CEO Fritz Henderson is a straight shooter. It's one of the things about him that I like. That said, how many of us believe the man when he says GMs latest restructuring plan is the final "fix" for the auto maker? Count me among those who are skeptical.
Since December, GM has given us three major restructuring with plans to cut thousands of jobs, close 16 plants, and get rid of half the auto makers brands. Each plan also has come with the CEO saying, "We think we've made the changes necessary for us to get back on track."Every time I heard this it sounded like the movie "Ground Hog Day" where Bill Murray re-lives the same day over and over.
Why am I skeptical we've seen the last of the GM business plans?
First,I would be stunned if GM bond holders go for this debt exchange offer. They are being offered 10% of GM in exchange for $24 Billion they have loaned the company. Meanwhile, the UAW is being offered 39% of GM in exchange for $10 Billion the auto maker owes the union for its retirement health care fund. One rep for a major bond holder summarized the offer saying, "This is ridiculous." That's layman lingo for "see you in bankruptcy court."
Second:If GM goes into Chapter 11, it will have to come up with yet another business plan. It will likely be similar to this one with its plan to bring GM plants and production down to lower levels, but it will probably go even further in terms of cutting costs. That's the advantage of bankruptcy court GM and its advisors (the Treasury Department) should and will use. If they don't, it would be a wasted trip into bankruptcy court.
Third:We have yet to see a game plan of how GM plans to grow its business. I'm not talking about a marketing program. I'm talking about a well thought out product plan for the next 3-4 years. Yes, we know the Chevy Volt is coming, but beyond that the models and positioning in the market are far from clear. Once GM is finished with the major corporate restructuring it will need to convey a clear vision of the future.
All of this is my way of saying GM is still very much a company in transition. Is it taking some critical steps that should help it compete in the future? You bet. Just be ready for more business plans, more changes, and more of us wondering where the future leads for GM.
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