How General Motors Was Really Saved

[Capt Worley PE]

For months the news was horrific, a pounding beat of warm-up obituaries for what once had been America’s greatest and most influential corporation: General Motors. At death’s door or already in the graveyard were Bear Stearns, Lehman Brothers, Merrill Lynch, AIG and Citibank. The mood was apocalyptic.

With car sales in a free fall from the worst economic downturn since the Great Depression, GM was losing billions and running out of cash. By the time the company closed its books on 2008 it would be in the red by a staggering $30.9 billion. Chief executive Rick Wagoner led the auto delegation in Washington seeking government funding to save the industry and keep GM out of bankruptcy.

Five years later, after an unprecedented government equity investment, GM is thriving and the Treasury plans to sell its remaining stake in the coming months. With countless articles and books now written about the GM restructuring and turnaround–not to mention three years of trumpeting by the Obama Administration taking full credit for the turnaround’s success–the most startling aspect of the prevailing narrative is that the core of how the restructuring really happened, inside GM, is yet to be fully told.

Really a "tooting my own horn" type of article, but interesting nonetheless for a behind the scenes view of what was going on.

http://www.forbes.com/sites/danbigman/2013/10/30/how-general-motors-was-really-saved-the-untold-true-story-of-the-most-important-bankruptcy-in-u-s-history/

 

[mudpuppy]

And yet Ford made it through without having to go into bankruptcy.

I think it's funny he mentions Rick Waggoner had to make a "personal sacrifice" for this plan--yeah, he came out with an extra $10 million to leave the company. What a horrible sacrifice--the kind of crap that put GM in bankruptcy to begin with, greediness on the part of management and greediness on the part of the unions.

They talk about the OldCo ending up with all the liabilities. What they don't come out and say is this was a way around having to clean up their environmental liabilities. They have lots of sites around Michigan that are contaminated (and I'm sure much more around the country), that would cost billions to clean up, and they put these under the old, "bad" GM. Oh and by the way, the old GM is bankrupt and doesn't have the money to clean them up. Nice little trick, huh? So who is going to be on the hook for this?

 

[Capt Worley PE]

And yet Ford made it through without having to go into bankruptcy.

Ford made it through by putting everything they had in hock at a time when it was possible to do so. GM could have done the same thing, if they'd done it at the same time.

Likewise, if Ford had waited like GM, they'd have found themselves in the same boat as GM.

Some claim that was Mullally being a genius, but I think it was dumb luck.

You are correct about Old GM and the environmental liabilities. That isn't unusual or unique, sadly, but that's something else you'll end up subsidizing, mp.

 

[knight1fox3]

^ I've been wondering about how Ford didn't take any hand-outs and didn't go into bankruptcy. I'm curious if instead they made huge cuts company-wide, mainly to their quality program. Just this week I was reading an article on how 5 of the 10 worst vehicles to own are Fords. Before we bought the Infiniti, we looked at the Escape and the Explorer. Both of which looked pretty sharp IMO. But based on CR and other reviews, reliability was completely out the window. We just couldn't justify the purchase price in exchange for what we would most likely have to pay in the long-run down the road. Very glad we did not end up going with either Ford.

And BTW, some GMs we looked at were no better. And I won't even make mention of Chrysler. LOL Kind of disheartening though.

 

[Capt Worley PE]

CR's reliability is pretty bogus, IMO. A lot of the Ford 'quality' problems are folks bizzitching about Synch.

CR will have vastly different reliability scores on the same car, the Pontiac Vibe/ Toyota Matrix for example. Fist year, the Toyota was a flawless piece of workmanship, and the Pontiac was a worthless POS assembled by drunk Hondurans fresh off a three day blow bender.

The Escape and Explorer are both fine vehicles. I wouldn't hesitate to recommend them.

 

[knight1fox3]

^ have to disagree. Mainly because it wasn't just the reliability criteria that they failed, it was pretty much everything else too. Including engine issues, fuel system, transmission, etc. These are not minor issues. And what I read in CR seemed to be in line with reviews I read from other sources too. I don't think these articles would continue to be printed if there weren't some truth to it. Despite whatever accuracy CR has or does not have. I was able to confirm some of the reported issues with some of my local mechanic buddies too. That also has to count for something. My recommendation remains against.

 

[Capt Worley PE]

Yeah, I'd go with what the mechanics say.

As for CR, I still don't listen to them about cars. Too each his own, i guess.

 

[mudpuppy]

Meh, I had a mechanic tell me the Aveo was junk, but I haven't had any major problems with it in 7 years. Just a bad windshield wiper motor.

 

[csb]

(knocks on wood) Driving a Ford Escape with one issue in the seven years I've owned it- had to switch out the air filter for the hybrid battery.

 

[Flyer_PE]

Six weeks with no problems out of the F-150. We'll see what I think of it seven years down the road.

 

[knight1fox3]

(knocks on wood) Driving a Ford Escape with one issue in the seven years I've owned it- had to switch out the air filter for the hybrid battery.

What year? We were looking at the 2009-2011 line. I don't recall, but one of the years was better than all the rest but then just went downhill from there.

I didn't do any research on the F-series trucks.

 

[csb]

2006-prior to the fall of America

 

[Capt Worley PE]

Meh, I had a mechanic tell me the Aveo was junk, but I haven't had any major problems with it in 7 years. Just a bad windshield wiper motor.

The only thing wrong with the Aveo, IMO, is that it still has a timing belt instead of a chain.

 

[Weavs33]

Six weeks with no problems out of the F-150. We'll see what I think of it seven years down the road.

Have had my F-150 for about 3 years and nothing major, just general maintenance....... (finding wood to knock on)

 

[Ship Wreck PE]

I had some GM stock when they went bust.

 

[Master slacker]

Meh, I had a mechanic tell me the Aveo was junk, but I haven't had any major problems with it in 7 years. Just a bad windshield wiper motor.

The only thing wrong with the Aveo, IMO, is that it still has a timing belt instead of a chain.

And what's wrong with a belt? I've only had to change mine two times in the past three years after being stranded on the side of the road. When it works, it works well.

 

[Capt Worley PE]

Meh, I had a mechanic tell me the Aveo was junk, but I haven't had any major problems with it in 7 years. Just a bad windshield wiper motor.

The only thing wrong with the Aveo, IMO, is that it still has a timing belt instead of a chain.

And what's wrong with a belt? I've only had to change mine two times in the past three years after being stranded on the side of the road. When it works, it works well.

They said the same thing about the DC-10.