42 responses so far ↓

• 1 Swade // Nov 21, 2008 at 3:50 pm

  Great analysis, Eggs. Good reading.

  The market share argument is often bought up by historians and analysts, but when you look at the way the industry has changed, I don’t see a way that GM could have possibly retained 50% market share. Apart from Microsoft, I can’t think of another international business with so many players and one of them having such a large share.

  The industry and the market has changed a lot since the 50s.

  I agree that C11 would be ideal if it could be done and not cause a panic. I just don’t see that happening, though. One thing I was thinking the other day is the backlash that GM would suffer from it’s own customers who were former employees. There must be thousands who would be adversely affected by a GM bankruptcy who are customers of theirs primarily becuase they used to work there.

  How many bankruptcy burned buyers will they lose and what will that do for their market share? Could a combined GM/Chrysler actually end up with less market share than when they were separate entities?

  These are very interesting times.

• 2 Bruce // Nov 21, 2008 at 3:56 pm

  It’s all very strange to me.

  If the USA had tax-supported (with the wealthy paying more of it than the less wealthy) universal health care as does every other major industrialized country in the world, the cost of auto industry labor and retirement would drop dramatically. US healthcare costs are incurred at the individual salary and benefits level of workers. And the workers and retirees would be healthier, live longer, and cost less. The US would be better off eliminating HMOs than auto manufacturers.

  I also see no reason to object to workers who do an honest day’s work being paid well for it. I don’t see the savings from building cars or parts of cars in low-wage countries being passed on to consumers . . . it looks more that the extra margins have gone into excessive executive remuneration (especially bonuses). Union bashing does not help GM; they have already made progress in controlling these costs.

  Build cars more or less where you sell them, change a fair price, cut the ratio of executive to worker salaries to a single digit, and stop making ordinary folks welfare cases. Those unionized salaries go right back into the economy, and a GM employee generates more economic spin off benefits than a Wal-Mart serf.

  I am not impressed by these very wealthy business tycoons who are willing to destroy the lives of hard-working, loyal people, and who do not contribute their fare share to the overall well-being of the society at large. All these calls for bankruptcy are just another form of playing with other people’s money (mostly workers), which seems to have been the problem that led to the current mess of the US and world economies.

  As I said, I’m no expert in all this, but I don’t like seeing my neighbor put out of work. I’m sure the CEOs can afford to lose their jobs more than GM employees.

• 3 Arnold // Nov 21, 2008 at 4:43 pm

  Here is another perspective presented not to cause controversy, but to give another perspective that is worth considering. In the end most of this type of ‘debate’ is really about the degree that we think politicians and bureaucrats can make decisions better than we can.

  Don’t Bailout U.S. Automakers–Untie Them
  November 20, 2008

  Washington, D.C. –Politicians across the spectrum are calling for an auto bailout, arguing that we cannot allow such large companies to fail.

  “If U.S. automakers cannot find a market fix for their problems, they must fail,” said Alex Epstein, an analyst at the Ayn Rand Center for Individual Rights. “They should go through bankruptcy proceedings so that creditors and owners can redeploy their assets as efficiently as possible.

  “Every day these companies remain in existence in their current form, they are destroying shareholder wealth and wasting worker effort. To preserve these companies with a bailout would be obscenely unfair. Every dollar of a bailout would come at the expense of those who did nothing to cause the auto mess.

  “There is one thing the government does owe the auto companies, however: freedom. For example, however the industry shakes out, automakers must be liberated from CAFE fuel economy laws that arbitrarily dictate what kind of cars they must sell, forcing them to sell millions of small cars that have no chance of profitability given consumer preferences. The auto industry must also be liberated from the Wagner Act, which gives unions the coercive negotiating power that railroaded the Big Three into their lavish, unprofitable wage and health plans. If a liberated Big Three can rejuvenate themselves, great; otherwise, a liberated next generation will be able to succeed where they failed.

  “Economic freedom is what created the American automotive industry and made it the envy of the world. Economic freedom is the only thing that can bring it back.”

  ### ### ###

  Mr. Epstein is an analyst at the Ayn Rand Center for Individual Rights, focusing on business issues.

