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GM readying ‘Plan B’ in case Detroit bailout fails

11/25/2008, 12:44 PM

By Drew Johnson

With federal bailout money up in the air, General Motors is developing a ‘Plan B’ in case funding doesn’t come through. The automaker has already drastically slashed spending, but more cost-cutting measures could be on the way as GM tries to survive the current economic downturn.

In order to stave of Chapter 11 bankruptcy filing GM has already sold off part of its stake in Suzuki, announced several job cuts, delayed new product introductions and cut back production, particularly of large trucks and SUVs. But those measures might not be enough if the Detroit-based automaker doesn’t get help from Capitol Hill soon.

If the Detroit bailout doesn’t get passed by Congress next month, GM has a Plan B waiting in hand, according to Automotive News. Plan B would mean further and deeper cuts, including delaying payments to suppliers, announcing more white collar job cuts, slashing marketing spending and possibly even cutting spending on research and development – a move that would severely impact GM’s future product offerings.

Although GM’s Plan B would probably be enough to keep the company from going belly up in the short term, it is by no means a way to carry the company into the future. GM could devise all the backup plans it wants, but it sounds like the only thing that will keep the automaker in business is some kind of federal aid.

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11/25, 12:52 PM

posted by:

johnnycanuck

That would be ‘b’ as in ‘belly up’?

11/25, 1:07 PM

posted by:

HoosierHero

teehee!

11/25, 1:14 PM

posted by:

Z06ified

Regardless, it’s always a good idea to have a Plan B.

11/25, 1:26 PM

posted by:

procrastinate now

It’ll be a long quiet drive back to Detroit if Plan “A” doesn’t stand for “Allocation” of Funds! And, the quiet drive won’t just be the result of those Hybrid engines.

11/25, 1:39 PM

posted by:

idrinorbarsaku

wow!! just now they start thinking of a plan b?? i agree with johnnycanuck…belly up is what it really means in the long run

11/25, 1:43 PM

posted by:

nowei

I was unaware they made a hybrid Gulfstream

11/25, 2:01 PM

posted by:

johnnycanuck

…yeah, it runs on Jet A and BS.

11/25, 2:08 PM

posted by:

Mike the loser

I have a great plan B———Fire Wagoner

11/25, 2:16 PM

posted by:

Impulsive

Took the chimps this long to address the matter … they should stock up on gold and save themselves.

11/25, 2:27 PM

posted by:

ryanpstr

Let’s not kid ourselves, plan B is Bankruptcy.. WIll this happen? I highly doubt it.. You can’t piss people off outside in that parade.. somebody has to pay for their gas bill on the way back..

11/25, 2:37 PM

posted by:

Borat

Wait, last week there was no Plan A, today there is Plan A & Plan B? I am sure it is the same old plan: suck up as much as possible from Mother Ship while cash is available.

11/25, 2:37 PM

posted by:

howsmydriving

“slashing marketing spending….” What?!? No more excessive multi-million dollar endorsement contracts for athletes? The amount that GM has spent on marketing is truly absurd. Toyota and Honda have shown that you can gain market share with a more restrained approach to marketing if you let the quality of your products speak for themselves.

11/25, 2:48 PM

posted by:

procrastinate now

Next year it’ll be Plan “C”, “Cough Up Some More Coin. The reasoning will be since they were already given $25B, if you don’t give them more, that money will have just gone to “waste”.

11/25, 2:57 PM

posted by:

400horseSS

How about asking the Gov for retiree pension and healthcare help, thats the problem, the big 3 will not survive without help for the retirees health, put the retired auto workers on some type of medicare program, honestly thatsthe only way I see them surviving.

11/25, 2:59 PM

posted by:

400horseSS

You guys better hope they dont file bankruptcy, then the government will be responsible for all cost.

11/25, 3:02 PM

posted by:

beemerdude

Why is everyone so joyful over GM’s woes? I don’t think you guys get it… GM going down will take what’s left of this economy with it. And yes, that could mean YOUR job too.

