Save GM from its Defenders: Louis Woodhill’s Forbes piece–General Motors is Headed for Bankruptcy, Again–has drawn several Web responses defending the bailed out automaker from the accusation. The ones I’ve seen are more damning of GM than Woodhill’s original attack. Here’s veteran auto reporter Micheline Maynard (also writing in Forbes):
At the moment, there are none of the classic signs of a bankruptcy filing, such as low cash (GM has plenty), an inability to borrow (GM just announced a 5-year bond issue) and executives who can’t keep a grip on the company. Okay, two out of three.
And which of those three do you think is more important to the firm’s future? … Plus there’s this ringing bit of Obamaesque optimism:
… GM’s U.S. market share is falling. Never mind the fact that it’s selling small cars for more than its bean counters probably ever dreamed they could sell small cars. It is losing share at a time when it by rights ought to be gaining share, if its turnaround was indeed as successful as the company declares it to be.
Well, all right! That’s a “buy” then?
Even more vicious is the defense from one of Truth About Cars’ knowledgeable commenters (Erikstrawn):
… I don’t think GM’s going bankrupt any time soon, but I think they eventually will if they don’t change what they’re doing.
… GM is flush with cash, just issued a 5-year bond, and has made ready lines of credit. While that might make them feel more secure, being able to borrow lots of money and throw it around didn’t save them from bankruptcy the first time around. …
GM’s foundation should be built on a bread-and-butter car. If your best-selling car isn’t what you depend on to pay the bills, you’re in trouble. GM spent a lot of time and money to make the new Cadillac ATS competitive with the BMW 3-series and paid for a lot of press to proclaim it a BMW-beater, but they forgot that it’s a niche car with far fewer sales than their mid-sized family car, the Malibu. They cheaped out on the redesign of the Malibu by using an readily available global platform, which made it more cramped than the rest of the competition … Then they botched the launch by releasing it 6 months early to avoid the launches of the new Accord and Fusion. If it were truly a great redesign, then why were they worried about the competition? They knew they’d cheaped out. To make matter worse, they didn’t have the new powertrain ready yet, so they threw in their old hybrid powertrain that gets worse gas mileage than the competitor’s non-hybrid powertrains. … This is their bread-and-butter car! As an automaker you have to get the bread-and-butter car right. …
… GM’s pickups are going through a redesign. If they botch the launch like they botched the Malibu it could spell disaster.
Another hearty vote of confidence. … P.S.: There is a reason they went broke. … P.P.S.: If GM “cheaped out” on the new Malibu … well, would GM have to do that if it could pay most of its assembly line workers, say, $20 an hour instead of the full UAW rate of $28 (when Volkswagen is paying $14.50 in Tennessee and getting plenty of applicants)? Just asking. …. Reminder: In a real bankruptcy, the wages of “legacy” UAW members could have been adjusted. In Obama’s bankruptcy, they weren’t. Thanks, Steve! …