Chicken Licken said the sky is falling…
Last year, pundits around the country painted a grim picture of rampant unemployment and a second great depression if GM and Chrysler were allowed to go bankrupt. Since then both companies have declared bankruptcy and restructured their way out of it. The economy did not spiral into a depression, and the floodgates of unemployment were not unleashed. Though some suppliers did file for bankruptcy, many survived, and Detroit… well Detroit is still Detroit.
As I have mentioned in previous posts, straightening out the balance sheet was not the hard part. GM was such a poorly run corporation, it was inevitable that restructuring both management and financials would lead to cost savings and an increase in efficiency. Furthermore, the decision to reduce the brand offerings was bound to help (only the Chevrolet, GMC, Buick and Cadillac brands remain.) GM will operate 13 fewer American factories and shrink its dealer network from 6,000 to 3,600 by the end of 2010.
General Motors Co. CEO Fritz Henderson revealed a revamped management and is determined to repay loans from the U.S. government “much sooner” than 2015. Henderson expects to cut the workforce from 91,000 (at the end of last year) to 64,000 by the end of 2009. He further proclaimed that GM would launch 10 new products in the U.S. over the next 18 months, as well another 17 overseas. An IPO could be launched as early as the second quarter of 2010 (provided that the market conditions are conducive).
Though GM will be keeping a watchful eye on the condition of its suppliers, the biggest challenge for the ‘new and improved’ GM is going to be to change the perception of the company. The fact that GM has had no marketing for the past six to nine months could be a blessing if they play their cards right. The idea of government motors, overpaid workers and poor quality cars has to be replaced with the thought of an efficiently run organization that makes durable and fuel efficient cars. Furthermore, GM has to ensure that the cars are competitive in the market in order to have a chance to be able to win back the faithful support they once had. It is by no means an easy task and will be a long road ahead…
