Blog: GM and Chapter 11
Dave Leggett | 11 November 2008
The enormity of the seismic shift happening in Detroit is still sinking in. There's not much time and it's quite a dilemma for the US government. Would a 'bailout' be the right thing to do? What would it really mean and would it just be delaying the inevitable, throwing good money after bad?
Is Chapter 11 actually what GM needs to get its US house in order? Would that enable it to slim down, reduce cost (and shake up the UAW deals further) and eventually emerge leaner and fitter? What would US ops in Ch 11 mean for the rest of the company outside US? Business as usual?
There's the oft-cited case of the US airlines emerging from Ch 11 restructured and able to carry on, but what about a car company in Ch 11? What would that mean for customers (and perceptions) and would it really be workable?
There are lots of questions being looked into now and I get the impression we have moved on a little since Friday. It's become 'what are the implications of Ch 11 and what does it really mean?' rather than simply 'how is it avoided?'. And for the new administration in the White House, it's a time for careful evaluation of options rather than a rush of blood.
How do you avoid the full disappearance of 'Detroit', maximise retention of the good, remove what's bad or diseased and end up with companies that are commercially viable, making competitive products that people actually want and can believe in? Ah, that last thing, 'belief'. That will take some doing, whichever scenario we're talking about.
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