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GM CEO: Bankruptcy now “probable”

04/17/2009, 2:49 PM

By Andrew Ganz

Speaking on a conference call with reporters this morning, General Motors CEO Fritz Henderson confirmed that a bankruptcy filing for the struggling Detroit automaker is a probable, but not preferred, outcome. GM is under a tight deadline to restructure by June 1 or else it will lose access to low-interest government loans.

“Our preference remains to accomplish this outside of bankruptcy,” Henderson told reporters during the conference call.

“I felt several weeks ago that it would be more probable that we would need to go through a bankruptcy process. I certainly feel that way; that continues today. I wouldn’t be able to hazard a guess as to what the probabilities would be.”

Henderson said that GM isn’t resting, however. The automaker is working hard on its restructuring plans, which it could make public as early as later this month.

“Contingency planning is under way,” he said. “We are on several tracks.”

GM hasn’t launched serious discussions with its unions since crosstown rival Chrysler LLC is under a far more strict deadline. Chrysler and its unions must reach an agreement with Fiat by the end of April or it will lose its access to the government loan program.

Henderson said that the automaker will begin ramping up negotiations in May with the UAW and CAW.

Focus on core brands
Henderson also addressed the rumor that GMC will be discontinued by stating that Buick and GMC are highly profitable for the automaker and thus unlikely to go away, despite slipping Buick sales in North America and the fact that GMC’s product portfolio is essentially redundant. Henderson did not comment on Pontiac’s future.

A decision on the Hummer brand is expected by the end of April, a month later than GM had previously led the media to believe. Henderson confirmed that there are three interested parties, though he did not give names or offer specifics.

Opel likewise has seen some significant interest from up to six outside parties seeking a stake in GM’s European brand. Henderson said GM will make an official announcement in two to three weeks.

GM will not sell its ACDelco division, one of the automaker’s most successful arms – and one which has been subject to much interest from potential buyers.

“It’s a highly profitable business for us, it’s creating good, strong cash flow,” Henderson said. “Our conclusion was that we weren’t going to get the value for the business. We’d rather keep it and grow it.”

In addition to accelerating job cuts to reduce spending, Henderson said that at least 2,000 dealerships will close in the near future.

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04/17, 2:54 PM

posted by:

The Stig

Duh, that was obvious.

04/17, 3:14 PM

posted by:

idrinorbarsaku

of course bankruptcy isn’t preferred retard!!! that doesnt mean you wont be going into one!!!

04/17, 3:21 PM

posted by:

mikemacnn

04/17, 3:26 PM

posted by:

JakeK66

If ACDelco is so successful, maybe they should make it a car brand? Joking aside, it’s interesting something in GM is doing well.

04/17, 3:27 PM

posted by:

F50

No Sh*t

04/17, 3:32 PM

posted by:

shaver

Many divisions within GM are very succesful. MIsguided leadership and legacy costs are about all that seperates GM from Toyota.

04/17, 6:06 PM

posted by:

johnnycanuck

Uh, no. Probable might be better used when evaluating the chance of there being intelligent life on other planets. I for one believe we have already been visited in the past. And if they do return I can only surmise how shocked they’ll be to discover the world no longer revolves around General Motors.

04/17, 6:27 PM

posted by:

teahead

If we let GM go bankrupt, then we should have let these banks and big companies like AIG go belly up too.

04/17, 9:34 PM

posted by:

Jax

Chrysler isn’t sure if they will file bankruptcy, so I wonder if GM really will?

04/17, 11:02 PM

posted by:

DrFill

Shaver
Don’t forget 3 decades of selling monkey crap
I could go over the other differences, but I have to go to work on Monday
DrFill

04/18, 2:26 PM

posted by:

Borat

I love the argument that GMC and Buick are highly profitable: if that the case lop off all others and don’t be bankrupt!

04/18, 2:49 PM

posted by:

Lariat Luxury Locomotive Liner No.3

For the uninitiated who are not familiar with how bankruptcy works on a large scale as GM here is a decent article: A Quick Bankruptcy for G.M.? Not So Fast. Those of us who have dealt with large scale bankruptcies know that GM should have done so from the get-go as matters would have been well underway to sorting out the damage. Now, as it stands, GM has duped the taxpayers into holding the largest amount of financial responsibility—something that should have never occurred. Executive management at GM deserve being placed on trial for pulling such shenanigans at taxpayers expense. The reality that GM will survive, and be viable in the time needed, is close to nil.
.
Is your wallet feeling lighter…there’s a reason…you’d better get used to it.