  Mr. Epstein’s op-eds and letters to the editor have appeared in such publications as the Wall Street Journal, San Francisco Chronicle, Philadelphia Inquirer, Canada’s National Post, and the Washington Times. He is also a contributing writer for The Objective Standard, a quarterly journal of culture and politics. Mr. Epstein has been a guest on numerous nationally syndicated radio programs.

  Alex Epstein is available for interviews.
  Contact: David Holcberg
  E-mail: media@aynrandcenter.org
  Phone: (949) 222-6550 ext. 226

• 4 Snotfjold // Nov 21, 2008 at 6:00 pm

  Arnold, is that an alias for Alex? Yours is a highly political opinion not commonly seen here. The purpose of government is to govern the people, guide them through decisions they are just not capable of understanding or might be against the immediate will of the majority but in the end is better for everybody. A good government will do that together with the people.

  Giving everybody individual freedom without obligations is just a pipe dream of the ultra liberal. CAFE rules may be misguided in their execution but to have rules leading to vehicles using less CO2 and all the other pollutants they release is better for everybody. Allowing smokers to kill themself and the people around them may grant them freedom but not better lives.

  GM and the others have freely entered agreements with the UAW and see what that led to. The US system of individual healthcare insurances and pensions is evidence of an injust system that favors the “Haves” over the “Have nots” Individual freedom is what got the great US nation in to the mess it is in, failing to realize that is a sure way of repeating the mistakes in the future.

  I would not be surprised if Swade removes this comment. At least one saw then.

  No need for that. Comments are only removed if they’re abusive and I’ve only had to remove one or two in nearly four years. This is just a point of view. – SW

• 5 Markac // Nov 21, 2008 at 6:45 pm

  Great piece Eggs. You have underscored the point that change has to happen with GM and Chrysler or a bailout will just delay the inevitable. Chapter 11 or some kind of receivership is probably the only answer. Ford can possibly afford go down a softer route, but it has to change too. I think receivership is unusual in the US, but independant government appointed receivers for both GM and Chrysler who could administrate any bailout funds and try to determine a viable way forward, make a lot of sense.

• 6 ctm // Nov 21, 2008 at 6:58 pm

  A Chapter 11 may be fin for some reason. But, what will happen with all the suppliers during the process? How many will have to close the doors? How many employees will lose their jobs? And, even if the Big 3 raise from the ashes again, how much of the parts for the cars has to be bought from Asia instead because the US suppliers are not there anymore? Or are they gonna Chapter 11 a whole sector of the industry? It’s just impossible…

• 7 Ken H // Nov 21, 2008 at 7:17 pm

  As a comment to ctm and regarding parts suppliers – do you think they will vanish in thin air? The tools and people to produce the parts will be available for some period, even if they would have to shut down for a period. It may even be that some parts suppliers have reserves to survive a while. Remember, they may even have qualified owners…

• 8 ctm // Nov 21, 2008 at 7:49 pm

  Ken H

  What I mean is this. In a Chapter 11, I would assume that things do come to a standstill. In todays worlds, businesses like parts suppliers can’t afford even a short standstill. If GM put a hold on buying stuff from supplier Acme Inc. for just a few weeks, they are in deep trouble. No money in, no money out to pay salaries, rents, interest… They have to close down. And when they are closed down, someone else will clear out the shop to pay the banks. I think it’s unlikely that owners will just be idling their plants and losing money while they wait for the Big 3 to continue operation. Either you run the factory, or you close it down.

  Looking at the situation in Sweden, the parts suppliers are under a huge press from the buyers. They are basically obeying everything they say. And by having to do so, they can’t diversify and making other types of products. Everything they do have to be done to satisfy the auto company.

  And then if the Big 3 raises again… Do you think they will start their new streamlined cost-effective operations by giving huge orders to (maybe newly started) US suppliers with a high-paid work force, or will they give the orders to low-cost suppliers in South America and Asia to be able to compete with foreign brands?

• 9 van god los // Nov 21, 2008 at 8:29 pm

  I’m more and more convinced that the combination of chapter 11 with a loan from the government would be the best solution :

  the advantage of a chapter 11 is that the whole company could be easily reorganised. the problem is finding the necessary funds to go through chapter 11.

  if the goverment would give a loan on the condition that GM would go through chapter 11 proceedings, all problems could be solved and we can keep buying saabs.

