General Motors is following Chrysler into bankruptcy. Currently GM is going to file Chapter 11 Bankruptcy, where it reorganizes and sheds debt to become a profitable company again. Chrysler filed bankruptcy at the end of April and is set to emerge reorganized and perhaps the blueprint for GM’s bankruptcy.
Chrysler is selling most of it’s assets off to a european group lead by Fiat. Chrysler is getting rid of 8 factories and nearly 800 dealerships. The majority shareholder will be the United Autoworkers union (UAW) at 55%, followed by Fiat at 20%. I have to wonder what this will mean for UAW? I mean they are going to be forced to look at their pension and employee compensation packages from both the standpoint of the worker and business owner.
GM is expected to finish their bankruptcy proceedings with the same speed as Chrysler, within the next 30-60 days. The biggest difference between the two companies is that Chrysler sold off it’s assets to Fiat in an attempt to get solvent. GM will try to restructure with help from the US government. Basically they are becoming a government run company.
I wonder what repercussion this will have on our current economy? Thousands of jobs will be lost. I also believe that pensions for both Chrysler and GM will be wiped clean and renegotiated. Though the UAW took cuts, I don’t think they are substantial enough to survive the bankrupcty.
I’m not sure if the US government shouldn’t have let GM fail? Or find outside help like Chrysler? What do you think?
8 responses so far ↓
1 Prince Of Thrift // Jun 2, 2009 at 9:37 am
We the people will now own 60% of GM or as you say Government Motors.
2 Mary // Jun 2, 2009 at 11:18 am
What Obama is doing is destroying our way of life. The government should never get into the business of running any company, let alone an automobile company. It is the surest way to destroy an industry . The UAW has been the reason the companies are insolvent and Obama has stolen the bond holders major positions and given it to the UAW–even when there were legally binding documents in place. There is no earthly reason the Union should own a majority of the companies. The only reason Obama has broken the rule of law in this country is because he is in the back pocket of the unions. We need to wake up and tell our elected representatives that this is unacceptable or one day very soon we are not going to have any freedoms left in this country. Once the rule of law is tossed aside, as Obama is doing, our civilized society is destroyed!
3 JoeP // Jun 2, 2009 at 11:31 am
Our founding fathers are rolling in their graves! Company management has caved to gradual demands by the UAW over 60+ years, and it has resulted in this: http://www.marginalrevolution.com/marginalrevolution/2008/12/fords-uaw-contr.html
What board would stand up to contract changes with the threat of strike? Do you want to be known as the chairman who is responsible for a 2% drop in stock value?
With a contract like this, and commitments to pensioners, it is no wonder GM is in the shape it is in. This is not the kind of change voters thought they were in store for. We and the next couple generations are doomed.
4 fengshui // Jun 2, 2009 at 8:09 pm
It is all the product of GREED. Plain and simple. Quit pointing fingers. Liberals vs conservatives. That way of thinking will never allow us to move forward.
5 Don // Jun 4, 2009 at 3:04 pm
Here we go. fengshui, shut up. no one said liberal vs conservative. It’s lawful vs unlawful. bush and his crew did the same thing giving bailouts. free enterprise and they should be allowed to fail or go into bankruptcy without the govt interferring.
6 LAL // Jun 4, 2009 at 9:55 pm
LOL, i was about to say I recall this happening the last administration. It doesn’t appear anything’s changed sadly.
7 JoeP // Jun 5, 2009 at 3:51 pm
This is not about any particular party or administration. It is about our government interfering with businesses, businesses losing the ability to self-govern, and consumers not exercising their influence via the free market. I will say that the us-and-them mentality between the major political parties, as well as labor and management, are certainly contributing factors.
8 LAL // Jun 7, 2009 at 2:56 pm
I also think that people want to hang onto their jobs. But the way the pensions and healthcare is structured on the company’s balance sheets make it impossible to compete.
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