Never Let the Facts Get in the Way of a Good Story
By Tom Wilkinson
Director of News Relations
Hang out for long with a group of journalists, and someone will, half jokingly, repeat that newsroom nugget. Like many jokes, it reveals an uncomfortable truth. Sometimes the facts simply don’t support the story the reporter wants to write or the editor wants to put on the front page. In my past life as a journalist and magazine editor, I wrestled with this almost every day. The choices editors make when faced with this dilemma are revealing — they are what separate serious journalism from the tabloids.
Unfortunately, The Wall Street Journal, once a bastion of business journalism, seems to be wrestling unsuccessfully with this dilemma, at least where GM is concerned. In headline after headline, story after story, the front pages of the paper have promoted bankruptcy as a solution for GM. The story on page B1 of today’s paper, headlined “GM’s Chief Shifts Posture on Surviving Bankruptcy,” is yet one more distortion of GM’s position on this critical issue. (An online version with a slightly revised headline can be read here.)
The story came from a Q&A session with Rick Wagoner, GM chairman and CEO, at a March 17 media breakfast hosted by the Christian Science Monitor. In response to a question about bankruptcy, Wagoner responded (and I quote):
- “A lot of people who write about bankruptcy, I don’t think have ever been in bankruptcy. And what I have learned after studying it in detail is that it brings significant risk on, and puts things out of the control of the board and management, and into the control of other parties.
“You talk about a fast “pre-pack” that could work in 30 or 60 days. And what I have learned is that it could work. And it might not work. And if it doesn’t, it could mean, in the end, a long period of bankruptcy which, I believe, would result in the liquidation of the company.
“Because all of our research, by the way, continues to support the view that consumers will shy away from buying vehicles from companies in bankruptcy.
“We can accomplish 99 percent outside of court that we would inside of court. Why in the world wouldn’t we do it outside of court, save the risk, and by the way, at a much lower expense from the standpoint of support? Because if we have to file Chapter 11, there is no DIP (debtor in possession) financing other than the U.S. government, and that would be a huge, potentially huge amount of financing required.
“So I think it makes sense from everybody’s perspective to do this outside of court. We have to show that we can do that. I think we can. I think it is in everybody’s interest, including the bond holders and VEBA and others, to do that. But it’s not done yet.”
Journal reporters at the breakfast heard these very words, which I transcribed verbatim from a digital audio file of the event.
What Wagoner said is completely consistent with the detailed Bankruptcy Analysis in Appendix L of our February 17 viability plan. We understand the arguments made by proponents of bankruptcy reorganization. We have hired outside experts to assess all the options. And we have concluded that an out-of-court restructuring is less risky for GM stakeholders, less expensive for the U.S. taxpayers, and reduces the very real potential of GM death-spiraling into liquidation, dragging down the U.S. economy with it.
Did The Wall Street Journal ignore what Wagoner really said so it could write the headline and story it wanted?
I’ll leave it to you to decide.
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Mr. Wilkinson,
I commend GM and Mr. Wagoner for exploring every avenue to avoid ch. 11. I just must ask very bluntly: what are your intentions with reguard to the UAW since they will not agree to the changes that must be installed for GM to survive? They will not agree to everything needed for restructuring. Are you prepared to essentially break them? Let them strike? I say you should. I want GM to succeed, and I want you do handle the UAW head on. Call their bluff, and if need be, hire new people….. remind the UAW that there are about 12 million people in America right now who would bust down the gate to do exactly what they do without a contract, for half their pay, and with a positive attitude, dedication to quality, and a sense of pride the UAW has forgotten about long ago.
I can see it now: thousands line up at GM assembly lines all over the United States and Canada for a chance to get a job. At the same time, the UAW cries “scab” and any other derogitory name you want…. but guess what….. those people WANT to work, and will do so with very few strings attached, and without insipid and time consuming labor discussions and negotiations.
Somehow, GM, you MUST break the UAW.