  @swade : feel free to e-mail this idea to GM head quarters. They can send me a 9-3 convertible TTid in return.

• 10 Mailr // Nov 21, 2008 at 10:38 pm

  I agree with ctm, but a few months halt of operations for suppliers will most likely mean bankruptcy for a lot of suppliers (i.e. it’s not an option for the owners to hold out, it’s out of their hands). And as the suppliers have low profit margins already (most are likely to be in the red already), there will not likely be that many new applicants that steps up to get the wheels rolling again. Also, quality will go through the floor. The most likely net result is that chinese suppliers and car manufacturers will gain hugely in market share.

  Enough of this effect was actually seen during the local downturn in Sweden during the swedish banking crisis in 1992-1993, a lot of smaller suppliers that relied on Saab and Volvo alone went out of business and were replaced by non-swedish suppliers.

  Any solution that stops the wheels from turning will be very damaging.

• 11 The Fop // Nov 21, 2008 at 10:54 pm

  Just a personal p.o.v, but I think if they entered Chapter 11 there would not be much left afterwards to come out. If an airline is in Chapter 11, people will still fly. It does not matter to them that there is a good chance the company will be gone in three years time if they are flying next Tuesday. However, spending tens of tousands of dollars or Euros on a car whose manufacturer may not be around to provide service support after a couple of years is a much bigger gamble, and evidence suggests not one the majority or people would take. There is a precedent in the Rover Group in the UK – once they got close to the dreaded “B” word it was pretty much over. The residuals on the cars fell so fast it was frightening – you could barely give them away. If that were to happen to GM I doubt much would survive, and I don’t see that Saab is a viable concern on a stand-alone basis. My fingers are crossed that some sort of stop-gap funding is put in place until the economy recovers – they can still do the restructuring, but not in the guise of a bankrupt company.

• 12 eggsngrits // Nov 21, 2008 at 11:31 pm

  Taking these one by one:

  Thanks all for the compliments.

  Swade: I agree with your market share comment, it was bound t change some.

  Bruce: UAW-style socialism didn’t really work out so well. Why bring it up now? UAW workers have been inflating their pocketbooks for years and they’ve killed initiative and market share. I don’t think that Rick Waggoner is worth $9 million per year either, but far be it from me to assume that someone else isn’t. The secret ingredient is competition. Without competition, Detroit’s excesses were masked. With competition, their weaknesses are exposed. Are people forcing labor in Marysville, Ohio or Smyrna, Tennessee or Georgetown, Kentucky to work? No! These people are fairly paid. They do not have the legacy costs and union benefits. They are eating GM’s lunch everyday.

  ctm, et al: Chapter 11 does NOT mean a halt to business. In chapter 11, suppliers have a greater voice in decisions, actually, because they are net creditors.

  van god los: That idea was already proposed by some others, but good thought. I think that something along those lines will be the end answer.

• 13 eggsngrits // Nov 21, 2008 at 11:39 pm

  The Fop: Yes, in a perfect world, you would be correct, however someone needs to break the union and dealership contracts. Bankruptcy is the only way to affect those two things without having to handle a huge number of lawsuits individually.

  As for the service and warranty, there are potential remedies — third-party guarantees, etc.

  It’s not perfect, I’ll admit, and for Jack Welch to say that it’s very difficult, it really is. But something drastic has to happen now. Right now.

• 14 joemama // Nov 22, 2008 at 12:26 am

  ctm – while I can see people’s concerns for the suppliers and dealers, this is part of the risk of being in business…Sh$t happens.

  It’s not a perfect world, and America is not a socialist country.

