BREAKING NEWS! BREAKING NEWS!
The auditors (Deloitte & Touche LLP) for General Motors Corporation has raised 'substantial doubt" that the automaker can continue to operate given the economic and sales climate facing the auto industry. It's reports indicate that it may have to seek bankruptcy protection if it is unable to fully execute a tremendous restructuring of it's debt and finances.
GM communicate the results of the audit to the Securities and Exchange Commission today. The report said "The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern."
This will no doubt be a substantial blow to its stakeholders, dealers and customers and comes in the midst of ever growing government bailouts and request for more money from the U.S. Government. The automaker has already received more than $13.4 Billion dollars in federal money and is asking for another $16.6 Billion to keep its doors open.
I have voiced strong opinion that GM as a going concern will have to sell off divisions and completely reinvent itself, Change its focus and culture, similar to what GE did a couple of decades ago. The company will be forced, against much opposition to produce and manufacture its vehicles in other parts of the world, Mexico, India, China and other areas to be shipped back for sale. The cost of labor in those markets are substantially lower and the company made huge economic mistakes beginning with exporting manufacturing to Mexico and Canada but under increase pressure for price concessions in manufacturing and an already eroded base of customers it is forced too.
The economic model that GM enjoyed throughout the history of the company was substantially diminished when the company did not examine the true economic impact of displacing whole communities and families who were building, supplying and purchasing there products.
The simple math that was examined was that they would save X amount of dollars with reduced labor cost, simple savings. However the Micro and Macro Economic impact was far more substantial, with entire communities dependent and loyal to the brands, those loyal, beholden legions of buyers were left to make new choices and develop new loyalties and in most cases those folks became bitter and punished GM with there purchasing decisions.
As market share eroded and quality issues became the focus, the brands started losing luster and customers. This will be the greatest lesson in modern business history on how a brand could be destroyed internally with bad decisions. But, it does have a chance to remake itself, just not in it's current incarnation, it will have to be a trimmed down version of itself that will have a chance to improve and grow from its past.
Enjoy Today!
That Car Guy
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