# General Motors gone......says ABC radio news



## Family_Guy (8 April 2009)

Just listening to the radio news before and they were saying GM is preparing to file for bankruptcy this morning US time. I cant find any info on the net anywhere. But i heard it on ABC radio

If so, does it have an immediate direct effect on the Oz car industry?


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## Largesse (8 April 2009)

http://www.businessspectator.com.au...e-bankruptcy-prep-QVLNZ?OpenDocument&src=srch


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## ojm (8 April 2009)

Family_Guy said:


> If so, does it have an immediate direct effect on the Oz car industry?




I'm not sure. Working for Holden I try and not think about it. But this news has kind of put a bit of gloom on my Easter long weekend break. I don't like the idea of my parent employer going bankrupt .


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## Solly (8 April 2009)

ojm said:


> I'm not sure. Working for Holden I try and not think about it. But this news has kind of put a bit of gloom on my Easter long weekend break. I don't like the idea of my parent employer going bankrupt .





ojm .... It's not really this bad

"A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks"


Have a look here http://www.cnbc.com/id/30086764

Thanks goodness it's not Toyota, where would I get the parts for my "Toyota Crown"   :


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## Beej (8 April 2009)

You have to remember that in the US what we call "bankruptcy" over here is generally "Chapter 11" over there. Many companies enter chapter 11 - restructure/trade their way back into solvency and then emerge again. Many US airlines have been in Chapter 11 several times.

So in particular a business unit like Holden, which actually does pretty well on it's own, has a high likely-hood of surviving GM going into chapter 11. Of that well depend to a large extent on the current and future local demand for Holden as well - but I can tell you that Holden makes FAR superior cars in all respects than there parent company does back in the USA!

Cheers,

Beej


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## marklar (8 April 2009)

Beej said:


> but I can tell you that Holden makes FAR superior cars in all respects than there parent company does back in the USA!



In that case it's no wonder they're in such dire straits over there 

m.


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## ojm (8 April 2009)

Solly said:


> ojm .... It's not really this bad




You are right, but I just try and not read about GM in general. Too much to worry about . 

In Q&A sessions with upper management, they always dodge the bankruptcy questions. "We don't think that's an option" or "we will think about that if it happens". Come on, they must have some idea, ah well.

Time will tell.


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## trillionaire#1 (8 April 2009)

if GM files chapter 11 ,will holden survive?,you would imagine holdens
would be one arm of Gm to go forward,but what about the costs of
research and development , updating models and new engine updates,
could be still making 4 speed auto ve commodores 5 years from now?


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## Smurf1976 (9 April 2009)

trillionaire#1 said:


> if GM files chapter 11 ,will holden survive?,you would imagine holdens
> would be one arm of Gm to go forward,but what about the costs of
> research and development , updating models and new engine updates,
> could be still making 4 speed auto ve commodores 5 years from now?



Short term they can just keep stamping out today's models at the cost of materials plus labour, a situation that ought to be cash flow positive.

But long term they need to invest in new designs and new production machinery to keep pace with competitors. Even if there was no competition, the production machinery would still wear out eventually.

So I can't see too much of a problem for Holden to be profitable in the short term. Just stamp out Commodores and buy materials / labour to match the volume of production and sales. They'd have to be carrying some pretty massive fixed costs under the Holden banner to fail in the short term doing that.

But long term it's a classic case of no investment = complete demise. We've seen hundreds if not thousands of once iconic manufacturing businesses in Australia go that way over the years. 

As anyone who's worked in such a place will know, the first thing that stops is investment but it all seems OK for the moment. Then parts of the plant become unprofitable and one by one they are shut down, leaving some short of "shell" operation that either produces a few parts for further processing / assembly elsewhere or is at the other end of the chain. It's no longer a complete operation that buys raw materials and produces a finished consumer product. And then, finally, what remains becomes unviable and that's the end of the plant. 

This process can extend over a period of years to decades - there's one I know of (not in the automotive industry) that's been going on since the 1970's but parts of the plant are still running. It's just that it has only 6 - 7% of the original workforce and hasn't run a complete raw materials to finished product production line for over a decade (and hasn't been at original full capacity since about 1980) but there's still a bit of activity there. Only reason it's survived that long is the finished product isn't subject to design changes etc - a car factory wouldn't survive anywhere near as long without investment.

Other times it happens more quickly. Start winding things down and create the "shell" of profitable components. Then physically dismantle that machinery and send it to another site (quite likely overseas), thus closing the original site completely. Lots of examples like that in Australia and it's the future for Holden without ongoing investment into new models etc.


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## metric (9 April 2009)

is US bankruptcy going to affect their brand new factories in russia and brasil?


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## Ageo (9 April 2009)

ojm said:


> I'm not sure. Working for Holden I try and not think about it. But this news has kind of put a bit of gloom on my Easter long weekend break. I don't like the idea of my parent employer going bankrupt .




mate just start looking for another job now, that way if it did come to closing down you wont have to worry.


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## ojm (9 April 2009)

Ageo said:


> mate just start looking for another job now, that way if it did come to closing down you wont have to worry.




Not gonna have much luck with that mate. I'm doing a one year work experience thing (co-op placement), taking a year off uni to do it. I wouldn't be able to get a job like this at the moment as its done later in the year. 

My job is apparently safe (the govt pays for part of my wage or something), i.e. if they start retrenching people, I'll still be right, but if GM go bust its a whole different situation you'd assume.

If push came to shove, I could just go back to uni next semester or something, but I'd prefer to finish my year at Holden.


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## Ageo (9 April 2009)

ojm said:


> Not gonna have much luck with that mate. I'm doing a one year work experience thing (co-op placement), taking a year off uni to do it. I wouldn't be able to get a job like this at the moment as its done later in the year.
> 
> My job is apparently safe (the govt pays for part of my wage or something), i.e. if they start retrenching people, I'll still be right, but if GM go bust its a whole different situation you'd assume.
> 
> If push came to shove, I could just go back to uni next semester or something, but I'd prefer to finish my year at Holden.





Well im sure holden will be around for another yr, but in the longer term who knows.


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