• 15 ctm // Nov 22, 2008 at 12:44 am

  eggs

  Thanks for the info. I “no nooothing” about US laws and regulations. But I doubt that a Chapter 11 would work here. I know that some of the US airline industry have been operating under Chapter 11. But that is another story. They do not have massive contract with suppliers, but rather large loans or rents on machines. What they sell cost far less than a new car. When the costumer buys a seat, they just want to make the trip. What happens with the company they day after is of no interest. On the other hand, a car is an investment. You expect warranties and service a few years on at a minimum. And you also want to sell the car later on at a reasonable price. If a car manufacturer goes Chapter 11, I fear the market will be dead as very dead dodo for that/those bands. Sure, you will probably be able to find spare parts for a Chevy for many years in the US, but the market for the used cars will be dead and thereby hardly no one will by a new one.

  joemama

  Yep, but that is what I meant. You try to save some jobs by Chapter 11, but will lose tons of others. I think that the only that can be done are those loans from the government. Surely, some strings must be attached but they need money. And the UAW has to get their act together and stop whining…

• 16 gordon // Nov 22, 2008 at 12:56 am

  You might want to check your facts on “universal healthcare.” Government paid free health care exists in Sweden, France, England, and Canada. I read that Australia’s auto companies want a bailout too. I’m not sure about Italy, Japan, or Korea, but it is in Germany, China, India, and Mexico, you need insurance, money or employer payment. So when you look at which of these countries have strong internationally successful car manufacturing businesses, it may not be the ones with free health care for all. Jeremy Clarkson at least would say that it was the union strikes and the socialists that destroyed the British auto industry. Not even Honda was able to save Rover.

• 17 The Fop // Nov 22, 2008 at 1:04 am

  eggsngrits
  You may well be right, and Chapter 11 may be the only way to get big concessions from the UAW. However, as a resident of the small damp island near Paris (!) and therefore a close observer of the Rover debacle, I saw what happened when the smell of death hung around them. They died. I truly hope that you are right, but I fear you may not be. Latest reports suggest UAW is negotating possible cessation of the jobs bank – maybe even out of bankruptcy a few sacred cows will prove fodder for burgers.
  As before, my fingers are crossed for a good outcome – by whatever mechanism. I just want to be sure I will get to see that bl**dy new 9-5 launched before I get too old to drive one.

• 18 eggsngrits // Nov 22, 2008 at 1:35 am

  Gordon: Good point. As a mitigating circumstance, Germany, France and India are very protectionist — quotas and tarriffs are not used in the United States to level the playing field. China says that they are not protectionist, but they absolutely are perhaps the most one-way export-only economy on the planet.

  If the US slapped about a $2500 tarriff on off-shore brands GM would have huge market share once again.

• 19 zippy // Nov 22, 2008 at 1:35 am

  What I dont understand is the US Administration very quickly gave money to the people who created the credit crisis in the first place with absolutley no restrictions yet they are reluctant to assist the car industry that employs directly and indirectly 7000000 people in North America.

• 20 eggsngrits // Nov 22, 2008 at 1:38 am

  Zippy: Well said. The credit crisis is a huge debacle and I am frankly not good with the bailout.

• 21 Curtis // Nov 22, 2008 at 2:17 am

  I guess I would agree with allowing them to fail. Give them money and they have no motivation to change. People lose jobs everyday, they will find another one. This situation really needs to progress on it’s own with NO government help.

• 22 van god los // Nov 22, 2008 at 2:19 am

  @ gordon : “You might want to check your facts on “universal healthcare.” Government paid free health care exists in Sweden, France, England, and Canada. I read that Australia’s auto companies want a bailout too. I’m not sure about Italy, Japan, or Korea, but it is in Germany, China, India, and Mexico, you need insurance, money or employer payment. So when you look at which of these countries have strong internationally successful car manufacturing businesses, it may not be the ones with free health care for all.”

  Belgian has reimbursed health care. The reimbursement is paid by funds who get there money from employers and employees. The thing is, all employers are legally obliged to contribute a certain percentage of the salaries to these funds. As far as I know, France has a similar system of mixed financing by employers and employees.

  Important is that the governments organises and obliges everyone to contribute one way or the other to the health care. Who actually picks up the bill (the insurance company, the employee, the employer, the government), is just a practical arrangement.

  The point is, if the government makes sure, by law, that everyone or every employee is entitled to health car, the employers can not get a competitive advantage by not giving health care to their employees (because every employers has to do this).

