What bankruptcy would mean to GM

[Guest Josh]

Plunging market share, huge layoffs and a copycat filing by Ford. Those are just a few of the likely outcomes if GM can't avoid bankruptcy court.

By Robert Walberg

Rick Wagoner, chief executive of General Motors, has tried to comfort investors by saying GM has no plans to file for bankruptcy protection.

Cold comfort, I'd say. The company's deeds, if not the CEO's words, point to an acute need for some sort of bankruptcy plan, even if just as a contingency. Consider: GM (GM, news, msgs) lost nearly $4 billion over the last year; its credit rating dropped to junk status; car sales plunged as GM built bigger cars and trucks just as gas prices skyrocketed; its cash horde has been cut nearly in half; and its leading parts supplier, already in bankruptcy, faces a possible strike that could shutter GM plants for weeks if not months.

It would be irresponsible of management not to at least have some bankruptcy plan in the works, so that if the worst-case scenario did play out, they would be ready with a recovery plan. Below, I'll outline what a GM bankruptcy might look like, and how it would impact workers and competitors.

No leadership, no vision
First, a quick look at what management is doing now. GM's main push in coping with its current troubles is to cut back production deeply enough to create a balance between supply and demand. To achieve this objective, management announced that it will be closing a total of 12 plants and support facilities and slashing 30,000 employees by the end of 2008.

Basically, this course is a tacit admission by management that it has no interest in developing a plan to increase customer demand for its cars. That would require real vision, real leadership and real innovation. These are not traits Wagoner has displayed to date.

Full Story: http://moneycentral.msn.com/content/P136968.asp

[Guest Josh]

I swear many may not agree with me....but when does Jim Dollingers AKA Buickmans words start to hold water? I mean, seriously?

[Guest Josh]

But then the more I read the piece, the more I think this dude is an ass clown and is only writing this to cement the ToyoHondaSan sentiment amongst Americans. Such pieces of dog trash. I can't wait until NAIAS '06. It's going to be fun.

[Guest Josh]

Ok one more thing that strokes me but not in a good way:

If GM ever wants to be a major player again, though, the Board of Directors needs to admit that the current management team lacks the imagination, innovation and resolve necessary to accomplish that goal.

Is this guy kidding me? He's going to question the new management team? Bob Lutz is the BEST thing to happen to General Motors. The Pre-Lutz vs Post-Lutz designs are keeping the company further from bankruptcy than we are seeing now!

[Member55]

Why is everybody assuming that Ford would follow GM into bankruptcy. Financially they are in better position, they have no brands to get rid off, most of the UAW concessions GM would get if it went into bankruptcy Ford would probably get too. And, what's in it for Ford family since they are large shareholders also?

[CARBIZ]

This has been said before, but why isn't the press all over the fact that Toyota and Honda missed the last 10 years of trucks sales? The press pisses all over GM for "missing" the hybrid/gas mileage thing, yet what did they do by buying Daewoo? The Aveo may not be as great on gas as a Civic, but it is a start. I admit this Delphi thing has me concerned, but one would have to give the Board some credit for seeing this thing coming. I believe this is all playing out for the upcoming 2007 UAW talks. The Board can't reveal their bankruptcy plans, quite obviously, because then the media would trumpet that the Board thinks GM is going to go bankrupt. DAMNED IF YOU DO, DAMNED IF YOU DON'T.

[ehaase]

they have no brands to get rid off

[post="47877"]<{POST_SNAPBACK}>[/post]

Many consider Lincoln and Mercury just as weak as Pontiac and Buick, if not weaker.

[NOS2006]

Many consider Lincoln and Mercury just as weak as Pontiac and Buick, if not weaker.

[post="47887"]<{POST_SNAPBACK}>[/post]

I sure do.

[Sixty8panther]

My Buddy Ross predicts taht Buick will bite the dust and GM will get bought out by Toyota. When he suggested that and I realized it's not completely unrealistic I felt sick to my stomach.

