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Would General Motors Be Alive Today Without Government Help?

Would General Motors Be Alive Today Without Government Help?

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pbrauer

pbrauer

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Would General Motors Be Alive Today Without Government Help?

YES (please state how)
NO, the assets would be liquidated.
 
Did you see recently Mitt Romney campaign spokesman saying that it was his idea to Bailout GM and obama followed his lead...LOL
 
When companies get in trouble, they can file for bankruptcy. It's called Chapter 11.

Chapter 11
This is where a company gets to delay their payments to their debtors, is allowed time to accumulate revenue, restructure and reorganize via a structured plan, which is what they did. They sold off assets to create cash. The Governments 350 million or whatever amount was used to bail them out wasn't needed and shouldn't have been provided. Too big to fail not only still exists, but is bigger than ever. Lessons learned? When you're too big to fail, you don't have to learn... gubamint bails you out.
 
They would have been better off if they reorganized without government help.

GM should look toward Honda for reorganization tips (as mentioned in this video):

 
Ockham said:
When companies get in trouble, they can file for bankruptcy. It's called Chapter 11.

Chapter 11
This is where a company gets to delay their payments to their debtors, is allowed time to accumulate revenue, restructure and reorganize via a structured plan, which is what they did. They sold off assets to create cash. The Governments 350 million or whatever amount was used to bail them out wasn't needed and shouldn't have been provided. Too big to fail not only still exists, but is bigger than ever. Lessons learned? When you're too big to fail, you don't have to learn... gubamint bails you out.
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You were not specific, what about General Motors in the middle of the biggest recession since the Great Depression? Who would invest in a company with declining sales and hundreds of thousands of people losing their jobs per month? GM may have been too big to fail, but that exactly what would have happened if the Government didn't step in.
 
pbrauer said:
You were not specific, what about General Motors in the middle of the biggest recession since the Great Depression?
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Because the recession had no impact on the ability of a Chapter 11 filing, nor were credit markets needed or involved in Chapter 11 filings.

pbrauer said:
Who would invest in a company with declining sales and hundreds of thousands of people losing their jobs per month? GM may have been too big to fail, but that exactly what would have happened if the Government didn't step in.
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Chapter 11 is not a time to invest... the purpose is to sell off failing parts of a business, reduce spending, re-organize and correctly size the company. However to answer your question, if the steps taken AFTER Chapter 11 were seen favorably by the market, investment comes from the private sector just as investment occurred in the 1930's during the depression. :shrug:
 
No they wouldn't and thank George Bush for getting that ball rolling:

http://www.nytimes.com/2008/12/20/business/20auto.html?_r=3&hp

But ultimately we will have to go through this again. Because per Al Gore "They keep trying to sell large, inefficient gas-guzzlers even though fewer and fewer people are buying them."
 
Ockham said:
When companies get in trouble, they can file for bankruptcy. It's called Chapter 11.

Chapter 11
This is where a company gets to delay their payments to their debtors, is allowed time to accumulate revenue, restructure and reorganize via a structured plan, which is what they did. They sold off assets to create cash. The Governments 350 million or whatever amount was used to bail them out wasn't needed and shouldn't have been provided. Too big to fail not only still exists, but is bigger than ever. Lessons learned? When you're too big to fail, you don't have to learn... gubamint bails you out.
Click to expand...

bingo, thank you. GM would still be making cars today had she been allowed to go into bankruptcy.
 
cpwill said:
bingo, thank you. GM would still be making cars today had she been allowed to go into bankruptcy.
Click to expand...

GM went through Chap. 11 bankruptcy. The US government provided Debtor in Possession financing rather than a financial institution (JPMorgan, Citi, etc) due to the market environment at the time. The financial institutions at that time were highly unlikely to provide such financing. Without Debtor in Possession financing GM would have been liquidated.
 
I think the more pertinent question is:

Why do we want GM to still be around if its only means of survival was a government bailout?
 
drz-400 said:
GM went through Chap. 11 bankruptcy. The US government provided Debtor in Possession financing rather than a financial institution (JPMorgan, Citi, etc) due to the market environment at the time. The financial institutions at that time were highly unlikely to provide such financing. Without Debtor in Possession financing GM would have been liquidated.
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So too big to fail is alive and well... if that was the case, they would have filed Chapter 7 which is liquidation, yet they did not.
 
Ockham said:
So too big to fail is alive and well... if that was the case, they would have filed Chapter 7 which is liquidation, yet they did not.
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Because the US Treasury provided DIP financing. They were the only bidder, its a fact.

Edit: The UAW and Canadian Governments also provided some financing.
 
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Nick2253 said:
I think the more pertinent question is:

Why do we want GM to still be around if its only means of survival was a government bailout?
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This is indeed the right question.

If they would not be "alive" without government intervention, then they should not be alive.
 
drz-400 said:
Because the US Treasury provided DIP financing. They were the only bidder, its a fact.

Edit: The UAW and Canadian Governments also provided some financing.
Click to expand...

