Is GM really in better shape?

[theamcguy]

GM got bailed out in 2009, they reorganized, got rid of toxic assets, they were afforded bankruptcy procedures no other business in over 200 years of bankruptcy precedent was afforded, all in the name of saving the General. At the time we were told the money being "given" to GM was not a gift but a loan and would be paid back and most likely Treasury would come out ahead getting more from GM than they were given.

2013, where are we at? Sure GM is buying back stock, but by the time it is all done and GM is a private company again Treasury will have lost between $12-20 billion dollars. Far from that profit we were practically assured. What has GM learned from all this, apparently not much. After getting rid of all the excess capacity, toxic assets, closing plants, getting rid of workers etc, they still can't seem to figure out how to match production with demand (same problem pre 2009). They have 200 day surpluses of almost all models and have up to $9K rebates to move the metal. So much for that learning their lesson, GM is going to be a much leaner, profitable, company. Sure they are making money (profits are falling though), but Europe is a mess, investor confidence is down, and the latest redesign of their core product (Trucks and SUVs) is more evolutionary, then revolutionary. You never get ahead following the other guy. On top of that where is the profit from the Volt, you know the car that was going to save GM. A product so good they were going to sell 40,000 a year (for 2012 they will sell 13,500, hmmm sounds like the old GM overly optimistic sales projections to justify huge investments (you know like the Pontiac Aztek someone actually thought they were going to sell 50,000 Azteks a year in 2001 when they were released Look at that Rick these baby's are going to fly off the lot). I just do not see where they learned from their mistakes. They were handed a bunch of cash, a preferential bankruptcy proceeding, and they continue business as usual after the obligatory reorganization. I mean they put a PR guy in charge of Cadillac. Not an engineer, not a manufacturing guy, a PR guy. Hey but he used to be in charge of a large company, well I feel better already and the stock price went up $10 a share when it was announced (reality check here, the stock price fell on that announcement and Treasury lost money. Current estimates show GM stocks' needs to be $55 a share for Treasury to break even. Currently GM is trading at $27 a share).

In my opinion this is a glaring example of why bailouts do not work. No lesson was learned. The only thing GM learned was no matter how bad we screw up, we are too big to fail and the government will bail us out. C'mon man 200 day supply of vehicles, $9K rebates PR men in charge meet the new boss, same as the old boss except he is using our money. As far as I see not much has changed.

[lam]

GM got bailed out in 2009, they reorganized, got rid of toxic assets, they were afforded bankruptcy procedures no other business in over 200 years of bankruptcy precedent was afforded, all in the name of saving the General. At the time we were told the money being "given" to GM was not a gift but a loan and would be paid back and most likely Treasury would come out ahead getting more from GM than they were given.

2013, where are we at? Sure GM is buying back stock, but by the time it is all done and GM is a private company again Treasury will have lost between $12-20 billion dollars. Far from that profit we were practically assured. What has GM learned from all this, apparently not much. After getting rid of all the excess capacity, toxic assets, closing plants, getting rid of workers etc, they still can't seem to figure out how to match production with demand (same problem pre 2009). They have 200 day surpluses of almost all models and have up to $9K rebates to move the metal. So much for that learning their lesson, GM is going to be a much leaner, profitable, company. Sure they are making money (profits are falling though), but Europe is a mess, investor confidence is down, and the latest redesign of their core product (Trucks and SUVs) is more evolutionary, then revolutionary. You never get ahead following the other guy. On top of that where is the profit from the Volt, you know the car that was going to save GM. A product so good they were going to sell 40,000 a year (for 2012 they will sell 13,500, hmmm sounds like the old GM overly optimistic sales projections to justify huge investments (you know like the Pontiac Aztek someone actually thought they were going to sell 50,000 Azteks a year in 2001 when they were released Look at that Rick these baby's are going to fly off the lot). I just do not see where they learned from their mistakes. They were handed a bunch of cash, a preferential bankruptcy proceeding, and they continue business as usual after the obligatory reorganization. I mean they put a PR guy in charge of Cadillac. Not an engineer, not a manufacturing guy, a PR guy. Hey but he used to be in charge of a large company, well I feel better already and the stock price went up $10 a share when it was announced (reality check here, the stock price fell on that announcement and Treasury lost money. Current estimates show GM stocks' needs to be $55 a share for Treasury to break even. Currently GM is trading at $27 a share).

