orrr they could just make a plan for “viability” and stick to that and theyll get their money

Screw GM. Let them file Chapter 11, and let the stockholders fire all the upper level management- it’s been long overdue.

Oi, no lawyers, please. The first 25 billions goes there. Then we will be talking what to do with retards from Detroit.
I am ready to compromise. We know that government will pay unions and their plebes. Lets give them salaries till end of their careers and then they can retire. Management already took care of themselves. This is the cheapest solution I can come up with. Even if we pay union members to end of their natural life, it will be much cheaper for us, then them manufacturing the crap they manufacture.

If Barack Obama is “eloquent” enough to pull that off, he should be GOD elect…….

By the way…..YES WE CAN !

Go with the prepack. It’s the only way for them to get out of absurd UAW contracts that prohibit them from being competitive in a global environment, where competitors share similar if not exact platforms. Shareholders should put pressure on the Board to set the current management on the curb right next to the UAW.

I suppose this is like choosing between safe or unprotected sex. I doubt Detroit really cares which way they go as long as there’s a money shot.

Not as easy as it sounds as you have to secure accepted terms and conditions agreements of your creditors—and that takes time and an immense amount of negotiations. Larger creditors may acquiesce creating a stronghold against any term agreements although the alternative might be worse. The BIG 3 minus 1 still have attachable tangible assets in the form of property, etc. that creditors might find more appealing.

i think this plan may be the best compromise. I personally like the restructuring BK offers, but also think even with BK now rather than 10 years ago some money would be required to keep B3 afloat. I do not know enough about prepack to be definitive, but at this juncture I think its the best solution.

“The strategy would enable GM to eliminate the union obligations that make it uncompetitive, say proponents”.

So they eliminate these obligations. How eloquent can Mr. Obama be that he can explain to the entitlement crowd the need for more concessions? How convinced will the consumer be that it is wise to buy a car built by a bunch of spolied children that just got their comeuppance?

The trick for Obama will be to convince consumers that the factory warranties on their new cars will actually be valid down the road. Good luck with that!

The dems ain’t gonna let the UAW fold

This is a much better plan than letting Chinese commies take over one of the Big 3 (or all of ‘em!).

So let them BK, and the UAW keep there foot in the door…..

Well, let the dems and the UAW bailout the Big 3 on their own dime.

…the dems being the ones in the House and the Senate. Not the folks trying to pay their own monthly bills.

This sure is an option, but without more details, it’s not known if it is a good idea. For one, in a Ch. 11 proceeding, whether prepack or not, the SAME executives and board of directors remain “Debtor-in-possession” and will continue to operate the company as usual. Do you think these execs are going to slash their salaries and bonuses?

“The strategy would enable GM to eliminate the union obligations that make it uncompetitive, say proponents.”

On the other end, the execs screw the little guys and undo their UAW contracts (if it is allowed). LLN, the bankruptcy court judge still has to rule on getting rid of the UAW contracts. It’s not like the suppliers and GM can agree on that alone in a prepack deal, so these “proponents” are hoping at best that GM can eliminate the union obligations. It’s not a sure thing and to report as such is misleading.

@sharpie, since the precedence of this unusual situation is altering the legal environment to the extent the government should have never become involved I see no reason the government cannot request both the top executives, and the board of directors be dismissed. After all this plan is the basis of guaranteed government funds. The fact that we are even discussing workouts means the car companies have already gotten away with something they should have never been able to achieve in the first place. Our government was never established to operate this way. Big business has worked it way into the political system to such an extent that the US Constitution should be revised to read “We the corporations…” In many, many ways we have reached a shameful existence, and we are opening the floodgates for more of the same to come.

This will be interesting… I wonder how the loyal democrats are going to react when their own party sold them out in the whole bailout debate. HAHAHAHA! On the other hand, I found the Republican response … Chapter 11, go it on your own response to be reprehensible and should disgust workers of all kinds, not just members of the UAW. What both parties and auto company management are generally saying is to the US worker: SCREW YOU! HA – to all of you who voted for Obama or McCain. You deserve what is coming.

I’ve covered the fundamentals of the problem in depth. You should read it before making snap decisions.

http://it.toolbox.com/blogs/paytonbyrd/the-economy-and-your-it-job-28417

@Payton,

While many of your points are sound, you must admit that the status quo cannot be kept either. Something will have to give in this economy, like it or not. And while a ‘prepackaged bankruptcy’ may not be exactly right, the true solution involves some kind of compromise. Keep the vibrant parts of each alive and dump the underperforming assets on an accelerated time-line. Yes, job will be lost. That’s reality.

