Newsletter Masthead
July 2009

GM Out of Bankruptcy - Now What?

On Friday July 10, 2009 a new company GMGMQ.PK arose from the GM bankruptcy proceedings just 40 days after the bankruptcy filing with:
- U.S. Treasury owning 60.8%
- The Canadian and Ontario governments owning 11.7%
- The Union Retirees Healthcare Trust (VEBA) owning 17.5%
- Current Debt Holders could get as much as 10%
This new company may be ready to have an Initial Public Offering (IPO) sometime in 2010 and may raise some capital to pay back some of the money borrowed from the U.S. Treasury. Below is the comparison from the OLD GM to the NEW GM.

172.81 billion
11 billion
(Another 9 billion in preferred shares)
Chevrolet, Cadillac, Buick, GMC, Pontiac, Saab, Saturn and Hummer
Chevrolet, Cadillac, Buick and GMC
91,000 (end of 2008)
6,000 (end of 2008)
3,600 (end of 2010)
US Factories
34 (end of 2010)

The new auto industry is expected to move 9.5 million vehicles per year down from the 16 million units of years past.  This new trimmed down GM supposedly can be profitable in an auto industry of 10 million units per year or more. As a matter of fact, since 2005 GM lost more than $80 billion in the US. Why?
Bad Management?  Yes, management does play a role in the crisis at GM and how Ford has avoided this same fate. However, GM was making vehicles (SUVs, etc) that at one point the American public wanted and were profitable for GM. Then the American public changed and what was delivering a good portion of GM’s profit, dried up quickly.
Unions? It’s been all over the news how much more United Auto Workers (UAW) union workers get than their non-union counterparts in foreign owned car manufacturers. Yes, these higher wages and benefits and other legacy costs contributed to GM’s situation.
Credit Crisis? Companies have shed millions of jobs since December 2007 when the recession officially started. People without jobs and people worried about losing their jobs don’t buy new cars. Also, with the credit crisis, many people were unable to get loans for new cars.
Lack of Economic Nationalism? Let us all look in our garages and see what vehicles we own. My parents never have and most likely never will buy a car from a foreign car maker. I, on the other hand, have never owned a car from an American car maker…even my motorcycle is foreign. After seeing what has happened to the American Car Manufacturers, I think I need to buy American for the next vehicles for my family. Some of you may want to consider the same.
All of these things contributed to GM’s demise, now let’s see what the new, leaner GM does. All of American Manufacturing and all of America is watching and hoping for GM’s success.


Ben Moore
Agent Technologies, Inc.

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GM Out of Bankruptcy - Now What?

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Manufacturing Statistics 
1) Manufacturing Output decreased 1.0%in May 2009 with durable goods down 1.8 % and nondurable industries fell 0.2%. 
Source: Federal Reserve Board
2) Manufacturing Employment fell by 156,000 jobs in May 2009.  
Source: Bureau of Labor Statistics
3) Manufacturing Trade Deficit in May 2009 decreased $2.6 billion, or 6.5%, to $37.3 billion.   Sources: Census Bureau, Bureau of Economic Analysis
4)Manufacturers' New Orders in May 2009 increased $4.1 billion, or 1.2%, to $347.9 billion.      Source:Census Bureau
5) Manufacturers' Inventories decreased $3.2 billion, or 0.6 %, to $513.3 billion. Source: Census Bureau
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