Word: gm
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Dates: during 2000-2009
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Rick Wagoner, CEO of General Motors, the automaker in most imminent danger of failure, gave lawmakers three reasons Chapter 11 isn't an option. First, the special financing that usually tides companies over through reorganization is so scarce right now that GM might not be able to get enough to keep functioning. Second, the stigma of bankruptcy would deter consumers from buying GM cars. Third, GM is already in the midst of a dramatic reorganization that will pave the way to a profitable future...
...first two are good reasons for Congress to take the carmakers' pleas seriously--a shutdown of GM is not what anybody wants now. The third argument is more problematic. Yes, GM and the other automakers have cut costs sharply, especially since 2005, and the United Auto Workers union has made historic concessions. But GM could accomplish even more along those lines, plus reduce the big debts it has incurred trying to settle pension and retiree health-care obligations, under Chapter 11 protection...
...weeks now, the auto manufacturers, led by GM, have been warning that they are on the brink of bankruptcy. And they insist that in the current climate, without billions of dollars from Washington, bankruptcy would mean total liquidation, not the restructuring that many experts argue is the only real way to fix the industry. Given the complex, interdependent system of auto-parts suppliers, analysts warn that the loss of one of the Big Three could take down the entire sector - and with it some 2.5 million U.S. jobs - in a cascade effect...
...needed to bring costs down, and whether the proposed $25 billion in bridge loans wasn't simply a down payment. But several noted that Ford is at the head of the class. "My sense is that Ford has done a better job," said Senator Bob Corker, who added that "GM is spiraling downward and in serious trouble" and that Chrysler "barely has a heartbeat." He then called on Ron Gettelfinger, president of the United Auto Workers, to rate the companies. "I'd rank 'em Ford, Chrysler and General Motors," the union man responded. That won't get Mulally any more...
...American auto industry were to fail, the job losses for autoworkers and the consequences for other industries would be catastrophic: It is estimated that the collapse of General Motors, which is the closest of the Big Three to bankruptcy, would result in 2.5 million jobs losses, not only among GM employees, but also among parts suppliers, some of which would also fail. Given the centrality of the auto industry to the American economy, its failure could have unpredictable and wide-ranging repercussions. Rather than letting the auto companies fall victim to the free market, Congress needs to intervene by providing...