General Motors will file for bankruptcy today. The U.S. federal courts had specified June 1 as the last date for filing for bankruptcy and it has been one of the closely followed corporate happenings in the world, reason being that GM has been the world’s largest car manufacturer for over seven decades in its hundred year history. It employs thousands of people in the United States alone and takes care of over 5 Lakh retirees.
If the courts decide to liquidate General Motors, it will be the largest manufacturing unit bankruptcy in the world. But the U.S. government is ensuring that the company be provided with funds to help restructure in order to become more competitive.
GM has been a victim of weak global economy, high oil prices, and tight credit situations that put brakes on sales of its products and left it unable to raise cash from open markets. Even though filing for bankruptcy would have helped it procure cash to pay of its debts and commitments to employee funds, it wanted to avoid it as this would give the U.S. government a chance to control 60 percent of the company. The global economic meltdown took away all hopes of reviving the automotive manufacturing giant.
Auto analysts say that bankruptcy of General Motors will take longer time than Chrysler as the former’s operations are spread over different continents. The courts will have to take into account many more factors than they did for Chrysler.
However, President Obama has assured help to restructure General Motors to ensure that it becomes profitable within a year. General Motors India has largely been insulated from the happenings in its parent company but the effects are likely to trickle down to India in no time. In this backdrop, General Motors has decided to make more small cars, which is a deviation from its passion for large vehicles.
If the courts decide to liquidate General Motors, it will be the largest manufacturing unit bankruptcy in the world. But the U.S. government is ensuring that the company be provided with funds to help restructure in order to become more competitive.
GM has been a victim of weak global economy, high oil prices, and tight credit situations that put brakes on sales of its products and left it unable to raise cash from open markets. Even though filing for bankruptcy would have helped it procure cash to pay of its debts and commitments to employee funds, it wanted to avoid it as this would give the U.S. government a chance to control 60 percent of the company. The global economic meltdown took away all hopes of reviving the automotive manufacturing giant.
Auto analysts say that bankruptcy of General Motors will take longer time than Chrysler as the former’s operations are spread over different continents. The courts will have to take into account many more factors than they did for Chrysler.
However, President Obama has assured help to restructure General Motors to ensure that it becomes profitable within a year. General Motors India has largely been insulated from the happenings in its parent company but the effects are likely to trickle down to India in no time. In this backdrop, General Motors has decided to make more small cars, which is a deviation from its passion for large vehicles.
Labels: General-Motors
1 Comments:
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