AFSCME 3357-HOF'S BLOG

GM Exits^* Stage Left
(^*from bankruptcy)



The new GM officially gets out of bankruptcy this morning after spending 40 days in the hole. In an interesting coincidence, 40 days is common time period in many religions for suffering before rebirth or enlightenment. That's how long Noah was cast adrift during the flood. That's how long Moses stayed on the mountain. That's how long Jesus spent wandering in the desert. IT's also the amount of time traditionally spent mourning the dead in Islam.

The total cost to the taxpayers to date is about $50 billion. By the end of 2009, GM is expected to have only 68,000 employees, down from about 90,000 at the beginning of this yesr. GM plans to cut about a third of its management jobs this year, starting in October. If you divide the $50 billion by the saved 68,000 jobs, each job saved cost $735,000, but that type of calculation would demonstrate the "damn lies" of statistics. For starters, the number of supplier jobs saved (including mine) is hard to calculate, but it would likely be several times the amount of the GM jobs saved. Secondly, this money has helped provide "soft landings" for laid-off employees. Finally, all of that money isn't lost. GM is holding on its books a substantial amount of government debt and common stock. In theory, that money might be paid back.

Here's how Autoblog describes the ownership structure of the new company.

GM has received $50 billion from the US government to keep the mega-corporation out of liquidation. For its troubles, Uncle Sam will receive a 60% stake in the new company. Canada, which pitched in $9 billion, will be 11.7% owners, while the UAW will receive 17.6%. Old GM will receive 10% of the new company to help creditors recoup some money. The "New GM" will be smaller in almost every way, with four fewer brands, a smaller presence in Europe, fewer employees, and a markedly more attractive balance sheet.

With the shedding of Pontiac, Saturn and Hummer, GM will no longer be the largest carmaker in America. Ford will take the lead. I keep meaning to write a blog entry on the emergence of Ford, but the real world and other events keep getting in the way. Maybe one day soon . . . .