04/18, 4:45 PM

posted by:

BuyUSA

Dr Fill: “Don’t forget 3 decades of selling monkey crap”

DrFill, our 23 year old 1-family owned Buick with 216,000 miles (never rebuilt) disagrees with you. So does my Uncle’s 1985 Silverado pickup (also original, never rebuilt 350 block & tranny) with almost 300,000 miles.

What is your definition of “crap”? Is it what you perceive through your own personal bias, or does it come from years of experience driving GM products? Please enlighten me.

04/18, 6:46 PM

posted by:

jayjc08

BuyUSA- The doctor here doesn’t use logic, neither does he use a cane or work for Lisa Edelstein of House fame. Ruling that out, his illogical thinking isn’t gonna get you logical answers.

04/18, 7:54 PM

posted by:

jdasch1

He will tell you though, that if GM ran their company like Toyota, they would be #1 like Toyota….uh Volkswagon…uh… well like the almighty Toyota…

04/19, 3:11 PM

posted by:

TomF

@BuyUSA: By “crap” I expect Dr. Fill was referring to the Chevrolet Vega, Chevrolet Citation, Cadillac Cimarron, Olds Omega, Buick Skylark, Olds Achieva, Buick Reatta, Pontiac Fiero, Chevrolet Celebrity, Pontiac TransSport, Pontiac Aztek, Cadillac Catera, Pontiac Sunfire, Chevtrolet Cobalt, Saturn Ion, Chevrolet Uplander, Saturn Relay, Pontiac G3 and all Daewoo rebadged cars, and the Cadillac Allante. All those GM products were crap.

You got a good one. Not enough people did, or GM’s market share wouldn’t have plummeted as it has. It has collapsed owing to a preponderance of crap.

04/19, 5:07 PM

posted by:

Borat

LLL3, Tom you guys nailed it right.

04/19, 7:14 PM

posted by:

BuyUSA

Tom, OK. Thanks for clarifying DrFill’s remarks. I think most of us can agree on those cars mentioned above. Only a fool would categorize something like a Grand National under the “monkey crap” column.

04/19, 7:17 PM

posted by:

BuyUSA

But hey, didn’t those Reattas have those really cool (at the time) talking digital dashes? Or maybe I’m thinking of the Chrysler Laser/Daytona?

04/19, 7:59 PM

posted by:

jayjc08

BuyUSA- Yes, they did.

TomF, I would have to disagree with some of your list. For what the Cobalt does it does a great job at. The Pontiac Fiero was just too short lived, but was an amazing car at the time. If you want to talk about reliability, I remember nearly all problems being with breaking connecting rods in the 2.5. Reason for it? People didn’t change their oil. If you leave oil levels low, somethings gonna break. The older GM Minivans, the Trans Sport, Lumina and others, aside from having too many clones and underpowered engines were great. You don’t have to like the styling. The Reatta was another surprisingly nice car, but just sold too poorly (shouldn’t have been a Buick). And lastly the Aveo’s probably one of the best cars in it’s class, although it’s not meant to suit any tastes aside from a budget buyers. For that reason, I wouldn’t consider the G3 a crap car, just crap marketing.

Oh, and the Aztec. Horribly ugly vehicle, but otherwise it’s very nice. Huge amounts of space, nice interior and creative options. Oh, and had the highest customer satisfaction of pretty much any recently recorded vehicle. Only problem? Looks. You need to look deeper than the skin.

Otherwise, you can keep all the rest of the crap on there. Add pretty much every GM sedan from the early 80’s to 2005 aside from the first gen. Aurora, every SUV and pick-up aside from the Syclone and the Silverado, and… any further and it would be opinionated.

04/20, 10:19 AM

posted by:

injunraiv

Having listened to Fritz make the headline comment directly, I would like to point out that what he said was bankrupcy was actually more probable a couple fo weeks ago, inferring that it is actually less probable now. Typical media bull**** getting it backwards to sell newspaper advertising.

Gee, why are where we are again?

04/20, 10:29 AM

posted by:

TomF

@jayjc08: you make some points, but what I recall about the Fiero was that (A) it caught fire a lot, (B) its plastic panels faded and bleached out in the sun, and (C) there was a Playskool spare tire but, in the event of a flat, noplace to store the removed full-size tire except for the interior, so your prom date could end up with a dirty, warm steel-belted radial in her lap instead of you. The car belongs in the design hall of shame on that point alone.

04/20, 10:44 AM

posted by:

injunraiv

“it caught fire a lot” is a stretch. they had the potential to catch fire if you ran them low on oil and performed certain maneuvers – IIRc an extended medium to high G turn? There were very few fires, but the stigma lasts on…

04/20, 6:13 PM

posted by:

jayjc08

TomF- I didn’t know that about the spare tire! However, I did know about the fires and fail rate. Something like one percent, which sounds low but is high when your talking about fires. I say though just watch your oil- if you don’t then somethings bound to fail.

