Tuesday, June 2, 2009

GM Files For Chapter 11 Bankruptcy; Plants To Close, Dealerships Cut, Holden ‘Unaffected’


THE INEVITABLE for General Motors - America’s 101 year-old vehicle manufacturing colossus, a symbol for generations of Americans and once the world’s largest car company - has now occurred.

Last night, Australian time, GM filed for bankruptcy. But while 11 plants will close, and three will be mothballed until at least the end of 2010, an additional 21,000 of its employees will lose their jobs and its dealership network will be cut from 6000 to 3600, GM’s filing will not affect the operations of GM Holden.

Speaking on ABC radio this morning, Holden Managing Director Mark Reuss told breakfast presenter Fran Kelly that Holden was “part of the new GM” and had taken “the hard actions to restructure (Holden’s) production operations” to align with the market.


According to Mr Reuss, this had put Holden in a good position, with good revenue streams and with the expectation of returning a profit.

In achieving this, “we have not taken one dollar from the Australian Government,” Mr Reuss said.

For GM US, now in majority tax-payer ownership, the path ahead will be a painful one, and perhaps even more painful for the thousands of components suppliers who will be affected by this action.

There will be a string of bankruptcies among component manufacturers and materials suppliers following GM’s announcement this morning.

The new GM however will be leaner and a much smaller company. It’s output, and return to profitability, will be predicated upon a production capacity of just 10 million vehicles annually, little more than half the 16 million it has produced in the past, and barely more than the 8.5 million it is currently selling.