GM Most Like Will Face Bankruptcy
Tuesday, April 7, 2009
GM and members from the Obama administration have said many on times on record that a "quick" bankruptcy for GM might be the best option. Now we believe quick bankruptcy will happen because if Obama wanted to give the bailout money it would without giving GM 60 days, just like he did with the Banks. The firing of the GM CEO by Obama was just a show, it is a way to show people that the Government is now behind GM and it will not make mistakes as it did before. Firing of the CEO was a way of saying, even if GM goes bankrupt, the Government is behind it and will insure warranties of the cars.
The biggest problem for GM is two things, one being the low consumption of their cars. Majority of people who buy/lease cars, get it from Toyota, Honda etc. Foreign companies who offer inexpensive and more MPG per car. Especially in today's economy, no one wants to buy a Hummer, that gets 10 miles per gallon.
The second major problem for GM is its workers, who belong in a union. GM is currently paying more health care benefits for its workers than people get from medical. This is a major problem because it is costing GM billions to pay off these health care costs for its union workers.
Now the GM worker union which is called UAW and its president Ron Gettelfinger refuse reduce their benefits/demands in the sake of GM's survival. If union demands are lowered by the union and GM, it could be a turning point in GM's survival. UAW however refuses to compromise and negotiate its demands from GM.
BOTTOM LINE:
Bankruptcy is the best option for GM. GM will get an opportunity in court to re-negotiate union worker's demands and spend less for workers in the future. Now this benefits GM and not the worker, however it is better to have a low benefit job from GM, than to have no job from GM.
