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GM: End of era, new beginning

2009-06-01 09:08
Washington - US newspapers have described the impending bankruptcy of General Motors as the end of an era for the US vehicle industry, but also as an opportunity for a new beginning.

Saddled by a heavy debt burden, GM, the leading US carmaker, will declare bankruptcy on Monday, senior US officials said.

But the officials said they hoped it would be a swift process, and GM should be able to re-emerge from bankruptcy protection as a new, leaner company within 60 to 90 days.

The Detroit Free Press said in an editorial that "the Chrysler, GM and other bankruptcies in the automotive sector are meant to be transitions, not liquidations" and that "these companies don't intend to close their doors."

"Diminution of the 'big' leaves room for the small - new, innovative and edgy entrepreneurs of the sort who built the auto industry in Detroit way back when," the paper continued. "Many of them may be just an idea around here at the moment. But that's how a future starts."

The Washington Post said the court filing will mark "the end of financial independence for the 100-year-old industrial leviathan that once conflated its interests with the country's and that employed well over one million people."

The paper quotes a letter sent to Treasury Secretary Timothy Geithner by 20 members of the House of Representatives, who complain that "contractual rights of investors are being trampled by the government.

"The proposal seems to favour the rights and claims of the UAW (United Auto Workers union), a political ally of the current administration and a powerful lobbying force in Washington, over the rights and claims of the company's diverse group of bondholders," the letter said.

The New York Times cautions the Obama administration that owning a car company like GM is likely to be "politically trickier than it appears at first blush."

The Times said in an editorial that GM cannot be micromanaged from Washington.

"Neither the Treasury nor members of Congress should decide which plants or dealerships are to be closed, how many workers are to be laid off or hired, what specific designs GM adopts and where it should make them," the paper pointed out.

Meanwhile, the conservative Wall Street Journal said the move essentially converts GM into "Obama Motors." The paper predicts "a long, expensive and unhappy exercise in political car making."

Reminding readers that under the restructuring plan the US government will become the owner of most of GM, The Journal said the government would now try "to vindicate its ownership by favouring GM over Ford and the other auto makers that aren't wards of the state."

A piece of legislation already passed by Congress already contains a $7 500 tax credit for consumers who buy GM's new electric car, the Chevy Volt, the Journal pointed out.

"Mr Obama likes to say he's a pragmatist who only prefers a government solution when it will work," The Journal concluded. "But in resurrecting an industrial auto policy that even the French long ago abandoned, the president has made himself GM's de facto CEO. Our guess is that he'll come to regret it as much as taxpayers will."

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