My thoughts about a “pre-pack” is that we’ve heard all the negative sides to it, GM has come out and said “it’s not an option” and I understand why they say it. Now what are the benefits? I’d like to hear both sides. Would it allow GM to sell cars and avoid dealership markups? What about labor contracts, etc.
I’m a GM employee and I want to commend Tom for writing this post. Too often we see media coverage that’s taken a turn from the truth. I appreciate the explanation and the information. Thank you.
Todd –
As the viability plan and Rick Wagoner’s comments indicate, a pre-packaged bankruptcy might be possible, although I am not aware of anyone trying one in an industry as large and complex as ours. The concern is that it is a one-way trip. If you file, and things start to unravel because of unanticipated events (always a risk in bankrutpcy) there is no way back. As Wagoner noted, a pre-pack could easily slide into Chapter 7 liquidation. That’s essentially what happened earlier this decade to Daewoo Auto in Korea, the last carmaker to try a bankruptcy reorganization.
Since we believe we can accomplish the same things with a controlled restructuring out of court, why not pursue that path? What we do will impact many thousands, if not millions, of lives. Why not be as prudent as possible?
I have noticed some pseudo reassuring ads on tv promoting confidence in Saturn. A month ago it was a sure thing that Saturn was for sale or would be discontinued. So what is it. Was that threat just a scheme to make the American Public support a bailout. Now that you are getting money it looks like you will continue to keep Saturn and let it bleed losses and continue sub-standard products.
I think it is time to clear up what is the current thinking within GM on the future of Saturn and Saab.
Basically Tom, GM needed to move faster. Ford is five years ahead of GM in terms of dealer/factory streamlining, brand streamlining, asset sales, and capital raising to fund their operations and they did all of that without any taxpayer money because they were smart enough to know their business needed help. GM on the other hand waited until there was no other option than a massive asset sale/reorganization that could cause bankruptcy or a significantly smaller company in the future.
Saturn and hummer should be two brands that GM closes. why in the world would you sell any of those products/dealership outlets to a foreign automaker. that will be extremely smart, so that in ten years they can begin importing cars and introducing new brands to the american market via GM’s former dealership network and undercutting GM on price by upwards of 7-$10,000 per vehicles…sounds excellent.
You are in true crisis mode and must act accordingly. the faster you can shut down Saturn and Hummer the better. SAAB must also be sold immediately.
I must say some major progress is being made with the BPG Channels and those brands seem as though they will survive and be marketed as one brand outlet in the near future.
Pontiac- needs to become your american arm of Holden. Keep the nostalgia of the pontiac name but import several Holden sports cars, globalizing product without having to constantly invest in Pontiac.
Buick- U.S. Arm of Opel, GM has already suggested it is leaning in this direction which will further free up cash and resources for GM to focus on Cadillac and Chevrolet.
Daewoo as a brand should disappear and either become Buick International or Opel.
Another major inefficiency in your worldwide brand network is the Opel/Vauxhall debocle. why do you operate under the name Vauxhall in just one country, yet sell the same cars as opel everywhere else? major cost inefficiency right there. Opel should replace the Vauxhall name in the United Kingdom.
Your restructuring plan and reduction of U.S. dealership footprint as well as union concessions are well under way, but the brand structure, how those brands are funded and the core of what they mean must be clearly defined going forward. the company must move with increase speed and accuracy if they want to survive. all options should be on the table regarding asset sales/brand closures.
No surprise that the WSJ is pushing Chapter 11. Most right leaning publications and TV hosts are in favor of it so they can see the UAW punished. For these people the greatest fear is that bankruptcy is taken off the table permanently. They have to keep the idea alive for as long as possible hoping that the government will consider pushing GM into chapter 11. If it becomes clear (and I think it will soon) that the Obama administration has NO intentions of forcing GM into chapter 11 all of this talk will stop almost immediately. To foes of GM and the UAW chapter 11 is the ONLY solution and they are afraid that GM may prove it can get out of this without going that route. People like Sen. Shelby who are demanding bankruptcy chose to accept the notion that GM’s problems are caused by union labor and the way to get out of union agreements is to declare chapter 11 and void all promises to current workers and retirees.
