GM promises a “new beginning”

Well that’s really awesome isn’t it? The government pushed in money, you fleeced secured bondholders going straight against bankrupcy procedure, and all you can do is promise “a new beginning”. So, tell me – who on earth who isn’t completely out of their mind would purchase new GM stock next year? Oh, I forgot – it’s probably guaranteed by the US gov’t right?

Here’s a statement, with some questions :

CEO Fritz Henderson said the swift trip through Chapter 11 showed that GM can move fast, and added that GM will work hard to repay trust, not to mention the money committed to the struggling company by the U.S. and Canadian governments.

“Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers,” said Henderson.

How come you’ve been designing, building, and selling crappy cars and trucks up until now? What has changed? Why didn’t you serve the needs of your customers before? How is all this going to change just because you received an extra $50 billion and wrote off a lot of debt?

Detroit-based GM, kept afloat by government loans since January, filed for bankruptcy on June 1. The Obama administration committed $50 billion to GM as part of its bailout of the auto industry.Henderson said Friday that the company wants to repay loans “much sooner” than their due date, with a public offering of the stock as soon as next year.

What about the secured bond-holders? Will you pay them back as well? And why would you pay the government back when everyone knows you’ll be back begging for more bailouts within a few years?

At that point, the U.S. government will own 60.8% of the common stock and the Canadian government will hold 17.5%; the United Auto Workers retiree trust will own 17.5%, leaving 10% to the so-called old GM.

“We want to take that intensity, the decisiveness and the speed of these last several weeks and then transfer it from the battle field triage of the bankruptcy process to the day-to-day operation of the new company and this will be the new norm at General Motors,” Henderson said in a conference call.

Since the entire bankrupcy procedure was a big fraud, I am assuming that this means you want to, during day-to-day operations, include the norm of fleecing customers, steem-rolling your suppliers, stuffing the pockets of the UAW and demanding special favours from the US and Canadian governments. Sounds like a solid business-plan, eh?

GM, which has about $11 billion in U.S. debt, said it was able to slash its obligations by more than $40 billion, mostly from unsecured debt and the UAW benefits trust. GM explained that its government debt excludes $9 billion in preferred stock. To help GM build on its new product portfolio, long-time top designer Bob Lutz will come out of retirement as vice chairman. Still, GM will slash the number of U.S. executives by 35% and total white collar workers by 20% by the end of the year.

GM’s total U.S. employment will drop from about 91,000 workers at the end of 2008 to about 64,000 by the end of this year, the company said.

The one thing that GM managed to do was scale back. *Applause*. But you’re still leaking money to the UAW, and will continue to do so at a rate that makes you non-competitive on the auto-market.

“In recent years, GM has been burdened by its history, making it almost impossible to be truly competitive,” Jeremy Anwyl, CEO of car-buying research Web site Edmunds.com said. “This government-supported bankruptcy, while controversial, has created an opportunity — but not a guarantee — of success for the new GM.” GM’s exit from bankruptcy comes amid a historic downturn not only for the company but for the broader U.S. market, where consumers are still grappling with a reeling housing market, tighter credit and mounting job losses.

The most sad thing of it all is that they know the problem. “Burdened by its history”. Yes, it’s history of playing the cuddlies with the UAW, making the average cost per worker $25/hour more than say, that of Honda, Toyota or other automakers with factories in the US.

GM sales dropped by 33% in June to 174,785 cars and trucks.

Duh.

People can say what they want, but until GM has efficiently payed back the US government, and managed to run a company for profit for a few years, plus made up for all the secured bondholders that got fleeced – GM is still going to be called Government Motors. A fascist transformation of what was once a good business.