@Payton Byrd, you need to ask yourself where does it state in the US Constitution / Bill of Rights that you are guaranteed employment? The world as a whole is undergoing a downturn. And why have you chosen media itself to deliver your message if you believe that media is the root of the cause?

A wave of intelligence from Washington
First the Senate Hearings
Now Obama showing why he’s President
Almost like a real government!
Kinda spooky
DrFill

Michigans economy could easily survive on hunting alone. Michigan is the best state to live in, living off the land. I can see Michigan tearing down Detroit and having it be the first remodeled, city. A new green city. Borat as retards in Detroit you mean, The CEO’s of Ford, General Motors and Chrysler, who have been flying in private jets asking for a bailout.

Let the big oil companies bail them out for ripping everyone off at the pumps.

^ They (OIL) started this **** anyway, and George W Douche kept putting off meetings with the CEO’s now look whats happening.

@Stig

Change for the sake of change is not a good thing. Just because you don’t like something doesn’t mean it has to change. I’m sure the millions of people with their jobs in the balance would argue against change for the sake of change.

@LLLLL321

The constitution requires that government protect the people and the country. I didn’t touch on the national defense implications of the big 3 collapsing in my blog entry because I was trying to prevent information overload. The fact is that our military manufacturing capacity would be gutted without the big 3. It was the auto industry that saved the free world in WW2, and it’s just as important going forward.

@DrFill

Obama’s plan is not at all a solution. Any type of bankruptcy will be very bad, and don’t let the media’s Obama-ites fool you otherwise.

@murderedout

Replace that with commodities traders all over the world and you’re a lot closer. The funny thing is that the people who ran up the gas prices (not the oil companies, learn how commodities markets work) that killed our economy are now wallowing 70% losses on oil! This reinforces why we cannot let the big 3 fail, the ramifications are far reaching. Some markets are affected more quickly than others, but in the end they are all interconnected.

A government-sponsored restructuring is EXACTLY what GM needs.
They have too much expense and liabilities to do a standard BK
And no one will buy from them while it occurred
If Obama says he can help them rebuild their cost structure through legislation, smart people will support him.
Redo the union contracts
Better than leaving it up the Wagoner with a blank check
Unless you have a better idea?
DrFill

“Obama’s eloquent way with words might also enable him to explain such a strategy to the American people, thereby preventing a massive drop in sales.” Seriously? Most journalistic statement of today

@DrFill

There’s a difference between a government sponsored restructuring and a pre-packaged bankruptcy. You can do a massive restructuring without bankruptcy. Causing a bankruptcy to get out of a union contract does not solve the root problem which is that unions are anti-competitive and should not be forced on companies when there is a proof that doing so imposes a competitive disadvantage the threatens national security.

gas guzzling SUV’s like The Toyota Sequoia, Highlander, Honda Ridgeline, Nissan Armada, Titan should be outlawed! These damn greedy Japanese pigs!

There is NO difference between a government sponsored restructuring and a pre-packaged bankruptcy when you’re broke. You see they’re even selling their jets!
Healthy companies restructure.
Broke companies rebuild through BK
The union contracts, not the unions themsleves, are only part of the problem.
THE REAL root problem is people are tired of domestics cars, overpromising, underdevleoped, and underdeliver.
People over the past 25 years have discovered foreign cars, and most won’t come back to a domestic.
The domestics have been throwing money on the hood for years, only getting 10% conquests sales.
Total domestic share is close to 45%
Brand equity is the problem.
Domestic makes have no equity anymore.
They’ve ruined their name
This is what happens when nobody likes you.
You hear everybody saying GM/Ford can drop dead, they deserve it………
DrFill

Very interesting artile on the plight of car dealers, and their views on the Broke 3:
http://money.cnn.com/galleries/2008/autos/0811/gallery.dealer_row/3.html
DrFill

@DrFill

That’s definitely a worthwhile read, and it does express the frustration that Chrysler/Jeep/Dodge, Pontiac and Chevrolet dealerships are facing. It’s a completely different story with Buick, Cadillac, Ford, Lincoln and Mercury. If you do some research on why Buick and Cadillac have such better quality than the lesser GM brands you’ll discover that it’s through incentives to the UAW to supply the best workers for the most profitable brands. Buicks have been right at the top of the heap for quality for years.

