Now that Chrysler’s Chapter 11 restructuring process is well in hand, though hardly without further pain, beady eyes are now sharply focused on General Motors which has roughly two weeks to make a pact with bondholders and the United Auto Workers union or follow its smaller US rival into the hands of bankruptcy court.
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Will or won’t Fritz and co file Chapter 11? It’s looking increasingly likely. On Monday, CEO Henderson described that as probable and a certain T Geithner of the Obama bean counting department obligingly noted Treasury would ‘facilitate’ the move.
And it continued in that vein all week. Up piped Canada’s presently rather busy industry minister demanding advance notice of a GM Ch 11 filing in the US, as, on his side of the border, 2,200 Ontario GM employees walked out of the doomed Oshawa truck plant for the last time.
Then we heard GM execs were dumping stock, and word arrived, doubtless delighting the UAW and CAW, of where some of the cars no longer built in already closed or doomed North American plants were going to come from.
Then it became clear large axes had been raised over thousands of dealers (GM’s grim news was an eventual cut of 2,370) and the words ‘Chapter’ and ’11’ popped up yet again.
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By GlobalDataParallel to all this is the hard case currently known as General Motors Europe. Profitable for a time, yes, and capable of producing fine-looking products, yes, but, well, they’re not exactly biting off the German government’s hand to buy it, are they?
We’ve had numerous reports this week alone, there is some likelihood Magna might emerge triumphant with Russian help, but it ain’t in the least bit over until we see what happens in the US on 1 June. Meanwhile, one of the formidable opposition a New GME would face has opined on the other merger option currently on the table. Saab? Not too promising there, either.
In supplier land, the clammy hand of Ch 11 did tighten around Hayes Lemmerz but this was at least a ‘structured’ bankruptcy with lenders’ approval and due process is moving along apace. Lear, too, got clobbered by dismal Q1 output at the automakers and, ominously, is in “discussions with the company’s lenders and others regarding alternatives to address [our] capital structure” having deferred a default date to 30 June.
There was at least a bit of good supplier news from China and Hungary.
After Britain’s first decisive second world war victory at El Alamein, following several years of conflict, the late Sir Winston Churchill described it as ‘not the end, not even the beginning of the end, but perhaps the end of the beginning’. We’re starting to see a few comments like that for our recession-mired and credit-crunched autobiz to digest. From AT Kearney came suggestions pent-up demand could take the US market back up to 16m+ units by 2012 – not that far away now.
VW and PSA are getting on with Russian plant plans (there is a little optimism there after a grim spell), and VW is still on track in Chatanooga. Even little Ireland made our news this week, but it was not so good – the emerald bubble has well and truly burst.
Which is roughly the state of the rain-heavy clouds above News Ed Towers as the weekend beckons.
Have a good one.
Graeme Roberts
Deputy/News Editor
just-auto.com
