Gm Bailout
GENERAL MOTORS BAILOUT PROBLEM
Introduction
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
Introduction
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
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