GM: Better Off Bankrupt

[Purveyor]

The automaker is in trouble, but even Chapter 11 would be better than hooking up with Chrysler.

By Alex Taylor III, senior editor
October 15, 2008: 9:04 AM ET

NEW YORK (Fortune) -- GM certainly is keeping a close eye on its cash these days.

One supplier reports he is now getting paid 60 days after he presents an invoice - not the 30 days he was used to. Worse, the clock doesn't start ticking until after the bills get approved in Detroit - and then sent to Arizona for processing.

Next thing you know, GM will be inflating its float by cutting supplier checks on banks in Fiji that will take weeks to clear.

It is a measure of GM's desperation that it is reported to be considering a linkup with Chrysler to get access to Chrysler's cash so it can remain in business. The idea has provoked nearly universal skepticism among analysts and GM watchers.

With good reason; they have history on their side. The list of unsuccessful auto mergers stretches from the present day - Daimler (DAI) and Chrysler, BMW and Rover - all the way back to Studebaker-Packard and Nash-Hudson.

Buying Chrysler would only get GM (GM, Fortune 500) more of what it doesn't need: more brands, more models, more factories, more employees, more dealers. You have to wonder what makes GM think it could run Chrysler's operations more successfully than it has run its own. Like a second marriage, a GM/Chrysler merger would be a triumph of hope over experience.

So what's an ailing automotive giant to do?

MORE...

FORTUNE: http://money.cnn.com/2008/10/14/news/companies/gmwoes_taylor.fortune/index.htm

[Neshanic]

1. "So what's an ailing automotive giant to do?" Merge with an architecture firm. They never pay.

[AndyTiedye]

2. Would Chapter 11 Let GM Screw Its Pensioners?

[Purveyor]

5. That and tear up all union contracts. The pensions however should be

covered by the Pension Benefit Guarantee Corporation, which btw the last I heard was $25billion short of current obligations.

In other words, the taxpayer would end up covering these pensions.

[NV Whino]

3. I've always been amused at all the different models

from the same company. I mean, how many sizes of essentially one style do you need?

Take a look at this site. They have GMC, Chevrolet, Pontiac etc. etc. and multiple styles within each "brand."
http://www.gm.com/vehicles/results.jsp?bodyStyle=11&bodyStyle=12&bodyStyle=04&bodyStyle=05&bodyStyle=03&bodyStyle=13&bodyStyle=01&lowPrice=10000&highPrice=65000&fuel=E85&fuel=HYBRID&fuel=DIESEL&fuel=30MPG&fuel=GAS&

Aside from the fact that they kept building gas guzzlers long after they should have seen the light, if they had eliminated half of the brands and models, they might have had a chance. I have great sympathy for the workers soon to have no job, but no sympathy for the management whatsoever.

[kurt_cagle]

4. Chapter 11 Bankruptcy - Night of the Living Dead Corporation

Chapter 11 Bankruptcy is like a trip to the spa for corporations - get away from all those pesky pension obligations, slough off those unsightly unions, get your supply chain to renegotiate their onerous deals with you because you might just go under and take all their work (and money) with you, and when you're done with the manicure and pedicure and facial rub then you can head out, all shiny new and fresh.

Frankly, I wish that the bankruptcy laws hadn't been rewritten to be so gentle on companies. Perhaps its time for the GM conglomerate to break up into all its component companies that actually have to compete with one another to produce cars that people want, rather than trying to sell the shit that's cheapest for them to manufacture. The US automotive industry, like its banks, are long overdue a complete reboot rather than trying to keep these night of the living dead corporations going with ever more federal money.