Experts say GM bankruptcy is almost inevitable

[Von Bongo]

Here is my guess. The UAW will eventually fail and their pension and health care will be take over by by the government in the first steps toward national healtcare, car companies will finally be free of all their debt and legacy costs and they will be modestly successful until the unions find a way back in.

There is no way the car companies can handle these legacy costs. It probably would have been better for all involved if the government would have moved the pensions and health care under the government umbrella instead of forcing the bankruptcy. In the end it would have cost us less.

 

[MattBMiller]

I'm hearing June 1st :ack2:

 

[Ratickle]

I'm less concerned with UAW's partial ownership than the gov'ts majority in the case of GM. The UAW will have board representation chosen by the fund managers for the VEBA. Basically, the same as any other equity holders with 40% with the only interest being the stock return, not the UAW. The joe blows on the line won't like it or get it, but they won't have any say in the VEBA's investments, including GM equity.

A very legitimate concern. The US government is as crooked as they come.

The problem I see as structured, or hinted at structuring, it is not a true bankruptcy (actually illegal according to current law), so the debt of the unsecured VEBA will take precedence over the debt of the secured creditors. Would you ever lend money again to a struggling company?

Also, they are not wiping out the contracts for the unions or the retirees. I know it's not popular is why they are doing it, but under the plan the companies will never come out of bankruptcy. Or, if they do, they will be right back in in a few years.

 

[Ratickle]

Here is my guess. The UAW will eventually fail and their pension and health care will be take over by by the government in the first steps toward national healtcare, car companies will finally be free of all their debt and legacy costs and they will be modestly successful until the unions find a way back in.

There is no way the car companies can handle these legacy costs. It probably would have been better for all involved if the government would have moved the pensions and health care under the government umbrella instead of forcing the bankruptcy. In the end it would have cost us less.

The pensions would have been capped at $54,000 per year and the health care would have disappeared. Just like every other bankruptcy under the law. The bankruptcy should have been according to the law, not some socialistic plan to restructure a company at the complete expense of the suppliers, secured creditors, and taxpayers.

 

[ryan9154]

Just to give some of you a heads up.I'm a pipe fitter for trw formally delphi/gm last night the companies managers had a idea to clean one of our machines needless to say instead of doing it right they threw away 6000.00 dollars of cleaner.They could have reused the cleaner, dumped it to the pit and pumped it to a different machine.Cleaner is good for two cycles. Instead they put a block off plate ,now the cleaner won't flow to the pump.So they want to pay someone to run a manually pump stupid.But they don't want anyone's help they know everything.Everyone needs to see the stupidity of the management.I guess that's why my company has made it 44 years I don't hire dumb$$$.I don't think the union has caused gm's issues.Everyone needs to see the decisions maintenance management makes in the shops.Not trying to start a fight with anyone but our maintenance management is very naive.

 

[RLJ676]

The problem I see as structured, or hinted at structuring, it is not a true bankruptcy (actually illegal according to current law), so the debt of the unsecured VEBA will take precedence over the debt of the secured creditors. Would you ever lend money again to a struggling company?

Also, they are not wiping out the contracts for the unions or the retirees. I know it's not popular is why they are doing it, but under the plan the companies will never come out of bankruptcy. Or, if they do, they will be right back in in a few years.

That is what I am talking about is how they are thowing common sense away to give the company to the gov't/unions. Sure adds risk in my mind to all bonds out there.

I completely disagree with the second statement here though. The UAW contracts are being reworked, and are completely competitive with transplant pay, only GM's plants are more efficient. As for the retirees, the biggest cost was healthcare, and the VEBA took that off the books, and now it's being mostly paid with equity. These moves set GM up to succeed, and quickly. The plan is profitable with a 10.5 million SAAR. That should be next year. This is would clearly be at the expense of bondholders, but to the benefit of everyone else (well, except all the employees "exited" during this process).

 

[Expensive Date]

My thoughts are they won't file and here is why.The government let Lehman bros. fail and later admitted it was a mistake.Had Chrysler not filed first they (GM) would probably have to but they did .There is a lot going on right now and I am hoping tomorrow is not "black Thursday"

 

[Ratickle]

My thoughts are they won't file and here is why.The government let Lehman bros. fail and later admitted it was a mistake.Had Chrysler not filed first they (GM) would probably have to but they did .There is a lot going on right now and I am hoping tomorrow is not "black Thursday"

I think you're wrong. We'll see.

 

[Expensive Date]

I think you're wrong. We'll see.

About GM or tomorrow?

 

[MattBMiller]

My thoughts are they won't file and here is why.The government let Lehman bros. fail and later admitted it was a mistake.Had Chrysler not filed first they (GM) would probably have to but they did .There is a lot going on right now and I am hoping tomorrow is not "black Thursday"

I'm slated to start working there tomorrow!

 

[Ratickle]

I'm slated to start working there tomorrow!

I hope for the best. Either way, they will survive one way or another for some time.

 

[Ratickle]

About GM or tomorrow?

About GM.

 

[ryan9154]

Gm

I hope for the best. Either way, they will survive one way or another for some time.

I hope your right.My uncle owns a machine business in texas that sells machines for aeromotive application they haven't sold a machine in two months usually sold three to four a week.So everything is starting to be effected.It's bad when their not building airplanes.

 

[MattBMiller]

I hope your right.My uncle owns a machine business in texas that sells machines for aeromotive application they haven't sold a machine in two months usually sold three to four a week.So everything is starting to be effected.It's bad when their not building airplanes.

Indeed. I've been looking into jobs out of state to get away from this automotive chit, but it's getting bad everywhere now.:ack2:

 

[Ratickle]

I hope your right.My uncle owns a machine business in texas that sells machines for aeromotive application they haven't sold a machine in two months usually sold three to four a week.So everything is starting to be effected.It's bad when their not building airplanes.

I know what you mean. I have a cousin who owns a design company in Seattle and Boeing is his biggest customer. They're just hoping to survive.

Yesterday I golfed with the owners of two companies here in West Michigan. They are down to one shift of less than 100 employees from 3 shifts and over 500 employees. The odd thing, their second largest cutomer base was military based vehicles.

The thing that bugs me the most, I haven't seen one thing the government has done to fix the base issue, only $ thrown at those who caused it in the first place.

 

[MattBMiller]

The thing that bugs me the most, I haven't seen one thing the government has done to fix the base issue, only $ thrown at those who caused it in the first place.

Just a band-aid.:ack2:

 

[ryan9154]

Just a band-aid.:ack2:

The government has dropped the ball on this one!!!Also don't try to get a small business loan there about impossible to get.