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http://money.cnn.com/2008/10/14/news/companies/gmwoes_taylor.fortune/index.htm?source=yahoo_quote

NEW YORK (Fortune) -- GM certainly is keeping a close eye on its cash these days.

One supplier reports he is now getting paid 60 days after he presents an invoice - not the 30 days he was used to. Worse, the clock doesn't start ticking until after the bills get approved in Detroit - and then sent to Arizona for processing.

Next thing you know, GM will be inflating its float by cutting supplier checks on banks in Fiji that will take weeks to clear.

It is a measure of GM's desperation that it is reported to be considering a linkup with Chrysler to get access to Chrysler's cash so it can remain in business. The idea has provoked nearly universal skepticism among analysts and GM watchers.

With good reason; they have history on their side. The list of unsuccessful auto mergers stretches from the present day - Daimler (DAI) and Chrysler, BMW and Rover - all the way back to Studebaker-Packard and Nash-Hudson.

Buying Chrysler would only get GM (GM, Fortune 500) more of what it doesn't need: more brands, more models, more factories, more employees, more dealers. You have to wonder what makes GM think it could run Chrysler's operations more successfully than it has run its own. Like a second marriage, a GM/Chrysler merger would be a triumph of hope over experience.

So what's an ailing automotive giant to do?

GM has the wrong products to sell into a shrinking market and can offer little or nothing in the way of financing to its customers.

To remain liquid through next year, it needs to raise $10 billion to $15 billion through a combination of internal measures, borrowing and asset sales. That's next to impossible these days. With some of its bonds selling for less than 50 cents on the dollar, the cost of new debt would be prohibitive. Not even vulture investors are clamoring to buy shuttered parts or assembly plants. And Hummer, which GM is trying to shed, does not appear to be the next iconic American brand. Harley-Davidson it isn't.

Bailout or bust
So how about a government bailout? What's good for GM is good for the country, and vice versa. The federal government has promised more than $1 trillion to keep banks, insurance companies and other financial institutions afloat. Couldn't it find another $100 billion or so to invest in the Detroit Three on top of the $25 billion in loans already approved?

A government loan wouldn't be about protecting well-compensated union jobs or keeping afloat inefficient suppliers in Michigan and Ohio. It could be directed toward advancing Detroit's and the country's strategic interests by speeding development of alternative fuel technologies that reduce our dependence on foreign oil as well as help limit the generation of greenhouse gases.

GM may have a decent shot at that in a Democratic administration. If not, there is bankruptcy. That's a horrible possibility, to be sure, and one that GM claims is not an option because it would destroy consumer confidence in its vehicles. Who is going to accept a three-year warrantee on a new car from a bankrupt company?

But hear me out. Bankruptcy would give GM a chance to negotiate further cost reductions with its union workers, work out its obligations with those suppliers that are still solvent, and help speed the rationalization of its dealer body.

Would GM then be stigmatized as the only bankrupt auto company? No way. Ford (F, Fortune 500) and Chrysler would immediately find that they have been made uncompetitive by GM's actions and quickly follow it into Chapter 11.
 

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Bankruptcy has its allure, but sales would plummet. I also don't see how it would raise any cash for ongoing operations.
 

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Bankruptcy has its allure, but sales would plummet. I also don't see how it would raise any cash for ongoing operations.
It wouldn't raise any cash for ongoing operations, but it WOULD relieve GM of some of their financial obligations (read: outgoing cash) at least temporarily.

I think that bankruptcy would be the best thing for GM, but would be disastrous for their suppliers.

As for sales tanking, you may have a point... however, when Delta Airlines filed, it wasn't as if no one was willing to use them (I personally refuse to use them, but that has nothing to do with their financial situation and everything to do with their customer service).
 

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That type of delay in paying suppliers is not unheard of in some companies. I know one firm that is extremely profitable and because of its clout pays out 60 - 90 days later. Everyone hates it but there's not much that can be done. I've been caught in that trap with this firm and it's impossible to get them to budge. They do pay, but if you're tight on cash God help you.

And the fact the article is saying a $125B loan/bailout/whatever to Detroit is a good thing is amazing, esp. as it's CNN. But I think folks are starting to realize that Detroit is changing but they're hamstrung and, in the interests of the United States, saving Detroit is crucial.
 

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Somewhat surprised to see that CNN failed to mention that it already raised at least $15b next year through UAW contracts. Not to mention another possible $45b to add to that through other delays and cuts.
 

