Skip to comments.GM Goes From Bad to Worse Despite Obama Bailout
Posted on 08/23/2012 5:23:17 AM PDT by Kaslin
Readers with long memories may recall that Charles E. Wilson, president of General Motors and nominee for secretary of defense, got into trouble when he told a Senate committee, "What is good for the country is good for General Motors, and what's good for General Motors is good for the country."
That was in 1953, and Wilson was trying to make the point that General Motors was such a big company -- it sold about half the cars in the U.S. back then -- that its interests were inevitably aligned with those of the country as a whole.
Things are different now. General Motors' market share in the U.S. is below 20 percent. It has gone through bankruptcy and exists now thanks to a federal bailout. But Barack Obama seems to think that it's as closely aligned with the national interest as Wilson did.
"When the American auto industry was on the brink of collapse," Obama told a campaign event audience in Colorado earlier this month, "I said, let's bet on America's workers. And we got management and workers to come together, making cars better than ever, and now GM is No. 1 again and the American auto industry has come roaring back."
His conclusion: "So now I want to say that what we did with the auto industry, we can do in manufacturing across America. Let's make sure advanced, high-tech manufacturing jobs take root here, not in China. Let's have them here in Colorado. And that means supporting investment here."
Was he calling for a federal bailout of other American manufacturing companies? And what does he mean by "supporting investment"? White House reporters have not asked these obvious questions, for the good reason that the president, who has been attending fundraisers on an average of one every 60 hours, has not held a press conference in something like two months.
Obama talks about the auto bailout frequently, since it's one of the few things in his record that gets positive responses in the polls. But he's probably wise to avoid probing questions, since the GM bailout is not at all the success he claims.
GM has been selling cars in the U.S. at deep discount and, while it's making money in China -- and is outsourcing operations there and elsewhere -- it's bleeding losses in Europe. It's spending billions to ditch its Opel brand there in favor of Chevrolet, including $559 million to put the Chevy logo on Manchester United soccer team uniforms -- and just fired the marketing exec who cut that deal.
It botched the launch of its new Chevrolet Malibu by starting with the green-friendly Eco version, which pleased its government shareholders, but which got lousy reviews. And it's selling only about 10,000 electric-powered Chevy Volts a year, a puny contribution toward Obama's goal of 1 million electric vehicles on the road by 2015.
"GM is going from bad to worse," reads the headline on Automotive News Editor in Chief Keith Crain's analysis. That's certainly true of its stock price.
The government still owns 500 million shares of GM, 26 percent of the total. It needs to sell them for $53 a share to recover its $49.5 billion bailout. But the stock price is around $20 a share, and the Treasury now estimates that the government will lose more than $25 billion if and when it sells.
That's in addition to the revenue lost when the Obama administration permitted GM to continue to deduct previous losses from current profits, even though such deductions are ordinarily wiped out in bankruptcy proceedings.
It's hard to avoid the conclusion that GM is bleeding money because of decisions made by a management eager to please its political masters -- and by the terms of the bankruptcy arranged by Obama car czars Ron Bloom and Steven Rattner.
Rattner himself admitted late last year, in a speech to the Detroit Economic Club: "We should have asked the UAW (the United Auto Workers union) to do a bit more. We did not ask any UAW member to take a cut in their pay." Non-union employees of GM spinoff Delphi lost their pensions. UAW members didn't.
The UAW got their political payoff. And GM, according to Forbes writer Louis Woodhill, is headed to bankruptcy again.
Is this really what Obama wants to do for all manufacturing across America? Let's hope not.
I just heard Biden today. He said something like “I have a bumper sticker for you: Osama is dead and GM is alive.”
They may want to stop the presses on that one for a while. ;-)
“Supporting Investment” is Orwellian double-speak for “Government Takeover” of more private industry
Yes, Obama wants to bring his world view of justice to America. America must be brought down and the third world, particularly the Muslim world, must be raised on the bones of the West. Obama constantly lies and deceives, but he despises America and is trying to end it.
GM pissed me off when they discontinued the 8.1 Vortec engine under pressure from certain groups that it was too much engine for the peasants. I have a 2002 Silverado dually with it, an amazingly powerful reliable engine, originally designed as a marine engine. And yes its s fuel drunkard.
Because of Gm’s financial problems they won’t be coming out with any new aids or tech on their vehicle lineup, same old stuff as before.
I want my money back..GM is a UNION slush fund.
GM is failing because they should have aggressively reduced themselves to Cadillac, Chevrolet, GMC Trucks and Opel/Vauxhall and unified their product line just like what Ford—and GM should have implemented this plan back in 2009.
Can someone explain THAT one to me ???
Subsidizing failure and sloth is never a good idea.
The Law of Nature strikes again.
If Romney wins, he should just pull the plug. Let the unions die.
GM, like all American branded automakers, never sold that many cars to Democrats. Now they’re not selling cars to any self-respecting Republicans, either. Double whammy.
I have to call BS on this...
I work for an automotive equipment supplier..
I have not been this busy in my whole time in this industry..
and gm is leading the way, they are upgrading every single plant..
I think part of this was during the bankruptcy they went “garbage picking” in the old plants and took equipment to the plants that remained open...
all of that equipment was old to start with, and now it is worn out...
I have walked into plants and seen equipment roped off and shut down to pedestrian and vehicle traffic because it is so old and worn out it is now hazardous..
they have no choice but to spend money now, so they must have it if they are spending it...
