Once, General Motors was the largest automaker in the world. For a long time, it was the largest automaker in the country. Then, decades of mismanagement, union thuggery, and just generally selling cars no one wanted lead it into decline and, finally insolvency. The end was seriously nigh. The curtain was closing on this once great car company.
Unable to face the horror of a GM collapse, and unwilling to leave it to blind fate, King Barack The Magnificent invalidated decades, if not centuries, of bankruptcy law and engineered the GM Bailout. With a price tag in the billions of dollars, and requiring that secured bond holders be denied their claims, the GM Bailout was laughably illegal. But, we were told, it was necessary to save GM, and, it was darkly suggested, the country.
In the end, the US Government established a de facto new Board and installed a new CEO. You, the US Taxpayer, own over a quarter of the company. Most of the rest is owned by the UAW. Very specifically unchecked by the Federal Government, the Union extracted a very nice contract for itself from GM. Not for GM was the much reduced in cost contract that Ford Negotiated. Neither would the union or the US Government simply allow GM to return back to private ownership.
Where Ford has battled back from the brink and is still making the number 1 truck in America, GM is still flailing. GM has spent immense sums of money on bringing the Chevy Volt to market. This car, mandated by the Government, is one that no one wants and isn't even as good as it's closest competitor, the Nissan Leaf. A compact sedan that costs more than some full-sized sedans, and that includes a hefty subsidy from you, the US Taxpayer, the Volt is only moving at fire-sale prices. By which I mean: when it spontaneously combusts.
So it should come as no surprise that GM is once more on the path to bankruptcy. Math will not be denied, nor will the laws of competition. If you make a product that is more expensive than your competitors, but isn't as good, you're not going to make money. Add to that a Barack Obama approved CEO who had never worked in the auto industry before getting the job, and you can see why GM is on a collision course with reality.
Now there are two questions. The first, which only time will answer, is if GM can turn things around, or when (more likely) they will actually be forced to go into bankruptcy again. The second is, when (yeah, I'm not going with 'if') they are forced into bankruptcy, will they actually be allowed to go through it correctly.
See, had GM been allowed to go through the normal bankruptcy, things would be very different. First off, the secured bond holders would have gotten their just share. Beyond that, though, GM would have been able to shed its crippling union contracts. They would have been able to restructure their debt. Perhaps most importantly, they would have been able to select their own CEO. Say, I don't know, someone who knew cars.
Instead, we're faced with a second bankruptcy, probably, within the next few years. Worse than that, we're faced with the prospect that the Federal Government will try again to "save" GM by bailing it out. Buy why should they care, it's not their money, right?
As an addendum, remember when Obama said that GM had come roaring back after the bail out? Yeah. Not so much.
I totally agree !
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