Tom Wilkinson wrote:
“As Wagoner noted, a pre-pack could easily slide into Chapter 7 liquidation. That’s essentially what happened earlier this decade to Daewoo Auto in Korea, the last carmaker to try a bankruptcy reorganization.”
Would that be the same Daewoo that is now part of General Motors? In that case, didn’t the best parts of the company survive under your purchase, and the rest went the way of the do-do as it should have?
To date, GM has not been able to reach an agreement with the UAQ that will allow GM to survive. Nor have you reached the required agreements with creditors. In other words, in the three months since GM received it’s marching orders from the government, GM hasn’t been able to deliver on those items required for survival.
In my opinion, a pre-pack Chapter 11 filing is GM’s best chance at a re-org. If it doesn’t work, then, as was the case with Daewoo, somebody can come in and buy what is worth buying, the creditors can get paid whatever results, and the UAW can go stand in the bread line, and possibly get a job with whatever company picks up the pieces, at wage and benefit levels that the business can support.
“Since we believe we can accomplish the same things with a controlled restructuring out of court, why not pursue that path? What we do will impact many thousands, if not millions, of lives. Why not be as prudent as possible?”
As stated above, GM hasn’t demonstrated that it can accomplish the same things with a controlled restructuring. How long do we have to wait, and how much money do we have to shovel down the black hole until it becomes obvious that a Chapter 11 filing is the only way out?
What you do will also impact Rich Wagoner and his rubber stamp board. Keep the company out of Chapter 11, and they all keep their jobs, when they need to be thrown out in the most expeditious way possible. You folks had the chance to form something with Renault / Nissan. Carlos Ghosn, who knows how to save an auto company, could have been leading the charge and instituting true change. Instead, GM is still stuck with a CEO who only knows how to try to save his job.
What Rick Wagoner, his management team, and the BOD have done is no less repugnant over their rein than what the fine folks at AIG did, and got US$165M in bonuses for.
When GM overstated earnings for all those years, and had to restate earnings, how much money did those GM execs with bonuses tied to financial performance give back to the company?
The only thing protected by avoiding bankruptcy is the top jobs and a thin sliver of shareholder value.
GM will axe dealers (it’s already happening, GMAC is wielding the axe for you), same as bankrtupcy.
The investors have already lost 90% of their investment and having the shares written off hardly makes a difference (the more recent speculators, though… too bad for them), so a loss for the investors in inconsequential and bankruptcy makes no difference.
GM’s plan is to eliminate lots and lots and lots of jobs, same as bankruptcy.
Chapter 11 means that the process can be accelereated and GM can be rightsized quickly, rather than through painful and protracted negotiations that consume additional billions of taxpayer dollars (and the extra billions is just a further burden) and that new leadership will be installed.
No one I know believes that Uncle Sam will be on the hook for less money by letting GM drag the process along indefinitely; we’re all quite confident that this will be painful one way or another but a Chapter 11 helps to limit taxpayer exposure.
Tom Wilkinson,
The problem with GM’s viability plan is that several things make no sense… like selling off brands… who would buy them and why on earth would GM sell something to a future competitor who could
It is really obvious that GM needs to cut production short term, sell off their surplus inventory and then re-evaluate. Can the market really support 15 million vehicles a year or maybe a more reasonable 8? for the time being. Why wouldn’t GM set it up so that ALL their vehicles sell without sitting on the lots long. Reduce the supply so that the demand matches….
Reduce the number of models to help with this…. the answers are pretty obvious… and for these reasons it seems obvious that this is why GM needs to file. They probably can’t do the things they need to without first getting out of their now foolish contracts with workers, dealer etc….
I tend to agree with some of the pro bankruptcy people merely because it seems to be the only way GM can do what has to be done. That last 1% of what they need to do… the percent that can’t be done without filing is the critical thing GM seems to miss.
