Forbes: GM Heading to Bankruptcy, again

[silvrsvt]

Bankruptcy doesn't mean the same thing as out of business. I think a lot of people seem to miss that point when people talking about "saving the auto industry". Would some people lose jobs? Yes. But it would be a rush judgement to assume everyone would.

 

I understand that, the point I was making was partly the gov financed bailout of GM was to prevent severe psychological damage of GM actually doing an "uncontrolled" BK. I dunno about you, but with all crap that was going on at the time, it would "hurt" more with them doing that when what actually happened.

 

It would have been more or less mass hysteria if that happened with no real way to stop it and could have boiled over into other industries....

 

With the way the market is now (more or less stable) they would be able to absorb/mitigate the damage GM would cause going into a real BK

[blazerdude20]

Bankruptcy doesn't mean the same thing as out of business. I think a lot of people seem to miss that point when people talking about "saving the auto industry". Would some people lose jobs? Yes. But it would be a rush judgement to assume everyone would.

 

I strongly disagree. As RJ pointed out GM likely would have taken the "burn it to the ground" ch.7 route in 2008/2009. The credit market was tight already and there was no way it would come up with the bridge loans to support a ch.11 bankruptcy the size of GM.

 

I know that in ch.7 the assets would be bought by other parties but i think there was fear (and rightfully so imo) that China would have outbid for a lot of the IP of GM. Which could come back to haunt the US auto industry even more than the jobs lost from GM going under. After bankruptcy there would be no obligation for the new owners of plants to offer high wages or benefits. They would have become the defacto industry powers with lower overhead. A scenario based out of fear but most of our society is run on fear.

[RichardJensen]

China would have outbid for a lot of the IP of GM.

I think it's doubtful that the bankruptcy trustee would've accepted bids from shadowy Chinese companies or even the more legitimate appearing ones. And I don't think the Chinese would be inclined to outbid for something that they can steal and sell within China with little consequence.

[blazerdude20]

I think it's doubtful that the bankruptcy trustee would've accepted bids from shadowy Chinese companies or even the more legitimate appearing ones. And I don't think the Chinese would be inclined to outbid for something that they can steal and sell within China with little consequence.

 

My thoughts were more with the idea of ease of entry to the American market (Fiat)

 

Honestly it wouldn't have to be shaddy auto companies. BYD or Cherry seemed to be on solid footing at the time but my thought was more of an investment company buying up the IP ( similar to Cerberus not having any auto experience).

 

Like I said fear was a factor.

[RichardJensen]

Yeah, possibly.

 

But you could construct an overpowering argument for intervention without even hinting at the threat of imminent Chinese access to the NA market.

[jpd80]

With current conditions, I don't see GM going bankrupt, but how about the idea that GM's lack of

corporate reform means that they will never realize the true scales of efficiency that Ford is enjoying.

No way could GM have ever put its own house in order - they still can't bring themselves to do it.

 

 

The main thing impeding Ford's perceived financial progress, centers around the desire to continue

delivering well designed products, continued expansion in Asia and China whilst paying down debt.

That singular focus on Ford brand globally is a huge advantage for Ford, one that GM will never

replicate due to its continuing insistence on multiple brands in North American and around the globe....

Edited August 24, 2012 by jpd80

[akirby]

GM's lack of corporate reform means that they will never realize the true scales of efficiency that Ford is enjoying.

 

The fact that Ford sells 85% of the volume that GM sells with 50% as many employees should tell you all you need to know about GM's lack of efficiency.

[jpd80]

The fact that Ford sells 85% of the volume that GM sells with 50% as many employees should tell you all you need to know about GM's lack of efficiency.

That's what I was getting at, it's a problem that stems from GM's corporate management and basic business philosophy, their desire to retain those

multiple brands and maintain individuality with them is what really hurt their internal efficiency, something the singular Ford brand neatly circumvents..

And that's before we even talk about excess production capacity and force feeding the market by dumping into fleets...

Edited August 25, 2012 by jpd80