As we have talked about in class, General Motors continues to struggle to become profitable again, even after receiving government bailout money. Fritz Henderson, GM's chief executive, was ousted on Tuesday, and other shakeups followed. New presidents have been appointed to various regions, and the marketing and sales divisions are being recombined.
Last month, GM reported a loss of $1.2 billion but positive cash flows for the third quarter. A public stock offering is planned for 2010 or 2011.
The swiftness of changes within GM is surprising, given the traditional sluggish response that has characterized the automaker. Will it be enough to get GM on the path to profitability again, though?
5 comments:
It is hard to say whether government's assistance will help GM to survive in the long-run. I think the key to making GM profitable is to produce cars that are more fuel efficient and have better design. In that perspective, I think Ford is doing a better job.
I feel that the government's assistance is a stopgap measure that will only help GM in the short-run. It is easy to say that GM is not profitable because they don't have the right lineup of cars and that they need more fuel efficient cars. But is the car lineup the reason the government got involved? I would think it is a matter of overhead costs and labor costs. Ford has remained profitable but did not have to cut their SUV and Truck lineups.
I agree that the government's assistance is likely to only help GM in the short run. There are many reasons why GM is not profitable, and no matter what that reason is, more money will only get them so far unless it is used to fix this problem. Clearly, GM is huge, and some firms are just too big to let fail. However, it is unfortunate that GMs problems are creating such inefficiency in the economy.
I hope that these numerous changes occurring in the GM infrastructure won't seriously deteriorate the company's opportunity of rebounding from their bankruptcy in July. The company is need of some serious stability and even though these changes address key markets, it may have a trickle down affect. Workers may begin to question their job security and the company's goals. Nonetheless, the article discusses these changes will not have an affect on their product-development plans.
I'm honestly surprised that the company's employees haven't already began to question their job security and company goals! I understand that GM is too big of a company to just let be, however further government intervention would only worsen the crisis already at hand. The pumping of additional funds into GM would only fuel the company further for a couple more months. If the government wants to truly intervene, then they need to help the board make critical decisions, such as their line of vehicles, and their setup at the corporation. This might actually help the company rather then just funding them with additional sources of income! I truly hope that GM and the government resolve these epic issues soon. Sooner they do so, sooner the economy can reel itself out of this economic turmoil!
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