The logo of General Motors Corp. (GM) is
seen outside the GM headquarters in Detroit, the United States, May 29,
2009. The largest U.S. automaker, General Motors Corp., officially filed
for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest
bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu
Xinrong) Photo
Gallery>>>
by Xinhua writers Yang Lei, Wang Jiangang, Zhou
Xiaozheng
NEW YORK/DETROIT, June 1 (Xinhua) -- In the largest
industrial bankruptcy ever seen in U.S. history, General Motors Corp., the top
U.S. automaker and once the world's largest corporation, filed for bankruptcy
protection on Monday.
The Detroit-based company, for decades a symbol of American manufacturing supremacy, corporate culture and even lifestyle, filed a Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of New York early Monday morning.
The collapse of the century-old auto giant came at a
time when the United States is experiencing the worst economic recession since
the Great Depression. Just a month ago, Chrysler LLC, the country's third
largest automaker, took the same path.
The logo of General Motors Corp. (GM) is
seen in front of the GM headquarters in Detroit, the United States, April
15, 2009. The largest U.S. automaker, General Motors Corp., officially
filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the
largest bankruptcy protection case in the U.S. industrial history.
(Xinhua/Gu Xinrong) Photo Gallery>>>
Hoping to reemerge from bankruptcy protection as a
new, leaner company within 60 to 90 days, GM will close 14 U.S. factories and
three warehouses to slash its operating costs, affecting some 18,000 to 20,000
workers in nine states. It aims to bring down the total number of U.S. plants
from the current 47 to 33 by 2012.
The GM bankruptcy, along with the previous one of
Chrysler, will also lead to the loss of hundreds of dealers and suppliers as
well as hundreds of thousands of jobs, dampening U.S. President Barack Obama and
his administration's efforts to stimulate the slumping economy.
However, backed by the U.S. and Canadian governments,
GM warranty, service and customer support will continue uninterrupted during
bankruptcy. Essential suppliers and employees will be paid in the normal course,
according to GM President and CEO Fritz Henderson.
GM court filing also will not affect its overseas
operations, including the GM joint venture in China, which said in an overnight
statement to Xinhua that the impact "will be minimal to our China business
including our operations and sales."
"We will maintain our normal business operations,
including our suppliers system, dealers, warranty and customer support
operations," it added.
A piece of news about the General Motors
Corp. filing for bankruptcy protection is seen on the front page of a
newspaper in Detroit, the United States, June 1, 2009. The largest U.S.
automaker, General Motors Corp., officially filed for bankruptcy
protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy
protection case in the U.S. industrial history. (Xinhua/Gu
Xinrong) Photo
Gallery>>>
For a company like GM whose importance and prestige
were epitomized in once popular phrases like "What's good for General Motors is
good for America" and "As GM goes, so goes the nation," its bankruptcy filing
was anything but an ordinary case.
The U.S. government, which at the end of last year
lent 19.4 billion dollars of taxpayer money to GM in a controversial bailout
move, has played a key role in directing and pushing GM in key restructuring
talks with auto workers' union and bondholders, to secure a smooth bankruptcy
and quick revival.
Under the agreements reached in the last-minute
countdown to the bankruptcy filing, creditors holding some 54 percent of GM
bonds accepted a plan to swap 27.1 billion dollars in debt for a 10-percent
stake in a reorganized "new GM" and warrants for an additional 15-percent stake.
A retiree health care trust will get a 17.5-percent stake in the new GM and 6.5
billion dollars in preferred stock.
The liquidation of an iconic company like GM would
cause "enormous damage" to the U.S. economy, said President Obama in a brief
statement live televised around Monday noon.
Therefore, he said, his administration is investing
another 30 billion dollars to help the creation of the new GM, thus becoming the
largest stake holder with a 60-percent stake. However, the president explicitly
stated that he "has no interest in running" the new GM, which will be able to
make decisions on its own.
As GM produces in 34 countries and employs 244,500
people worldwide, some foreign governments, out of concerns about plant closures
and job losses, also came to the rescue.
The governments of Canada and the Canadian province
of Ontario pledged another 9.5 billion dollars in aid to GM's restructuring, in
exchange for a 12.5-percent stake in the new GM. In Germany on Sunday, the
government agreed to lend Opel, GM's European subsidiary, 2.1 billion dollars,
to pave the way for the acquisition of the company by Magna International Inc.,
a Canadian auto parts supplier.
President Obama thanked both the German and Canadian
governments for their support to the U.S. auto industry.
For some ordinary Americans, the downfall of GM, long
regarded as an icon of American dream and a cradle of middle class, seems to be
hard to accept.
"It's sad. It's very very sad," said Bob Dewar, one
of the baby-boomer generation and one of those who migrated to Detroit in the
1970s for a better life. "The American dream is gone."
But Shusheng Wang, co-director of Global Trade Group
at Detroit-based Butzel Long law firm, told Xinhua that he believes GM will
benefit from the bankruptcy in the long term.
"GM will shed the bulk of its liabilities, and it
will become cost competitive against Japanese transplants under the deal with
the union. Even better is that the government will finance the company through
bankruptcy," said Wang, who had worked at GM headquarters as a legal counselor
for nearly 10 years until 2006.
Topping world auto sales for 77 consecutive years
until 2007 and owning internationally-famed brands like Buick, Cadillac and
Chevrolet, GM, along with Chrysler and Ford Motor Co. in the so-called Detroit
Three, has kept losing ground to its Asian and European competitors due to its
over-dependence on powerful, oil-guzzling trucks and sport utility vehicles
(SUVs), poor cost management and lax quality control.