Just my opinions.
Good luck GM. I hope the tides turn soon and GM can get themselves out of this mess.
Excellent comments & clarifications Tom.
I read two articles by two separate journalists following Mr. Wagoner’s breakfast meeting, & they each left the reader with very opposite conclusions, one bleak & one hopeful. I was scratching my head as to whether they were at the same breakfast… or whether one was busier than the other indulging on free pastry …. or whether ones motive’s, perceptions, intentions & biases were different?
Regardless of the fact that one can make a pretty strong argument that, broadly speaking, unions created the current domestic auto industry ‘disadvantage’ with strong arm manufacturing blackmail…. I think that most proponents of bankruptcy as an option are accurate ONLY in a theoretical, text book sort of way.
What fails to be factored in, in every argument for, is the consumer’s reaction. If nobody is willing to purchase, then there is NO good solution ( & let’s not be naive enough to snark that nobody wanted to buy GM cars before. Chevrolet was & continues to be the top selling name plate in N. America. Check the facts, people did & still do buy more General Motors vehicles than any other). But ask yourself, would you buy a car from a company in bankruptcy?
The warranty on new cars represents a large portion of the value received for the price. The perception in a bankrupt situation is that a new owner MIGHT not have warranty in the future (witness Mitsubishi in Canada), it is affecting sales today with the persistent news reports debating it! This is very real. In today’s show rooms people are sceptical, & that is based on the innuendo. Ask yourself if you would want to buy a Saturn in the current state of affairs there?
Bankruptcy is not an option for the survival of General Motors. And realistically, the demise of General Motors would have disastrous consequences, economically & otherwise, around the globe. If one thinks that the current LOANS to GM are akin to “pouring money down a black hole”, what analogy would we use if there were no means whatsoever of repayment?
The core of this business is transportation. Check out the line up of new products from General Motors. The products under the Lutz years that have just arrived & will soon arrive are exceptionally competitive in quality & styling. Let’s take it from there & get people’s perceptions in line with reality. It may take a little time, she’s a big ship to turn around, but I believe if you look close, we’re already on our way there.
- A GM Dealer
Stan –
In the viability plan submitted to the U.S. Treasury on Feb. 17, GM announced that it would operate Saturn through the end of the existing lifecycle of its products (which are all relatively new). This is expected to be at the end of model year 2011. GM also announced that it would consider a sale or “spin-off” of the Saturn brand. This “spin-off” alternative is what Saturn is working on – the opportunity to return to its roots as an independent company centered around its retailing strengths. We hope to be able to provide more information on this concept in mid- to late-April. Stay tuned to IMSaturn.com for the latest info.
Click here to see a CNN-Money article about the spin-off concept.
Thanks!
Steve Janisse
Saturn Communications
“…like selling off brands… who would buy them and why on earth would GM sell something to a future competitor who could…”
Point well made Nate.
If someone thinks there is a market for Hummer, Saab, or Saturn and that they can make money after purchasing the brand from GM, surely GM must be smart enough to keep the brand and also make money from it.
If there is indeed a market for those brands why would GM sell them ~ if there is no market for those brands, why would anyone want to buy them?
Unless the UAW gives the concessions GM needs, and dealers do not put up a fight when GM needs to axe at least 1,000 of them, then GM will have no other choice but to file Ch. 11. As things become more evident, it’s the UAW and the extremely overgrown dealer network that is dragging GM down more than anything.
As I said for anyone reading this and belong to the UAW, there are 12,000,000 Americans out there right now who would take your job at the drop of a hat for half of what you make and demand.
It sounds like you’re mixing apples and pears. The story says “That’s a subtle but significant change from (Wagoner’s comments in) November and December.” But you’re mistakenly claiming the story is wrong because Wagoner’s comments were consistent with an appendix in a GM report last month.
It sounds like the WSJ got it right. Last year, Wagoner said bankruptcy absolutely wouldn’t work. Now he’s saying it might work, but is risky and isn’t the best option.