And this is a good thing why? Why do I want the federal government buying interest in private companies? Why do I want my tax dollars bailing out bad behavior of large corprations? I've been against the bailouts from the beginning - all of them. GM would have been fine at least for a while after selling off their poorly performing divisions. The entire purpose of Chapter 11 is to delay debtors, delay payments, restructure and reorganize while continuing to run the business. I've seen no compelling evidence that suggests without the Government money, GM would have had to liquidate. I've seen lots of opinions on the subject, no evidence.
 
Ockham said:
And this is a good thing why? Why do I want the federal government buying interest in private companies? Why do I want my tax dollars bailing out bad behavior of large corprations? I've been against the bailouts from the beginning - all of them. GM would have been fine at least for a while after selling off their poorly performing divisions. The entire purpose of Chapter 11 is to delay debtors, delay payments, restructure and reorganize while continuing to run the business. I've seen no compelling evidence that suggests without the Government money, GM would have had to liquidate. I've seen lots of opinions on the subject, no evidence.
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Since there are plenty successful car companies, what would be the reason to restructure GM be? Why not sell the assets and be done with it and close shop altogether? What's the impetus to restructure?
 
General Motors is a proprietary trade name. As such it's an asset. Even in a straight bankruptcy liquidation the proprietary asset would exist. It would have simply come out of bankruptcy with different owners who weren't necessarily well connected politically.
 
pbrauer said:
Since there are plenty successful car companies, what would be the reason to restructure GM be? Why not sell the assets and be done with it and close shop altogether? What's the impetus to restructure?
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Because the void in the auto market would be so vast the others would not be able to fill it. GM was not going out of business. The uncertainty of the latitude management would have to restructure, especially union concessions, was what caused hesitation in the private lending market. By getting the government involved the unions had a force to recon with. Without gov involvement the unions would have more 'power' to affect the 11 restructuring potentially causing a less sustainable restructure. ALL THIS IS MY SUPPOSITION SO DON'T BE ASKING FOR SOURCE.
 
Ockham said:
And this is a good thing why? Why do I want the federal government buying interest in private companies? Why do I want my tax dollars bailing out bad behavior of large corprations? I've been against the bailouts from the beginning - all of them. GM would have been fine at least for a while after selling off their poorly performing divisions.
Click to expand...

Different question. I am answering the poll, would GM be alive w/out government help.

Ockham said:
The entire purpose of Chapter 11 is to delay debtors, delay payments, restructure and reorganize while continuing to run the business. I've seen no compelling evidence that suggests without the Government money, GM would have had to liquidate. I've seen lots of opinions on the subject, no evidence.
Click to expand...

See my earlier posts. GM went through chapter 11 restructuring. It required Debtor in Possession Financing, for which the US treasury, the Canadian government, and the UAW were the only bidders. Without the United States Treasury providing financing, GM's only other option was liquidation. This was what was passed through bankruptcy court. Thus, the correct answer to this poll is no.
 
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Bob Blaylock said:
4257071f-4ec7-82c0.jpg

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Yeah funny thing is they do it by shipping preassembly to Mexico and china just as gm does now. I'm back and forth with gm. I work for a real American car company making parts for real 100% American cars: Toyota and Honda.
 
JohnWOlin said:
Yeah funny thing is they do it by shipping preassembly to Mexico and china just as gm does now. I'm back and forth with gm. I work for a real American car company making parts for real 100% American cars: Toyota and Honda.
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Woopdido, Ford has manufacturing and assembly plants across the globe, similar to Toyota and Honda. Ford does not just make parts in Mexico and China, neither does any other major auto company. However, last I checked Ford was incorporated in Detroit while Toyota and Honda were in Japan.
 
drz-400 said:
Woopdido, Ford has manufacturing and assembly plants across the globe, similar to Toyota and Honda. Ford does not just make parts in Mexico and China, neither does any other major auto company. However, last I checked Ford was incorporated in Detroit while Toyota and Honda were in Japan.
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True however the majority of all preassembly and 100% of assembly of Honda and Toyota vehicles for American cars are made in America. The same cant be said for Ford or GM. Mercades is also more American than either of them, that is of course when building vehicles made for us.
 
JohnWOlin said:
True however the majority of all preassembly and 100% of assembly of Honda and Toyota vehicles for American cars are made in America. The same cant be said for Ford or GM. Mercades is also more American than either of them, that is of course when building vehicles made for us.
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I have a hard time believing that each of those companies supply chain management is drastically different, but I guess I don't know for sure. Common sense would tell me that if I am driving a car in North America, there is a good chance that most of it was manufactured in North America regardless of company. So I guess some could come from Mexico or Canada, but also most would come from US. I would bet that more of GM and Ford R&D/Engineering comes from the US than Toyota and Honda though.
 
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drz-400 said:
I have a hard time believing that each of those companies supply chain management is drastically different, but I guess I don't know for sure. Common sense would tell me that if I am driving a car in North America, there is a good chance that most of it was manufactured in North America regardless of company. So I guess some could come from Mexico or Canada, but also most would come from US. I would bet that more of GM and Ford R&D/Engineering comes from the US than Toyota and Honda though.
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Toyota and Honda looks for quality all around; gm an ford will let some stuff slide. As for r&d the second biggest car manufacture in the world is in Georgetown ky as well as one of the biggest r&d firms
In cali both part of Toyota.
 
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