Without gov. money, GM bankrupt in less than 4 mos.
$8 billion leftGM has $20 billion in cash. It's burning about $2.5 billion in cash per month. Once GM hits $12 billion, it's bankruptcy. Thus, GM has a cushion of $8 billion before it must enter bankruptcy, and GM will burn through it's cash cushion in less than 4 months.
Wow. It's now or never for the US auto industry. The fate of Detroit now rests in the hands of Congress. Scary days. Can this crisis be turned into an opportunity? We'll soon find out.
Labels: gm.
posted by Dahcredyns at
8:34 AM
8 Comments:
What would a GM bankruptcy look like, I wonder?
Would a leaner, meaner American automaker emerge from the ashes, Cruze, Vue and Volt intact? The airlines seem to go bankrupt all the time.
If selling so many big trucks and SUVs during the boom time was so profitable, what happened to all of those profits? I don't understand why they're in such bad shape. Health care costs?
Some "discipline" from the markets mightn't be such a bad idea.
That's the big debate. There are many Wall Street types that believe that bankruptcy could make them leaner and meaner.
However, it has a big effect on consumer confidence, and that's the real big worry. That, even if automakers came out leaner and meaner, consumers would be wary. in the interim, suppliers would go out of business, making emergence from bankruptcy even more difficult.
Re: those big SUV profits. Automakers needed those profits to finance health care and pension funds, that's for certain, then they reinvested that profit in the wrong kinds of vehicles.
US automakers have been burning a massive amount of cash most of this decade, and they just seemed too big and oblivious to change. And, once they realized change was required, they moved too slow and things got worse faster than they anticipated.
But, here we are.
It seems the solution must be driven by "discipline" or Congress needs to offer significant help to Detroit, but with serious strings. For instance, Increase fuel efficiency standards even more. Mandate a certain percent of fleets must be hybrid or electric. Maybe another percent should be natural gas. Do something bold and make it required to avoid bankruptcy.
Ultimately, giving them each $10 billion more only buys a company like GM 4 more months. That's it. Something has gotta give.
Just saw Rick Wagoner on CNBC say that he expects cash burn to slow down in the 4th quarter, so GM might have a little more time. Still, things are critical and any action needs to happen fast according to Wagoner.
Yet, if - as some analysts speculate - 2009 is worse than 2010, what happens then?
Thanks for illuminating it a little for us! I can definitely see how it can go from bad to worse.
It just bothers me that throwing cash at failing companies if they haven't demonstrated how to not fail... Sigh. Rock and a hard place.
I suppose it gives us pause in the healthcare debate. If skyrocketing healthcare costs can bankrupt GM, how on earth can American companies compete on the world stage?
As long as we're talking about it, why not listen to T. Boone Pickens and retool the auto factories for windmill production? GM can keep some small set of core products, and then everything left over spins off into GW - General Wind. With help from the feds, of course.
Well, sticking on that Pickens theme, how about we give automakers money to convert a number of cars into natural gas vehicles and natural gas plug-in hybrids?
That won't be enough to save all automaker jobs, but then turn those out of work automakers into wind turbine makers.
Sounds crazy and a bit silly, but it might be just the kind of out-of-the-box thinking we need to get through this crisis.
The biggest part of me wants nothing more than for the Big 3 to just go belly up and go away, that is how sick I am of them and their never ending mendacities. Of course, this turns out honest, hard working people with no where else to work.
As I see it, the only way further bail out funds will help is with strict governmental guidelines such as these:
1. All upper management is relieved of duties within 30 days.
2. Fleet mpg AVERAGES must be 35 or greater.
3. Alternative fuel vehicles must be offered and each automaker must have a CNG, PHEV AND EV model for sale.
They can all pop out the CNG models today and should be able to offer the PHEV's and EV's within a year.
GM could resume EV1 production with Panasonic PEVE lead acid batteries tomorrow (to comply with the bailout).
Ford could resume the Ranger EV and Chrysler could resuscitate their Epic minivan, or whatever it was called. No need to wait for exotic batteries, use what is proven today and if they do not agree, then they are not bailed out.
Nothing like I just described will ever happen though.
Well, I like Alan Mulally. He, like most of the Big 3's top execs, largely inherited companies that had made decades of bad decisions. So, regarding upper management, I'd rather focus on compensation.
Still, while all your ideas probably won't be incorporated into a bailout, it would really be a promising sign, in my opinion, if a few did happen. i really think that CNG could be the critical one. Let's just make the commitment to end foreign oil dependency - at least OPEC dependency - in the next 10 years with new CNG vehicles and a companies that develop CNG conversions.
These fkers made a killing on the SUV and truck market. THe profit margin was SO HIGH it was insane....yet now they want handouts?
Where did that money go? Back to developing Detroit's infrastructure? Anyone been to Detroit lately? It's a SHIT HOLE.
These companies need to die...because they are a cancer to this economy and to the people who depend on them in the long run.
Bailing them out is a short-term solution to live the pockets of the bastards who ran these companies into the ground.
tridequ
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