In my opinion this is a glaring example of why bailouts do not work. No lesson was learned. The only thing GM learned was no matter how bad we screw up, we are too big to fail and the government will bail us out. C'mon man 200 day supply of vehicles, $9K rebates PR men in charge meet the new boss, same as the old boss except he is using our money. As far as I see not much has changed.

'You lost me with ''afforded bankruptcy procedures no other business in over 200 years of bankruptcy precedent was afforded''.

The Secured Creditor of General Motors Corporation(U.S. Treasury) purchase the assets of the Corporation.
That's not unprecedented.

[MCGARRETT]

Blah, ba blah, ba blah, ba blah.

Welcome, you'll fit right in.

[DirtyMoney]

Begs the question, if this guy can start his own thread why can't I? Please explain.

[Hitman1970]

Which forum do you try to start them in? I can post inThe Lounge and Suggest a News Article without issue.

[Motors Man]

GM will be!, just you wait! Every new company has a rough couple of first years. The NEW GM is no different. All that old crap is gone and this new leaner company will soon be showing all other auto manufacturers how to get the job done. Give The NEW GM sometime and your going to be pleasantly surprised.

[theamcguy]

'You lost me with ''afforded bankruptcy procedures no other business in over 200 years of bankruptcy precedent was afforded''.

The Secured Creditor of General Motors Corporation(U.S. Treasury) purchase the assets of the Corporation.
That's not unprecedented.

Let me see, a bankruptcy that should have taken years to litigate was done in 30 days, no arguments were heard. In a bankruptcy there are 2 kinds of creditors, secured (stock holders, banks) and unsecured (suppliers). It is established bankruptcy precedent that secured creditors are first in line to divide the assets of the corporation, in a departure from over 200 years of precedent GM's assets went to the Government and the UAW. The President even chided the owners of GM stock for wanting what they were due. The stockholders who thought they were secured creditors were left with worthless paper while the Union got 50%. And for all that the taxpayer will take a $12-20 dollar hit, millions of stockholders in the old GM got nothing and the Union got 50%. The government only got the assets of GM because they found a judge who would rule in their favor and gave him the case. Can you say rigged? And after all that, it is business as usual, more vehicles built than they can sell, $9K rebates, poor decisions, chasing the competition instead of leading. And now some guy is saying just wait GM will be great. Answer me this, why is GM's ascension to greatness always and I mean always 3-5 years in the future? What about now? They always have middle of the road product, but fantastic product in the pipeline just wait and see. Where are these class leading cars? We have waited for about 5 cycles for these vehicles to show up. Go back read all the GM predictions from The Rick, Lutz etc. Tomorrow never shows up. We are in the second cycle since the bailout, they told us just wait we get rid of all the over capacity, toxic assets, too many people and man the vehicles will knock your socks off. And what do we get, warmed over, rehashed SUVs and pickups with bigger buttons on the center stack. Stop the presses, you can turn on the radio wearing gloves. That's it? All that pain and that is the best they can do? Alan Mullally over at Ford does more than that before breakfast. GM ought to be studying that guy and seeing if they can clone him or at least find his double.

[VS Ute 5Litre]

I think you don't really understand product cycles do you?

It takes about 5-7 years to design and engineer a scratch built car

[theamcguy]

GM will be!, just you wait! Every new company has a rough couple of first years. The NEW GM is no different. All that old crap is gone and this new leaner company will soon be showing all other auto manufacturers how to get the job done. Give The NEW GM sometime and your going to be pleasantly surprised.

Hint GM the new company you speak about celebrated their 100th Anniversary in 2008. I gotta figure they've been around for awhile. Riddle me this Batman, why is it GM's best product is always in the future? Tomorrow never comes at GM. They always have fantastic product just around the corner that never seems to live up to the pre-release hype. We were told the new pick-ups would be fantastic, no compromises, class leading and then they are released and what was released were warmed over redesigns. Then the excuses start, we did not want to stray to far from the norm, we'll get it right on the redesign, etc etc. Fact is management does not have a clue how to innovate so they just keep doing what is safe. Where are the Harley Earls? the Bill Mitchells? the Bunkie Knudsons? the John Z Delorans? the Alfred Sloans? These guys knew the automotive business. Harley Earl and Bill Mitchell kept GM at forefront of styling for 50 years (they had 50% of the market not bad) Bunkie Knudson transformed Pontiac from an old mans car in 14th place in sales to #3 in sales in 3 years (with somebody else's product it was already designed by the time he took over) These guys knew. What do we get some guy that ran a phone company and his PR guy. This has train wreck written all over it. Ford learned. (of course its Ford's money not government money) They tried the accountants, high priced execs, even family (Bill Ford Jr.) and in the end they hired the best manufacturing guy in the US and the rest is history. GM keeps repeating failure, they keep putting execs, accountants, PR men etc in charge when what they need are engineers, design, and manufacturing people in charge.