Oh, and I did forget the plastic panels. All Saturns, and the minivans I mentioned had that problem as well. A big let down, but there are now spray cans with a solvent to fix that.

I’ve never heard about G turns causing fires though, injunraiv. The problem was due to the connecting rods breaking and oil leaking out, and it doesn’t take TOO long to break a connecting rod, but not a few seconds of oil “fade away” from high G-forces. You might be on too something else though…

04/20, 6:44 PM

posted by:

injunraiv

I’m just going by memory, and it’s more than 20 years ago. It was low oil and a certain type of maneuver, though. I’m pretty sure.

04/20, 6:46 PM

posted by:

injunraiv

Interesting info from Wiki:

“Total production of the Pontiac Fiero over all 5 years was 370,168.[4] Regarding the number of cars which suffered an engine fire, we have the following two references, one from NHTSA and one from Pontiac Division.

“The National Highway Traffic Safety Administration…said it has received 148 complaints regarding [Pontiac Fieros catching fire] including reports of six injuries…Low levels of engine oil may cause a connecting rod to break; allowing oil to escape and come into contact with engine parts. The oil would catch on fire when it contacted the exhaust manifold or hot exhaust components…David Hudgens, a GM spokesman in Detroit… said, ‘If you ran out of oil, and then that coupled with some aggressive driving perhaps, and maybe not changing the oil very often, you end up with a broken rod, and that’s where the connecting rod came in, it is still the owners responsibility to check the oil.’ “[5]

“GM tests have shown that running these 1984 cars with low engine oil level can cause connecting rod failure which may lead to an engine compartment fire…Pontiac is aware of 260 fires attributable to the condition, along with ten reported minor injuries.”[6]

The larger of the two reported numbers of cars with fires (260), amounts to 0.07% of Fieros produced. The fires affected almost exclusively the 2.5 L engine, and mostly 1984 models. (Note that there may have been additional occurrences after the above reports were published.) The primary cause of engine fires was a batch of poorly cast connecting rods which failed when the oil level became too low. The faulty connecting rods were produced in GM’s Saginaw plant. The theory is that the sports car styling attracted buyers who would drive the car hard, most notedly over-revving the engine. Another factor was the misprinted three quart oil capacity, the actual oil capacity was 4 1/2 quarts but a misprint in the dipsticks and the owners manuals led to people running three quarts and perhaps a leaky valve cover gasket which would allow the oil level to decline over time to a dangerously low level. If the proper oil level was not maintained, the bearings could seize, snapping the porous castings of the connecting rods resulting in punched holes in the engine block, thus spraying oil onto hot exhaust components where it could ignite.

Most vehicles existing today have been serviced by GM during one of the safety recalls on the car. On the fire-related recall, shields and drip-trays were added to prevent leaking fluids from contacting hot surfaces. The presence of drip shields between the engine block and the exhaust manifold are a good clue that the car was retrofitted. The addition of the longer AC Delco PF51 oil filter and a re calibrated dipstick added extra oil capacity to the oiling system, and enabled running 4 quarts of oil in the crankcase instead of 3 quarts to help prevent oil starvation to the rods. Certain vehicles had their connecting rods or entire block replaced.

Another theory is that some fires may have been due to the engine wiring harness being located in the center of the engine bay above the exhaust manifold, where the heat could theoretically melt and ignite the wiring. Also, the 1984 model had a magnesium grille over this area. In later models, this was improved to some degree with much better heat shielding wrapped around the wiring harness.

A third cause of fires was due to the method used to cast the engine block and possibly overtorqued head bolts. Some engines developed cracks in the block that would leak coolant and/or oil, sometimes accompanied by broken head bolts directly above the crack. The leak would spray coolant or oil, the latter of which could result in a fire if sprayed onto the hot catalytic converter and exhaust manifold located at the front of the engine compartment. This was believed to be the cause in several cases.”

04/20, 6:49 PM

posted by:

injunraiv

So isn’t it interesting that all of this engine fire reputation that Fieros had was from .07% of the total build, and all from 1984 4 cyl models? Yup, total garbage… :rolleyes:

04/21, 4:08 AM

posted by:

fan

back to the article: is this guy really thinking hes spouting out wisdom to the masses?
someone better tell him right away the public knew GM was running into this Months and Months ago… do they EVER listen to their target group? or do they just make unwanted opinion polls to flush them down the drain (like they do with tax-money right now)

04/23, 10:28 PM

posted by:

jayjc08

injunraiv- Yeah it’s true. They have more fires with Explorers and 4Runners than Fieros, but the stigma still remains. I just thought it was a notable Pontiac vehicle.

 
 
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