• 23 Alex // Nov 22, 2008 at 3:04 am

  Amen to what Bruce said, let’s not penalize the workers for the management’s stupidity through layoffs, downsizing, etc. Take a look at how the Japanese do things, the CEO’s of Toyota and Honda make salaries that aren’t even in the double-digit millions. I’m sure that even Steve Shannon made more than those guys do and look at what he for his company did versus what they’ve done for theirs.

  The Japanese just have a different way of looking at executive salaries, and they value the honor of reaching the position of CEO far more than they care about monetary compensation. Rather than focusing on near-term profits, they focus on re-investing into their product lines and their manufacturing facilities to keep costs as low as possible while keeping their products ahead of the curve. It’s no wonder then that they’re kicking GM’s asses.

  But let’s not try to make the UAW out to be at fault for the majority of this, though even I think their salaries are a bit high for the work they do, if I was working for a company where the executives were as ridiculously overpaid as GM’s are (while they keep slashing line worker jobs) then hell I’d be just as interested in getting my share of the pie. And this is where bankruptcy comes in, there’s no way that the management at GM are ever going to make any sort of meaningful changes to their way of doing things (have you heard Wagoner and Lutz promising to drop their executive compensation to be in line with Toyota or Honda’s? I sure haven’t) as long as they are still in control of the company. The company needs a complete teardown-rebuild of it’s management structure, an executive purge if you will, and the only way that could ever happen is under a chapter 11 restructuring.

  Sure, it’ll be hell for a few months, but that will make it that much more important for GM to quickly and efficiently make the changes that it needs to survive in the long term. The bailout as it currently stands feels too much like throwing good money after bad for me to support it, it’s time has come and gone. Now GM needs something much more drastic.

  As to the other two, I think Ford is looking pretty good, they’ll likely pull through this as the least affected of the three (and you can see why in the quality of their products, they’re the only US company who’s stuff just exudes that same sense of quality that the Japanese cars do). I don’t think Chrysler will merge with GM, that sounds like a terrible idea that will alienate consumers, cause massive layoffs while making GM’s problems with it’s overlapping lineup that much worse. Chrysler does big cars/vans, trucks, and SUV’s quite well, what I can forsee is Chrysler forming a partnership with someone who does small cars well but has either a small or nonexistent market presence in the US. Someone like Fiat, PSA, or maybe even someone like Suzuki.

• 24 Ned // Nov 22, 2008 at 3:42 am

  I’m happy Congress has now directed the automakers to set forth specific plans for using federal loans as a condition for those loans, and delayed discussions for a couple of weeks. As time passes, pressure mounts, and Congress gains leverage over the automakers and the unions. In theory, this might lead to some drastic changes outside bankruptcy court, e.g., a substantial concession from the UAW or a decision by GM to eliminate one or more brands. The automakers’ plans will also set the stage for a “prepackaged” Chapter 11, with debtor-in-possession financing from the federal government, as Van God Los stated. This was the right move by Congress.

  I have been concerned about the huge fallout in consumer confidence from Chapter 11, but GM’s dire circumstances have seeped into the public consciousness already, so much of the damage has already been done. Therefore, if the bankruptcy is properly managed, both in substance and, critically, from a public relations standpoint by the companies and government, it might work.

  Indeed, Congress forcing the automakers to disclose their plans will help with the eventual PR campaign, because Congress can emphasize it made the loans “only with deep faith” about the viability of the companies.

• 25 Troll96 // Nov 22, 2008 at 5:35 am

  No matter what executives get paid (or whether they are worth it), their total compensation is a drop in the bucket compared to total corporate expenditures. Much as we like to complain about it (and we should), executive pay does not threaten corporate survival.

  If this is a global crisis, why is it that American car companies are getting hit the hardest? Well, it isn’t a free market if you have to pay workers whether they work or not. It isn’t a free market when your competitors can undersell you in the US, but you must face protectionism and coercive technology-sharing agreements abroad. And it isn’t a free market when you have to go shopping in the marketplace for financing while competitors benefit from long-term cozy relationships with banking conglomerates.

