Bailout Watch 481: GM Restructuring Plan Progress Report 2009 – 2014: Bankruptcy
We’ve got the link to GM’s Report Card to the Presidential Task Force on Automobiles. Bankruptcy is no longer that which must not be mentioned. In fact, the official recognition of this inevitability hardly gets a half turn of spin. End of days for Detroit.
Bankruptcy Considerations-In order to be prepared for events possibly precipitating a bankruptcy filing (for example, unsuccessful bond exchange or VEBA negotiations), the Company continues to evaluate its in-court restructuring options as part of contingency planning activities. The Company believes that the impact of a bankruptcy filing on its business would be substantial, on both wholesale (GM to dealers) and retail (GM dealer to customer) levels, as discussed in the February 17 submission.
General Motors continues to strongly believe that out-of-court restructuring provides the highest value outcome for its customers and this country long term. However, if the changes needed for long-term restructuring cannot be obtained out of court, the Company is prepared and would consider in-court options. Such options would be enhanced by the Administration’s commitment to back GM customer warranties, and to provide support for a rapid emergence from any in-court process.
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GM plans almost no improvement in MPG until 2013. In the attached report it reads: MPG for cars/trucks of 31.2/23.2 in 2009 and 33.4/23.0 in 2012. And some (maybe most) of the improvement is due to bogus flexfuel credits. The public clearly desires good fuel economy (as long as it's reasonably affordable) and GM will be stagnant on this front for the next 4 years.
It will be interesting to see them try to stay outside bankruptcy court while trying to favor the unions over other parties.
The three elephants in the room are the dealers, the suppliers and the unions. Bankruptcy is the only way to break holds held by all three. Unions are going to face the music, no question about it. The song is one the rest of us have heard for years. Dealers are too many and they all plan to hide behind state protection laws. This will be messy. See Oldsmobile shutdown for a preview. Suppliers of parts might actually have the best hand since they also supply the transplants and many are flexible enough to make anything. A great deal are owed money by the detroit 3 and will not survive. But these shops, including the union shops, represent value to the transplants and will probably get a lot of attention. Look to see them bought up first. This all is necessary to realign what has become a real mess in this country. We either fix these relationships by ending them or pour billions of dollars down the drain.
Saw in the news this morn that the Boston Globe union employees have considered going on strike. They are reporting that they will take pay and benefit cuts if the management will... THIS is what the UAW ought to be doing right now. That way they all still have a job in five years. American industry - WAKE UP! You will be out done by the other countries in short order...