plan for restructuring that is several years old, is still leaving GM in a free fall. You can’t work with decisions made back in the 80’s by refining them 25 years later.
Case in point, Back then GM thought they could save money by combining the cars into large and small platforms with slightly different bodies. It was here in the mid eighties that Lincoln would advertise only the town car looks like a luxury car as the GM mini-luxury front wheel drive cars were look a likes (caddy, buick, olds).
They were right and the public recoiled at paying luxury prices for badge engineered blocks of soap. (perhaps a reference to Ron Zarella who came from Proctor & Gamble to sell cars like well soap.)
GM has never recovered from this 50 year reversal of individual looking and designed models by five competing divisions. The right decision 25 years ago,would have been to trim brands if they could no longer support the engineering costs for the separate brands.
Now, Lutz has to some extent made the cars of GM look different with sheet metal but the engineering has been allowed to ossify. Take the Caddy DTS, it has a four speed tranny when others are at seven and eight in luxury cars. (Nissan is gearless) A new DTS is large on the outside and surprisingly small and chopped up on the inside.
Only GM can build front wheel drive and end up with huge driveline tunnels through the center of the car. (check out the rear seat floor of the toyota avalon, it’s almost perfectly flat).
Then there is the smoothness of the Japanese and German powerplants almost across the board compared to GM stuff which is ‘”almost as good”. I could go on to how good are cars made of cheap parts from bankrupt suppliers with a foot on their troat to make the stuff still cheaper?
Oh, it’s a book length narrative that will surely be written when it’s all over.
Contemplating Ch11 is a threat to get Obama to give more money. Rest assured Rick Wagoner still has his head firmly in the sand.
re: guyincognito,
I agree wholeheartedly with your first sentence. I’ll disagree with the second sentence for the following reason: Rick doesn’t know how to successfully run an automotive manufacturing company, but he does know how to extort money from the government and survive in a large bureaucracy. His head is not in the sand, he’s just playing a different game (and succeeding!) than any of us would rather see him play. It’s good for him, and it sucks for us!
Tex
It’s kind of like watching a meteroite falling to earth. It’s fun to watch it go down in a big ball of flames, but you better be prepared for one hell of an impact once it hits ground. GM is gonna leave one heckuva impact big crater in the economy when it crashes.
Here is the original quotes from the NY Times:
“It is only prudent for us to be prepared for all options,” Mr. Wagoner said of the possibility of bankruptcy. “But my personal view is that there options that can work in each of the areas – working with the union, working with the bondholders — that can get us to the position that we need to demonstrate viability.”
&
“By March 31, we’ll be able to address whether additional funding may be forthcoming or not,” he said. “We really haven’t said whether we will or we won’t need money after that period.”
Which got turned into an AP story:
“Wagoner: Bankruptcy filing still possible”
“GM CEO says automaker could still be forced to file for Chapter 11 despite federal loans”
Rick Wagoner said “no one will buy a car from a bankrupt auto maker”.
What he should have said is: “no one will buy a car from a company that might go bankrupt”.
The economy stinks, money is tight, jobs are scarce – anyone in a position to buy a car is not going to roll the dice on a company like GM.
The few people I know in the market for a car have flat-out declared they will not risk 20 – 30 large on a company that might not make it.
Time to face the music Rick, your company is toast. Chapter 7 may be the only way to recover some equity at this point.
-ted
The lynchpin is in the annual sales number. If it is north of 10.5M and shows them making it, games are being played.
If it is 9.325M or thereabouts and the plan shows they won’t make it, Rick has finally stepped up to the reality many talented experts pointed out several months ago.