Excellent post. Basically some of the same things others have been say all along, yet a few alarmists are watching the media hype machine and are believing GM is going to collapse completely. THAT ISN'T GOING TO HAPPEN!

GM folding would have an impact on the economy of biblical proportions. We're not talking about just North America folks, the entire world market would be effected by such actions. There is no way this new administration will ever let that happen. GM will get the low interest government loans long before they ever file for bankruptcy, and that's the bottom line.

 

I agree with the above.

Let's put this into cliff's notes...

If GM stops...

• All employees will be out of a job. Staggering number.
• All suppliers would be immediately out of business, and all employees would be out of a job. This number is immense and ripples into corners you would never think of. One example is this very site. No vendors to cover hosting costs...site goes down, hosting company loses money. Multiply this by 1,000 sites and hosting companies need to cut back. More people out of work and no jobs will be out there. This is just one small example that can be folded a million times over.
• What about Ford? Some suppliers are customers of both GM and Ford and those suppliers and employees would be out of business immediately as well. So Ford would immediately be severely impacted...and would possibly follow GM...and that number of people out of work would become staggering.

So, to summarize...a seriously huge percentage of the US would be not only out of work, but not paying taxes and needing government assistance to live. But they will not get it with no one paying into the system...

So...well...

I am thinking that it would get very bad, very fast and the very last thing on anyone's mind at that point won't be cruising in a new Camaro. It may very well be not having to kill and eat each other to stay alive. Kinda funny...but perhaps true? I am no doomsday prophet nor am I trying to be, but this is to illustrate my point that GM collapsing simply cannot happen.

 

Im not keen on a hand out but I do hope they get the loan. Im not sure people realize the real world consequences of whats going on. Yes the malls are packed but they are packed with loiterers not buyers. I think the lesson that should be learned from this downturn is, enjoy yourself but dont live beyond your means.

 

It seems like every time GM reports they Quarter losses there are layoffs to go with it. If they were to go through some kind of bankruptcy half the jobs will be lost anyway. I don't think GM will fold but by the time it’s all said and done GM will be a significantly smaller company. It just seems they cannot stop the bleeding. A Bailout/loan is just putting a band aid on the situation. To turn losses into profits a major restructuring plan must take place.

 

A smaller reorganized GM is not a bad thing in the long run. Many companies have gone this route and emerged much stronger.

 

With 7,000 "at msrp" orders on the books im willing to bet the dealers themselves would fill the lines and make the cars if they had too, lol.

 

Not only that, but other companies, even toyota and honda would be affected. Even when Delphi was still part of GM, they built brake pads and other parts for toyota, BMW uses GM transmissions, almost every major automaker in the world would be affected in some way by a GM collapse.

I agree. There is simply no way the government can let GM die. The consequences would be catastrophic.

 

Just happened to be watching the news this morning, this is a bit of an update to everything stated here...

Democrats on Saturday (today), have asked for help for the failing auto industry.

Obama has clearly stated, that helping out the auto industry is a main priority.

The only reason Ford is not in the same situation, is that last year they mortgaged ALL of their factories.

My point is, no one on this site, aside from a few GM higher-ups, know exactly what GM can and can't do. It is absolutely ridiculous to throw around numbers and speculation and state it as fact.

We live in the information age. We know more than we should, and more than we need. And that information changes daily. All that has done, is turn everyone into a self proclaimed expert.

I was 20 years old in 1991, the last time we experienced a serious recession, the last time comsumer sales almost sank numerous companies. I am not going to sit here and claim to give you an economics lesson, I can't. But I do know that consumer spending dictates life or death for companies, the same way it did in 1991, the difference... everyone knew within 5 minutes this time.

The majority of people are still making the same wages they were two months ago, but suddenly they can't afford the 5 extra Christmas presents for their kids, because they got a financial update on their iphone that says the economy is in the tank. They stop buying products which drives the economy down even further, all because of something that may not even affect most people.

There is a quote (I always forget where it's from) that says something like, -A person is smart... people are dumb.

And if you are thinking that the economy is not affecting me... think about this. I came into a bit of money when I turned 18. That money has been tied up in stocks for almost 20 years. I have lost approximately $300,000 dollars in the last 5 months. The money that I have lost, is twice as much as I initially invested, 20 years ago. I am not the least bit worried about that money, I still go to work everyday, earn a paycheck, and provide for my family... Life goes on, end of story.

/end of

 

And if GM goes under or files for bankruptcy, who is responsible for the pensions of the retirees and workers?
The government is with the pension guaranty system.
That system is already in bad shape now and could never be able to absorb the blow a dead GM would cause.

Government help is the only answer. For the Big 3 AND the country.

 

Panic and speculation doesnt resolve anything. Every single recession that we have had we have pulled out of in less than a year. Sit tight,
Everyone pop a Valium and RELAX.

 

The question is: Will GM cut back enough before they get a government rescue loan to make themselves profitable when sales come back?
Obama has stated that he wants to help the 3 domestic automakers, but he wont take office until Jan 20, 2009. Current cash burn and slow sales for 3 more months and GM could be at minimum cash reserves by the end of Jan 09.

 

Good post, IMO.

 

Personally, I would rather have a car built AFTER the holiday season, if you know what I mean.

 

No one wants to wait another minute. It is not like they are sitting there with the plant all lit up and workers standing at their stations and someone is snickering with their finger hovering over a big red button saying, "I wonder how long we can make people wait and complain? Let's push it! Nah...nah...let's make them wait a few more months to upset them more. We'll push it in February. *giggle-giggle*"

 

I think GM needs to boot the union out. Paying people over $30 per hour to fill up a windshield washer reservoir on the assembly line is obviously wrong. I'm sure the union members will defend their gravy jobs by claiming they work hard and earn every penny, but I don't believe it. I've been a machinist for about 30 years now. In both union and non-union shops. My personal opinion is that union shops are some of the most inefficient operations I've ever seen. I have personally been told by union members to work slower or face the wrath of other union members. I've had bolts loosened on set-ups because I was multi-tasking (a big no-no). If one machinist's machine is broken and another machinist calls in sick, the machinist with the broken machine can't run the sick guy's machine because it's against the rules. He reads the paper all day instead. The only team spirit in union shops is the labor team against the management team. Offering ideas for improving production are frowned upon by labor. Pay is based more on seniority than ability.

Smaller shops that depend on everyone pulling their own weight would go out of business if the adopted the union way of doing things. It's like socialism in a capitalist game. It makes it harder to compete. Productivity goes down. Costs go up. Slackers keep their jobs. Hot shots are held back.

People with valuable skills have nothing to worry about in a non-union shop. The pay and job security are fine. People with skills can always find work. See here:

http://files.shareholder.com/downloa...2008_FINAL.pdf

Businesses should not be responsible for paying welfare to unqualified or lazy workers. It's also bad for morale when hard workers see lazy slobs doing nothing all day and getting away with it day after day. Trim the fat.