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Feb 18th 2009: GM is seeking an additional $16.6 billion from the U.S. Treasury -- for a total of up to $30 billion in loans -- and said it would run out of cash as soon as March without new federal funding. In addition, GM said it expected to be able to borrow up to $6 billion from foreign governments and nearly $8 billion from the U.S. Department of Energy. It warned that without $1.5 billion from asset sales in 2009 it would need even more cash.The price tag for saving GM and Chrysler has now ballooned to $39 billion at a time when Republicans are challenging plans for stepped-up spending and increased debt.GM is seeking an additional $16.6 billion from the U.S. Treasury -- for a total of up to $30 billion in loans -- and said it would run out of cash as soon as March without new federal funding. You see its not working??????

Feb 12th 2009 :GM has to file for bankruptcy and cannot go on with government funding! as they must follow their rivals with less salaries equal to their rivals, zero incentives & health care and lavish pension funds to survive. General Motors offered lucrative buyouts Tuesday to 74,000 employees - its entire U.S. hourly workforce but getting past the Union is a hard one but it seems they have resolved this. The company is making a range of offers, up to cash payments of $140,000 to the remaining 74,000 GM workers represented by the United Auto Workers union. They have to too survive. Theyt must bring in new workers at a lower cost. About 46,000 of the GM employees are eligible to retire today and they can take pension incentives worth between $45,000 to $62,500 to retire. Ford and Chrysler also have the provision in their new contracts to pay new hires less in salary and benefits. But their workforces are not nearly as old as the UAW membership at GM.

Blame the short sightedness of the execs and their expensive payouts and lavish lifestyles to start. But thats not the only issue here. For years GM were dominant in the SUV and pickup market but never looked for an instance at the small vehicle market or the gas saving vehicles that could have saved them. This means they never analysed their competition either. But, the story goes far back than this. Pure and simple they were caught up in the web of Unions, payouts for the growing numbers of pensioners and their families, health care that went beserk & exhorbitant sponsorships to sports and lavish exec lifestyles beyond belief with a total of 7 jets to use at will to shuttle them around.

The first is the Unions who control a lot of what goes on in GM. They needed their members to be safeguarded from being laid off so they set about making sure if members were laid off they still receive full pay till the next contract? Some GM workers retired in their early 50s?? so this means GM looks after them till they drop? and as they eat more Big Macs their health care costs keeps going crazy. GM agreed of course but did get some concessions that really never kept up with the rolling costs. And then having a health care system thats costing a fortune for GM which would normally fall on the government as in Japans case. USA have gone with the stars and felt like they were indestructible but the tide has now turned and its far to late to help a dead duck when a lot of the money is being blown on these costs. Billions of $$$ per year in fact--does $16 billion sound close??? How can you pay all this then make a profit from cars & parts that are now not wanted anymore?---you can't. Then we have the strikes and the parts strike in 2008 cost General Motors for the three-month strike at its parts supplier $1.8 billion before taxes.

Chapter 11 Bankruptcy would assist GM to release them from contracts that are not profitable; allow them to trim costs and could help them far better than injecting money into them-- this is the easy way out but it puts Obama & Co the government in the firing seat. But with no game plan of how to use the funds if it was to get them this is a worry---remember we are talking about funds that even the US government hasn't got---they just print more money but this is a sinking fund going to grow worse, not better as the retirement rate increases as with medical costs for the company & unions that won't budge too much. But if they came to Thailand and sold their USA ops then there could be hope for GM.As said Thailand is attractive and GM could save billions being away from the USA. Labour costs would be reduced drastically as with manufacturing costs so it makes sense to built and develop in Thailand with its good labour laws. By filing Chapter 11 they can get out of the USA and settle in Thailand like many other manufacturers are doing. But on the downside Gm & Ford Car factories are already present in Rayong province. They employ tens of thousands of Thai workers & provide affordable cars to the Thai market bringing billions of baht into the Thai economy from exports so if they go belly up then the Thai workers will also be sent dfown the road. Putting it in a nutshell the USA cannot manufacture effectively cost wise any longer??? so they need to rethink and bring their whole plants to Thailand which is a better option then trying to make in the USA. They will never make it if they continue to manufacture in the USA.
 

Look at GMs play costs. Sponsorships are higher than the other car companies and corporate sponsorship over the moon from Golf for Tiger (now cancelled) to NASCAR racing, many other sports & to promoting the Academy awards while in the meantime their ship is sinking. $US900m for the Olympics just a part of the game thats ended. Great for the execs as they get corporate boxes to sit in?? Surely they would have noted the high costs??? but they did nothing. They have never changed their policies on sponsorships and if anything never analysed to see if they actually worked or looked at grassroot small track events for the local populous who are normally the most loyal to brand names anycase. It’s the old elite school calling the shots & keeping to the old games when in the distance the competition streams ahead & they are left to stew.  GM have not had any game plans for the future. They have lived on their past wins and have thought themselves infallible from competition and when it did come it came from within.

