Manufacturing Data Boosts Markets Despite Impending GM Bankruptcy
Even the fact that General Motors would be filing for a chapter 11 bankruptcy on Monday 1 June, essentially handing over the restructuring of the company to the government, did not dampen the spirit of optimism in the market. The U.S. government will have a 60 percent stake in GM and will reportedly be providing an additional $30 billion, over and above the $20 billion already loaned to the automaker, to facilitate the company’s restructure, which is set to be a major undertaking. Anxious workers, dealers and associated suppliers will no doubt be watching with keen interest as to how the restructure will play out. It has been reported that GM anticipate cutting 20,000 jobs, closing around a dozen plants, canceling agreements with up to 40 percent of its 6,000 retail dealerships and dropping four of its brands – Saab, Saturn, Hummer and Pontiac. In a competitive market which is dealing with a drastic reduction in new car sales, there are many challenges facing GM. One of these challenges, which may not be so easy to quantify, is that the general public, and especially younger generation consumers, are very aware of environmental issues, and GM will have to go to great lengths to shed its gas-guzzling image and win consumer confidence.