I am not arguing at all that GM needs to reorganize. Dropping Pontiac, Buick and GMC would be my first step. Moving those highly motivated UAW workers to Chevy plants would make a big difference. The problem for GM is that the UAW is such a powerful force that deleting three brands (and the corresponding production cuts) is nearly impossible. GM wants to kill Pontiac, otherwise why wouldn’t it create a new Firebird instead of spending money on the G8 ST?

The media article you quoted does show some interesting psychological issues concerning the media that I’ve railed against for quite a while. The reporter was setting a dismal background before even talking about product and business by pointing out the gravel parking lot. What is the significance of a gravel parking lot for the most successful used car dealership in the world? The significance to the story is nil, but the significance for prejudicing the reader before the subject matter is presented is real. Now, throw in the quote about the dealer saying he doubts he’ll get paid for the rebate on the SUV he sold. If GM says that the guy is scheduled to get paid in 2 weeks, what’s the significance? The guy can just as easily call GM to find out when he’ll get his money as the reporter did. What’s the point of bringing up this quote except to prejudice the reader? The whole point of this article had nothing to do with news; after all, what news was actually presented? The whole point of this article was to further erode consumer confidence, bringing us yet a little closer to disillusionment with our way of life to demand more change at all costs. Now, this would have been an appropriate topic and presentation for an editorial or online blog. The reporter could have personalized the report a bit more and could have been even more effective in getting their point across. Instead, the reporter chose to present this as a journalist report of fact instead of an opinion-laden editorial that it actually is.

You seem to see most of the problem
UAW only has enough good workers to produce for two makes, not 6-7. Might be a sign that you have too many makes, a weak union force, poor training, etc.
Putting all of your good wokers into a marque like Buick that has low volume and is generally of little impact on the market is also highly indicative of poor management

Regarding the dealer story, I live by, and have bought from, Major Chevy in LIC, NY
Bought a 95 Ford Probe (I was young and dumb once) as my first car.
And my nightmare, I mean love affair, with Ford began

The point is If the President of the franchise says I don’t know if GM will pay me what they owe, that is beyond significant, whether they end up paying him or not. It is a key indicator of everything that is wrong with GM. He said it to the press, and he meant it.

I always give the writer license to paint a picture with his words. That’s his job.
If you want to spin that as some bias, that’s up to you.
I think the content is much more valuable that your perception of the imagery used.
He was looking to show a window inside the mind of not one, but many New York dealers.
He did a great job of doing that.
That window is shut, and some nails are going in as we speak.
DrFill

Okay, so here is the plan for reorganization while in bankruptcy. Gm will be reorganized into the following units for the North American market:

(1) Saturn, GMC (2) Chevrolet, Cadillac

Buick, Pontiac, Hummer and Saab (maybe a reprieve for Saab?) will cease to exist. ALL UNION CONTRACTS ABROGATED. Result; GM’s $2000 per vehicle cost disadvantage removed and will now pay same scale as domestically produced imports saving another $2Billion per year. Company now sized for operations at approximately 20% North American market share. Saturn will market the best of GM worldwide, e.g., Holden and Opel products.

Furthermore, Lutz stays and Wagoner gone. Camaro gone – after the first year — sales will slide – watch and see! The Volt; who cares, to expensive, and not much of a market for a plug in hybrid from any manufacturer – niche vehicle – that’s all they ever will be.

Drastic times call for drastic action! Time to do what should’ve been done long ago. It may turn out that bankruptcy is the way to save GM – yes it will hurt! If not you are looking at a Stage IV Cancer patient r.i.p.

DB9

p.s. posted twice

The chances of GMC, a VERY redundant division, surviving while stablemates Buick and Pontiac go are nil.
They live, or die, as a team. Dealers are built to sell these three franchises together nationwide, and GMC definitely can’t support a dealership alone.
I would keep Pontiac LONG before GMC anyway.
Make Chevy dealers stand alone, and pair Pontiac and Saturn.
DrFill

@DrFill GMC still has brand equity and is profitable. Dealers?/! Under bankruptcy GM can eliminate/rationalize dealerships and then combine GMC and saturn. Saves the mess/expense of the oldsmobile experience. Remember, under this scenario, GM is reorganizing under bankruptcy — whole new game!

DB9

P.S. “Any rigidity by an automobile manufacturer, no matter how large or how well established, is severely penalized in the market,” Alfred P. Sloan Jr.wrote in his 1965 memoir, My Years With General Motors.

Sorry Harly Earl r.i.p.

^^ One more;-) The NEW GM:-)

(1) New Saturn & GMC franchise:

Saturn: Aura (Opel Insignia – new Epsilon II platform), Astra (Opel Astra – new Delta II platform), Sky (currently Kappa platform switched to the new Alpha platform), Vue (new Theta platform), Outlook (Lambda platform), Mid/Large RWD sedan (Zeta platform or new Sigma II platform).

