Bankrupcy not a Option; Performance Standards Are
November 21st, 2008 at 09:47am Bob Trojan
I think GM, Ford or Chrysler should not be forced into Bankruptcy, otherwise known as Chapter 11 (C-11). This filing will allow the company to continue tooperate, but:
1. Many small-medium suppliers would get next to nothing for the payables they are owed from any of the “3″. I talked with one local supplier the other night whose company is owed “millions” and if his customer went Chapter 11, they’d get a small part of what they are owed. That’s the way the Bankruptcy works. Some Rockford manufacturers could get hit hard and possibly have to file for bankruptcy as we.
2. Pension funds for former or current employees that include GM or Ford stocks, could become worthless. Sure, they ‘re pretty low right now, but remember Chrysler 25 years ago when it went down to $3/share? As they got well and paid their government loans AHEAD of schedule, the stock price went way, way up. I wish I bought then. It could happen here if they avoid C-11.
3. Where will they get the DIP financing? That’s “Debtor in Possession” financing from banks/government to operate while they reorganize.
If the “3″ and Congress can fashion a bailout plan, Congress MUST put some strings and oversight over the use of the loaned money and the 3’s restructuring plan which should include: executives wages of $1/year, sale of foreign assets and foreign ventures, MAJOR concessions from the UAW and the Dealer network, and a rigid timetable to implement the changes and for paying back the loans.
Well, I guess it’s not that critical as Congress is going on vacation until next month.
Entry Filed under: Management, Economy
3 Comments Add your own
1. Monkey | November 21st, 2008 at 2:37 pm
Thought it was great symbolism that the three auto CEOs flew into DC on their multi-million dollar G4s.
While I sympathize with the downstream suppliers, this proposed bailout is a joke. American car companies have been producing sub-standard cars for year and have had their hats handed to them by the foreign auto-makers. Then, when gas was cheap, they greedily sucked in the profits from gas-guzzling SUVs, with no foresight to think that gas might not always be cheap and,hmmm, maybe we should diversify our product line.
Now, the chickens are coming home to roost and they are appealing to the TAXPAYER for a bailout. If we give them a dime, it better be with strict conditions attached and with some pretty sweet terms so the TAXPAYER will profit if they turn their companies around. Also, it wouldn’t be a bad idea to do some housecleaning at the tops of these companies and replace the idiots running the show now.
I just have to laugh at the new Republican philosophy which appears to be “Privatize the profits and socialize the losses.” It’s a sweet deal if you can get it.
2. Bob Trojan | November 21st, 2008 at 2:49 pm
Don’t forget, it’s the Democratic Congress that’s in charge and they can’t get their act together, Republicans are OPPOSED to a bailout.
Saw this a.m. that the private planes are being sent back.
I say, they should sell their foreign joint ventures and plants that GM is building in Russia, China and who knows where else.
Union contracts need more work done as well
3. MDH | November 21st, 2008 at 3:05 pm
No doubt. There will be pain. But too big to fail is, well…..too big.
We all are suffocating under the weight of these behemouths. It’s time to let these big companies fail and see the rise of smaller, more nimble companies with better focus on specific products.
It will be accompanied by the rise of new competetors, new products and smaller, more nimble companies that will rise to success (or failure).
Just like it should be.
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