[ehaase]

Why would Toyota want GM? Why would Toyota want to deal with the UAW? If GM ever liquidates, I could see Toyota getting a factory or two, as long as the UAW wasn't part of the deal.

[wildcat]

Sixty8panther: Tell your buddy Ross that if something major happens, Buick wouldn't be the only one to "bite the dust." GM itself will be through.

[Guest buickman]

Rick Wagoner is a wonderful family man, an involved father, and I believe he truly cares about GM. That aside, his record as head of GM is disastrous, therefore he must go. He has allowed Lovejoy, Smith, and LaNeve to virtually destroy GM with ineffective marketing, this in spite of truly competitive products. Let's not forget these are the vehicles promised to us in years past. The engineers, stylists and production people have all fulfilled their responsibilities. Marketing is THE PROBLEM! Return to Greatness solves that problem, if only they would listen and give their top salesman a chance to prove himself. These are NOT only my ideas. I have spent decades listening and developing what WILL WORK. Forget the money, give it a try. What does GM have to lose? Bean counters don't understand customer psychology, I do. Choose... BK or BM.

[Munson05]

[quote name='ehaase' date='Nov 24 2005, 09:58 AM']
Many consider Lincoln and Mercury just as weak as Pontiac and Buick, if not weaker.

[post="47887"]<{POST_SNAPBACK}>[/post]

I was at a mercury dealer recently pretty weak!

[Flybrian]

Many consider Lincoln and Mercury just as weak as Pontiac and Buick, if not weaker.

[post="47887"]<{POST_SNAPBACK}>[/post]

Agreed very much, though not necessarily on the Mercury end. I can Mercury attaining stability and brand-growth very soon, but at the heavy expense of Lincoln. I'll be so audacious to say that one day Lincoln may exist within Mercury offering one or two models like the Navigator and Town Car successor, much like the Geo/Chevrolet relationship though on the other end of the spectrum.

I really don't see much financial or marketing sense in pouring money into the sieve that is Lincoln. Its a brand with little cache, little cash, no identity, and vehicles that are either completely unappealing or decent if you ignore the cheaper Mercury variant (Zephyr vs. Milan, Mountaineer vs. Aviator).

How many new Lincolns have you seen on the roads? How many Zephyrs? Mark LTs?

[Lexcar14]

I gotta agree, the marketing at GM is atrocious! It's been like that for ages too. I think Wagoner should go too. He's a not a car guy, and it shows. Bringing Lutz was a great move, but Lutz is not the CEO. At the end of the day, Wagoner makes the decisions. I don't know who they could bring in, but GM does need a new leader, IMHO.

[Slick_Holden]

What about all GM own that's outside of the U.S?? Just like GM has done forgot the rest. Some country's rely heavy on there car manufactures.

[Chris_Doane]

Rick Wagoner is a wonderful family man, an involved father, and I believe he truly cares about GM. That aside, his record as head of GM is disastrous, therefore he must go. He has allowed Lovejoy, Smith, and LaNeve to virtually destroy GM with ineffective marketing, this in spite of truly competitive products. Let's not forget these are the vehicles promised to us in years past. The engineers, stylists and production people have all fulfilled their responsibilities. Marketing is THE PROBLEM! Return to Greatness solves that problem, if only they would listen and give their top salesman a chance to prove himself. These are NOT only my ideas. I have spent decades listening and developing what WILL WORK. Forget the money, give it a try. What does GM have to lose? Bean counters don't understand customer psychology, I do.

Choose... BK or BM.

[post="47962"]<{POST_SNAPBACK}>[/post]

I have an unrelated question. Is you moniker self-assigned? I just ask because I saw this very thing backfire when I was car shopping back in March. I was at a Honda dealer in the area...I wont say where, but let's just say it rhymes with Bay City. :rolleyes:

Within 15 mins I could tell I wasn't going to be too interested in anything they had to offer me. Past that the salesman I got was a 100% complete asshole. Within 10 mins he was asking me questions like "whats stopping you from buying this car right now?!?" And with an almost angry tone. Anyhow, the amount of bullsh!t coming out of this guys mouth was hilarious. I didn't even call him on any of it just so I could see how far he'd go.

