GM Restructuring Its Way Out Of The US
Bill Warner Friday, May 08, 2009
What a kick in the head. As part of its restructuring plan, GM plans to dramatically move manufacturing offshore, taking advantage of cheaper foreign labor. In addition, an increasing number of its cars will be sold in foreign countries. The taxpayers, through the Obama bailouts, have paid billions to save GM. At the same time, Obama has pounded GM management for a new plan, as the unions compromised nothing. Well, they now are about to have the plan from hell that will eliminate more US jobs, putting thousands of auto workers on the street.
The unions are destroying GM
What the heck did Obama and the unions expect. GM has a failed business model, mainly due to expensive management negotiated union contracts and an unaffordable debt structure, that cannot be fixed under its current labor cost assumptions. Now Obama is between a rock and a hard place. He has to decide if he will put further restrictions on GM to keep the US jobs, which will spell the demise of GM, or suffer the wrath of the liberals who elected him by losing jobs to foreign countries. This is yet another lesson why government should stay out of private sector businesses.
The bailout was a bad investment
Our taxpayer dollars have been spent foolishly, as Obama tries to save a company that is tied in knots with union contracts and work rules. Any investor looking at this deal would walk in a second. The business model is just not workable and needs a total bottoms up restructuring. GM is predictably trying to do that by getting out from under the oppressive unions by moving manufacturing operations overseas.
Let the free market system work
None of this had to happen. We should let GM declare bankruptcy and undergo a court ordered restructuring. The free market system would have fixed this situation quite nicely, and we would have had a great chance of saving a lot of auto worker jobs in the process. GM would have been saved. Now we face losing it all.
Filed Under: Business Operations, Managing Business Financials, International Business
Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.
Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.
