Look, no matter what your politics, you know that GM’s bankruptcy had to happen, and today happened to be the day. At his late-morning press conference (video below), President Obama stressed the positive, naturally: Government will get out quickly, warranties will be safe, today’s sacrifices will produce an America that “makes things” again.
It was a good statement of the facts, such as they are. Here is some of what he didn’t (and couldn’t) say to the nation. (Apologies to the parties depicted in the photo at right; it was too good to pass up.)
- The old GM will take at least a year, probably more, to accomplish its makeover to GM.2—which is predicated on the economy cooperating. But if the new company can’t pass the stress test of operating successfully in a 9-million-cars-a-year sales environment, what happens then? To be fair, no one can answer that.
- All the stakeholders (bondholders, UAW-CAW, the Treasury) want out ASAP, but transformation of the GM product line will take at least a year. Yet GM is in a better position than Chrysler, which has awful cars and will have to wait on Fiat to fill its pipeline. Ford may be the big gainer here.
- 20,000 people will be on the street, 12 plants (at least) will close, dealerships and some suppliers will go bye-bye, creating an enormous cascade of pain and economic cost.
- As Fritz Henderson acknowledged in his subsequent press conference, GM was carrying simply unsustainable debt and had no way out. You have to look at this as, he said, a “remarkable opportunity to address” balance sheet and product issues.
I then watched Jared Bernstein on Andrea Mitchell’s show (msnbc.com, not posted yet). He’s an economist and member of the auto task force, who was asked the big political question: “How would the government handle it if the company decided to keep promoting the sale of big gas-hogging trucks?”
His response: The government as shareholder has as its major concern the profitable running of the company. If it came to that, the government would want GM to sell trucks if it was the right management decision. The government’s environmental goals should be dealt with outside the boardroom.
That’s the first statement I’ve heard on what could be a very dicey issue. You’ve got to have hope.
Will the government be able to keep its political and social goals out of the boardroom?