Since I’m in town anyway, I decided to go hear the President announce the government taking a 60% stake in GM at the White House today (and they let me in!).
Given the finalization of the Chrysler sale today, the announcement had the distinct tone of an "I told you so:"
And keep in mind — many experts said that a quick, surgical bankruptcy was impossible. They were wrong. Others predicted that Chrysler’s decision to enter bankruptcy would lead to an immediate collapse in consumer confidence that would send car sales over a cliff. They were wrong, as well. In fact, Chrysler sold more cars in May than it did in April, in part because consumers were comforted by our extraordinary commitment to stand behind a quick bankruptcy process. All in all, it’s a dramatic — an outcome dramatically better than what appeared likely when this process began.
And I will confess, I was one of those who–in January–doubted that the Chrysler bailout could have ended as well as it did (though I regard it more as a "least worst solution"). So kudos to Obama’s auto task force team, thus far, they’ve pulled this off.
Of course, with GM’s additional size and complexity, Obama’s announcement of the GM restructuring was basically a bold doubling down. They admit that BK will take three times as long, and I’m sure it’ll be every bit three times as difficult.
In all likelihood, this process will take more time for GM than it did for Chrysler because GM is a bigger, more complex company. But Chrysler’s extraordinary success reaffirms my confidence that GM will emerge from its bankruptcy process quickly, and as a stronger and more competitive company.
There was one piece of news–or news to me–that I hope to check the math on. Obama claimed that this BK process will result in GM "building a larger share of its cars here at home."
As this plan takes effect, GM will start building a larger share of its cars here at home, including fuel-efficient cars. In fact, if all goes according to plan, the share of GM cars sold in the United States that are made here will actually grow for the first time in three decades.
Given the sharp decline in production they’re forecasting, this may just be a matter of math. But it does suggest they’re going to close down some Mexican production (or something) in an effort to keep factories open here. And as I pointed out last night, they have apparently committed to assembling a new small car (possibly the Spark?) here in the US.
Stay tuned, and I will try to clarify those numbers. In the meantime, it was basically a cautiously cocky declaration that the government is going to try to pull of what it did with Chrysler with GM.