The reporters are just reflecting what they are hearing from the politicians they deal with on a day-to-day basis. And that news could not be good news for GM, if you are counting on Congress to bail you out. Perhaps you have been hearing about the backlash against the AIG bonuses? Well, there is now a full-fledged backlash against any more public assistsance for failed or failing companies. Good money chasing bad, etc. So bankruptcy may not be an option for GM, but the only option. Putting six cylinder engines in eight-cylinder muscle cars isn’t going to do it, and isn’t a plan for GM’s future. It will take all of the political might of the new Obama administration to get any new assistance package through Congress, and I doubt it will have the votes in the Senate to overcome the opposition. Southern Democrats have little reason to support this package and will back up Republican opponents. So if I headed GM, I would prepare the bankruptcy filing and prepare for reorganization, intsead of setting up blogs to counter what you contend is misinformation. The WSJ reflects the political mood that GM is responsible for the problem it finds itself in now, and needs to find a better solution than draining public funds.
Charlie H:
Bankruptcy would be financed by the US government. Don’t delude yourself into thinking that Chapter 11 is “free” for taxpayers. HAve you read GM’s plan? Doesn’t seem like it to me. They clearly lay out how much they would need to survive and how much Chapter 11 would cost. The costs of bankruptcy are quite high.
Someone said staying out of court protect the jobs of Wagoner and others. If Wagoner has agreed to work for $1 I question how its logical to suggest he wants to keep GM out of bankruptcy to save his “high paying” job. Do you guys really think Wagoner is saying these things because he so desperate to hold on to his $1 per year? Give me a break. Even many politicians have said that Chapter 11 is unlikely to succeed in this climate.
“The WSJ reflects the political mood that GM is responsible for the problem it finds itself in now, and needs to find a better solution than draining public funds.”
How would GM get DIP financing from any private source in this economy? They wouldn’t which means the money would come from Washington.
Todd and Edward –
If you go back to last fall, the Journal and many conservatives have said that bankruptcy should be considered as a mainstream alternative for reorganizing GM, one that is more likely to work than the out-of-court process we are currently engaged in.
We have consistently said, based on extensive experience in this area (including participating in very ugly bankruptcies at Daewoo Auto and Delphi) that we think bankruptcy is a very risky option, one that could easily spiral out of control into a full-blown liquidation of the company, an event that could severely damage all carmakers and suppliers operating in the U.S.
I don’t blame politicians and taxpayers for being unhappy with the state of the global economy. But just because you are mad doesn’t mean there is a quick or easy solution.
The Phoenix is a mythical creature. As the experience of the U.S. and especially Europe in the Great Depressions showed, allowing an economy to burn to the ground does not automatically make a shiny new one rise from the ashes.
Sheth writes, “HAve you read GM’s plan? Doesn’t seem like it to me. They clearly lay out how much they would need to survive and how much Chapter 11 would cost. ”
I have read the plan and it’s an hour of my life I’d like back, thank you very much, so that I could do something productive, instead.
The first two things that jumped out at me are, first, an unrealistic SAAR. Second, GM’s going to be profitable and have a positive NPV in terms of EBIT – Earnings Before Interest and Taxes. In other words, still unprofitable (where I come from, Interest and Taxes are things deducted from one’s Earnings).
It is now reported that GM’s bondholders are digging in their heels. Why is that? It’s because they think they can. As of now, DC is on the hook for whatever it takes. Put GM into chapter 11 and the bondholders suddenly find they’re in a different game.
And if the costs of Chapter 11 are uncertain, there’s always Chapter 7. I’d prefer to see Chrysler go there but we can’t support GM indefinitely and if they’re more ready than Chrysler, so be it.
–
Tom Wilkinson,
I object to the entire tone of this article. The WSJ reports what the WSJ reports and it’s simply part of the business landscape for GM. Whining about it (and, yes, your original blog entry sounds like whining) serves no useful purpose.
Frankly, it make you look like you’re all in denial about GM’s “viability.”
