The tiresome, drawn-out procedures have only just begun, as GM entered Chapter 11 bankruptcy yesterday. Unlike fellow Detroit automotive giant Chrysler’s bankruptcy filing, GM’s is estimated to take up to three times longer (as much as 90 days), to complete due to the sheer size of the fallen General’s operations, though business will continue as normal in all regions of GM’s operations.
GM will emerge leaner, restructured, and more efficient, but the terms of the bankruptcy agreement allows the US government a 60 per cent share in the new GM in exchange for a $30 billion loan. According to President Obama maintains that the federal government will act as “reluctant shareholders” and steer clear of “all but the most fundamental corporate decisions”.
The governments of the United States and Canada will collectively own almost 75 per cent of the restructured GM, but CEO Fritz Henderson echoed Obama’s sentiment that they’ll remain just shareholders where decisions concerning plant locations and the development, planning, and production of future vehicles.
Unfortunately, the most painful part of the procedure will be the loss of 21 000 GM employees (including non-essential executive positions) in order for the firm to focus on its core brands in North America and allow for simpler decision-making processes, improved products, improved manufacturer to customer relationships and improved quality.
“The GM that many of you knew, the GM that let many of you down, is history,” Henderson said.
Steve Koch, president and managing director of GM African Operations, stressed that the Chapter 11 bankruptcy filing allows for reinvention – as opposed to liquidation – of the North American parent company, and that business could continue as normal while the firm negotiates with creditors to arrange a solution under court supervision.
“GM South Africa is not part of this filing in the U.S. and will not be affected by the measures announced today. Creditors of GM in the U.S. would have no claims on GMSA as we have not guaranteed any U.S. obligations nor are any of our assets used as security for their obligations. We continue to generate our own cash and are responsible for our own viability. We are a self-sustaining operation and as such will continue to operate as normal,” Koch reiterated.
Koch explained that GMSA began taking the necessary actions to remain competitive and allow continued operation at the low industry levels experienced at present since the beginning of 2008. “We have successfully stabilised our cash balance, reduced inventory levels and continue to make progress reducing our structural costs, all directed at ensuring profitable growth in South Africa,” said Koch.
“We have operated in South Africa since 1926 and are proud of our long standing history of involvement and support in our local communities. We remain committed to the ongoing investment in our South African operations and together with our dealers have invested R4 billion since 2004, leading to a strong product portfolio backed by excellent distribution and after sales support. Our plans for investment in future product programs for assembly at our production facilities in Port Elizabeth remain on track,” concluded Koch.
GMSA and its distribution partners will continue to provide full sales and aftersales support for all its vehicles, honouring all warranties, service and maintenance plans, parts supply and all other areas of aftersales support for the Chevrolet, Isuzu, Opel, Hummer, Saab and Cadillac brands.
