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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > July > 15 > Entry
Editorial: GM gets shot at new life surprisingly fast
With all the bad economic news these days, when something important actually goes better than expected, that should be noted.
Not long ago, the idea of an automaker going into bankruptcy seemed unthinkable, because bankruptcy proceedings go on forever, and nobody would buy a car from a company in bankruptcy.
Then Chrysler emerged from its bankruptcy in about a month. Even then, however, when General Motors entered bankruptcy proceedings, warnings were heard that things couldn’t be expected to go so quickly for GM, which was in a more complex situation.
But now, after about a month, GM has emerged in the form of a new company.
The law allows for a bankrupt company to be split into two companies, a good one and a bad one. The good one — the one with all the positive assets — gets a new lease on life. The bad — the one with the empty factories and big debts — heads toward death, as the court presides.
The provision almost sounds as if it was created for the auto companies. But it wasn’t. It was there before.
What’s now being called the new GM — and will officially be called the General Motors Company — looks a lot like what critics have said GM should have looked like all along: fewer models, fewer plants, fewer employees, fewer executives, fewer dealerships and much tougher union contracts. The company will make only Chevrolet, Buick, Cadillac and GMC vehicles.
The company’s design doesn’t assure its survival. It still has to make cars people want. But the top executives are saying that all the changes noted above will be accompanied by changes — and even foster changes — in the company’s culture that will result in such products.
(Toward that end, too, the new GM announced that it is canceling the retirement of Robert A Lutz, 78, who directed development of the electric car, the Volt, due in showrooms next year. Not all GM critics will be happy about that news, though.)
Make no mistake: It’s still a big company. GM will have 34 plants in this country, down from 47 last year. It’ll have 64,000 employees domestically (down from 91,000 last year). The worldwide number is 235,000. It’ll presumably still have a large share of the huge U.S. auto market, if not the 20 percent it had before the recession. (It also has half a million retirees.)
Because of its size, the company’s survival — albeit expensive to American taxpayers, at least pending repayment of $50 billion in loans — is better than the alternative: liquidation.
Bankruptcy Judge Robert E. Gerber rightly said liquidation would be “staggering” to the public. He wrote of the possibility of “grievous damage to all of the communities in which GM operates.”
The news of last week — when the new GM emerged — was certainly not all good, however. Leaders of the International Union of Electronic Workers-Communication Workers of America (IUE-CWA) are up in arms about the health care benefits of their retirees, including many in the Dayton area. That issue hasn’t been dealt with properly. An editorial on the subject will be in this space tomorrow.
Still, after a long, bumpy ride — though not as long as some had feared — a fabled American corporation comes out with a shot at new life. That’s good news for a lot of communities in the Midwest, which still have a lot riding on GM vehicles.
As bad as things are, they could be a lot worse.
Permalink | Comments (3) | Post your comment | Categories: Auto industry, Economy, Editorials, Local Business, Martin Gottlieb
Comments
By Rob
July 14, 2009 1:01 PM | Link to this
Too bad they still produce GM vehicles…By jim
July 14, 2009 2:15 PM | Link to this
My goodness the DDN editorial board is stupid. The law doesn’t allow for GM to be split into two new companies. GM’s assets were sold to a newly formed company, owned mostly by the government. It’s a totally different entity that was never in bankruptcy and never even existed until the government decided to organize it.By Carlos
July 15, 2009 8:49 AM | Link to this
I didn’t run it in the ground.