So im leaving and I notice his business card says Earl "The Pearl" xxxxxxxxx. Apparently everyone at the dealer has a little thing with nicknames on their business card. Anyhow, any thought of this guy being a pearl is downright asinine. I sent it back to his sales manager telling him what happened and changed it to Earl "The Asshole" xxxxxxxxx.

By the way...referring to yourself as "BM".....yea. Not good either.

[ehaase]

I'll be so audacious to say that one day Lincoln may exist within Mercury offering one or two models like the Navigator and Town Car successor, much like the Geo/Chevrolet relationship though on the other end of the spectrum.

That's a good idea. For most of the 1960's, all Lincoln had was the Continental sedan and convertible. The Town Car is what Lincoln is all about. There will always be 50,000 to 100,000 people who just want a big, luxurious comfortable sedan.

Back to GM's bankruptcy. I don't think that Wagoner has it in him just to give up and do what Wall Street wants - which is go through Chapter 11, eliminate the pension plan, slash even more workers, plants, and the health care plan and cut everything except Chevrolet and Cadillac. An honorable man like him wants to keep pushing and fighting until there is no other option.

[Guest buickman]

For decades people in Flint proclaimed they worked at "The Buick". Also it has been fairly common for many here to refer to themselves as a "Buickman". Now I do not have any such reference on my business cards, nor do I refer to myself as such in person. However, many people have a nickname on the net, therefore I proudly use "Buickman". Having led the United States 6 times in retail Buick deliveries, I suppose it's appropriate.

[OptimusK]

Agreed very much, though not necessarily on the Mercury end. I can Mercury attaining stability and brand-growth very soon, but at the heavy expense of Lincoln. I'll be so audacious to say that one day Lincoln may exist within Mercury offering one or two models like the Navigator and Town Car successor, much like the Geo/Chevrolet relationship though on the other end of the spectrum.

I really don't see much financial or marketing sense in pouring money into the sieve that is Lincoln. Its a brand with little cache, little cash, no identity, and vehicles that are either completely unappealing or decent if you ignore the cheaper Mercury variant (Zephyr vs. Milan, Mountaineer vs. Aviator).

How many new Lincolns have you seen on the roads? How many Zephyrs? Mark LTs?

[post="47992"]<{POST_SNAPBACK}>[/post]

Really interesting thoughts on FMC, Flybrian. Come to think of it, most, if not all Lincoln dealers are Mercury dealers anyway...How hard is it to sell the same vehicle with a different face/interior on the same lot? Just by the dealer network alone, it seems as if L/M should be complimentary, if anything. (Similar to the GMC/Cadillac/Buick dealership.) And give 'em some autonomy from the Ford brand!

About the article:


...As others have said, Lutz, in particular, has lead a striking improvement in product. They're willing to try novel things (Solstice, in particular), and shoring up the areas where other products have had deficiencies. GM may need to dump Wagoneer, but to say that GM's (new) products (business management, is a different matter) reflect this 'lack of vision' shows lack of literal vision on the writer's part. He's damning them for all the wrong reasons!

GM's not going to solve all its problems in one fell swoop, so to say that they need to dump everyone at the top, especially in light of vehicles like the refreshed Impala and retooling of Saturn, seems knee-jerk and suspect. Bring in better 'talent' and 'vision' to suppliment product gurus, such as Lutz...and, yes, better marketers, as well.

...And then there's the healthcare issue...[massages temples]...IMHO, that's where this vaulted 'vision' is really needed... Edited November 24, 2005 by OptimusK

[CaddyXLR-V]

Rick Wagoner is a wonderful family man, an involved father, and I believe he truly cares about GM. That aside, his record as head of GM is disastrous, therefore he must go. He has allowed Lovejoy, Smith, and LaNeve to virtually destroy GM with ineffective marketing, this in spite of truly competitive products. Let's not forget these are the vehicles promised to us in years past. The engineers, stylists and production people have all fulfilled their responsibilities. Marketing is THE PROBLEM! Return to Greatness solves that problem, if only they would listen and give their top salesman a chance to prove himself. These are NOT only my ideas. I have spent decades listening and developing what WILL WORK. Forget the money, give it a try. What does GM have to lose? Bean counters don't understand customer psychology, I do.

