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Attention, GM webmaster: Is that post "fiction"?

Posted by Clifford Atiyeh  March 5, 2009 12:55 PM

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According to, the official PR website intended to dispel rumors about General Motors' dire financial situation, it's still a "fact" that bankruptcy is essentially out of the question.

"It’s just not in anyone’s best interest - GM; our customers, employees, suppliers and dealers; or U.S. taxpayers. GM’s restructuring out of court remains the best approach for all constituents."

Tom Wilkinson, the spokesman I interviewed about GM's future model cuts, also has a take on the GM corporate blog:
"Bankruptcy reorganization takes cash - lots of it. For a company like General Motors to operate in Chapter 11, it would need massive debtor-in-possession loans. With credit markets frozen, there is realistically only one source of such loans - the federal government. We estimate loans needed to reorganize GM in Chapter 11 could top $100 billion, far more than the out-of-court fix envisioned in our restructuring plan."

Fact: GM's own annual report for 2008, just released today, says this at the top of page 20:
"Our future is dependent on our ability to execute our Viability Plan successfully or otherwise address these matters. If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code." (emphasis mine)

The word "bankruptcy" is mentioned over 120 times in the report, and phrases like "potentially requiring us to seek relief under the U.S. Bankruptcy Code" appear 10 times in the section "Risk Factors" at the beginning of the report.

However, Northeastern University professor Harlan Platt brought a tingle of good tidings with this quote from the Associated Press this morning:

"I think the government has forced the hands of everybody," Platt said. "In 18 months to 24 months, I anticipate they will be profitable, in the black. A mean and lean competitor that will be world-class."

It's not over yet, but the rumor mill doesn't look like one anymore.

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11 comments so far...
  1. Sorry, I don't see a contradiction here. We might be forced into bankruptcy, and we need to be forthcoming about this in our 10-K. But we think the out-of-court restructuring we are implementing (and that is discussed in great detail in both our viability plan and 10-K) is a far better option for GM and the taxpayers.

    Posted by Tom Wilkinson at GM March 5, 09 02:49 PM
  1. Better for the taxpayer to not squander any more money on bankruptcy or restructuring. Liquidate GM assets, drain the stock holders, pay the pensioners .40 on the dollar and scrap the Union. Let a true competitor buy up what's left and take a crack at the market. GM is done.

    Posted by Starboard March 5, 09 04:11 PM
  1. Well said Sarboard. This is an unfortunate mess which has gone on for too many years. Unfortunately it's the front-line workers who will bear the brunt of this; both at GM and its suppliers.

    Posted by PhilGH March 6, 09 09:29 AM
  1. The unions are killing these companies....

    Posted by Tim March 6, 09 10:43 AM
  1. Thank you, Tom.

    Now how much of the taxpayer money do you geniuses plan on squandering?

    Can you inform us why GM has been blindsided not by one, but by two episodes of an oil crisis?

    Can you tell us why GM can't deliver a fuel efficient economy car, let alone an automobile that has both quality and a price that is compelling?

    Can you tell us why GM management has played so many games and gimmicks with its accounting, that the currently underfunded pension plans threaten its existence, and will probably be paid for by the US taxpayer?

    Can you tell me why GM can’t make money on automobiles when they (unlike Japanese, German, and Korean autos) don’t have to ship the product half-way across the world?

    Can you tell me why the Detroit automakers can’t make a product cheaply when they are in fact near the raw resources needed (iron, coal) for manufacturing?

    I feel so much better now that GM management is double talking. Bankruptcy? Not a chance. That’s only a ploy to get taxpayer money. I get it now.

    Posted by Eric March 6, 09 12:28 PM
  1. Sadly, for GMs employees the GM moneies from the last fifteen years of selling overpriced t

    Posted by Anonymous March 8, 09 07:30 AM
  1. Sell off whatever assets GM has left. They cannot blame the economy for their lack of leadership and business sense. As far as the workers are concerend, luck of the draw. As a taxpayer I do not want to go into the auto manufacturing business. Let capitalism work. Let the weak companies die and the well run companies thrive. Workers will just have to find other jobs. Unemployment and retraining. The governemnt will help with that and it can be done. I know. I did it and I did it without the governments help.

    Posted by Mike, South Carolina March 8, 09 11:45 AM
  1. Obviously the GM management is totally incompetent. How else can a company get into so much trouble. I've seen it so many times over the years: an entrenched management unwilling to change and innovate so they can keep their own multimillion dollar salaries, with an arrogant attitude unwilling to listen to the people who work for them or promoting a corporate culture of fear so workers and middle managers can't try anything new.
    And to own a fleet of multimillion dollar corporate jets so they can work more efficiently is ridiculous in these times. Blackberrys and laptops costs a lot less than $30 million dollar jets.

    Posted by icq March 8, 09 01:11 PM
  1. The quality of GM vehicles is pathetic. Had there been ANY attempt at producing quality vehicles, then success would be found. Instead of using the cheapest gadgets and accessories, why not use QUALITY material like ALL foreign (ok, except Hyundai/Kia) auto makers do! I'm happy to hear that GM may be a thing of the past. Now, if Chrysler could do the same as well, we'll have Ford as our last vestige of hope for the AMerican car maker!

    Posted by Joe T from boston March 8, 09 04:09 PM
  1. Hm.

    When Japanese companies are losing money, the country rallies around them.

    Of course, when Japanese companies are making money, everyone from the assemblers to the CEOs is doing actual work for pay somewhat related to their performance.

    GM *is* improving its cars, and they make what the people will actually pay for with a lag time of several years. Not long ago people would put down 30-50K for anything big and nothing for something small. Small and good costs nearly as much as cheap and good - price out a Mini if you don't believe that. It takes quite a while to design, go through management comittees, tool up production lines and certify for even a modest redesign.

    A structured bankruptcy would be much better than a liquidation. Liquidate and that engineering and manufacturing base won't get shifted to work somewhere else; it'll be replaced by foreign competitors, permanently.

    Lots of spite in the above comments. Cutting down your own economy to satisfy it isn't exactly smart, but then neither is the artificial boom, bust and bailout cycle we established with the S&L giveaway. I guess greed, spite, and what's on TV are more important to most people than having a sound economy.

    Posted by Bubba March 8, 09 07:22 PM
  1. Every motor vehicle within the US Armed forces is manufactured by General Motors...are we prepared to entrust our military's on-the-ground mobility to, I dunno, Japan and Germany??

    Posted by formerdetroiter March 9, 09 09:24 AM

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Clifford Atiyeh is an automotive writer and car enthusiast . He has spent his entire life driving cars he doesn't own.
In the garage: 1995 21-speed Iron Horse, 2002 Jeep Wrangler X (by association)
Bill Griffith is a veteran Boston Globe reporter, having reviewed cars for more than 10 years and serving as assistant sports editor for 25 years. He was also the paper's sports media columnist.
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AAA's Car Doctor, John Paul John Paul is public affairs manager for AAA Southern New England, a certified mechanic, and a Globe columnist. He hosts a weekly radio show on WROL.
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Craig Fitzgerald has been writing about cars, motorcycles, and the automotive industry since 1999. He is the former editor of Hemmings Sports & Exotic Car.
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