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leistb
12-11-2008, 08:48 PM
Thursday, December 11, 2008

Report: GM Mulling Bankruptcy


General Motors (GM (javascript:stockSearch('GM');): 4.12, -0.48, -10.43%) has hired a team of lawyers and bankers to determine whether the ailing auto maker should file for bankruptcy protection, according to The Wall Street Journal.


The legal team would include bankruptcy law firms Harvey Miller of New York and Weil, Gotshal & Manges, the Journal said citing several sources familiar with the matter. Other experts including Jay Alix, William Repko, and Arthur Newman could also be tapped, according to the Journal.

GM Chief Executive Officer Rick Wagoner pushed aside the notion of bankruptcy earlier, saying bankruptcy would severely hurt the company’s viability because people would lose faith in warranties.

Even if the proposed auto bailout does pass through congress, the company still might have to file for bankruptcy, according to the journal. Senior GM executives worry that suppliers might tighten up credit to the embattled auto maker, making it difficult for the company continue business and possibly compromising any potential loan from the federal government.

Some analysts say this news could be a clever way of pressuring lawmakers to vote for the rescue package, but others say this could be a crucial next step for the auto maker.

The United Auto Workers – a powerful auto-union – has hired Lazard to help renegotiate the multi-billion dollar healthcare trust set up by the Big Three auto makers, the Journal also said.

http://www.foxbusiness.com/story/markets/wsj-gm-mulls-bankruptcy/

Ought Six
12-11-2008, 11:51 PM
This is what GM needs to do. Bankruptcy is the only thing I can see that can break the UAW's deathgrip on the Big Three. But even that does not take care of the other half of the equation; U.S. automaker's grotesque mismanagement and fossilized dinosaur corporate culture. If GM could repeat the Saturn division model with even more innovation in its other divisions, it might have a chance.

jason
12-12-2008, 01:23 AM
If GM could repeat the Saturn division model with even more innovation in its other divisions, it might have a chance.

Funny cause Saturn is one of the divisions they are considering terminating.

theoryman
12-14-2008, 12:55 AM
I think bankruptcy is the right thing, but with one special bailout.

I want a gov. guarantee of the warranty on new and existing vehicles for the company's in bankruptcy.

This would prevent the 'massive loss of confidence' and sales slump that would otherwise occur.

Several people have said that this is not necessary, citing the airline bankruptcy's as an example. But there is a major difference in buying a service, (a flight), and buying a product that requires maintenance and repair. There is also a major cost difference.

leistb
12-14-2008, 01:35 AM
I think bankruptcy is the right thing, but with one special bailout.

I want a gov. guarantee of the warranty on new and existing vehicles for the company's in bankruptcy.

This would prevent the 'massive loss of confidence' and sales slump that would otherwise occur.

Several people have said that this is not necessary, citing the airline bankruptcy's as an example. But there is a major difference in buying a service, (a flight), and buying a product that requires maintenance and repair. There is also a major cost difference.

In your opinion, how would the government administer such a warranty?

watcher
12-14-2008, 06:34 AM
Without a plan in effect to establish how cars purchased after a bankruptcy announcement would be warrantied and serviced over the long haul, I tend to agree with Wagoner (can't believe I said that). There would be significant concern on the part of the buying public regarding future service and market value for their purchase. The current sales figures would look good in comparison. How many here will consider buying a GM vehicle after their bankruptcy announcement? How good are the chances that they'll emerge successfully from the bankruptcy? Do we really expect this bloated, inefficient behemoth to completely redesign their business plan, product offerings and labor arrangements during the relatively short period that bankruptcy typically provides companies to get their act together? I'm not real optimistic about that happening.

As far as the Saturn model, the division only had some success initially because of their "novel" labor and dealer operations. In the end, they produced essentially the same 1980's-designed vehicle (at least it didn't rust due to it's plastic body panels) for 13 years. That car, while reasonably reliable, was a mediocre offering at best. Saturn owners were a loyal bunch and that kept them going for awhile but they eventually moved on as the company didn't have anything new to offer. GM failed to provide the funding and engineering resources the division needed to move forward and keep up with everyone else. The current Saturn models are mildly rebadged versions of vehicles from GM's other divisions...and not receiving many accolades of late. As with everything else GM does, a good idea that never quite turned out the way it was intended. Do we really expect GM to remake itself in a short period of time with limited resources and emerge successful? As much as I'd like to see them accomplish that, their history doesn't bode well for them even if given the chance.

Ought Six
12-14-2008, 07:06 AM
W:"As far as the Saturn model, the division only had some success initially because of their "novel" labor and dealer operations. In the end, they produced essentially the same 1980's-designed vehicle (at least it didn't rust due to it's plastic body panels) for 13 years. That car, while reasonably reliable, was a mediocre offering at best. Saturn owners were a loyal bunch and that kept them going for awhile but they eventually moved on as the company didn't have anything new to offer."The car was not mediocre at all when it first came out. It was quite competitive with Toyotas of the time. If GM had allowed Saturn to retool, they could have kept up.
----------"GM failed to provide the funding and engineering resources the division needed to move forward and keep up with everyone else."Yep. Most GM execs viewed Saturn as a bastard child, which they witheld resources and cash from. It was the GM management that so restricted what was essentially a plant run just the way Toyota plants here are run.
----------"The current Saturn models are mildly rebadged versions of vehicles from GM's other divisions...and not receiving many accolades of late."I know that is not true of the second generation Saturn Vue. It is getting rave reviews, and is quite competitive with foreign offerings. While it is a rebadged vehicle, in this case it is a rebadged Opel Antara, which is an excellent and competitive vehicle.

The Saturn Astra is a rebadged version of the second most popular car in Europe, the Opel Astra. It is an excellent vehicle in every respect. Motor Trend gave it an extremely positive review, only wishing for more horsepower.

If GM brought in more German engineering from their Opel division through the Saturn line, they could really do well with them.

My parents just got a Saturn Aura. They love it. Even with a four cylinder engine, it has good power and great mileage. It rated very well in crash safety; better than most other foreign models in the same class. This vehicle is getting good reviews, though it is not rated as top of class. But it is quite competitive.
----------"As with everything else GM does, a good idea that never quite turned out the way it was intended. Do we really expect GM to remake itself in a short period of time with limited resources and emerge successful? As much as I'd like to see them accomplish that, their history doesn't bode well for them even if given the chance."Agreed. The problem is the current upper and middle management, and corporate culture they collectively represent. If that does not change, then GM is doomed no matter what kind of bailout package it gets.