Auto Industry Bailout Essay

In late 2008, General Motors was in financial distress due to some major financial liabilities. These included

General Motors, an American borne company established in 1908, designs, builds and distributes a wide range of cars, trucks, crossovers and automobile parts worldwide. The company’s automotive operations adhere to the demands of consumers stationed internationally through its four primary automotive regions: GM North America, GM Europe, GM International Operations and GM South America. GM North America targets and serves the demands of customers based in North America with vehicles manufactured and marketed under the Buick, Cadillac, Chevrolet and GMC brands. The demands of consumers outside of North America are primarily met with vehicles manufactured under the brands Buick, Cadillac, Chevrolet, GMC, Holden,

Founded in 1701 by nearly 100 French settlers, Pontchartrain du Detroit was not doomed to bankruptcy. Located near epicenters of trade including the Canadian Border and the -Detroit River and rich in resources Detroit, from a geographic sense, was a city established on lands destined to prosper. Turning into an industrial powerhouse in the 20th century, the city saw an enormous boom in both population and industrial prosperity with the growth of the iron stove, railroad car, and ship building industries. It wasn’t until auto manufacturing renaissance initiated with the founding of Henry Ford Co. in 1910 that Detroit began it’s nearly 100 year long descent

The purpose of the loans was to provide operating cash for GM and Chrysler, and to keep making auto loans available for car buyers. Ford Credit planned to use funds from

By 2008, the recession impacted the global marketplace, as automobile sales declined. This time period became problematic for GM since the company was near bankruptcy. After weeks on Capitol Hill in an effort save GM, an automotive bailout package was approved during the Obama Administration. Gm would receive bailout loans from the America, Canada, and the Ontarian governments to address the recession, record oil prices, and a serious global automotive crisis. As a result of GM’s bankruptcy filing, the company would reorganize itself. This meant that a popular brand like the Pontiac would be phased out, while GM focus on North American brands like Cadillac, GMC, Chevrolet, and Buick. In 2009, the old GM was replaced by the New GM in an effort

Chapter 11 is referred to as the reorganization bankruptcy. A debtor that files Chapter 11 may obtain approval from the court to continue operation of their business (UScourts.gov). In this chapter, the value on a secured debt, such as equipment loans, mortgage loans, or car loans can be adjusted to the market value. The unsecured debt owed to creditors can also be reduced. This chapter requires payments to your creditors. The payment plan usually lasts for five years. However, the court may require that the payment plan be extended past the five-year mark for business owners and corporations.

The climax of the 2008-2009 financial crises, the largest ever since the Great Depression of the 1930s, witnessed the near collapse of multibillion-dollar industries in the United States. Concerns over the economic impact of the possible collapse of these industries compelled the then administration and Members of Congress to seek legislative options to salvage them. Consequently, two of the industry biggest players in the auto industries, General Motors and Chrysler, were offered financial support by the government and in return, shareholders and other stakeholders had to make necessary sacrifices in order to fundamentally restructure their businesses and commit to the tough decision of returning the companies to financial viability. In

Over the last few years, GM filed for bankruptcy. Chevy and GMC sales have gone down by 16% while Ford gained 8.4%. “According to Kelly Blue Book, the Silverado's ATP increased

Auto workers at Fiat Chrysler are in an uproar over changes in job assignments at the auto plants. Many feel Fiat Chrysler Automobiles (FCA) is looking to eradicate the skilled trade jobs by reassigning so-called minor tasks to production workers (Jones, 2016). Tasks such as fault resets and electrical cable replacement, now done by skilled tradesmen, would become the responsibility of workers who are not sufficiently prepared for such work and often for only little additional pay. Auto workers feel that the United Auto Workers (UAW) union is working with the FCA to implement concessions contracts over workers’ protests. Though sales figures have been down in the auto industry, with many companies reporting declines, FCA has shown an increase with Jeep up almost 3% and Maserati revenue up 69% (FCA). The FCA has released a statement that passenger cars would no longer be produced in the United States, though it plans to continue to produce larger vehicles like trucks, leaving many workers worried over job prospects in the future. So far, 1300 auto workers at a plant in Michigan have already been laid off in July 2015.

In 2008 and 2009, a series of bailouts were provided to General Motors and Chrysler, due to slowing car sales and massive quarterly losses. Unions buckled due to the fact that they received much higher wages, and more luxurious benefits than their non-unionized counterparts. In 2006, Consumer Reports top ten car picks were Japanese (Noe). Parts makers were quick to move jobs overseas, where laborers were willing to work for much less money. In 2008, GM closed 14 factories, 2,000 dealers, and cut 47,000 employees. All of these factors, among numerous more, were responsible for the collapse of the economy on a national and global scale. Gasoline prices soared during the energy crisis which lasted from 2003-2008. Consumers moved from buying SUV's and trucks to more fuel-efficient cars, such as hybrids. This was especially disconcerting considering that these larger vehicles were the most profitable for the automakers (MSNBC). The market which was hardest hit was that of the parts-makers, which saw their cash flow cut in half, since automakers were rushing to cut production (Economist). GM filed for bankruptcy 32 days after Chrysler, effectively making GM the fourth-largest company ever to file for bankruptcy (Carty). According to Darwin Bible, "probably one of the worst things about it has been watching all the stress on workers' faces and their families' faces" (Carty). Overall mental health is rapidly

GM faced a financial crisis in 1990 due to overcapacities, rising oil prices and increasing

Between 2008 and 2009, the American automotive industry incurred a major crisis, on the heels of the housing market collapse occurring in 2007 (Klier & Ribenstein, 2013). General Motors was already in a financial vulnerable situation at this time, having already filed a $10.6 billion dollar loss three years earlier (United States Securities and Exchange Commission, 2005). In 2007, General Motors losses for the year were $38.7 billion and its sales had dropped a full forty five percent from the year before (Weardenm, 2009; Usborne, 2008). By the end of 2008, the company was in such bad shape that analyst predicted that the company would have the liquidate or discontinue operations without any assistance from the government (Bosco & Plante,

General Motors is one of the world's most dominant automakers from 1931. After 1980s economic recession the main goal for automobile companies was cost reduction. Customers became more price-sensitive. Also Japanese competitors came into market with the new effective system of production. So market was highly competitive and directed toward price reduction. The case states that in 1991 GM suffered $ 4.5 billion losses and most part of the costs of manufacturing was due to purchased components. GM NA hired Lopez in order to find the way from "extraordinary" situation and reduce costs.

GM will use the trip into bankruptcy court to shed plants, dealerships, debt and other liabilities it can no longer afford. Emerging out of bankruptcy quickly will be a "new GM," made up of the four brands that GM will keep in the U.S. market -- Chevrolet, Cadillac, GMC and Buick -- as well as many of its more successful overseas operations.

General Motors Company, one of the world’s largest automakers, estimated in 1908. With its global headquarters in Detroit, Michigan, USA.GM employs 209,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 31 countries, and sell and service these vehicles through the following brands:  Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling. (Elizabeth, GM, 2009). GM was the largest automaker for 77 consecutive years from 1931 through 2007. It is longer than any other company in the world. In 2008, it was surpassed by Toyota (Elizabeth, GM, 2009).