THE FACTS

General Motors is one of the most significant companies in automotive history, having celebrated its 100-year anniversary in 2008.

The industrial giant has recorded four years of financial losses, resulting in a total loss of $88 billion dollars.

General Motors filed for bankruptcy on June 1, 2009, making it the fourth-largest company in terms of assets to ever do so.

The company has negotiated a deal with the US government and now has 60 to 90 days to clear its huge debts and reposition itself.

The terms of the deal stipulate that the US government will inject $30 billion into General Motors in return for a 60 per cent stake in the company.

In the washup about 21,000 union workers will lose their jobs, at least nine motor plants will shut and three others will be put on hold.

THE VIEWS

US President Barrack Obama:

“The deal that has been worked out is tough; it is also fair. It will require the United Auto Workers to make further cuts in compensation and retiree health care benefits – painful sacrifices on top of all that they’ve already done. It will require GM’s shareholders to give up the remaining value of their shares, just as they would have had to do in any private restructuring of this kind. And it will also provide unsecured bond holders with an equitable outcome.”

Economist Robert Gottliebsen, writing for Businessspectator.com.au:

“Had General Motors and Chrysler been allowed to go to the wall some three million US jobs would have been lost – the industrial equivalent of the Lehman failure.

The General Motors ‘rescue’ via bankruptcy has been conducted with remarkable surgical precision and out of it will emerge a very strong General Motors without its legacy issues. Significantly it will be able to make money on far lower volumes.”

BREAKING IT DOWN

A) In order to succeed GM will have to steer clear of the gas-guzzling large cars it is renowned for.

Fuel efficiency needs to be at the top of the priority list for GM when it resumes business.

B) The company needs to find a way to significantly boost sales, or else bankruptcy is only going to reoccur.

Sales have been falling for the past few years. Companies like GM, Ford and Chrysler need to market new, attractive, environmentally sound and economical options to consumers.

WHAT’S YOUR OPINION?

Are companies that produce large cars doomed to fail because of changing environmental expectations?

GM employs thousands of people. Was it the right move for the US government to step in and bail the company out?

The bankruptcy declaration will allow GM to start anew and not pay the money it owes to its debtors. Is that fair?

Will automotive manufacturers continue to struggle as the global financial crisis continues?