The fact of the matter is, GM has already failed. GM is on life support and without fast and generous action by the Feds some months ago, GM would already be in bankruptcy court. Nothing is off the table and nothing should be off the table.
If GM wasn’t on the rocks, the WSJ wouldn’t have a story at all. But you are and so they do. Stop complaining about how the story is being covered and just work to change the story.
And, while I’m at it… aside from further putting the squeeze on labor and suppliers, GM hasn’t made much in the way of detectable forward progress. Your marginal brands are still in business (not sold off or closed), you’ve still got dealers you don’t need and people are still very uncertain about where GM is going. Your viability plan shows a lot of magical things happening two years down the road but not much in the way of roadmap for travelling there.
Last night, I was watching TV and I got to see an advertisement touting the progress Saturn is making and emphasizing Saturn’s staying power in the market. Are you keeping Saturn or killing it? Make up your minds. The plan says you’re open to possibilities from others who might propose this or that… Well, there’s nothing like taking the bull by the tail and facing the situation squarely and honestly and letting somebody else make the important decisions. If you’re not killing Saturn, what are you killing? You recommitted to Pontiac on Fastlane a couple weeks ago but the viability plan calls it a very restricted niche operation. Is Hummer really dead? “Foreign Operations Restructuring ‘Comprehended?’” What is that? Are Opel and Vauxhall dead or alive?
GM has been unprofitable for a long, long time. The idea that you’re now floating around ideas for how to improve the situation is crazy. You should have been “comprehending” the restructuring of all your operations years ago.
Glad you brought this to people’s attention. The Wall Street and the current Republicans don’t realize or don’t care that their abandonment of the American middle class and the Midwest in general is the reason they are out of favor with the American people (and out of power for the GOP). President Reagan won with the blue collar vote, but the current GOP seems to have chosen to alienate the American worker, American business, and even the Republican wing of the Republican Party.
In November 2008, Dr. Paul Craig Roberts a key economic advisor to President Ronald Reagan, defended General Motors and the U.S auto industry, and wrote the government should prefer helping the American auto companies:
Paulson should rethink the automakers’ and FDIC’s proposals. A bank produces nothing but paper. Automakers produce real things that can be sold. Occupied homes are worth more then empty ones. [See "The Crisis Has Hardly Begun" by Paul Craig Roberts]
http://www.counterpunch.org/roberts11172008.html
The GOP Senators like Senator Shelby displayed an unbelievably hostile attitute toward American business and American jobs. Certain shameful GOP Senators like Shelby treated the auto CEOs incredibly rude. The Senators have attacked pay and private jets, and things that have nothing to do with the economic problems. With the possible exception of Senator Corker, the GOP seems out of touch on the matter. Sadly, the GOP has had decades to address health care costs and did little or nothing to address it when they had the power. During the fall elections, the people waited to hear one kind word from the GOP on fairer trade and American jobs – they heard almost nothing and the GOP was summarily thrown out of power.
As noted previously, the American auto companies have made healthy profits every year since 1955 except brief periods following war-recessions of 1971, 1981, caused by Vietnam , 1991-93 caused by the Gulf War, and the current Iraq war in 2002, 2006-09. Pundits don’t not want to hear the truth. Its as though the GOP learned nothing from the Vietnam war’s devasting impact on the U.S economy:
An end to the war would be good, not bad, for American business. War is, as we would say in business, a low-yield operation. —Louis B. Lundborg, Chairman, Bank of America
THE myth that capitalism thrives on war has never been more fallacious. While the Nixon Administration battles war-induced inflation, corporate profits are tumbling and unemployment runs high.[From “The Hidden Costs of the Vietnam War” Time magazine July 13, 1970]
http://www.time.com/time/magazine/article/0,9171,909470,00.html
During the last half century, American auto companies have prospered, except following the war- debt-recessions. Foreign automakers mainly made market share gains connected to these recessionary periods. Congress balanced the budget in the 90s. Ford was the world’s most profitable company in 1999.