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What kind of surprises me is that all GM brands aren't considered separate companies. IE: Chevy.inc Pontiac.inc ect. Then you could bankrupt the useless brands that are causing a lot of trouble and hopefully keep going for a while longer.
 

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Somewhat surprised to see that CNN failed to mention that it already raised at least $15b next year through UAW contracts. Not to mention another possible $45b to add to that through other delays and cuts.
Well duh, there's fear to sell. Can't be telling the whole story when you need to influence the market, now can we?

Again, journalism is dead. Now there is only what corporations deem news. The Press cannot function unless it is a part of the populace and not a corporate controlled entity. Companies own America now, and quite a few of those are foreign companies. All hail the bottom line.
 

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nobody buys a car from a bankrupt company. period.

bankruptcy would allow other manufacturers to swoop in and buy off the brands they want.

Toyota would swoop in and take chevrolet, Hyundai would scoop up Cadillac, etc.
 

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How about this: Instead of a financial bailout, make U.S safety and emission standards equal to Europe (which is to say, slightly lower). The Big Two could bring over their best and brightest, plus CAFE would go up.

I am a genius
 

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they should go bankrupt and then shed the uaw move production to china and north korea and India. I would say to also offload the pensions on to the government as well. then merge with tata or vw! and rename chevy to GMC!
 

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How about this: Instead of a financial bailout, make U.S safety and emission standards equal to Europe (which is to say, slightly lower). The Big Two could bring over their best and brightest, plus CAFE would go up.

I am a genius
Or stop meddling all together so people can have products they want. Like an inline six from Jeep. Though unlike BMW they think their customers wont pay for that tax increase/fine...

I think the whole country is better off bankrupt teach everyone a lesson.
 

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Somewhat surprised to see that CNN failed to mention that it already raised at least $15b next year through UAW contracts. Not to mention another possible $45b to add to that through other delays and cuts.
cutting costs is not raising money. also as facilities are closed, breakeven volume rises and losses deepen. this only worsens as sales decline. preferable to grow the business but GM has not shown any ability to succeed in that regard.
 

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How about this: Instead of a financial bailout, make U.S safety and emission standards equal to Europe (which is to say, slightly lower). The Big Two could bring over their best and brightest, plus CAFE would go up.

I am a genius
Why should the U.S. government bend over because GM didn't have the foresight to design some of its cars for both the international and North American markets?

GM didn't want to invest in globalizing its products... and that's GM's decision as a private company.
 

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How about this: Instead of a financial bailout, make U.S safety and emission standards equal to Europe (which is to say, slightly lower). The Big Two could bring over their best and brightest, plus CAFE would go up.

I am a genius

See you're making too much sense.:p: Instead of each major world player develop their own standards, lets come up with one master standard (much like the standard v. metric issue) and set one and go with it!
 

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nobody buys a car from a bankrupt company. period.
Agreed.

bankruptcy would allow other manufacturers to swoop in and buy off the brands they want.

Toyota would swoop in and take chevrolet, Hyundai would scoop up Cadillac, etc.
Um-m-m-m, no. You can't just separate Chevrolet, Pontiac, Buick, Cadillac, GMC, and Saturn from each other. They share design, engineering, and components.

Let's leave aside the fact that most auto manufacturers--foreign and domestic--are struggling in this current economic environment. Let's pretend that Toyota buys Chevrolet. It will have a choice of designing, engineering, and manufacturing its own original models or sharing existing platforms with its new Chevrolet brand. Neither of these choices is particularly desirable. The former is expensive. The latter would result in product that does not sale particularly well. If you howl at the prospect of buying a rebadged Daewoo from GM, then why would you feel better about buying a rebadged Corolla from Toyota?

Other new owners of single GM brands would face the daunting tasks of developing replacements platforms for the new brands, but they won't have the economies of scale enjoyed by Chevrolet.
 

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they should go bankrupt and then shed the uaw move production to china and north korea and India. I would say to also offload the pensions on to the government as well. then merge with tata or vw! and rename chevy to GMC!
Go BK. Nationalize the pension and healthcare liability. Pay competitive wages and benefits.

Now to figure out the vehicle warranty part.
 

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Why should the U.S. government bend over because GM didn't have the foresight to design some of its cars for both the international and North American markets?

GM didn't want to invest in globalizing its products... and that's GM's decision as a private company.
GM is not the only company that is spending billions to come up to the emission levels the government wants. We are about 5 years away to the first wave of sanctions and most companies are no where near ready. Toyota, Honda and GM are said to be the ones with a better chance of success.
 
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