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Archive for Thursday, November 18, 2010

General Motors sees rebirth after crash, government control

November 18, 2010

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— The last time General Motors threw a big party was two years ago, for its 100th birthday. Two months later, its CEO was before Congress, begging for bailout money. Now GM is getting ready for another celebration — this time for its future.

GM will be reborn as a public company today with a stock offering, ending the government’s role as majority shareholder and closing a remarkable chapter in American corporate history.

The U.S. government should make about $13.6 billion when GM shares start trading on the New York Stock Exchange. The federal Treasury is unloading more than 400 million shares of GM, reducing its stake in the company from 61 percent to about 33 percent.

The IPO could wind up as the largest in history. GM set a price of $33 per common share on Wednesday, a day after it raised the number of shares it will offer to satisfy investor demand. When the U.S. government and other owners sell their shares, they’ll raise $18.2 billion. GM will raise another $5 billion by selling 100 million preferred shares at $50 each.

Together, the sale of common and preferred stock will bring the deal’s value to a record $23.2 billion.

The stock offering is the latest in a series of head-spinning developments over the past two years for an American corporate icon.

In September 2008, to mark the beginning of its second century, the automaker celebrated in the grand three-story atrium on the ground floor of its Detroit headquarters. GM had seen a lot of changes in its 100 years, said then-CEO Rick Wagoner.

“In fact, it’s changed a lot in the last 100 hours,” he said, referring to the banking crisis, which was just starting to unfold. Two months later, Wagoner found himself in front of members of Congress, begging for money to keep GM alive. Four months after that, he was ousted by President Barack Obama.

Comments

Liberty_One 4 years, 1 month ago

Message to other businesses: screw up all you want, the government will come save you.

just_another_bozo_on_this_bus 4 years, 1 month ago

The more important part of the message is that corporations should continue to merge into ever larger megacorporations so that they too become too big to fail.

just_another_bozo_on_this_bus 4 years, 1 month ago

From what I've heard, small banks are failing at a rather high rate because they aren't getting the same bailouts that the large ones got.

Flap Doodle 4 years, 1 month ago

The lesson is that if your workforce is both highly unionized and big money supporters of Democratic candidates you will be bailed out.

scott3460 4 years, 1 month ago

Better a union full of lots and lots of middle class citizens than the right winger's successful efforts on behalf of the richest 3/10 of one percent of the population. Go ask the tax paying citizens of Detroit if they were in favor of this bailout.

notajayhawk 4 years, 1 month ago

They're easy to find on any street corner, since most of them are unemployed.

scott3460 4 years, 1 month ago

Thanks to "free" trade policies and the ruinous stewardship of the economy of george w. bush and the right wingers.

Blessed4x 4 years, 1 month ago

So where is the article celebrating Ford's stellar year after NOT taking government bailout money?

notajayhawk 4 years, 1 month ago

(Shhhhh. We're not allowed to speak such heresy around here.)

scott3460 4 years, 1 month ago

First of all, there have been plenty of such articles.

Second, the Ford executives that did not run their business in to the ground have been pretty well compensated and remain at the controls of their company. The GM execs screwed up and lost their jobs and fat compensation, but were not allowed to completely bankrupt the entire southern Michigan region in doing so.

Centerville 4 years, 1 month ago

Blessed, Corky, nota: You'll never see an article like that in the AP. Nor will you see AP explain why only Democrat-friendly entities are given preferential treatment in this IPO offer. Or why taxpayers aren't being refunded. Or why GM was bailed out in the first place.

notajayhawk 4 years, 1 month ago

Hate to interrupt your delusion, but the taxpayers will not come out "ahead". We put almost $50 billion into GM, spanky.

Flap Doodle 4 years, 1 month ago

I (heart) ag when he/she/it gets all harsh & stuff.

whats_going_on 4 years, 1 month ago

haha, this is pretty much the truth.

I mentioned this story before, but I'll say it again. When asking my grandmother once if Obama saved a dying child with no help from any other source...I mean personally put himself on the line to save a child...would she still find a reason to b*tch about it?

She said yes.

notajayhawk 4 years, 1 month ago

"Perhaps the only person you hate more at this moment is me... because I've given you the plain truth about yourselves."

No, it's pretty much because you're a troll.

notajayhawk 4 years, 1 month ago

"The auto maker has returned $9.5 billion"

Much of which was paid back with more borrowed TARP money.

MyName 4 years, 1 month ago

WTF. So is it a "loss" to not have two screwed up major sectors of the U.S. economy? You have to be in some kind of reality distortion field to think that we'd be better off with the banking sector and a large automaker bankrupt and out of business. It was expensive, but worth the money, especially since we're already getting $23 B of that $49.5 B back after today.

And I'm sure not a single one of those "union thugs" pay taxes, not a single one of them lost salary or benefits, and they are all out there trying to find a way to "steal" more money from American corporations by actually forcing them to negotiate worker compensation just as they are forced to negotiate the costs of other things that the company pays for.

Why are you complaining about <$50B that we might actually get paid back, when we've spent $1 Trillion looking for non-existent WMDs in Iraq?

notajayhawk 4 years, 1 month ago

"And I'm sure not a single one of those "union thugs" pay taxes, not a single one of them lost salary or benefits, and they are all out there trying to find a way to "steal" more money from American corporations"

Of course, they now own a good-sized chunk of GM and a majority interest in Chrysler for themselves.

