American giant GM about to go bankrupt?

in all honesty? This is probably a scare tactic by GM to get out of paying its pension obligations which it made and which thousands of people depend on, otherwise they WOULD NOT have worked for GM. GM's executives are only worried about their stock price, pure and simple

 

The company has been run like **** for a long time. It's about time they shake things up there. The quality of their cars has been improving, and their trucks and SUVs have always been rock solid (although I've always preferred Ford trucks, myself, as do the rest of America since the Ford F series has been the top selling vehicle of any kind for something like 10 years straight...).

Bankruptcy isn't the end of the world. Continental Airlines has gone bankrupt twice, and they're still in business. Chapter 11 is different than Chapter 7. Chapter 7 is where you sell off all your assets to repay your creditors, then you go out of business. Ch 11 is more of a corporate restructuring opportunity.

 

Agreed with what you said on GM. Here's my slight off-topic question for ya texxx, do you think the bankruptcy law passed by Congress last year unfairly put individual Americans at disadvantage? In other words, these hapless Americans who declare bankruptcy have far less chance to get back on solid financial footing, compared to their "corporate counterparts?"

 

I have very little knowledge of individual bankruptcy laws. Refman would be a better person to ask, since he is a lawyer in that space. SamFisher might have an idea as well if you can pull him away from Dance Dance Revolution on his PS2 this evening.

 

My memory of the specifics is a bit vague but I believe there is a scenario that would allow them to file for bankruptcy, stick the government (i.e. taxpayers) with paying the pension plan and then reorganize and move on. IIRC I heard the discussions on the subject as an aside to one of the airlines bankruptcies.

Every time I hear some pundit speak on either Ford or GM they always come back to the fact that both companies make cars that don’t appeal to consumers. (You wouldn’t know it living in Texas but trucks are a fractional part of the global market). Most of the auto industry problems, unlike the airlines problems, could be alleviated by management having a strong consumer-oriented adjustment of their product lines.

People my age will always think of crap-mobiles like the Pinto or the Gremlin when it comes to American cars, but those days apparently are behind them and they are competitive for quality with all automakers that aren’t Japanese. They just need strategy.

 

Well, GM still sells more vehicles than any other carmaker on the planet, so they can't be that far off. Ford F-Series and Chevy Silverado are by far the top selling vehicles in the US market, which is the biggest automobile market in the world, so I wouldn't exactly call it a "fractional" part of the world's market. That market is still very important.

 

Texxx, while (or, because I'm) a generalist, I have no specific knowledge of the US BR code provisions of what you seek. However you should know that, last gen, I was an xbox partisan (power = superior) rather than a PS2 ho. Honestly, who needs to see spiky haired gender neutral Japanese ish kids with emotional issues - not I, which is why I left that system behind.

 

How can GM ever sink if the government is paying them billions for military supplies (i.e. Humvees, etc)? That settles it, the only way to save GM is to invade Iran.

Get R done!

 

yes..it sucks. congress chose to ignore creditors' attorneys, debtors' attorneys and bankruptcy judges who overwhelmingly criticized the bill that became law. congress would not listen.

i don't think it's unfair because of the inequity between consumer and corporate bankruptcy...i think it's just bad law. Refman can explain why the pieces don't fit...why there's very little harmony from provision to provision. But ultimately, this was democracy for sale in the worst way I have ever seen.

 

lol ok now. if they cared more about their stock price then they would have changed how they were running their business. your stock price is unimportant if you don't have a liquid company. bottom line is GM is burning a TON of cash and they have no foreseeable way out. the unions are about to destroy everything they've gained in terms of health care and pensions if they let GM go bankrupt, which is very possible. a couple years from now when you hear on the news that GM is considering bankruptcy then go back over your scare tactic statement and learn something.

also....if you followed the situation rather than spouting things that sound good to the ears of people who like to think of big business as greedy then you would know that GM has not talked of bankruptcy. they have repeatedly stated that bankruptcy is not an option. the only people who have brought up bankruptcy are 3rd parties like analysts and debt organizations like moodys, s&p, and fitch. so please understand the situation before spouting rhetoric.

 

HAHAHAH, thats one of the best lines I've ever heard. Please tell me what flavor of Kool Aid you're drinking.

Of course, it's always the fault of those greedy unions. Tell me something, who offers them those CBAs that they sign?

I'm sure you're the expert for all of us to find out the truth on. What was that line again about Executives only care about running their Company, and damn their stock options?