Its U.S. market share has plunged from more than 50
percent at its peak time to a barely 20 percent, and it has lost 82 billion
dollars in the past four years.
The ongoing global financial crisis, triggered by the
U.S. mortgage meltdown, turned out to be the last straw for the mammoth company,
whose final struggles with government bailout support proved futile in the face
of a severe credit crunch on the financial market and a 35-percent drop in new
cars demand in the United States since last October.
Public began losing confidence in GM. Its shares
dropped to 75 cents as close of Friday, the lowest level in 76 years, and less
than the 1-dollar minimum price normally needed for a New York Stock Exchange
listing. The long-term blue chip was kicked out of Dow Jones Industrial Average
right after its bankruptcy filing on Monday, with networking giant Cisco Systems
taking its place.
However, industry experts pointed out that the Monday
bankruptcy might have opened a new chapter for the aging GM, founded in 1908,
and the company stands a chance to reemerge as an industry leader if it can well
adapt itself to the new challenges faced by the global auto sector.
Amid growing concerns about soaring oil prices and
dire consequences of climate change, the Obama administration on May 19unveiled
tough standards for tailpipe emissions from new automobiles to be sold in the
United States, while also raising the auto fuel efficiency targets.
In his Monday statement, Obama said that GM has
prepared a "viable and achievable" plan to rise again, and expressed his
confidence that the new GM will be able to produce "high-quality, safe and
fuel-efficient cars of tomorrow."
And GM has started preparing for such a comeback even
before it enters the courtroom. It has recently introduced Chevrolet Volt, an
all-electric plug-in compact car dubbed the company's "new DNA "that "represents
a fundamental reinvention of the American automobile industry." It has also
confirmed the production of low-emission Ecotec engines at its joint venture in
China, which will be mounted on the newly-launched Chevrolet Cruze compact
sedan, another fuel-efficient model.
On Friday, the company announced a plan to utilize an
idled U.S. assembly line to manufacture small cars. And it plans to sell about
17,300 China-made compact cars in the United States in 2011 and to triple that
to about 51,500 in 2014.
"I am absolutely confident that if well managed, a
new GM will emerge that can ... out compete automakers around the world and that
can once again be an integral part of America's economic future," Obama said on
Monday.
And hopefully he has said it right, because analysts
believe that if GM fails again, it will not only drag the U.S. government into
deeper deficits and a far steeper decline in Treasury bond prices, but also take
toll on the urgently-needed recovery of the U.S. economy.
WASHINGTON, June 1 (Xinhua) -- U.S. President Barack Obama
promised on Monday that the U.S. government will invest additional30 billion
dollars in GM, which he was confident will emerge from the bankruptcy protection
process quickly. Full story
NEW YORK, June 1 (Xinhua) -- General Motors CEO Fritz
Henderson said Monday that China will continue to be a key partner of business
of GM.
Speaking at a press conference in GM's New York
building, Henderson said that GM's venture in China is a critical part of GM,
saying its business in China in "growing very fast."
"Our business in China continues to grow very fast, I
should say at torrid pace," he said. "And we are very appreciable of
that." Full story
DETROIT, June 1 (Xinhua) -- The largest U.S. automaker
General Motors which has filed Chapter 11 bankruptcy will not abandon its
headquarters in Detroit's Renaissance Center as part of its restructuring, the
Detriot News reported Monday.
President Barack Obama told Michigan's senior members
of Congress during a call Sunday night that GM will remain in the RenCen,
despite enticements from the city of Warren to move there, a congressional aide
briefed on the matter said. Full story
DETROIT, June 1 (Xinhua) -- General Motors Corp. announced
on Monday that it will close or idle 14 plants in more than two years, just
several hours after the troubled carmaker filed for bankruptcy in New York. GM
also reaffirmed it will build a small car at one of its U.S. assembly plants as
it announced on last Friday. Full story
DETROIT, June 1 (Xinhua) -- Many are mourning the
iconic collapse of General Motors Corp. as it is just hours away from its
bankruptcy filing on Monday. But the once largest company in the world may have
been quietly betting on a quick comeback as a leaner automaker.
As 54 percent of GM bondholders announced their
support for a sweetened debt-for-equity offer on Sunday, the GM took another
step forward toward a quick exit from bankruptcy protection which the company is
expected to file on Monday morning. Full story
BEIJING, June 1 (Xinhua) -- The No. 1 U.S. auto
maker, General Motors Corp., is poised for bankruptcy protection on Monday as a
way to seek a rebirth in the wake of a similar move by its rival Chrysler about
one month ago.
The GM, with a history of more than 100 years, is set
to deliver paperwork for its bankruptcy protection at 8 a.m. EDT (1200 GMT), the
largest bankruptcy protection case in the U.S. industrial history, said informed
sources who asked not to be named. Full story
BEIJING, May 31 -- General Motors Corp.
president and Chief Executive Officer Fritz Henderson have scheduled a news
conference in New York on Monday, when the Detroit automaker is expected to file
Chapter 11 bankruptcy, according to media reports Sunday.
GM's board of directors met for a second day Saturday to
make the final decision. The outcome of the meeting could not immediately
be determined. GM and the Treasury Department, which has been guiding the
Detroit automaker toward a rescue plan that will give taxpayers nearly a
three-fourths stake in the company, went into secrecy mode. Full story
DETROIT, the
United States, May 29 (Xinhua) -- The United Auto Workers (UAW) union ratified a
labor deal with General Motors Corp. on Friday, which will help the largest U.S.
automaker to emerge more quickly from a possible bankruptcy.
The contract was approved with an overwhelming 74-percent
vote by its members, the UAW said after a conference at its Detroit headquarters
on Friday afternoon. Full story
