30 May 2009

The Future of GM - Government Motors

Roughly $20 Billion and over half a year later, the government appears ready and willing to let GM sink into bankruptcy. This is bad for the taxpayer because, well, we lose ALL of the money the government so wisely invested on our behalf in exchange for what? Ownership in a bankrupt entity. Just like the government’s unwillingness to accept repayment of TARP money (because they like the power they now have), GM will never be a privately owned entity again.

But we will have to share this "public" ownership with the UAW – the union that helped transform this once proud icon of America into the suckling pig that it is today now run by bureaucrats who have intruded entirely too far into private enterprise. Meanwhile, like the Chrysler deal, the investors are last to the table once again succumbing to the government’s extortive “take it or leave it” offer of pittance on the dollar. Is this a great country or what?

But the bankruptcy plan (which we ALL knew was coming) is doomed to fail from the get-go for a myriad of reasons. Here’s my prediction… whatever entity(ies) come out of this disaster-in-the-making, they will all fail. Old GM. New GM. Doesn’t matter. GM will ultimately fail. Here’s why…

Let me give you a snapshot into the thinking of 55 million Americans who did not vote for the current CEO of GM. A lifelong friend of mine sent me an email today (hat tip: Nathan G.) sharing the following:

“I am a Capitalist and I believe you are on the same page with me. I am for every sized business to be successful and to grow within its possibilities. I hate to see a business fail, but it is natural for these things to happen. Supply and demand will always dictate one's profit. Customer service is what I believe sets one profitable company light years ahead of its competition. I digress...

As we have watched our economy seemingly swirl into the downward spiral we hear more and more about these companies taking bailouts...which I think is the most un-American thing in the world. Bankruptcy was created for failed business to pay off their creditors, but now we have a whole new level in effect. This is Fascism!

Here is where I stand. I am never going to do business with any company that has taken a handout from the government ever again. Yes, you read that correctly. The only sector where I might not be able to inject this philosophy is the banking world. I have sold my Tahoe, took the equity and put it in the bank. I would have never bought a Chrysler in the first place, but I am never buying a GM product ever again. As a matter of fact, Melissa and I sold both our cars and we have a new one and just one. Life is so much simpler. Oh, what did I buy? We got Melissa a brand new ML 350 which is, yes, a Mercedes, but it is built in Alabama by Americans. So, if the money may eventually wind up in a foreign country, the person who built it is right here and there is my oddball justification.

I want to see where this could lead, but I am sickened to think that if I bought a GM product in the future I am filling the pockets of UAW people who are nothing more than crooks in the first place and are part of the reason why the car companies have failed. Hmmm, Michigan....what a nice state you have there....how is the employment?”

My guess is that there are thousands if not millions of potential vehicle purchasers in the market at any given time. As the Obama administration takes the reins at GM, people will take their business elsewhere. People like Nathan will look for alternatives and they will find them. Toyota. Nissan. Hyundai. Mercedes-Benz. BMW. Others. There are many manufacturers to choose from who can meet each and every need any car buyer could want. Heck, the “new GM” may even save Ford and may even make them profitable!

So, as the “new GM” starts putting out small cars with small engines to placate the green movement, people will go elsewhere. As long as gas is under $4 a gallon, you can bet that Americans will continue their love affair with powerful, large cars. If the last price hike didn’t stop it, nothing short of $5 a gallon will – if then. (Couple that with the Obama tax increases and it may kill the economy anyway…).

Having the government as the primary owner of GM will not set well with a vast majority of Americans. They will express this displeasure both at the ballot box (eventually) and on the showroom floor. Regardless of which brands remain of GM at the end of the day, people are not going to want to deal with another bureaucracy for something so vitally important to them.

Soon enough, the new GM will be the old GM and the old GM will be ancient history. But the problem will be the same… an incompetent, inept management group that continues to anchor themselves to union labor and trying to rely on the political & ideological in order to run a major corporation. The government has never run anything efficiently. Education. Ruined. Social Security. Bankrupt. Now automakers, banks, and coming soon, healthcare

A Democrat-controlled government will always want to tell you what you can and can’t do because you are only smart enough to pull the lever for them in November. Other than that, you are a moron who needs to be saved from yourself. But feel free to have a couple of kids to fill the pipeline.

Hopefully by November of 2010 America will realize that the “Check Engine” light is on and trade their “new GM” in on a more reliable model.


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