Choose... BK or BM.

[post="47962"]<{POST_SNAPBACK}>[/post]

Your joking right?

[Guest buickman]

No joke, he's a family man. :) I don't know that working in the north end of Flint was such an advantage. You saw the area in Roger and Me. High crime, boarded up buildings, weeded lots. Success was more due to word of mouth, customers throughout Midwest, specialized in home deliveries, other aspects included in The Plan. If you know Flint and Saginaw, you may be familiar with Birch Run. Raised sales there 52% last year as General Manager. Traditionally the store was around #40 out of top 50 in market. Last month finished #7, climbing. Who is John Galt? Edited November 24, 2005 by buickman

[Hey Now]

Why would Toyota want GM?  Why would Toyota want to deal with the UAW?

[post="47927"]<{POST_SNAPBACK}>[/post]

That's easy: the full size truck lineup, especially the HD's. Everything else would get pitched out the window, except maybe the Vette.

[Guest carpetbagger]

compare HD trucks to free soap? are you mad?

[turbo200]

Rick Wagoner is a wonderful family man, an involved father, and I believe he truly cares about GM. That aside, his record as head of GM is disastrous, therefore he must go. He has allowed Lovejoy, Smith, and LaNeve to virtually destroy GM with ineffective marketing, this in spite of truly competitive products. Let's not forget these are the vehicles promised to us in years past. The engineers, stylists and production people have all fulfilled their responsibilities. Marketing is THE PROBLEM! Return to Greatness solves that problem, if only they would listen and give their top salesman a chance to prove himself. These are NOT only my ideas. I have spent decades listening and developing what WILL WORK. Forget the money, give it a try. What does GM have to lose? Bean counters don't understand customer psychology, I do.

Choose... BK or BM.

[post="47962"]<{POST_SNAPBACK}>[/post]

you've posted the same thing at CZ28. I posted something in response and you never bothered to say anything about it. You are severely mistaken, Buickman. Where are the products we were promised? Where are the gotta haves? Where are the fullfilled responsibilities you speak of?

When was the last time you saw a Buick place higher than 3rd or 4th place in a compairson in the major magazines? You'll have to think a long time back. Even with thousands and thousand of dollars off the metal, Buick's market share is still decreasing.

What is the problem? Desirable product. It goes no further than this.

I am tired of you ignoring sensible posts, we should just ignore you, because you are not sensible.

BUICKMAN has called for the UAW to STRIKE over at CZ28!! How in the world could that help profits, sales, GM's health? I'll answer that one. In no way would a strike be beneficial to GM's fortunes right now. Your plan won't be implemented, give up!! Clearly, if you were shot down once, you would have tried to see what the fatal flaw was there, and you would have fixed it.

With your limited perspective in Michigan where all things GM matter, you have no view of the most important markets where GM has lost all of its business. In order to get back to a healthy state, GM will have to stop thinking with the Detroit mindset, where everything domestic sells, and start thinking with the world mindset, where quality and design rank above all else in consumer products. Ultimately the product is about the consumer. GM lost touch with the consumer and is now paying for it. They didn't serve the customer, idiots!!!!!! They should have listened long ago.

Thank God, there is a glimmer of hope coming in the form of Lutz cars, the holy grail of Wagoner's tenure with GM.

[Member55]

The whole GM empire can be had for only ~15 billion and still nobody wants anything to do with it.

[2005 EquinoxLS]

I thought I heard that Toyota is buying GM or forming a partnership with them. Is this true?

