Well, it finally happened. Not even the Great Bailout of 2009 could save that lumbering dinosaur we’ve known and hated as the General Motors Corporation. This morning it was announced that the 100 year-old automotive manufacturing company filed for bankruptcy – the third-largest filing in U.S. history, and definitely the biggest in the history of American manufacturing. That’s all folks: the Dow Jones no longer lists GM shares, and the New York Stock Exchange has delisted the stocks as “no longer suitable for listing”. It’s closing time – you don’t have to go home, but apparently you can’t stay here.
I’m not going to rehash what we already know from the news coverage from the last six months, but I will say this is a very gutsy move on the part of the Obama administration. For those of us not in the know, contingent upon the bankruptcy filing, President Obama is providing USD $30 billion to “restructure” General Motors. Basically what’s going to happen is the company will be divided into two sections: “Old GM” which will constitute the dead weight that will eventually be cut up and liquidated, and “New GM” which ostensibly will become a much more streamlined, environmentally-conscious organization, 60% of the stakes in which will be owned by the federal government of the United States. The UAW will have a 17.5% stake, the Canadian federal government will take 12%, and GM bondholders will be left with 10%. Obama’s administration is hoping that such a restructure will allow General Motors to emerge as a viable competitor to successful automotive companies like Honda, Toyota, Nissan and Hyundai – you know, the companies that make good cars and aren’t German.
I’m not a union man myself, but my heart goes out to the 92,000 employees and the half-a-million retirees GM once employed and sheltered: in these trying economic times I’m sure this is not welcome news to those men and women or their families. With any luck we’ll see some good come out of this mess for those folks, but Obama’s rhetoric on what exactly is going to happen to GM has been pretty vague:
“I am absolutely confident that if well-managed, a new GM will emerge that can…out-compete automakers around the world and that can once again be an integral part of America’s economic future.”
Great. What exactly does that mean? Clearly, going back to the “old” way of doing things isn’t going to cut it anymore. GM has routinely been outpaced by more fuel-efficient vehicles designed primarily by East Asian and German interests; with this new direction, the days of the Hummer are numbered – I hope.
A more interesting question is this: what could the U.S. government do with thirty billion dollars to “restructure” an auto manufacturer? Do they want to throw good money after bad and keep traipsing down the same old garden path that inevitably ends at the mouth of an open well, at the bottom of which the creepy ghost girl from “The Ring” lies waiting to eat our souls? Or could we potentially go a (gasp) new and innovative route?
As much as I’m not a union man, I’m also not a big fan of Michael Moore. After “Bowling for Columbine” and “Sicko”, I sort of started to lose patience with his patent disregard for things like, oh, I don’t know, sources. But I think, in his recent blog post on this issue, he really nailed some fantastic ways of spending all that extra dough the Obama government wants to sling GM’s way, particularly his assertion that the U.S. should really have a country-wide light rail service like they do in Japan. I mean, New York to L.A. in 17 hours? Green? Who wouldn’t want that?
The next few weeks are going to be very telling. In my estimation we’re going to see the results of two major gambits: the Obama administration’s faith in putting a huge chunk of change aside to rebuild GM, and the American people’s faith in the Obama government.