The general thrust of the General Motors Death Watch series—the American automaker is headed for bankruptcy—has been proven right. In all but the technical sense, GM is already bankrupt. It depends entirely on $19.8 billion worth of federal life support (a.k.a. “loans”) to survive. Until June 1. At which point the re-constituted American Leyland will need more federal “investment.” Same again? Sure! More to the point, it’s been over a year since I’ve seen a comment promising “See you at Death Watch 2345!” But I’ve made a lot of mistakes along the way. I was sure that bankrupt former GM parts supplier Delphi would be the final straw. Somehow, the zombie parts maker has kept sufficient distance from the former mothership to avoid delivering the killer blow (which Wagoner may have been snorting). Uh-oh, here’s comes another bullet! And here comes the Presidential Task Force on Automobiles (PTFOA), ’cause Uncle Sam’s favorite automaker can’t spend over $100 million without Steve Rattner’s say so.
Delphi Corp. is likely to miss a deadline today to submit to the U.S. Treasury Department an outline of General Motors Corp.’s role in the auto supplier’s plan to emerge from bankruptcy.
Delphi, GM and the Obama administration’s auto task force held an urgent round of talks Thursday in Washington and will meet again today, but officials said the discussions are likely to continue into next week. . .
GM has allocated $11 billion toward Delphi’s emergence from bankruptcy and spent years negotiating a resolution of all outstanding issues with the supplier, which GM spun off in 1999.
The Detroit News doesn’t provide much analysis of this delay, but you could file this story under “we can’t be bothered with this shit right now.” I mean, $11 billion? Delphi can get in line with all the other creditors who will “feast” on “bad GM” when the PTFOA pulls the plug on The General’s life support v1.
Or you could put this one as “there’s a bad moon rising.” Although the PTFOA’s spinmeisters talk about a quick bankruptcy, it’s clear that a lot of people are going to get a right royal shafting. And they’re not going to take it without fighting for their future against a company that includes them out.
Delphi has been taking drastic actions to cut costs.
Last month, it ended life insurance and health insurance for salaried retirees, saving $70 million a year and it warned that its current shareholders are likely to get nothing.
Earlier this month, a federal bankruptcy judge delayed approval of GM’s purchase of Delphi’s steering business at the request of the Treasury Department.
Someone should go claw back the bonuses the GM and Delphi executives paid themselves for successfully doing the spin-off. Delphi has, in fact, never been an independent company. Just another botched strategy and botched implementation from the Detroit MBA gang.
When I worked for Visteon in the 00-04 Timeframe, we all talked about how GM’s handling on the Delphi spinoff was so much better, lol.
Seriously, it would be interesting to write a case study or book comparing the two spinoffs.
Although, maybe a sitcom would be more appropriate. It would be a laff-riot.
Delphi and Saturn are both evidence that GM executives saw the internal problems at GM, but could not fix them.
For Delphi, they just kicked out the horrible inefficient parts division to fend for itself. For Saturn, they collected all the good ideas for fixing labor and dealer problems and quarantined them inside a “Different” company.
Separating “Good GM” and “Bad GM” has been tried before. And Bad GM always comes back to beat up Good GM and take its lunch money.
That caption photo have me nausea. Thanks a lot.
I am about at the point where I don’t want to read or hear about this any more. I’ll just ignore the American (lol) car makers for another couple years. I know that the government is now spending my money on these companies, but let’s get real here. They were going to spend my money on something that wasn’t going to help me out anyway. Vote third party people, we need more options. I still love cars though. Kia is doing some fun stuff and Subaru and Mazda are making interesting cars. So let me know when I should start paying attention again, ok. Thanks Bye
How do you solve a problem like Maria Delphi?
GM needs the parts, otherwise GM wouldn’t have dumped $11 billion & counting into the company. Has GM put any numbers on the table showing what it’s going to take in terms of $ to either keep the parts coming from Delphi or from alternate sources? Presumably, that would have been part of the viability plan that Wagoner’s buch was supposed to provide but didn’t. Presumably that would be part of what is supposed to show up by June 1.
“Wagoner’s buch”
That freudian?
Sometimes I wonder if these people thought a spinoff of part of the company is simple like one TV show from another.
Fundimental difference:
– TV spin-offs are usually due to expansion and
the desire for additional profits.
– Automotive component company spinoffs are due to contraction and the desire to avoid additional costs.
To wit:
– GM: North American Aircraft, Frigid-Aire, Delphi (Saginaw, Harrison, AC-Rochester, et al.), Inland, Guide, American-Axle, Remy, Allison, Electro-Motive, (Avis?);
– Ford: Philco, Aeronutronic, Ford-New-Holland, Visteon (partially re-spun-in), Hertz, Budget, JLR; MC; VCC
– Chrysler: Chrysler Defense; Huntsville (to Siemens), Casting (to Metaldyne?), Gulfstream, Lambo (to Audi); Thrifty;
This is not only an American phenomenon…
– Daimler-Benz: AEG, Fokker Aircraft, Temic, Adtrans, MTU, M-B Lenkung, Mitsubishi, Chrysler,
Like the life (& death) process(es) of a star, automotive companies grow past their core, accumulating both automotive and non-automotive assets, burning ever brighter, reaching (red) giant status, but reach an unsustainable and instable state and thus begin periodically ejecting their non-core assets (much as a star ejects globs of its mantle) and consuming the core assets, soon comes cooling, shrinkage, and dwarf-status, and somewhere after they finish coughing-out and consuming their innards**, their corpus-corporations becomes a black holes (and prodigous consumers of government cash.)
** I recognize “coughing & consumption” comes perilously close to mixing the solar metaphor with one of TB (almost as fitting a metaphor).
Oh, and I forgot the financial service units:
GM: Motors Acceptance Corp (aka GMAC).
Ford: The Associates.