... Technically, the above headline is wrong. Or part of it, anyway. That's because the new, or should I say, "current" General Motors is a separate and somewhat independent company from the old corporation. First of all, its name is different, since the new GM is actually called General Motors LLC (Limited Liability Company), although many car journos are now calling it "Government Motors". I would rather call it GMM, from General Machiavellian Motors. Second of all, even ex-CEO Fritz Henderson said last year that "the GM that let too many of you down is now history". Or is it?
The truth is that the "new" company bought pretty much all of ex-GM's assets, including the "General Motors" name trademark. On top of that, the "new" GM has roughly the same employees and is the father to almost the same number of car brands - minus Pontiac, Saturn, Saab and Hummer of course. In the eyes of most automotive analysts, the General Motors Limited Liability Company is just a slightly smaller and definitely more efficient clone of the former corporation, which was founded in 1908.
Why is it more efficient? Well, because apparently it's selling so many cars and making such good profits now that it managed to return the entire amount of the US and Canadian government loans it received to stay afloat last year, with interest. That's a grand total of 8.1 billion US dollars, which were paid back in less than a year since the former company's bankruptcy filing.
And that's not all. The new GM plans to do an initial public stock offering (IPO) sometime in 2010. With the money they hope to gather via this method, they plan to buy back the majority of their remaining equity stake. So, let me get this straight, not even a year has passed, and the new GM is back in business, healthier than ever? Talk about great business ideas and improved efficiency in the new company.
What's actually changed in the new GM, compared with the old one? Well, if we're only talking about figures, lots:
Still, even if you only look at the figures, something's not right. You can't go from a bankruptcy situation to a cash flow that's so improved you manage to pay off all your debts in just under a year. Or can you? I think you can, but only if you plan your moves right. You see, GM had the money to pay off the $8.1 billion all along, and this was all part of the restructuring stunt. That money was just used to boost customer confidence.
Now, is this an efficient strategy or not? Let's talk fiction for a minute. Let's say that I have a colossal chocolate-making company – heh, just like Willy Wonka - with tens of thousand of employees and dozens of factories. Even though the customers' perception about their favorite types of chocolate have changed along the years, I'm still trying to sell my trademarked gigantic chocolate bars.
Meanwhile, a couple of competing sweets manufacturers from Japan have started to make good money by selling smaller chocolate bars, which incidentally are just what the customers want. If I ought to change my whole marketing strategy and start selling what customers want, I would need to invest quite a hefty amount of moolah in a restructuring process. Obviously I don't want to do that, but I do want to keep my no. 1 chocolate manufacturer status.
How about if I use the customer's own money to finance my restructuring process, while also getting rid of any excess weight (too many employees, factories, chocolate brands selling the same types of chocolate, etc.)? I don't know how you call this idea, but I call it utterly machiavellian.
My prediction, considering the way things are currently moving, is that the "new" GM will return to the number 1 car manufacturer status – which they had kept for 77 consecutive years before – much closer than you might be inclined to think. And all at the cost of just a hefty chunk of tax-payers money and circa 20,000 jobs. Knowing this, how many of you still want to buy GM products?
The truth is that the "new" company bought pretty much all of ex-GM's assets, including the "General Motors" name trademark. On top of that, the "new" GM has roughly the same employees and is the father to almost the same number of car brands - minus Pontiac, Saturn, Saab and Hummer of course. In the eyes of most automotive analysts, the General Motors Limited Liability Company is just a slightly smaller and definitely more efficient clone of the former corporation, which was founded in 1908.
Why is it more efficient? Well, because apparently it's selling so many cars and making such good profits now that it managed to return the entire amount of the US and Canadian government loans it received to stay afloat last year, with interest. That's a grand total of 8.1 billion US dollars, which were paid back in less than a year since the former company's bankruptcy filing.
And that's not all. The new GM plans to do an initial public stock offering (IPO) sometime in 2010. With the money they hope to gather via this method, they plan to buy back the majority of their remaining equity stake. So, let me get this straight, not even a year has passed, and the new GM is back in business, healthier than ever? Talk about great business ideas and improved efficiency in the new company.
What's actually changed in the new GM, compared with the old one? Well, if we're only talking about figures, lots:
- the new GM has reduced its US workforce from about 91,000 employees to about 68,500;
- the number of US dealerships has decreased from 5,900 to about 3,600;
- no less than 13 American car plants have been closed, from a total of 47;
- the company's debts decreased about six times - down from almost a hundred billion US dollars.
Still, even if you only look at the figures, something's not right. You can't go from a bankruptcy situation to a cash flow that's so improved you manage to pay off all your debts in just under a year. Or can you? I think you can, but only if you plan your moves right. You see, GM had the money to pay off the $8.1 billion all along, and this was all part of the restructuring stunt. That money was just used to boost customer confidence.
Now, is this an efficient strategy or not? Let's talk fiction for a minute. Let's say that I have a colossal chocolate-making company – heh, just like Willy Wonka - with tens of thousand of employees and dozens of factories. Even though the customers' perception about their favorite types of chocolate have changed along the years, I'm still trying to sell my trademarked gigantic chocolate bars.
Meanwhile, a couple of competing sweets manufacturers from Japan have started to make good money by selling smaller chocolate bars, which incidentally are just what the customers want. If I ought to change my whole marketing strategy and start selling what customers want, I would need to invest quite a hefty amount of moolah in a restructuring process. Obviously I don't want to do that, but I do want to keep my no. 1 chocolate manufacturer status.
How about if I use the customer's own money to finance my restructuring process, while also getting rid of any excess weight (too many employees, factories, chocolate brands selling the same types of chocolate, etc.)? I don't know how you call this idea, but I call it utterly machiavellian.
My prediction, considering the way things are currently moving, is that the "new" GM will return to the number 1 car manufacturer status – which they had kept for 77 consecutive years before – much closer than you might be inclined to think. And all at the cost of just a hefty chunk of tax-payers money and circa 20,000 jobs. Knowing this, how many of you still want to buy GM products?
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