On Saturday General Motors emerged from Chapter 11 bankruptcy, with the US government owning some 61 per cent of the company, the Canadian government the union's health care trust, and bondholders owning the rest. But the project will work only if the company really does become more competitive. And, in
any case, there are serious losers from what has happened.
The losers include the shareholders, of course, but also workers who lose their jobs, many dealers, some suppliers of the old GM, and possibly the US taxpayer - though that will depend on how quickly the company can be floated off, as is the intention, and at what price.
We don't know yet what will happen to the Opel/Vauxhall division of GM, but two and possibly three bidders are still in negotiation to buy it. Ultimately, what will determine the success or failure of GM will be what happens in North America. Four main brands survive - Chevrolet, Cadillac, Buick and GMC.
The company plans to close around a third of its plants and lose about a quarter of its staff. It is savage stuff, but cutting bits that don't work is a necessary, but insufficient, condition of a return to secure profitability. The product line-up has not altered as a result of the financial reconstruction and it remains be seen if the new and slimmed-down management can make the right choices over the next three years or so to rebuild the group.
Three things are astounding. First, the pace of decline. Second, how narrow the gap is between success and failure: Fiat, about to go under five or six years ago, is now strong enough to become the major owner of Chrysler.
And third? It is how firms in trouble often go back to a trusted oldie. Bob Lutz, 77, is not retiring after all. He's to take charge of "all creative elements of products and customer relationships". There is hope for us all.
- INDEPENDENT