[swagled]

Common stockholders usually get nothing from a bankruptcy. The bondholders and trust preferred shareholders duke it out.

[MonaroSS]

Let me see, a bankruptcy that should have taken years to litigate was done in 30 days, no arguments were heard. In a bankruptcy there are 2 kinds of creditors, secured (stock holders, banks) and unsecured (suppliers). It is established bankruptcy precedent that secured creditors are first in line to divide the assets of the corporation, in a departure from over 200 years of precedent GM's assets went to the Government and the UAW. The President even chided the owners of GM stock for wanting what they were due. The stockholders who thought they were secured creditors were left with worthless paper while the Union got 50%. And for all that the taxpayer will take a $12-20 dollar hit, millions of stockholders in the old GM got nothing and the Union got 50%. The government only got the assets of GM because they found a judge who would rule in their favor and gave him the case. Can you say rigged? And after all that, it is business as usual, more vehicles built than they can sell, $9K rebates, poor decisions, chasing the competition instead of leading. And now some guy is saying just wait GM will be great. Answer me this, why is GM's ascension to greatness always and I mean always 3-5 years in the future? What about now? They always have middle of the road product, but fantastic product in the pipeline just wait and see. Where are these class leading cars? We have waited for about 5 cycles for these vehicles to show up. Go back read all the GM predictions from The Rick, Lutz etc. Tomorrow never shows up. We are in the second cycle since the bailout, they told us just wait we get rid of all the over capacity, toxic assets, too many people and man the vehicles will knock your socks off. And what do we get, warmed over, rehashed SUVs and pickups with bigger buttons on the center stack. Stop the presses, you can turn on the radio wearing gloves. That's it? All that pain and that is the best they can do? Alan Mullally over at Ford does more than that before breakfast. GM ought to be studying that guy and seeing if they can clone him or at least find his double.

If you want to comment on bankruptcy procedure at least do a wiki search first on the basics. I went to law school to learn, so a little bit better than wiki, so let me enlighten you...

Stockholder and ordinary bondholders are NEVER secured creditors. You got that 100% wrong.

There was nothing new or unusual about the GM BK other than it's size. You got that 100% wrong.

The judge did nothing other judges would not have been expected to do, you are getting really bad info from somewhere - probably Fox News.

The stockholders got zero, which is all they would have got under any BK procedure. The bondholders got more than they deserved because the government gave them taxpayer money that they were not entitled to...

BTW, the government paid from memory something like 25 billion for the assets of old GM (that money then went to the BK court for bondholders and other creditors + as a free gift bondholders were given a 10% share in the assets the government just used taxpayer money to purchase), and the government gave the UAW a share in those assets in exchange for not paying them cash for debts owed to the UAW benefits, which the UAW had a right to claim from the GM BK.

Furthermore, the GM BK did take years to litigate. The 30 days was for a 363 assets sale (only part of the years of litigation), and 363 sales are not new and they are usually fast because their point is to sell off functional business assets that have an inherent value due to being viable operating businesses that could lose value if allowed to wallow for years mired in BK. Also, any other person or company in the world, foreign car companies included - Bain Capital included, could have bid more for those assets and got them for a higher bid as the bidding was open for all to participate. Nobody wanted old GM or it's assets other than the government.

[bballr4567]

Volt is going to sell 13.5k? You really need to get your facts right.

[swagled]

It must be the holidays when a creaky old debate like GM's bankruptcy is getting play on the forum.

NAIAS can't come soon enough.

[Engelman]

You have "NO" clue what your talking about......This bailout was started during George Bush's presidency, something all you Republicans forgot, and was well underway when President Obama was elected...Your just Pi**** that AMC didn't get bailed out.

[ne_one]

Begs the question, if this guy can start his own thread why can't I? Please explain.

Any member can start a thread. The only restriction is where the threads are started.