EVERYONE WILL SUFFER THE CONSEQUENCES.
Don’t be in such a rush to see GM fold. You will not like the results.

11/25, 3:11 PM

posted by:

F3INT))AP3X

Where is the article about Ford’s plan B? O yea they aren’t completely in the **** like GM I forgot. I hope GM comes back but I hope they take second spot next to Ford because they don’t deserve to come back as big as they were. Ford has been playing it smart and actually reinventing themselves while GM has been toiling away on either bad models or models that get more press than sales and now it has come back. So like I said I don’t want GM gone but I don’t want them to hold the glory position they once did because it is Ford’s turn now.

11/25, 3:22 PM

posted by:

Sfiveten

GM is too big for it’s own good. Their business model is built on reacting to market trends rather than producing market trends.

Their shell of a company has been over inflated for too long. It’s time to bring them down to realistic operations. The other Autos will pick up the pieces but GM will be half of what it once was. Maybe from there they can get back to making cars that change the rules and sell themselves.

B for belly up indeed.

11/25, 3:39 PM

posted by:

NRG

Beemerdude is absolutely correct. All of you have read the numbers posted on here by LeftLane News if GM goes down. You think times are tough now? Just wait and see what happens if GM goes under. Do you not realize how much they, along with Ford and Chrysler, are intertwined with our economy?

If GM, Ford and Chrysler survive, they will be a shell of themselves. They need to get the old management out if they do survive. It’s what has gotten them in this mess in the first place. If it’s broken, you fix it.

11/25, 3:44 PM

posted by:

bcjohnso99

The gov needs to make unions illegal. Companies should be able to pay whatever they like in terms of base pay and benefits. Somehow the import transplants are allowed to do it yet the big 3 are shackled to the union.

Education and training are ubiquitous. Anyone not capable of finding themselves decent employment does not deserve it. Is this not the core of capitalism?

If the big 3 cannot survive on equal terms, then they should fail (capitalism at its best) but until then, the gov owes them support for making laws that allowed the unions to get too strong.

11/25, 3:47 PM

posted by:

yarddog82abn

LOL plan “B”
They will get there money, it’s all a show. Do you relay believe that the feds will let them go under? The banks got $700 Billion! Credit cards are now going to get $8000 Billion! Come on now! Plan “B” who are you kidding?

11/25, 3:48 PM

posted by:

yarddog82abn

I meant to say $800 Billion, my bad…

11/25, 4:13 PM

posted by:

simonc

Whats the matter with some of you guys??
Why in the world do you want GM to go down??
You guys either are too young to understand economics or your a bunch of dumb-ass’s.

11/25, 4:39 PM

posted by:

TomF

Plan B: close Pontiac, Buick and Saturn, and sell Hummer and Saab to the Russians.

It’s not that anyone wants GM to go down. It’s that GM as built today is definitely going to go down, and nobody on the inside is willing to make the hard call — and decide to save half.

11/25, 4:41 PM

posted by:

americancarssuck

Judging from my name its easy to see I don’t have much love for the Big 3. For years I’ve seen nothing but sub par crap coming from them. Chrysler was was left in the gutter by Daimler, keeping them from producing a decent luxury car. Hard plastic is not luxury. GM instead of focusing on one car overproduces and part shares. Where is the necessity for an Enclave, Traverse, Outlook, and Acadia. Now not producing the Cruze is an even bigger dumb move. Not to mention their interest in emerging markets like China. A new factory there but no new jobs in MI? BS. Nice one Rick. Ford however has experienced the biggest change up in the positive direction. Kinetic design for the line up is showing a wave of good looking products. They may run out of cash before they can turn a profit but Go Ford!
Living in Detroit is already depressing enough and for a city with so much unseen beauty. Everyone should hope things pick up for them all or southeastern michigan will fall into a black hole. No telling how all suppliers and countless other industries will be effected.