The foreign companies like Toyota are now burning holes in GM and they do not have headaches of having loads of older staff in retirement, in house medical policies that keep going up, unions that hold them to ransom, outlandish corporate sponsorships etc; vehicles that burn a hole in the pocket, unions like the USA & changing technologies to keep up the pace for improvement. This allows them a lot of freedom from those extra burdens that GM is faced with which will be hard to turn around. In fact it is impossibe to turn this situation around as the baby boomers are coming into retirement en mass & a lot of money will be used to keep them alive at home. Are, but not in the case of the Japanese car market or India or China who are producing vehicles that cost less, last longer, use less fuel & can produce better. Now doesn't this make sense.

To bail GM out is just putting them into a deeper hole as they cannot turn around what is already implemented unless they file bankruptcy under Chapter 11 which will in fact help them if done right. Remember it saved the airlines & steel works and internal restructuring is far better than using tax payers money to do the work the execs should have done in the first place---- but the hard part of this story is will they. GM spends $2billion a month. Ok they sell assets but what are those assets worth today. Can they say and use last years property valuations, will they officially say how much they save by reducing execs salaries, payouts & percs & get rid of the social activities, jets & limos ----- on paper of course -. Or will they just keep pleading they need funds to survive taking the easy way out as then its the governments problems & they are free to go and play golf without looking over their shoulders..

GM -- spends $5.6 billion annually on health care for employees -- reported a loss of about $2.3 billion for North American operations in the first half of this fiscal year and announced a third-quarter loss of $1.6 billion so health care has gone nuts. Employees must pay for their own health care as well as retirees benefitting from health care via GM--- basically US retirees should pay for their own health care once they retire?

The union will not reopen the GM contract. The agreement will reduce GM retiree health care liability by about 25%, or $15 billion, and reduce annual health care costs for employees by about $3 billion, with cash savings of about $1 billion annually but when they said they would place billions in trust this has gone wrong. GM must have a game plan to reduce costs & be cost effective in this world today as the health care costs change or they like many others will fall in the dust they created---I don't think they can do it otherwise they wouldn't have asked in the first place. So much for exec confidence in this auto business!!!!.

High salaries have now affected GM with their labour contracts so they are paying a lot more to have their cars made in USA than moving to places like Thailand who have easier labour laws, sound work force that will not ask for too much & they are away from the Union fangs as in the USA. The past cannot replace the future, the changes made cannot be rectified in a day & GM must say its time to restructure alone or go belly up. Just think what these execs have been doing for the last 3 years and bet your life you will envy their day to day activities & pay packets they get.

If Obama rescues them due mainly due to the amount of unemployment he will create if he sits idle then we will see them collapse as the name of the game now is competition, viable manufacturing costs, less health costs & the likes of Toyota are hard to beat as they too will want to stay one step ahead for sure. Obama will have to deal with health care & who pays, take over GM, run the risk of bad karma if he doesn't help, get rid of the execs & have a game plan for retirees like put them on a pension with zero benefits, that are a burden as we know. Employees and retirees must start looking at less benefits for it to work. Its wake up time America as the government has no experience to run a Car manufacturing business. The USA started this subprime mess & the likes of GM from millions to billions -- now you reap what you sow --- as the peak has been reached and its time to drop back down to the early 90s levels. You can't keep pumping billions into a company that cannot show a profit while it pays more money out for retirees sitting at home poping heart pills & sifting thru Pizza Hutt- - US companies cannot sustain this over indulgence. Helping GM, Ford and Chrysler will certainly lead the USA into the depression that must come about as it will wake up the USA and other companies in similar circumstances to follow suit. Either rethink or go bust

Dec 10th on CNN: South Carolina Republican Sen. Jim DeMint, who plans to appear with Ensign at Wednesday's press conference, said he fully supports "extending debate" on the auto bailout legislation. "This bailout will hurt taxpayers, it won't help the economy, and it will prevent these car companies from becoming competitive. The only way for the automakers to survive is a complete restructuring that allows them to break free from the stranglehold of union bosses," said DeMint. If you think $15b is enough watch them all come back in the New Year for another handout as thats how things will be??????

2009 Obama is saying as we say the Recession was caused by the finance and banking execs who paid themselves large amounts of bonuses & salaries. These & their board of directors are the ones to blame to the financial collapse.

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BANKRUPTCY UNDER CHAPTERS 7 & 11

Chapter 11 of the Bankruptcy Code means to "reorganize" the company and try to become profitable. Management continues to run the day-to-day business operations but business decisions must be approved by a bankruptcy court.

Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors.

The investors who take the least risk are paid first. eg secured creditors take less risk because the credit that they extend is usually backed by collateral, like a mortgage or other company assets. They know they will get paid first if the company declares bankruptcy.

Bondholders have a greater potential for recovering their losses than stockholders, because bonds represent the debt of the company and the company has agreed to pay bondholders interest and to return their principal. Stockholders own the company, and take greater risk. They could make more money if the company does well, but they could lose money if the company does poorly. The owners are last in line to be repaid if the company fails. Bankruptcy laws determine the order of payment.