GM's Been on the Brink Before—Many Times

[longtooth]

GM's Been on the Brink Before—Many Times

This isn't GM's first brush with death. Since 1910 the company has nearly disappeared three times—and come back stronger every time

By Ed Wallace

The executives at General Motors (GM) knew they were in trouble: Their negative cash flow had become intolerable, and their lending institutions had locked up. Bankers refused to lend the corporation any more money, fearing that they'd never see GM's current loans repaid, much less any new funds they might advance. New car divisions that had opened only a few years earlier were now huge money pits. And even those divisions whose sales had once shown incredible potential now had virtually no sales at all.

GM put some divisions and parts operations up for sale, but potential buyers showed little interest. GM cut the size of its workforce repeatedly but could not lower expenses quickly enough to match the fall-off in demand. Finally, GM's lead creditors met quietly at Chase Bank in New York, seeking to find out whether they could salvage any of their loans if they forced General Motors to liquidate.

The bankers hammered GM executives: Why did they insist on keeping different divisions, when it was obvious they were simply money pits? One GM executive explained that if the company failed, it had the potential to set off a nationwide panic, which could damage the improving consumer confidence just starting to take hold after the massive downturn in the economy. He also pointed out that the vehicles the bankers were calling foolish had been some of GM's most profitable vehicles just two years earlier. It couldn't be helped, he said, that the public had become so fickle and tightfisted, not when a massive economic contraction had just scoured the country.

The bankers had their doubts. But after looking at the facts they decided that if GM would dump its losing properties, effectively fire the CEO, and allow the bankers to elect the new board of directors, then GM would be advanced the funds to get past its current financial problems.

Boom and Bust

Welcome to September 1910, when the bankers revolted against Billy Durant's General Motors...

http://www.businessweek.com/lifestyle/cont...ampaign_id=yhoo

[The article does go on and I found it an informative take on the matter]

[Dsuupr]

Fun read. Though I do remember another time that GM was on the brink of disaster. The last time GM was near bankrupcty was during Bush Sr., and this one started during Bush Jr.

[longtooth]

Fun read. Though I do remember another time that GM was on the brink of disaster. The last time GM was near bankrupcty was during Bush Sr., and this one started during Bush Jr.

Early '90s.

Weren't sure that Corvette would survive then either.

Camaro redesign was delayed for three or four years.

Much was made of Robert Stemple's leadership style at the time. I think he's a New Jersey native.

[Justin Bimmer]

Bob Stremple used to carry around a piece of legal pad paper with the names of plants that he was going to have to close if things didn't get much better for GM. Then when it came time to execute the closures, he came up with the idea of plant competitions to see which plant would do the best building identical cars.

[FUTURE_OF_GM]

EXCELLENT READ!

Too bad americans are so stupid...

[G. David Felt]

Great read, So true of GM. They can survive and come back stronger than ever. I think this will be the pivitol point of GM finally cleaning house and getting into a strong position with Chevy, BPG & Cadillac. I see a bright future for GM.

[Z-06]

Great read, So true of GM. They can survive and come back stronger than ever. I think this will be the pivitol point of GM finally cleaning house and getting into a strong position with Chevy, BPG & Cadillac. I see a bright future for GM.

+1. Bankruptcy will not be bad for GM. Let the bad assets go, detach from Opel, Saab, Hummer and other things which are dead load and come back resurrected. Some good things will go to but GM will be certainly leaner.

[Teh Ricer Civic!]

The more things change, the more they remain exactly the same.