Skip to search.

Lather, Rinse, Repeat: GM Following Chrysler's Script with UAW, Creditors, Dealerships

Posted May 15, 2009 02:45pm EDT by Aaron Task
Related: GM, F, XLF, FAS, ^GSPC, ^DJI, SPY
As many expected, the Chrysler bankruptcy is proving to be a template for GM's likely filing. At least, GM certainly appears headed down a similar path on several fronts:
  • Negotiations with the UAW: The WSJ reports the union is reportedly willing to trade wages and health care benefits, as well as some jobs, in exchange for a big share of the post-bankruptcy GM.
  • Negotiations with bondholders: This is a very touchy subject in financial circles right now after the Chrysler's case upended the normal rules of which creditors get paid first in a bankruptcy. In the GM case, much of the focus right now is on the unsecured creditors, who are being offer 4% of GM in exchange for their $27 billion of obligations; the creditors want 58%. Something's gotta give - and it'll be bondholders' pocketbooks if the Chrysler episode really is the template.
  • Slashing dealerships: A day after Chrysler announced plans to close 789 dealers, or about 25% of its total, GM said it wants to eliminate about 1100 of its dealers by the end of 2010, and ultimate cut about 40% of its current 6200 total.
  • The politics of bailouts: One the one hand, the Obama administration feels like it needs to save GM and Chrysler in some form to prevent massive job losses at both automakers and their suppliers. On the other hand, critics say the administration is showing favor on the UAW as a way to secure future votes.

Whatever your political persuasion or views on the GM-Chrysler dramas, I think we can all agree the automakers and their stakeholders are being asked to sacrifice a lot more than the financial firms and their creditors.

President Obama has yet to satisfactorily answer why this double standard persists in this era of "change".

Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.