GMC: Acadia (Lambda platform), mid/small SUV(new Theta platform), GMT360 (envoy) cancelled, GMT900 platform – full-size trucks and SUVs

(2) New Chevrolet & Cadillac franchise:

Cadillac: CTS (Sigma II platform), STS & DTS replaced by one car on the Zeta or stretched Sigma II platform, XLR (second Y-platform), SRX (new Theta premium platform), Escalade (new Lambda premium platform).

Chevrolet: Traverse (Lambda platform), Equinox (new Theta platform), GMT360 (trailblazer) cancelled, GMT900 platform – full-size trucks and SUVs, HHR (new Delta II platform), Cruze (new Delta II platform), Malibu (new Epsilon II platform), Impala (Zeta or new Sigma II platform); if kept Fwd the cancelled 2010 Buick Lacrosse Epsilon II platform; if Zeta, new El Camino is added, Corvette (second Y-platform), Volt (new Delta II/E-flex platform), Aveo (currently Kalos platform (T250) switched to new Gamma 2 global subcompact platform).

All With the latest High Feature power trains.

DB9

Mitchell, Harly Earl and Duntov would be proud

The problem with this plan is, a prepackaged bankruptcy involves all parties negotiating the restructuring in good faith, voluntarily. The UAW does not negotiate in good faith, and they certainly don’t make concessions voluntarily. In other words, the UAW plays only one game: hardball. Hardball doesn’t work in a prepack. The only way you’ll get current UAW contracts eliminated or restructured is to have a bankruptcy court judge force it on them. The UAW is too pig headed to be reasonable. It’s sad, but true.

@Z06ified

A prepack won’t work. I’m talking full out Bankruptcy court. Yes, as I stated it will hurt; but, that’s the direction they are headed anyway. Might as well take the measures now. It can’t be saved – period – to far gone for that!

GM needs to radically restructure! The company is now facing a full blown liquidity crisis! Industry analysts have been warning about this for years! Well; it has arrived!

GM’s pension plans will be dumped on the federal Pension Benefit Guaranty Corp. Think of it as similar to the $1.5 TRILLION in banking sector obligations that the treasury has had to guarantee since January 2008 – and growing I might add. The old way is no longer tenable. Anyone who thinks otherwise; well, I’ll be nice, are not seeing the forest but for the trees.

The current economic mess (financial and Autos etc.) has been 20yrs in the making. Obama and crew can’t put the genie back in the bottle:-(

DB9

@DB9

No bankruptcy will ever work for a car manufacturers. The warranties are simply too important to consumers.

Accounting Info – Don’t read if you don’t care about facts

Warranties are an expense that is set up like an Accounts Payable account, ie. a liability. When the manufacturer sells a car to a dealer, he immediately adds an entry to the Warranties liability account. This is an expected average cost per vehicle. Typically these expectations are correct, and if there is money left after warranties expire then they are removed as a liability. Each year, money is also removed from these accounts via a calculation similar to amortization and these amounts are expensed against profit.

The number one fear that customers will have is whether or not a car’s warranty will be honored. When AMC was going belly up, that was a major factor that caused their sales to plummet at the end and Chrysler was able to buy them rather cheaply (with a Government loan, BTW).

The bankruptcy court could allow a manufacturer to expunge the warranty liabilities. This would be very bad for consumers, but would help balance the bankrupted company’s balance sheet. Bankruptcy is not a pleasant thing for anyone involved. Trust me, I know about having customers file bankruptcy on me while owing lots of money.

@Payton Byrd

I’m well versed in accounting – thanks anyway;-) We are talking about a major Corporation that has been Cash Flow negative for the better part of 4 years. GM is effectively a Health Care provider and Pension Fund that just happens to build autos on the side – Sad but True. How much damage due you think Bankruptcy will cause? The current scenario, if left on its own, will scare off the majority of potential customers. Thus, declare now and get it over with… and rebuild! If they give them money they will be back for more within a year. The warranty issues will have to be settled separately or transferred to a third party – see banking sector;-)

Shareholder equity has already been destroyed. Dealership network is too large. GM’s Exorbitant Legacy costs makes it worthless to a potential buyer; unless the Government assumes these obligations which brings us back to square one!

DB9

^Some might say quaint; nevertheless, a good read:

http://money.cnn.com/2008/11/21/magazines/fortune/taylor_generalmotors.fortune/index.htm

DB9