Chapter 11 is waste of time and money in this instance. Its not an option. We like what GM has accomplished out of court. We’re behind GM and the U.S auto companies management and we’re not backing down. The bond holders and the union should get the deal done ASAP for their own sake and sake of the country and the economy. GM has great plans, great products, and great brands. We drive them. Another neighbors just bought a new DTS.
Did anyone see Neil Cavuto’s interview on FOX of a chief bankruptcy judge recently? The judge seemed to agree with General Motors’ management on the matter, so Cavuto cut her off and went to a commercial break.
Funny how congress and the treasury couldn’t throw money at AIG fast enough, but a real American company that made this country great is treated like an unwanted step child.
GM needs a wake up call. and $ 40 billion dollars from american taxpayers should never be a reality for a corporation. where do we draw the line? do we now give airline industries,credit card companies, and every other company asking for massive amounts of money to stay afloat.
That being said, their turnaround is about 20 years too late. the year Saturn was launched was the downfall of the entire company. that is when the turnaround should have occured. the $5 billion just to start the company which is a ton of money in the 1980s could have been re-invested in core brands and strategy.
GM didnt need the short lived GEO brand or Saturn and both have proven to be HUGE and expensive failures that severely cost the company in both profitability, marketshare, and sunk costs.
The days of Alfred Sloan and a 50 year old strategy for being an automaker are things of the past. there is no one who is intelligent that will agree with a 12 brand strategy for a company selling 5 lines of products. five lines of products should at most have 5 brands to attach themselves to.
I know people get emotional over brand names and certain brands but the reality of this global economy is that painful changes must be made in order to better compete far into the future. While it absolutely makes sense to close down Hummer,Saab,Saturn, GM wants to stop there and say it wont close anymore brands or consolidate.
That in and of itself makes no sense. having a stable of brands each with less than 2% of respective market share in the markets in which they operate is not helping GM at all. the layers of management and lack of focus also hurts the company. there are too many global brands for the company to have a cohesive strategy and focus.
If Opel/Vauxhall want to become independent of GM, which it sounds like dealers and management actually want, it would take a burden off of GM to have to invest in those brands who needed over $3 billion in support from the EU just to stay alive. I do know some people enjoy this brand, and GM had planned to align Opel and Buick as one in the same, the reality is GM is in crisis mode and all options at raising cash and capital should be on the table for viability well into the future.
If certain markets are bleeding money and needing substaintial investment, those are two things GM can not deal with at all currently. Even though GM has owned Opel since the 1920s it might be time to let that division split off into a separate operating company and deal with their own problems.
Daewoo and Holden as international divisons both do extremely well in their respective markets and remain a positive note for GM. Holden/Daewoo will in coming years be aligned with Pontiac, although Pontiac in the U.S will only carry about 4-5 imported vehicles not the entire line up of Holden.
Maybe the Pontiac name disappears in the U.S. and Holden/Daewoo/Pontiac become Holden vehicles, with a global management and reach. that is if consumers in the respective countries in which those brands operate do not mind a name change. a global company can actually grow marketshare through global brand name recognition and the economies of scale factor.
over the next several years GM could potentially shutter GMC as a brand. currently their marketshare is strong here in the U.S. but if things change for the worst, this distraction of a brand could be simply cut out of the GM family and allow it to focus on Chevrolet and Cadillac as their strength products.
The 3 brand channel of Pontiac-Buick-GMC seems to be working currently, and with updated products might further enhance the BPG channel’s standings, it remains to be seen just how much GM is willing to cut or consolidate in the spirit of actually savings their company. Good luck no matter what path they puruse. Hopefully the American taxpayer will get some of the money politicians readily handed over to this corporation back someday.
Alex D.,
GM is a very well run operation. As noted above, the debt problems in America occured. Let’s see them resolved and move forward. Brands have nothing to do with the present credit crunch problem. Don’t get too down, sale may turn around here sooner rather than later. Manufacturers need credit. Credit is just beginning to turn around. GM’s plan showed it need about that amount during the hearings last fall. Let’s just hope the bond holders and the UAW make a deal soon.
