General Motors' Chapter 11 Bankruptcy Is Long Overdue

High union, health and retirement costs have been plaguing General Motors for years and now the Court will clean up the mess to make the world's former largest automaker leaner and competitive. Bankruptcy should have filed six or eight months ago. GM has needed significant union concessions for years and the only way to jolt them into giving up enough was bankruptcy. The Obama government had to give a non-bankruptcy a try because union workers are a big part of the Democrats' voter base. GM, "Government Motors", will be 60% -owned by the U.S. government or, really, us - the taxpayers.

GM says it "reached agreements with the U.S. Treasury and the governments of Canada and Ontario to accelerate its reinvention and create a leaner, stronger "New GM" positioned for a profitable, self-sustaining and competitive future."

Under its plan, GM will sell substantially all of its global assets to the New GM with approximately 3,600 U.S. dealers. GM dealers will continue to service GM vehicles and honor GM warranties, and U.S. and Canadian government guarantees of manufacturers' warranties are designed to reassure consumers.

None of GM's operations outside of the U.S. are included in the U.S. court filings or court-supervised process, and these filings have no direct legal impact on GM's plans and operations outside the U.S. GM confirmed that all business operations are continuing without interruption in its Europe; Latin America, Africa and the Middle East; and Asia Pacific regions.

The New GM will focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC - with fewer nameplates and a more competitive level of marketing support per brand. The GM News Release claims that they will "effectively close the competitive gap in active worker labor costs compared with transplant auto manufacturers."

The GM news release says they'll "achieve its lower structural costs in part by further reducing 2009 salaried employment in North America from its year-end total of 35,100 to approximately 27,200, and continuing to improve its balance sheet by reducing retiree benefits for salaried retirees and non-UAW hourly retirees."

New GM expected to launch as an independent company approximately 60 to 90 days after June 1, 2009

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• Posted by: Richard Saxton June 1, 2009, 8:18 AM
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