So much for the bailout.
General Motors Corp. filed for Chapter 11 bankruptcy early Monday, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for U.S. taxpayers.
Obama is expected to defend General Motors’ bankruptcy plan and the massive bailout. The reorganization plan will call for a huge infusion of U.S. tax dollars, but the White House hopes the company will survive.
The bankruptcy filing, made in the U.S. Bankruptcy Court in Manhattan, marks the climax of a lengthy debate over the auto maker’s future after it sought a bailout from the U.S. government in December to stay alive. In the end, GM couldn’t complete its restructuring out of court and filed for bankruptcy-court protection to get billions more in aid from U.S. taxpayers.
The question now facing 56,000 auto workers, 3,600 GM dealers and the Obama administration: Will it work?
……Under the plan, the government would own 60% of the new GM, but Obama said auto executives “will call the shots and make the decisions about turning this company around.” He said the government would refrain from playing a management role in all but the most critical areas.
……The U.S. government has agreed to provide GM with a further $30 billion in aid, in addition to the $20 billion the auto maker has already borrowed, to see it through its restructuring and exit from bankruptcy protection. The Canadian and Ontario governments are putting in $9.5 billion for a 12.5% stake.
……GM said Monday that it will shutter 17 factories and parts centers by the end of 2011, including seven factories in Michigan and plants in Ohio, Indiana and Tennessee, and cut an additional 5,000 salaried jobs.
The closures will reduce GM’s U.S. facilities to 33 from 47 by 2012. Between 18,000 and 20,000 workers will be affected by the shutdowns, Tim Lee, GM’s vice president of North America Manufacturing, said during a conference call Monday.
So, according to the terms of the government takover, the government will own 60% of the company and make management decisions only in ‘critical areas’.
How do they plan on recouping the $50 Billion taxpayer bailout, especially when they can’t produce cars that make a profit? Aside from that, further government interference in business decisions and daily operations is a virtual certainty now that the government is a majority owner.
Good luck with that ‘restructuring’.