And so, as i predicted in December, it came to pass that GMAC was given bank-holding company status and GM declared bankruptcy. Chrysler did too, but as always Chrysler is an afterthought. With the benevolence of the taxpayers and their representatives ushering GM through a very quick bankruptcy process, something called “The New GM” has emerged phoenix like from the ashes of a house fire it set by falling asleep with a lit cigarette. We’re treated to headlines of how wonderful the new company will be and optimistic scenarios of returns to profitability in the near term. But let’s put the word “new” into its proper, governmental, context. When the CEO says “new”, hear your Congressperson saying “reform” or your presidential candidate saying “change”.
After miraculously freeing itself from the debts incurred by horrible decision making, short-sighted strategy, and woeful products the new GM is ready to get busy. Too bad for you if you happened to be a stock-holder, an employee (many of whom were stockholders but at least a few will get to keep their jobs), a retiree or the owner of a dealership that got shuttered. The old GM bemoaned its labor costs that arose from having not prefunded the pension/retiree health care plan that it had agreed to in contracts written long ago. So the UAW cut a deal with the manufacturers to operate the plan after the companies contributed seed money. The new GM is not liable for the contribution; because that was the old GM…it’s a different company now. Instead the UAW gets stock in the new GM and can only hope for the rosy predictions of near-term profitability.
The corporate motto appears to be: that was the old GM, so it ain’t our problem.
Cleaning up the sites owned by the old GM and now worth nothing because they are environmental nightmares isn’t the new GM’s problem. Thanks to the particulars of this government intervention, those problems belong to the old GM which doesn’t really exist and has no money to pay up in any case. The taxpayer can fund those cleanups, because the new GM is staunchly against socialism and needs to focus on the rumored IPO. You don’t want to ruin your “investment” in the new GM by saddling that IPO with obligations of the old GM, do you? Of course not, because you’re not a socialist.
The new GM will not participate in the program to remove mercury switches from out-of-service vehicles, because the new GM doesn’t make any vehicles with mercury switches. See, that was the old GM and it doesn’t exist anymore. Mercury poisoning is no concern of the new GM. That’s your problem (and Ford’s problem because they weren’t smart enough to declare bankruptcy). If you’ve got a problem with that, then take it up with the government.
Please focus your attention on the Volt, because if/when it actually enters production the new GM is claiming that it will get 230+ mpg. Of course it will cost you $40,000, but through the wonders of capitalism you’ll be eligible for a $7,500 tax credit.
Do not, under any circumstances, attempt to apply the maxim “what’s good for GM is good for America.” You shouldn’t wipe out your debt incurred from buying things you cannot afford on credit by declaring bankruptcy. This is America, not a stinking socialist wasteland like Europe. We’re about individual responsibility, hard work and hard knocks. Do not attempt to have the government rescue you from cancer or unemployment. That stuff’s for commies. The maxim applied to the old GM, so it doesn’t count. This is the new GM. Isn’t it shiny?