General Motors will need a new name
North America's No. 1 automaker is widely expected for bankruptcy protection on June 1. Bloomberg News reported that GM, "the world's largest automaker until its 77-year reign ended in 2008, plans to file for bankruptcy protection on June 1 and sell most of its assets to a new company, people familiar with the matter said."
The company, which has been hemorrhaging jobs and money for years, will soon identify the 14 factories that it plans to shutter as part of its corporate restructuring, according to the Associated Press. GM also is trying to sell its Opel/Vauxhall before the parent company's bankruptcy.
The Detroit was founded almost 101 years ago by William "Billy" Durant, who was a leading manufacturer of horse-drawn carriages in Flint, Mich. He is responsible for the creation of GM through the acquisitions of Oldsmobile, Cadillac and the company which became Pontiac.
Neither Durant nor Alfred P. Sloan, GM's famous CEO from the 1920s, would recognize the company today. Earlier this year, GM announced plans to shed brands including Hummer and Saturn, which was created to be a "new kind of car company" by GM. GM has also announced plans to discontinue Pontiac, part of GM's line-up since 1932. The company also is trying to unload its European operations.
Politicians in Germany and the U.K. over the expected job cuts expected to accompany the job cuts.
"The political machinations on both sides of the Atlantic come as GM's U.S. workers prepared to vote Thursday on a new pact that would trim wages and benefits and provide a union-run health trust with a stake in a reorganized company," according to Dow Jones.
Members of Congress are complaining about the 70 percent stake the government is taking in the automaker. Chrysler L.L.C. is already in bankruptcy though it may emerge from court protection quickly. GM will not be so lucky, creating the most complicated bankruptcies in history.
Today, GM bondholders agreed to accept "a sweetened offer that will give them 10 percent of the new GM plus warrants to buy 15 percent more if stock in the new GM rises enough," as my colleague Peter Cohan noted.
The company will emerge from its troubles eventually. But will it still be GM?
No, the company is too different than the one founded at the dawn of the 20th century. The new automaker that emerges should have a new name. Any suggestions?