And in the long run we'll be dead. Put it out of its misery. The probability that GM (let's not talk about Chrysler) could enact a turnaround in a few months was nil. Most people knew that, though it seems some wanted to keep the company from filing for bankruptcy to placate the nervous animal spirits. Is the beast calm enough yet?
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BusinessWeek, The Tough Road Ahead for GM and Chrysler:
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Yesterday I implored the country not to save Detroit. Today Daniel Gross argues that Detroit's Big Three Are a National Disgrace: But we still need to save them. This is the only part which I think is on point:
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Of course it was doomed to fail, with labor costs at ~$70/man hour. And before you jump on me, I'm talking about labor costs the way accountants and management sees it not the way a worker on the factory floor sees it. Two different animals.
For a minute I thought you were talking about genetic modification, and got really confused...
When someone says "we need an auto industry in this country" and does not include "making cars" on the list of things we need it for, you know you got a problem.
GM could be profitable next year if it wanted. The problem is that it would mean laying off most of its work force, getting rid of a lot of managers devaluing its stock and selling off most of its infrastructure. It would be a much much smaller company. The effects of doing that are what people want to avoid...
I'm kind of mixed on it all. On the one hand I think GM is pretty incompetently run. And typically what makes their cars annoying are the small things that one would assume would be easy to fix. On the other I think keeping GM from failing would prevent some wider panic that would make the recession worse. It's purely buying a psychological effect. However how much is that psychological effect worth and how long can we afford to hold off the inevitable failure? I don't know. I'd feel much better if the economy had bottomed out but I don't think it has yet.