[Hey Now]

No, GM has alot of production capacity in the US, along with alot of fuel cell technology. To buy GM just for the trucks and the Vette would be like a Hilton Hotel just for the free soap.

[post="48070"]<{POST_SNAPBACK}>[/post]

Seriously, Toyota would not care about the car side of the house. That would be out the door sans the Vette (they'd be stupid to pass up all the technology in the Vette). You don't seem to understand that "breaking in" to the HD market is HUGE. GM, Ford, and DCX are low cost because they've been in the game for a long, long time and carry over the lessons to any new HD platform, it is MUCH harder to start from scratch on something that you (Toyota) has never made. That is why I predict that the rumored upcoming Nissan HD will fail miserably, you just can't increase the thickness of the frame and hope you're customers will accept it, you must completely understand the HD market (which is NOT the average Joe Schmo off the street).

As for fuel cell tech, GM and Toyota are working together on that anyway, plus that has not been proven to be the way of the future in autos......yet.

[Guest buickman]

Turbo, With all due respect, you are wrong about Wagoner, GM's problem is the marketing way moreso than the product. You are also off base about me, but hey, it can be lonely at the top. Buickman

[CaddyXLR-V]

Turbo,
With all due respect, you are wrong about Wagoner, GM's problem is the marketing way moreso than the product. You are also off base about me, but hey, it can be lonely at the top.
Buickman

[post="48191"]<{POST_SNAPBACK}>[/post]

Again, your joking right? Selling cars is all about the product. You come off as having some vendetta against GMs top management. I wonder why that could be.

[Guest buickman]

Wagoner has run GMNA since 1994. There is already talk of replacing Mariucci in Detroit, yet we keep a Chairman whose track record is nothing short of a disaster? I, for one, am not afraid of calling a spade a spade. That's why I attended the annual meeting and gave my top ten reasons why Wagoner should resign (in disgrace). If we don't sell the cars, there is no need to manufacture them. It all starts when somebody sells something. This whole GM thing really began when Billy Durant returned from the New York "Auto Show" with orders for 1108 "machines". The Buick was certainly a success. Edited November 25, 2005 by buickman

[Member55]

Long term no marketing strategy will work if the competition can produce a comparable product at significantly less cost.

[CaddyXLR-V]

The best marketing is having a good product. Who will people trust more, a friend or family member that says the car is great, or an ad on tv?

[CaddyXLR-V]

Hmm, no offense.....but you're an arrogant, egotisical f*ck when you say stuff like this.

[post="48291"]<{POST_SNAPBACK}>[/post]

:)

[Satty]

Yay, more Buickman. Hey Josh, whens that interview you've been promising us for the last eight months? You know, the one that is going to rock the industry. Remember, Buickman is going to have a huge impact on GM's future? Yeah, so when do we get to see the full transcripts from that?

[CaddyXLR-V]

No joke, he's a family man.    :)

I don't know that working in the north end of Flint was such an advantage. You saw the area in Roger and Me. High crime, boarded up buildings, weeded lots. Success was more due to word of mouth, customers throughout Midwest, specialized in home deliveries, other aspects included in The Plan.

If you know Flint and Saginaw, you may be familiar with Birch Run. Raised sales there 52% last year as General Manager. Traditionally the store was around #40 out of top 50 in market. Last month finished #7, climbing.

Who is John Galt?

[post="48040"]<{POST_SNAPBACK}>[/post]

So you can sell cars. That doesnt mean you can run a company. The top executives dont need to know how to sell cars. Thats what you are for. They are there to run the company. Dont lie, you dont like Wagoner because he wont chase your ridiculous ideas, which would be a complete waste of time. Stick to what your good at, selling cars, and leave the CEO alone so he can do his job.

[Satty]

We've been through the Buickman thing before. He doesn't want his "plan" out in the public, yet he emailed it to anyone who asked. Several of our insiders and people who know the industry tore his plan apart bit by bit, showing exactly why it wouldn't help GM, although it would make things a little nicer for the dealers. And the interview was supposed to happen a long time ago, Josh didn't bother to do it and wouldn't answer Buickman's emails. Professional journalism at its finest. Edited November 25, 2005 by Satty

[CaddyXLR-V]

Unless someone with the authority can offer a point-by-point breakdown of why his plan won't work, shut up.