"You have to be in some kind of reality distortion field to think that we'd be better off with the banking sector and a large automaker bankrupt and out of business."

This is the part of the propaganda I laugh at the most. Do you seriously think that all those GM facilities would have been sitting there growing cobwebs? Ya' think just maybe some other manufacturer - a profitable one like, oh, I don't know, Ford for example - might have bought them up? Or do you think they would have spent hundreds of billions of dollars building entirely new factories to meet the increased demand they picked up?

Would it have hurt in the short run? Yep. Too bad. In the long run, we'd have had someone building cars that didn't need billions of our tax dollars to stay in business. Instead we got what we have now: Chrysler, who got bailed out about 25 years ago, failing again, costing taxpayers billions, and ending up run by Fiat.

scott3460 4 years, 1 month ago

Well, based on what has actually happened over the last 20-30 years, I predict that the plants would have shuttered and the work moved to a non-union southern state or to a foreign country. In either event, it would have been a huge loss to the Michigan economy and a lot of unnecessary pain for innocent citizens. Once again, the executives are the ones who ran the company to insolvency. They, and the stock owners who supported them, are rightly the ones who should have borne the burden for the business failure, not the workers or citizens of Michigan. Thanks to President Obama's leadership, that is the way it worked out.

notajayhawk 4 years, 1 month ago

1) If another company could start up new facilities in different locations than they could buy up GM's facilities in a bankruptcy sale, then they were doomed anyway, pretty much by definition. When somebody can start up a new operation cheaper than you can run your existing ones, you are in an untenable situation, because sooner or later somebody will.

2) If that had actually been the case and had actually happened, too bad for the people of Michigan, good for the people in the states that get the new business. What do you have against those poor unemployed middle class workers in those places, anyway?

3) Someone hasn't been reading their Party literature. Good lord, man - peak oil!!! Haven't you been keeping up? We're all supposed to be good little drones, live closer to where we work, stop building roads through swamps, and forsake the evils of our personal transports in favor of public transportation and bicycles! What the heck kind of liberal are you???

3) (a) On a slightly more serious note, perhaps at some point during the last hundred years or so, somebody in the good state of Michigan shoulda' noticed that all their proverbial eggs were in a somewhat exaggerated state of risk from their all sharing the same basket. Kinda' makes you think that somebody maybe shoulda' started thinking about a Plan B along the way.

4) So we just keep bailing them out, again, and again, and again, because we owe them something, is that the way it is?

You know, I'm curious about something. You post here fairly frequently griping about how the people at the top should be sharing more of the wealth, spreading it around more. Have you noticed that maybe the sharing you're talking about seems to be a tad one-sided? You think when profits are high, it's all because of those hard-working production people, and the profits should be given to them. But when sales plummet and the company starts losing a hundred or two million every quarter, it's not the fault of the workers at all, and they shouldn't have to absorb any of the losses.

jafs 4 years, 1 month ago

Please elaborate.

Do you mean that management didn't decide what kind of cars/trucks to build, etc?

If so, what were they doing, and what justified their salaries/benefits/etc?

scott3460 4 years, 1 month ago

I can demand a $10M salary from my employer, but doing so does not mean I am responsible for a subsequent failure of the employer. Management is paid to make such decisions and bears the responsibility. Don't blame a group of employees for seeking the best deal they can get, blame the fools that gave them a deal that ruined the company.

jafs 4 years, 1 month ago

Actually, according to Congressional testimony, total union wages and benefits made up about 10% of auto companies' expenses.

It's funny that we don't hear people talking about the other 90% and any possible savings there.

notajayhawk 4 years, 1 month ago

Wow. You mean Reagan used taxpayer money to buy a controlling interest in Chrysler? Funny how nobody (but you apparently) ever heard about that.

By the way, skippy, I don't remember commenting on these message boards as to whether or not I was in favor of Regan's actions at the time, maybe you did - but, um, how'd that work out?

lawrencehatesbusinesses 4 years, 1 month ago

This is wonderful news! Of course, it also coincides nicely with the government's hatchet job of Toyota. Bigger government and government run companies ALWAYS succeed! It is guaranteed! Look at our local government flavor of entities and you will see the same success!

Centerville 4 years, 1 month ago

I wonder how much more taxpayer money will be spent to 'buy' stock to keep the price up. After all, we've only spent the original $49.5 billion to get the unions off Obama's back plus the $9.5 billion to pretend that GM is starting to pay us back. No amount is too high if the purpose is to maintain the fascist illusion.

notajayhawk 4 years, 1 month ago

Wow, cool links, skippy.

Do I need to link to a dictionary so you can find the definitions of "loan" and "purchase", or ya' think you can find those on your own, big guy?

But I'm glad you linked to Obama's inauguration date. Let's see, that would be before June & July of 2009, when GM entered into it's forced bankruptcy and the federal government became the majority shareholder, wouldn't it? Should I link to a calendar for you, skippy?

booyalab 4 years, 1 month ago

I hope this doesn't mean an end to their strong legacy of crappy cars we know and love.

Moderateguy 4 years, 1 month ago

Introducing the Chevy "Volt." The world's first production, coal powered automobile.

notajayhawk 4 years, 1 month ago

And now we have the president of the United States acting as a car salesman for Government Motors:

http://news.yahoo.com/s/nm/20101120/ts_nm/us_obama_gm

"Obama pauses at NATO summit to tout new GM hybrid"

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