11/25, 4:45 PM

posted by:

murderedout

SLASH SPENDING? I’LL SLASH ALL THOSE CEO’S NUTZ OFF! THEY NEED TO SLASH THERE OWN INCOMES. EVERYTHING IS ABOUT MATERIALISM, AND MONEY ANYMORE IN AMERICA, IT’S SICK.

11/25, 4:50 PM

posted by:

murderedout

american, all vehicles have hard plastic, yes, even Maybachs and Rolls Royces. You sound like you need a Violin.

11/25, 4:57 PM

posted by:

sj79

“Toyota and Honda have shown that you can gain market share with a more restrained approach to marketing if you let the quality of your products speak for themselves.”

Thats why Toyota spent 9 figures advertising the Tundra in 2007? give me a break. Every company advertises.

11/25, 5:01 PM

posted by:

complinitor

May 2009 headline:

TOYOTA MOTOR CORPORATION PURCHASES CHEVROLET, CADILLAC AND HOLDEN.

11/25, 5:04 PM

posted by:

procrastinate now

I do not want to see the Big 3 fail. But, I believe bad behavior should be disciplined, not rewarded. If they get the bailout, and I think they will, and they continue with the current top management and the UAW, when they end up in the same position hat in hand six months from now, I say f*** ‘em.

Insanity is defined as repeating the same behavior and expecting different results. Producing one or two good products in limited quantities and a bunch of useless crap in mass quantities, is hardly a recipe for success or profits.

I want to see them get past this but, they have to show that they want to get past this and PROVE it.

11/25, 6:57 PM

posted by:

beemerdude

Yes, the U.S. companies are definitely to blame for being short-sighted and wanting to ride the huge profits of SUVs and trucks until the end of time… But don’t be so quick to put all of the blame on them for the dire situation they currently find themselves in. When the economy was rolling, THEY WERE SIMPLY GIVING AMERICAN CONSUMERS WHAT THEY WANTED… huge, gas slurping SUVs and trucks. Americans time and time again showed their preference for these environment killers and the U.S. auto industry happily obliged. Sure, the Asians got into the act too, but the BIG contrast here is that they never lost sight of their small, fuel efficient models in their lineup – even when the big 4WD SUVs were all the rage.

But now, everyone is rushing to hang the U.S. companies. It wasn’t THAT long ago that you were lining up to buy their products. But now that the large, fuel hungry vehicle has fallen out of favor you are really quick to throw darts at the American auto industry.

WHO’S REALLY TO BLAME HERE? It’s time America shouldered some responsibility for this. It wasn’t that long ago that the nation couldn’t get enough of the SUV/truck craze. But boy, we sure as hell like pointing fingers now that the economy has tanked and fuel efficiency is more of a concern.

11/25, 7:20 PM

posted by:

TomF

But during the past 40 years, as the Big Three were “simply giving American consumers what they wanted,” their market share fell by 50 percent. If they were really so good at giving American motorists what they wanted, they would have DOUBLED their market share, not watched most of it dribble through their fingers and over to the Asians.

In fact, since 1970 a very large, perhaps fatally large, percentage of American carbuyers decided that Big Three products were NOT “what they wanted.” It’s more than the gas-guzzler stereotype. The Big Three have consistent misread public option, fought innovation and efficiency, and dismissed the consumers who walked away from them as eccentrics or idiots. It wasn’t THAT long ago that Detroit execs did not think inexpensive cars should even exsit. “The consumer already has cheap cars to choose from!” roared one GM exec, infamously, in the late 1960s. “They’re called USED CARS!” Hopefully that visionary is dead by now, and not watching his company heel over like a dying brontosaurus.

