Gm Bailout

Topics: Automotive industry, General Motors, Bailout Pages: 12 (4925 words) Published: June 27, 2010
Founded in 1908, General Motors has been one of the largest corporation and the second largest automaker in the world coming after Toyota. For 77 consecutive years from 1931 to 1908, GM has been a leading automaker and marketer as ranked by the total number of units sold yearly. General motors have also been a leading employer not only in the United States but also in other parts of the world where it operates. However, the company has been seriously affected by the current economic crisis. The Detroit Three, led by General Motors have been a backbone of the United States economy and there eminent collapse in the current economy crisis is likely to have negative impacts on the United State’s economy. However, the problem at GM and in the general United States automotive industry cannot be attributed to the current economic crisis alone. Their problems can be traced to the oil crisis of the 1970s where the government came up with new rules aimed at reducing the rate of fuel consumption. Consequently, General Motors and other American auto makers continued with their fuel guzzling SUVs especially in the 1990s leading to stiff competition from foreign automakers especially Japanese cars which were considered fuel efficient and friendly to the environment. Therefore the problems facing GM do not attribute to economic crisis alone but also due to other issues related to organization culture. The company has also negotiated payment package with the union which has continued to drain its resources despite its declining revenues. General Motors has consequently lain off million of workers and closed down some of it plants in a bid to reduce the cost of operation. The company has also sought government bailout package which will prevent the company from collapsing. However, the problems faced by GM may not e easily solved by the government bailout package. The company needs to restructure its operation to reflect the current consumer preference in term of fuel efficient cars. In wake of stiff competition from Japanese cars, the company needs to come up with new operational plan that will include re-negotiation of the labor policies to ensure that the company can pay what it can afford. Like what many have argued, it may not take a one sided approach to awaken the giant company. It requires a complete overhaul from the management, coming up with new operation plan, negotiation of labor laws, extensive market research, and in extreme condition, the company may think of merging with other automakers to reduce the cost of operation. Therefore the current government bailout plan may not turn round the company unless there are other extensive changes that will be taken to complement the stimulant package.

General Motors Company
General Motors was founded in the early days of formation of the U.S automotive industry. The company was founded in 1908 in Michigan first as a holding company which was controlled by William Durant. In its early years of the growth, the company made a number of acquisition including Oldsmobile, Reliance Motor Truck Company, and Rapid Motor Vehicles Company all of them in based in Michigan. However, the company soon faced a number of challenges and it collapsed with the collapse of the new auto market. It was after Alfred Sloan took over the leadership of the company that it started its upward growth trend until the 1980s when foreign automakers made their way to the American auto market. Since the end of the Great Depression, GM had undertaken globalization efforts establishing its operation in most European countries. The company has also expanded its operation to emerging Asian markets like South Korea, and others. General Motors is one of the largest employers in the world although in recent years it has sent home thousands of its employees. Currently, the company has more than 266,000 employees in the world. It headquarters are located in...

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