  No doubt bankruptcy would be painful, but people will still buy cars from somebody. Those companies that are structured to survive bad times will. We could learn from the example of Korea from 1998-2000. During that time, two of their Big Three (Daewoo and Kia) went bankrupt and the government threatened the third (Hyundai) with bankruptcy if it did not restructure. In the end, the government, which had coddled these companies from their inception, forced a merger between Kia and Hyundai. It also forced the sale of Daewoo to a foreign automaker (GM) under threat of total liquidation. Today, Daewoo makes one of GM’s hottest selling cars (Aveo) and Hyundai is making big strides as an innovative company, especially with its new Genesis model. Maybe tough love works after all.

• 26 eggsngrits // Nov 22, 2008 at 8:31 am

  Alex said: “Take a look at how the Japanese do things, the CEO’s of Toyota and Honda make salaries that aren’t even in the double-digit millions.”

  The Japanese also defend their domestic plants from the UAW as if the union is a plague. The UAW is a huge part of this problem, you can’t deny it.

• 27 ctm // Nov 22, 2008 at 9:05 am

  eggs,

  Did you see the stuff over at leftlanenews earlier about a “prepackaged bankruptcy plan?

  “U.S. President-Elect Barack Obama is said to be considering a ‘prepackaged bankruptcy’ plan for the Detroit Three automakers. Prepackaged bankruptcy is a strategy whereby a detailed plan for restructuring and creditor settlements are established before a Chapter 11 bankruptcy filing is initiated. Settlements with creditors and renegotiation of contracts takes place out of court, ahead of the actual proceedings.”

  That would address some of the issues I have with a Chapter 11. That is, it starts and then they wash the dirty laundry in public for months and months and months (we talking about some big corporations here – it’s not gonna be done in a week!) and the process would just scare every sane buyers away.

• 28 Dippen // Nov 22, 2008 at 9:45 am

  DETROIT (Reuters) – General Motors Corp will return two of its leased corporate jets amid intense criticism in Washington this week on the luxury travel arrangements of its chief executive even as the company pleads for federal aid

  http://www.reuters.com/article/topNews/idUSTRE4AK5EG20081121

  another of those funny buyouts:)

  Opel Dealers Want GM’s Euro Arm

  Javier Espinoza, 11.21.08, 01:00 PM EST
  German auto traders may ‘’seriously” make a bid for General Motors division.

  http://www.forbes.com/markets/2008/11/21/opel-gm-update-markets-equity-cx_je_1121markets14.html

• 29 joemama // Nov 22, 2008 at 2:09 pm

  And so it (really) begins…..

• 30 PT // Nov 23, 2008 at 10:56 am

  Mailr

  – interested in your comment re the 92-93 Swedish banking crisis. Was this a precipitating event for GM to up its stake in SAAB ? I don’t know the timelines or transactions in this period well – can anyone enlighten?

• 31 Markac // Nov 23, 2008 at 11:12 am

  PT: GM bought the first half of Saab on December 1st 1989.

• 32 eggsngrits // Nov 23, 2008 at 2:16 pm

  …and I believe the second half in 1991.

  You Swedes correct me if I’m mis-remembering this, but the Swedish currency was really down during that span of years, so it did play a role in GM’s purchase of Saab, but indirectly. Saab and Scania were struggling in part because the currency devaluation left the companies strapped for capital and it also made the purchase that much cheaper for off shore buyers like GM. It’s no coincidence that Volvo was purchased by Ford around the same time.

• 33 eggsngrits // Nov 23, 2008 at 2:18 pm

  ctm: Yes, I did see the ‘pre-packaged’ plan. Rick Wagoner called it “a fantasy”.

• 34 Markac // Nov 23, 2008 at 3:18 pm

  Actually I made a typo. GM bought the first half of Saab on 31st December 1989 and exercised it’s option to buy the second half from Investor AB ten years later.

• 35 ctm // Nov 23, 2008 at 6:21 pm

  I’m not sure here (just woke up…), but I think the official break up of Saab-Scania and the creation of Saab Automobile was in 1990. It was only the presentation of the deal that took place in December 1989.

  Saab was very successful in the mid-eighties. But in 88-89, the situation rapidly got worse. I guess that the looming financial crises in Sweden was part of the problem, but also (as usual…) the model lineup. They had the 900 (a 10 year old sedan and hatchback) and the 9000 (a 4 year old sedan and hatchback). Déjà vu, anyone?