 

ok fine then tell me how much GM's stock has gone up in the past 3 years. wait you can't because it has dropped like 60%.

hey the unions are greedy because they can get away with it. i am just stating that if they don't start to negotiate and realize that GM can go bankrupt then they could possibly screw themselves. they have done a ton for their workers, but this situation is simply different. GM owes insane amounts of money to the pensions. i need to find the number somewhere but it is mind boggling. they have like 16bil in cash and like 285bil in debt. they lost nearly 9bil in the past 12 months i think. i think you can do the math.

you can believe your dogmatic statements all you like but you aren't living in reality. the company has stated that bankruptcy is not an option. they are trying to hold up their stock and prevent panic by saying that. however, the reality is that GM is burning thru too much cash and their losses are just too great. the stock is HEAVILY shorted by institutions...it is approaching 20% of the float that is short. pretty insane for a company with over 560 million shares outstanding.

the writing is on the wall and this is not a scare tactic that you think is being put out there by the GM management. i like how you completely glanced over that part on your response and just stuck to your cute sayings. i may not be a total expert on everything about GM but they have massive debt, huge pensions, huge health care plans, massive cash burn, losing market share, getting ready to be the #2 automaker in the world behind toyota, they have been downgraded to junk by every credit organization, major analysts keep upping the chances of bankruptcy (i think B of A said its near 40% now), and institutions are positioning themselves against the stock with massive amounts of money (there is over 2 billion dollars already short GM). however, you are trying to tell me that this is management trying to scare the unions when everyone except the management has talked about bankruptcy. you are blind.

 

The last Fortune cover story was on GM, and I thought it was very interesting. Worth a read for people interested in a relatively in-depth story on how GM got to where it is and the problems facing it now.

It's going to be difficult to turn this company around. They built poor quality cars for so long that even though the company has largely turned that around, their products still aren't considered high-quality cars with a lot of potential consumers.

I think a big problem is having so many brands that have no specific brand image. Cadillac has been a relative bright spot within GM largely because consumers know what Cadillac is, and Cadillac offers products that appeal to customers and fit within that brand image.

The other brands don't have a distinct image and often their largest competitors are other GM divisions. In my opinion, to have a successful company in this modern world, they need to cut out that overlap and have their brands individually stand for something.

Buying a GM car is needlessly complicated, as well. There are too many combinations of options, which makes it difficult to price the cars and makes it difficult for dealers to order the cars that people will buy off the lot. Honda and Toyota have had a great deal of success by combining options into a relatively small number of trim levels and offering few (if any) individual options. It simplifies the process for buyers, and it eliminates a lot of the problems dealers face in ordering the right combination of cars to sell off the lot.

In the short-term, cost-cutting is the only option to keep the company going, but to survive in the long-term, the company is going to need major changes to its product lines and to its design, etc. philosophy. Cost cutting won't increase sales or turnaround their declining market share.

 

The "Qualified" Defined Benefit Pension plans(the ones within IRS compensation limits---mostly the working man), are backed by a government institution-The Pension Benefit Guaranty Company, PBGC for short.

However, the PBGC could very well be bankrupted itself by GM folding on DB funding obligations by slithering away with a Chapter 11 Bankruptcy. And that is with the PBGC only paying an actuarial PORTION of the earned DB payments.

Now, the "Non Qualified" plans could just go *poof* and disappear to creditors--let me tell you how sorry I feel for the exec's that loose it...I work with all manner of qualified and non qualified DB and DC plans all day long for a PRIVATE Fortune 200 Company--amazing the amounts of cash we are talking about here

 

So you stand by your position that executives don't care about the stock price? wow.

when in doubt, always blame the union

maybe I am, but at least I'm not blind enough to think that coporate execs don't care about stock price.

 

I have no doubt that GM executives are concerned with their stock price; however, it's silly to say that's all they're concerned about, as if the problems facing GM don't really exist.

 

i'm not solely blaming them i dunno why you just put these blanket statements out there. i am saying they need to negiotiate. they aren't negotiating very much. thats my point. if they don't negotiate then they lose a lot because GM will be bankrupt like its spin off of Delphi.

if you are just trying to get in a pissing contest over one little point then thats fine. i am guessing since you aren't talking about the scare tactic point anymore then you are recognizing you are wrong there. obviously, companies care about their stock price. thats why they go public. so they can help finance their business and higher stock prices allow them to sell shares and have shelf offerings at higher prices to have more money to spend to expand or stay alive. and of course the execs and insiders care about the prices because generally they have options they can exercise and its no fun losing money on your stock options if you cant generate solid business to keep the price of your stock up.

i don't even know what you are arguing anymore...just admit you were wrong and get over it.

 

auto parts maker dana corp just filed chapter 11 scare tactics!!!!

it will be iintresting to see how many others will have to file chapter 11 along with delphi and dana.