As we know GM is on the ropes. The implications and results of a GM bankruptcy are huge. The number of people employed directly and indirectly through GM is large. Besides the obvious construction and distribution of the vehicles there is parts manufacturing, transportation, advertising revenue, repair shops and workers, retirees and all of the managerial services that goes into these sectors.
Reading the Times article there is mention that GM is throwing new car design overboard in an effort to maintain some liquidity which would allow them to survive a little longer. Does this seem like a good idea? Do they think people still want the old stuff.
They are feverishly bailing out a sinking ship and the rate of water going in exceeds the amount going out.
Strictly from the point of view of employment and the implications of many more thousands of people becoming unemployed especially in a place like Michigan among others, I support a bail out of GM. However, there has to be a silver lining. I can't believe that this behemoth company cannot retool to manufacture a product that is extraordinarily good.
How many of GM's issues were a result of the spike in gasoline prices and the ongoing recession - probably most it, but they essentially produce dinosaurs. Even in a recession people still need transportation.
Time.com: Is General Motors Worth Saving?
...GM's bosses have been frantically throwing all manner of stuff overboard — retiree health-care benefits, people, assets, new car design — to conserve $5 billion.
"Immediate federal funding is essential in order for the U.S. automotive industry to weather this downturn..."
The whole industry would not be able to build cars in the U.S. (even if only one of the big three were to go into bankruptcy), because of the lack of parts.
"They still need to take structural steps: reduce suppliers, reduce the number of plants, reduce the cost structure and get rid of excessive debt."
3 comments:
This dinosaur needs too die. I hate too say it but propping it up is our equivalent of trying to prop up the old Soviet State. Let it go and new smarter companies will rise from the wreckage. I don't believe trying to bail it out will change anything in the long run. The sad truth is GM, FORD and Chysrler are yesterday's news as is our Industrial economy. America is a 3rd world country now with nukes and a huge military , sound familiar? Only took 18 yrs for us too follow the other Dino the ex-Soviet Union. I'm afraid we have some very very hard yrs. ahead. I'm saying that personally as someone who once had an old economy job ( owning a niteclub.) My "new" economy job ( IT worker) went the way of Windows Vista. My new new new economy job is one I'm working on. Along with half the rest of the population soon.
We saw this coming a mile away. They made practically no gains on fuel efficiency while Bush was in office. Bush promoted an oil based economy with the false notion of unlimited headroom. So GM went along with the program and gained nothing in terms of transportation advances. Pitiful.
If they collapse and its likely they will but not a certainty, I hope thee is some kind of phasing out, some kind of humanity to the thing. It sucks to wake up and boom your income is gone or greatly reduced, totally sucks. It doesn't have to be so unplanned, so brutal.
Brutal, yes but it's all the present management people know. I'm told the prevailing management philosophy is called aptly "Chaos". It's really not management at all it's just more "belief" in a free for all ( for them anyway) maybe that should be re-atated now a "free for some." The GOP and it's fellow travelers ( always loved this ex-McCarthy era term) was aiming for a return too a 2 class society and they've accomplished this in just 40 yrs. The BIG guys that own the "means of production" ( boy am I pulling out the marxists terminology today) have irony of ironies sent most of it to the Communist prolatriat ( China/Vietnam etc.) and it's abandoned the rest of us. Ricardo and Marx are I'm sure are somewhere smiling at how this has all turned out in the short. It seems the Communist millena is going to be built on the bones of our once Capitalist state. At the same moment we are being "forced" to Nationalize everything in sight out of fear. Fear of an angry sullen unemployeed mass of workers.
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