Its time to internationalize Pontiac as a brand. Holden should become Pontiac in Australia too. Australia buys American. Pontiac has fantastic imagery. GM American brands and classic names add high value to GM products in America and around the world. Chevy gains in Europe are outpacing Opel.
I do agree that Saturn products should have been invested in GM’s core brands and that it would be a prudent to close Hummer, Saab, and Saturn for the present. However, GM can create value at its dealerships with creative names. Perhaps Corvette could offer fashionable products at Chevy as a brand within a brand. When the economy picks up GM try some creative things.
This is in the New York Times….
April 3, 2009
G.M. Willing to Consider Bankruptcy
By MICHELINE MAYNARD
DETROIT — General Motors stated in a regulatory filing to the Treasury Department on Thursday that it is prepared to file for bankruptcy protection if it cannot restructure out of court.
It echoes what G.M.’s new chief executive, Fritz Henderson, said this week, but marks the first time G.M. has officially disclosed to President Obama’s auto task force that it was willing to consider such a step.
In the progress report included in the regulatory filing , G.M. said it continued to “strongly believe” that an out-of-court restructuring would be the “highest value outcome” for its customers and the United States.
“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,” the company said.
Tom – Great that you are taking on WSJ. Their actions are shameful.
What this all comes down to is CLASSISM.
It is easier to break down the guys who make the Caddies than ask the tough questions of the guys on Wall Street who are driven around in Caddies.
It is time we, the middle – class, stand up and be heard. We don’t need to break the UAW. We need to break the the congressmen and women who overturned Glass-Steagall. We need to break the bankers and quantum mathemeticians who created these ridiculous financial instruments. We need to break the CEO of Countrywide, AIG etc. who doled out loans to people (and backed them) knowing they wouldn’t get paid back.
We need to go after the greed on Wall Street.
CNN gave the result of a survey on thursday saying that 76 % of poeple want to see GM face
bancrupcy. It is a shame ,letting go down the drain such a big part of the American heritage .
Poeple have a tendency to put everything in the same bag. GM is not the problem it is what is
inside GM . The corporate governance failed to applied the drastic measured needed in the
80s so now it is a real big mess. POeple saythe UAW is too strong,butGM made them strong
by giving it all they wanted like a king child.
Now to all those 76%, hourrah we let GM down no more problems.And you believe it.
Not so fast .Who is going to sell you cars now,Ford ? Forget Chrysler ,if GM goes
Chrysler is long gone.
i dont think the Americans want to drive a Peugot .Ten we are left with th asians…
All the roads in U.S filled with toyota and honda… let me laught.
and then if the decide to build those toyota and honda in China,what do we do .We do f…all
because they owne the market
Have a nice day ( excuse my english)
Pam, I despise what Wall Street has become as much as the next person but what does that have to do with GM’s problems? Let’s stop pointing fingers at the boogeyman and start accepting the fact that while all automakers are hurting, GM is hurting a LOT more and it’s not just because of legacy costs. The GM folks I know are delusional — they had it wrong with hybrids and continued to pour money into expensive fuel cells, criticized Japan and Korea about fair trade issues when we all knew GM cars couldn’t compete with Honda and Hyundai and continue to push SUVs and pick-ups into showrooms even to this day. Don’t even get me started with the Camaro. Yes, I know all the planning was done years ago before this recession but I see a huge SUV and a sports car on the landing page of this blog but no compact. GM still doesn’t get it.
Mr. Wilkinson, with all due respect, the rest of us (and the WSJ) have always known that bankruptcy was a strong possibility even though you and Mr. Wagoner continue to live in fantasyland. I know you’re a PR man but after this post, I’m interested in hearing what you have to say about Mr. Henderson’s position on bankruptcy. Fritz seems to agree with the WSJ; I think you owe the WSJ an apology. Open your eyes in the future and don’t just be a shill for the boss. The boss is NOT always right…