General Motors Or Government Motors?

Dear Reader,

I’m deeply hurt! I feel like a jilted lover. For 50 years I’ve had an affair with a car company. My family has been carrying on with this same company for generations. My great grandmother drove Chevy trucks; my mother had a Cadillac and then a Buick. Over the years I, proudly drove and owned four Oldsmobile’s, five Chevy trucks, a Pontiac and two Cadillac’s. My wife’s first car was a Chevy convertible. My daughter drives a Chevy Suburban and my son-in-law, a Chevy diesel truck. My son drives a Chevy truck. My brother-in-law and his wife both have Chevy Corvettes and share an Avalanche. I have owned Chryslers, Plymouths and Fords, but I always came back to General Motors. Even when I bought an old Toyota Land Cruiser, I put a small block Chevy V8 under the hood.

I guess what it boils down to is that my family and friends love American cars and trucks, especially GM. True my current truck has a diesel made in Japan and the vehicle was assembled in Canada, but it still proudly bears the Chevrolet bow tie emblem.

Like so many Americans, we watch with breaking hearts, as weak management and a voracious demanding union brought this worldwide giant of the auto industry to its knees. The management could have taken a stand and declared Chapter 11, which would have allowed them to renegotiate their union contracts, close companies and manufacturing divisions trim down and recover. Instead, they crawled, hat in hand to the federal government and got a fifteen billion dollar loan from the taxpayers so that they “would not have to ruin their reputation and go bankrupt.” Guess what? They went bankrupt anyway and flushed those billions of taxpayer dollars down the drain.

Inter the federal government and the “Car Czar” who concocted a “structured bankruptcy” with the Federal Government dictating the terms.

According to Wall Street Journal, the “structured bankruptcy” required the taxpayer to pony up another $50 billion dollars for which the taxpayer would allegedly own 60% of the company. (Have you received your shares of stock? Neither have I… Don’t hold your breath.)

The Canadian government put up 9.5 billion and will own 12% of the stock. But, and this is the icing on the cake, or the stake in the heat of GM, the United Auto Workers Union, who reportedly “made concessions”, will own approximately 18% of the business. How can the folks who helped bankrupt the company end up owning the company?

In addition to owning a portion of the company, the Union Health Care Agreement is structured so that GM will still be sending 600 million dollars each year in preferred stock dividends to the Union Retirement Program.

General Motors market share dropped from 45% in 1980 to 22% in 2008 and is currently in the low teens. In this economy, the picture is dismal. Even if GM builds and sells 2 million units per year in the US (which is not likely in the projected 10 million per year vehicle market), they have a multitude of financial obligations that have to be addressed before showing a profit and starting to pay back the taxpayers.

• First, $300 in Union Retiree Health Care costs will be added to every vehicle built in the United States adding to GM’s non-competitive status.
• Second, the Union Pension Funds are under funded by 12 to 13 billion dollars and would need “significant contributions” as early as 2013. Where will these “significant contributions” come from? You got it! The good old, ever squeezed American taxpayer. Our current government will no doubt buy out most of GM’s pension funds insuring that the United Auto Worker Retirees continue their gold plated retirement.

You begin to wonder if the government has initiated a new “affirmative action” program that we weren’t told about. A new program which insures the union members receive preferential treatment in funding and benefits. Isn’t that the bias against the rest of us in the U.S. labor force?

• Third, the savior of the company is the new management, the U.S. Government. No problem there, congress and the White House have done a wonderful job with the U.S. Post Office, Amtrak, Medicare, Medicaid, Education, Social Security, etc.
• Finally, don’t forget about the new, environmentally friendly, economical battery powered, “green car”. (Humph!) Words escape me!

I recently received a letter from Mr. Tony A. Clarke, Group Vice President and President of GM North America. It was a nice letter, assuring me that the warranty on my wife’s car would be honored no matter what. The balance of the letter expressed GM’s thanks for my business over the years and hoping that I would return for yet another car. I feel compelled to write him and tell him that I stuck with GM in spite of huge price increases and shabby quality, but recent events have caused me to fall out of love with GM. After all, once jilted, twice shy. Plus, I would be very reluctant to ever buy a car or a truck from a company run by two such inept organizations as the Federal Government and the United Auto Workers Union.

As an aside, the current “Car Czar”, S. Rattner, is stepping down. Apparently like all the other choices for government high positions, he is under investigation for something. We’ll find out more later on or it will be swept under the rug. His replacement is…surprise, surprise, and ex high ranking official of the Steel Workers Union, Mr. Ron Bloom.

Having said the above, I recommend everyone hang onto your old GM cars and trucks. Someday they will be priceless. You can keep them repaired and looking great by stopping by the Pomona Swap Meet and buying from out vendors who stock thousands of used and new parts as well as aftermarket parts.

If you maintain your old vehicle it may truly and proudly be referred to as a “GM”, a rolling “Gold Mine”. Automobiles will be harking back to the good old days of a great American Icon.

Note to our readers:
As this article is being written, many of the details of the bankruptcy have yet to be ironed out. I realize that GM management has stated that they are now out of bankruptcy, but I assure you there are many shoes left to drop. Not the least of which is what do they do with the old GM. That is, all the odds and ends that were left when the new, leaner GM was formed. Pontiac, Hummer, Saab are all up in the air, as well as many manufacturing plants, distribution operations and spare employees.

And finally, even though I don’t love GM anymore; I must admit that I lust after the new Camaro Convertible.