| Our government has shoveled billions of dollars | | | | three years. Sometimes a new car would seem |
| into large corporations that have been deemed | | | | to spend more time in the dealer's service shop |
| "too large to fail". Among them are AIG insurance | | | | than our driveway. |
| and General Motors. Both of these companies | | | | In recent years, quality and dependability from our |
| suffered from poor management decisions and | | | | big three manufacturers has improved, but there |
| both have gotten billions of taxpayer's dollars and | | | | are too many models, and too many different |
| are asking for more billions to help insure their | | | | combinations of the same vehicle. It might be a |
| survival at a time when average Americans are | | | | good idea to adopt a business model used by a |
| asking where it will end. It seems that neither of | | | | more successful competitor or at least scale back |
| these "giants" learned anything from the financial | | | | to a sustainable level. The management style at |
| meltdown and economic disaster. The problems | | | | the big (?) three doesn't appear to be changing. |
| that caused the failures didn't happen overnight | | | | Is GM too big to fail? In this economic mess, |
| and I suspect that the corporate management | | | | someone's got to fail and declare bankruptcy. GM |
| had their collective heads buried in the sand or | | | | is the most likely candidate. Bankruptcy is not |
| were just hoping that the problems if ignored | | | | necessarily a bad thing. It would give them some |
| would go away. You can't be at CEO level without | | | | breathing room from creditors, and may allow a |
| knowing your company is loosing money. | | | | restructuring of the contracts with the unions |
| But, the question is; why buy General Motors? A | | | | while the company is restructured in a manner |
| question asked during a casual conversation, but | | | | that might allow it to make quality cars and |
| one worth considering. Why would anyone buy | | | | trucks in a manner that is competitive with |
| General Motors? Their own auditors recently | | | | foreign manufacturers. GM could be broken up |
| reported that it was unlikely that General Motors | | | | into smaller, autonomous business units. |
| could continue as an entity. The company is | | | | A bankruptcy might have a ripple effect on a lot |
| wracked by debt, contracts and commitments | | | | of suppliers and vendors, but if GM is not selling |
| won by the union over many years. The pension | | | | vehicles, there is going to be some down stream |
| plan for GM workers is so generous that a large | | | | suffering but General Motors is not the only |
| part of every car sold has to go to the | | | | customer for most auto suppliers and other auto |
| retirement plan. General Motors is facing and will | | | | makers will have to pick up the slack in the short |
| probably go into bankruptcy. | | | | term. |
| Poor quality, too many models, too many | | | | Back to the original question, why buy GM. I don't |
| combinations available to the customer and too | | | | believe that GM will go away. It might get broken |
| much competition from foreign manufacturers | | | | up and some divisions might be sold off, but I |
| contributed to the problems at all three American | | | | believe that GM will still be here. However, the |
| auto makers. Some of us are old enough to | | | | opportunity for shareholders to get anything will |
| remember when there were less of all these | | | | be remote. Everyone will loose something, but the |
| things. A long time ago (this sounds like a lead in | | | | stock is almost worthless now. The uncertain |
| to a George Lucas film) there were basically two | | | | future of General Motors as it is today makes it a |
| models to choose from. You could count on this | | | | poor investment choice. But then, I'm not a |
| year's deluxe model being next year's standard | | | | financial advisor. I could be way off on my |
| model. Every two years, the auto manufacturers | | | | assessment of the situation with General Motors |
| would retool and bring out new models. | | | | and Chrysler. The vast amount of taxpayer |
| Go back in history or to an antique car show and | | | | money used to bailout companies that are still |
| look at the models available half a century ago. | | | | paying bonuses of more than I'll earn in a lifetime |
| For instance, the 1949 and 1950 models shared | | | | might also make me less than sympathetic. |
| the same basic body design with different tail light | | | | If you are interested in investing in one of the |
| and grill treatments. The same thing is apparent | | | | auto makers, get the best advice you can and be |
| with the '51 and '52 model years. The first year | | | | prepared to stay in the market for a long time. |
| that this pattern didn't repeat was in 1957. Think | | | | When the economy recovers, any investment in |
| about the '57 Chevy, Ford and Chrysler models. | | | | companies that have received bailout money |
| All were different from the preceding years and | | | | should have a good return as consumer |
| would be different from 1958 models when all | | | | confidence increases and time dulls the anger |
| three manufacturers started making larger | | | | over the causes of the recession and the bailout |
| "boat-like" cars. Remember, back in the 70's when | | | | of these large companies. |
| we could count on the paint peeling off the cars in | | | | |