BUT! CNN Says this is a good thing:
You’d think GM, supposedly a company conceived in the crucible of capitalism, would have realized the FAIL in going socialist.
Is anyone really surprised at his?
My guess? Eventually rebadge Opel's to Euro_Chevy's and hope to get soccer fans to but them across the pond.
Knowing what I know about auto design cycles and their cost, that is a hellofa lotta money for a major new design or refreshes on "x" number of others. Not money well spent IMHO....
I have purchased the last of my GM products. My next vehicles will be Ford.
I want my money back...... the money due bond holders that was flat out stolen.
0bama and his regime keep saying that they "bailed out the auto industry." Ford didn't get a bailout.
and Honda is getting aggressive about picking up market share.
Ohio Unveils New 2013 Honda Accord
Tuesday August 21, 2012 7:20 AM
UPDATED: Tuesday August 21, 2012 7:22 AM
And the Preferred Stock-Holders as well if my memory is correct, they got the shaft as well...
I wish I could say who, but in a conversation with a titan in their own field, the utter destruction of contract law and the fear of having all intellectual, physical / mental efforts, and captial obsconded with the wave of a "Leaders" hand has Captial on strike post the GM bankruptcy. That whole "GM event" did not go un-noticed, and I was shocked when they told me how they felt about this and I thought I was the only one on a lonely screed here denoting that fact.
The silent Going Galt Revolution Continues until our Dear Leader is gone...
I think that is their new slogan to try and convince Americans why we should vote for them again. Gov. Quinn from IL botched it the othe day during a speech and said “Obama is dead, and GM is alive”.
What was comical to me when I heard Biden was the Osama part. I’m looking for a new job. Can you imagine me highlighting, on my resume, a success I had years ago, and even then only as the manager of a team that did the real work?
The potential employer would assume two things: First, is that all I’ve got and, second, I’ve done nothing since then? And that harkens back to the first.
Well, at least in Obama’s case we would be right.
The solution to the disgraceful action is for the next President to take money from the UAW pension fund and give it to the rightful owners from which it was stolen.
Who in the hell wants to buy a govenment car? Who wants to buy from a company that Braaaack Obama micromanages?
Eventually GM will become like the USSR’s Lada and East Germany’s Trabant!
Buy a Ford!
Agreed. I've bought 2 cars since the bailout. Neither GM.
Osama has nothing to do with GM. Obozo had little to nothing to do with killing Osama the poor bewhiskered waco just had to be on Obozo’s kill list.
GM will yet go down the tubes.
It will always fail because as long as there is some degree of economic freedom left, the market will ultimately decide winners and losers and in the case of GM, the market is deciding as the balance sheet indicates.
Of course, given another term Barry may have a solution for his problem.
If the Gubmint can mandate you to buy health insurance, then why can't the Gubmit mandate you to buy one of those green lemons called a GM Volt?
I am sure John Roberts and his new found friends on the Supreme Branch of Gubmint would not have any problems with the constitutionality of such a mandate.
“they have no choice but to spend money now, so they must have it if they are spending it...”
Sure Sounds like our government alright....
Yes, I just think both are negatives in different ways. And the Seals are to Obama what the Swiftboaters were to Kerry. They are effectively taking the one thing he thinks he did right and exposing him for what he is.
If it was indeed “too big to fail”, then GM should have been broken up.
You’re right. Ford didn’t get a bailout, and that’s why we purchased our last vehicle from them. I wonder how many other Americans have purchased Fords for this reason.
Obama only has one campaign speech......
“I’m going to steal money from the people who don’t vote for me and give that money to the people who do vote for me.”
Every other speech is a smokescreen.
The GM Bailout was like applying a tourniquet to the neck to stop a bleeding head wound.
I have been the GM of a new car dealership since 1990. Fortunately, before the BK of GM, I bailed out to a Ford dealership. The auto business is ‘roaring back’ so well that in 2007 and 2008, I put my son through college with my life savings. My income is now up to approximately 60% of what it was in 1998, with no retirement, only a small 401K that has the potential to lose money every month. In my area, probably 20% of the dealerships are closed, and the ones that made it sell about 40% as many as in the 90’s. This is really roaring back! My plans are to work till I’m 75-80, then choose between starvation and suicide. Of course instead of being a capitalist, I could have become a govt worker out of college, and I’d be retired now with a lifetime pension, insurance, etc.
I thought they did that - except for Buick. And Buick sells well in China.
GM wanted Obomination, they got him. GM, along with "made in the cess-pool Detroit" Chrysler are now known as OBAMA Motors Inc.
I have seen left wingers taglines saying that
“Despite Obama Bail-Out”?How about”Because Of Obama Bail-Out”??Everything this IDIOT touches or meddles with turns into SH*T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
“W” and Barbara had the Obamas over for the traditional reception at The White House(shortly before The Immaculation.Afterwards,”W”was heard to remark”He’s Clueless”.Tell us something we didn’t already know!!!!!!!!!
Has GM started producing Zyklon-B yet? Or is GE supposed to do that?
This brings up many questions and possibilities. Will the government step in a second time to prevent bankruptcy? Because, the last time all stock went to 0, this time the unions and government are holding most of the shares. Will the government step in and artificially raise the stock price? At least to the point where they could sell it with out losing too much. And will the government step in to help GM, by giving GM as many government fleet contract as possible? New military vehicles, FBI, etc cars and trucks. Getting into bed with GM is going to hurt tax payers no matter what the outcome, but maybe we can make some money in GM stock so it won't hurt so much.
What percent of GM is owned by countries other that the United States — China for one?