That was already done, I forget by who, maybe AH-HA or evok, but I'm not sure.
What needs to be broken down? GMs problems go far deeper than just marketing. GMs problems are in cost, and structure. Marketing cant overcome weak product.

[Guest buickman]

Josh and I are to do the interview in the next few days. I am looking forward to meeting him in person. My expectation is that he will be open minded, yet ask questions of substance and pertinence. I will give complete answers and honest opinions. Hopefully we can outline some solutions. As to my confidence, I truly believe in Return to Greatness, but do not claim to have created the entire plan. It was developed over numerous years, and contains ideas from many knowledgeable, experienced individuals. Edited November 26, 2005 by buickman

[FUTURE_OF_GM]

Basically, this course is a tacit admission by management that it has no interest in developing a plan to increase customer demand for its cars. That would require real vision, real leadership and real innovation. These are not traits Wagoner has displayed to date.

Wow. That's a WHOLE lot of opinion, and lets us know how the author REALLY thinks about GM leadership. It also shows that he has virtually NO concept of this industry. GM will never be able to regain the share that it is geared for REGARDLESS of how excellent their new offerings are. The market is just too crowded and too fragmented.

I'm really tired of every nut job in the media *thinking* that he/she has insight into what GM should do.. You push a pencil (and you're not too good at that) you DON'T run a fortune 500 company.

as a trip to bankruptcy for our two biggest producers would cement Honda (HMC, news, msgs) and Toyota (TM, news, msgs) as the worldwide leaders for generations to come,

TRANSLATION: VICTORY FOR US ALL!!!!

As it stands now, GM’s planned production cuts will mean that the company’s market share will be close to 23% -- roughly half of what it was decades ago and well below were it stood just a few short years ago. If bankruptcy becomes a reality and the cutbacks are more severe, the company’s worldwide share of the auto market could easily plunge into the mid-teens.

Isn't GM's worldwide market share close to the mid teens now?!?!?!? (18%)

So, management deserves some credit for taking some of the steps necessary to fight another day. If GM ever wants to be a major player again, though, the Board of Directors needs to admit that the current management team lacks the imagination, innovation and resolve necessary to accomplish that goal.

Hate to break it to ya bub... But GM STILL is the largest automaker in the world... If that isn't a "major player" then I don't know what is.

It's increasingly evident that this guy has an axe to grind with GM management. GM is in trouble but they're not dead yet.

[FUTURE_OF_GM]

That is why I predict that the rumored upcoming Nissan HD will fail miserably, you just can't increase the thickness of the frame and hope you're customers will accept it, you must completely understand the HD market (which is NOT the average Joe Schmo off the street).

I dunno..

Apparently according to some here Honda "succeeded" in the truck market by bolting an Avalanche knock-off body with an illogical "trunk" onto a thicker frame.

I think people would buy it just because of the "T" in the grille and the UNDENIABLE (and ass kissing) media endorsements

[CARBIZ]

Even though I am loathe to advertise for the Toronto Star, anyone who can should grab today's issue. In today's Wheels section, Jim Kenzie talks about GM's layoffs and cutbacks. He raises the issue of why would GM be closing down its most productive and quality driven plant when it needs all the quality and productivity it can. He also nails the nail on the head when he points out that while the legacy costs (health and pensions) are $1,500 a vehicle for U.S. made cars, Canadian made vehicles it is only $84, due to our "free" healthcare. He makes a few remarks about universal healthcare that some Americans won't like, but that is neither here nor there. He also raises the same issue about Japanese built vehicles, because Japan also has national healthcare. It is an interesting read. He half jokingly proposes that GM close all its American plants and move production to Canada or Japan because of the cheaper costs. Very interesting read. Certain to spark debate and controversy.