Thursday, June 4, 2009

"Government Motors" unlikely to survive

Even big companies with "enduring brands" that have been around for a long time die.


Being big and around for 100 years certainly didn't help General Motors or what is now being cleverly dubbed "Government Motors" from heading towards the abyss.
No matter which way you cut it the big GM is certainly in an abyss it will find its way impossible to climb out of, without even more massive amounts of cash to keep it afloat.

Lets face it, the company has been a basket case for a long time and hasn't made a profit for around 5 years. The nail should have gone into the coffin eight months ago but that great economist Barrack "I have a Plan" Obama decided he knew more about cars and how to build them than Henry Ford and proceeded to sink 10s of billions of American taxpayer dollars into it in the hope that doing the same thing it had been doing over the last few decades was going to turn the company around - amazing how resuscitive other peoples money is eh folks!

Ain't socialism a wonderful thing.

Here we are now 8 months later and there is talk of sacking thousands of highly overpaid car workers, killing multiple brands, ditching 2000 dealerships and even selling the car that beats the Toyota Prius for being ecologically sound, The Hummer, to a Chinese company.

But is that going to save it?

Short answer, NO.

But why?

For a start dropping 2000 dealerships simply isn't enough, they have 6,426, to be exact, to Toyota's 1,461, so try dropping another 2000 to reduce those massive overheads that are dragging GM down. Start with that and in combo with some of the other cuts - especially the gold plated pension plans - that just might work.

The big problem that GM has though is that it is now effectively a Government department and we all know that politicians and business equal failure with a capital F.

Some of us my age (43 years young) remember British Leyland being "rescued" by British taxpayers in the 1970s. Where is it now ?

It no longer exists.

It made poorly designed and built cars that politicians had influence over building and nobody wanted to buy them.

Mr Obama wants cars to be built that are "greener", whatever the hell that means and instruction on high from mad socialists like him will result in the same fate that was visited on BL 30 years ago.

Success for GM is almost impossible under its present ownership and Obama's "plan" to get the company out of the crapper seems to be a combination of the ability to sell cars to Americans that they don't want from a company that they already own by using taxpayer money(again) to bribe them to ditch their old cars, so they will buy the new ones from Government Motors.

This will apparently allow the company to sell 10 million cars a year, make the cash flow (out and in and out again of taxpayer wallets) and then they will be able to make a profit.

Again, ain't socialism wonderful!

No plan yet from Obama about just when that 50 billion loan is going to be paid back to Americans.

It never will.

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Related Amazon Reading

My Years with General MotorsMy Years with General Motors by Alfred Sloan
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