  Also (but I only go from memories), the option for GM to buy the rest of Saab was penned later on, like 1995 or something. But I’m not sure. Anyone has the official company history regarding these “legal” matters? Can’t find anything at the Saab web site about this.

• 36 Markac // Nov 23, 2008 at 7:25 pm

  In the late eighties Saab looked at building a new 900 on a downsized Saab 9000 platform but this did not prove to be cost effective. It lacked sufficient funds to design a new platform from scratch and it appears it was unable to arrange a deal with another manufacturer like it had done with Fiat to produce the 9000’s platform.

  Announcenment of the sale of half of Saab: http://query.nytimes.com/gst/fullpage.html?res=950DEFDA173AF935A25751C1A96F948260

  It is interesting to note that at the moment, Saab is an a very similar position as it was when GM accquired the first half of it. It has one old car and one middle aged one. We have yet to actually see anything else.

  It is also interesting to note that GM did not accquire the second half of Saab until it’s option had almost expired.

  GM buys remainder of Saab: http://findarticles.com/p/articles/mi_qn4182/is_20000111/ai_n10135025

• 37 Danni // Nov 23, 2008 at 7:42 pm

  I think ultimately the question that needs to be answered is whether GM is worth saving thru a bailout or not. Losing it will surely wreck the U.S. economy as the entire domestic automotive plants and their tiered up group of suppliers will surely goe pear-shaped. And then there is the labor unions. So should the market dictate what happens to GM or should the central government intervene as both the current incumbent and the President-elect seems to suggest?

  I personally think what is wrong with America Inc is that the whole gamut of businesses and plants is that they need to get ahead of the pack: take GM is an example. Someone said that GM can manufacture high-quality cars, but it neither makes the right kind nor markets them effectively. GM has taught us a lesson in how to effectively mess manage some of your international acquisitions. To quote from the FT – Last Word: “Saab is a perfect example of a niche, much-loved brand that General Motors could have used to launch a series of clever-looking and performing vehicles. Instead, they’ve left that territory wide open to Subaru to exploit.” [end of quote]. Tie this up to the comments elucidated in Part III of Swade’s interview with Eric Geers and everything seems to conjure images of a lost opportunity.

  Ultimately, what is certainly for sure is that the current management has had their time and unfortunately, for them all, the proverbial hand-writing is on the wall: mene, mene, tekel, parsin -focusing on the Tekel part – “GM has been weighed in the balances and have been found deficient.”

• 38 Markac // Nov 23, 2008 at 7:48 pm

  In the late eighties Saab-Scania’s car division looked at building a new 900 on a downsized Saab 9000 platform but this did not prove to be cost effective. It lacked sufficient funds to design a new platform from scratch and it appears it was unable to arrange a deal with another manufacturer like it had done with Fiat to produce the 9000’s platform.
  It took a deal with GM because it was the only deal that didn’t involve selling a controlling interest in the car division.

  It is deja vu to note that at the moment Saab is an a very similar position as it was when GM accquired the first half of it. It has one old car and one middle aged one. We have yet to actually see anything else.

  1989 Announcenment of the sale of half of Saab: http://query.nytimes.com/gst/fullpage.html?res=950DEFDA173AF935A25751C1A96F948260

• 39 Markac // Nov 23, 2008 at 7:51 pm

  Strangely GM did not accquire the second half of Saab until it’s option had almost expired. The were a number doubts expressed that it actually would.

  GM buys remaining 50% of Saab: http://findarticles.com/p/articles/mi_qn4182/is_20000111/ai_n10135025

• 40 Markac // Nov 23, 2008 at 7:56 pm

  It is somewhat strange to note that GM did not accquire the second half of Saab until it’s option had almost expired. At the time there were some doubts expressed tht it actually would.

• 41 Snotfjold // Nov 24, 2008 at 5:38 pm

  I seem to remember that there was a split of ownership between GM and Opel on this one, does anybody know? This might have a bearing if Opel manages to jump the sinking ship.

• 42 eggsngrits // Nov 25, 2008 at 4:49 am

  GM owns 100% of Opel.