American consumers in the main want reliability, build quality, innovation, safety, efficiency and style — in about that order. The Big Three have gotten progressively worse at providing any of the above. But mainly they have failed to provide market leadership. This “we were only giving consumers what they wanted” stuff is an excuse for lack of leadership. You hear the same lameness from bad parents who give their kids Oreos and Mountain Dew for dinner, “because that’s what they wanted.” Do kids grow up to respect such parents? No. Did today’s Gen Xers grow up respecting GM and Chrsyler? No. They have disdain for them.

11/25, 10:22 PM

posted by:

sharpie

“If the big 3 cannot survive on equal terms, then they should fail (capitalism at its best) but until then, the gov owes them support for making laws that allowed the unions to get too strong.” – bcjohnso99

In one brush stroke, you completely ignore the fact that MANAGEMENT failed to direct the companies to produce the kind of products customers want. Ford has since learned a lot from Mazda and Volvo (good handling and safety standard). GM on the other lets Saab, Subaru and Suzuki sit to collect dust while continuing its own stubborn way. Chrysler, well, there is a lot more wrong with Chrysler than simply product development.

I hear your complain about union, and while there is some merits to that argument, it is not the whole argument. Union or not, the Big Three would have been in the same position. Why? They are sold that American won’t buy import; that they should focus on gas guzzler; that American are stuck on the 3 box design and would never consider the more versatile hatchback and wagon and to ditch those SUVs.

Well, they were wrong not once, twice but many more times and don’t blame the Union solely on these bad decisions and missed chances. Labor component is only one element.

11/25, 11:18 PM

posted by:

wideopenthrottle

What was Plan A????
LOL @ johnnycanuck

11/26, 3:28 PM

posted by:

beemerdude

“When perception takes hold, reality becomes irrelevant.”

What I was referring to in my comments was the PERCEPTION that Americans have always had that domestic vehicles should be big, strong and powerful. And that Asians manufactured small and inexpensive cars. For sure, some of this thinking has been altered in recent years. Lexus comes to mind. And of course, Toyota/Honda/Nissan SUVs (which in many cases, are built in the U.S.). But the original perception still holds true for many.

I agree that U.S. manufacturers have really never been serious about building and selling small cars. The quality and designs of American small cars was never on par with the imports. U.S. companies sold small cars grudgingly and never realized that entry level small vehicles were how Asian makes grabbed young customers.

And then moved them up the ladder by graduating them into larger, more profitable models.

12/05, 12:53 PM

posted by:

jackjimturkey

LLN, don’t use the f-word. Instead of “funding,” say “money.”

“stave of” should be “stave off.”

johnnycanuck: “That would be ‘b’ as in ‘belly up?’” Funny stuff!

howsmydriving: marketing is selling more Toyotas and Hondas than is product quality. GM is wasting money on cute marketing campaigns, when it should just go with a simple approach: “buy our cars because they’re better.”

400horseSS: “How about asking the Gov for retiree pension and healthcare help?” Good question. PBGC, your phone is ringing.

bcjohnso99: “The gov needs to make unions illegal.” That’s an incredibly dumb comment. Maybe you want the minimum wage gone, too? The government needs to make universal default and the BCS illegal.

“Anyone not capable of finding themselves decent employment does not deserve it.” Even dumber.

americancarssuck: “Hard plastic is not luxury.” neither is a rebadged CamCord.

But you do have a point on there being too many Lambdas.

“A new factory there (Chine) but no new jobs in MI? BS.” It’d be prohibitively expensive to build cars in Michigan for the Chinese market, then ship them over.

complinitor: toyota probably could buy the Big three outright.

beemerdude: “When the economy was rolling, THEY WERE SIMPLY GIVING AMERICAN CONSUMERS WHAT THEY WANTED… huge, gas slurping SUVs and trucks.” Yep.

TomF: “American consumers in the main want reliability, build quality … The Big Three have gotten progressively worse at providing any of the above.” You done lost yo’ damn mind!

“You hear the same lameness from bad parents who give their kids Oreos and Mountain Dew for dinner, ‘because that’s what they wanted.’” Not the same thing; parents have a monopoly.

 
 
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