It was long overdue, but it was bound to happen: the company lawyers named Motors Liquidation Co. but which we came to know as “old GM” during the 2009 government bailout period, died on Thursday, December 15.
Though it had a very long lifespan of 103 years, no one really noticed its demise. After all, this was just U.S. Bankruptcy Judge Robert Gerbert signing the death certificate. Giving birth to the “new GM” two years ago was a very painful process – and one that most of those involved would like to forget.
It meant the sacrifice of three of its brands (Pontiac, Hummer and Saturn) and getting rid of another (Saab, which ironically is now in a similar position), closing 13 plants along with 900 dealerships. GM also had to reduce its U.S. workforce from 91,000 to 68,500 employees, which either way, is a far cry from the 525,000 workers it had in the States and another 100,000 outside the country in 1955.
Of course, all this would be nothing without the US$49.5 billion the government provided…
Despite the bitter end, the “old” General Motors had, for the most part, a long and prosperous life. Founded in 1908 in Flint, Michigan, by Billy Durant who created its first brand, Buick, it grew to become the world’s largest car manufacturer in 1931.
From that point on, it grew stronger and stronger, launching or acquiring 20 other companies until, in 1997, it was bigger than Coca-Cola, Boeing, Microsoft, Dow Chemical and Intel – combined!
A series of bad decisions and sub-par products, however, led to the company effectively been bankrupt and filling for restructuring under Chapter 11 of the U.S. Code on June 8, 2009.
The government bailout created two separate entities: the “Old GM” that was left only with assets deemed useless (and which must be now offloaded by the four trusts that have been appointed), and the “New GM”, which inherited all the good stuff.
In the process, GM cancelled its stock in bankruptcy, made significant cuts on pensions, and did not pay many of its bills.
On the bright side, the company’s future is looking good: the re-born GM recorded a US$4.7 billion profit last year. In 2011, it is doing even better, having regained the number one position that it lost in 2008 to Toyota, earning US$7.1 billion until the end of September.
Here’s hoping that the new management have heard of Spanish philosopher and poet George Santayana’s famous quote, “Those who cannot remember the past are condemned to repeat it.”
Story References: DetNews
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