Government Motors Troubles Means Troubles For US Taxpayers

Warren Beatty
In February, 2012, General Motors (GM, a.k.a. Government Motors) bought seven percent of PSA Peugeot Citroën, both of which suffered huge losses last year.  The purchase was made ostensibly to gain manufacturing synergy.  GM became the second-largest shareholder in PSA Peugeot Citroën.  Dan Akerson, GM CEO, said:

"There are tremendous opportunities and synergies to be realized in this alliance.  We expect unmatched purchasing power on a global scale and capital expenditures on future product programs that are much less than each of us going it alone."

The purchase is supposed to help unprofitable Adam Opel A.G., GM's wholly owned German subsidiary.  GM and PSA Peugeot Citroën are looking to attain about $2 billion in cost savings annually within five years, which will come in part from joint development of new vehicles.  Vauxhall in Great Britain, by the way, is the same as the Opel.

All of this from Akerson at a time when there is an over-capacity of auto manufacturing capability worldwide.  Unused factory capacity costs auto manufacturers money to maintain and unproductive workers must be paid, so unused capacity is not good.  "You can't keep that up for long.  You'll go bankrupt," said Sergio Marchionne, the chief executive of Chrysler and Fiat.  In fact, that is what happened to Chrysler and General Motors.

That is all well and good, but now there is real trouble at Opel.  Karl-Friedrich Stracke, Opel CEO, presented the profit/loss numbers to Akerson.  Stracke then stepped down from his position as CEO of Opel to take on "special assignments," where he will report to the Chairman of parent GM.  In other words, Akerson fired him.

But wait, as they shout on TV, there's more!  Dave Lyon, vice president of design for GM Europe, was appointed as the new head of Opel.  Guess how long Lyon lasted.  Not even one day!  Lyon's "departure is the latest blow to Opel/Vauxhall, which have endured management and labor turmoil as Europe's economy totters," wrote the Detroit Free Press.  Lyon was escorted from the Opel headquarters building to a waiting car by GM's head of personnel.  He was replaced by Joel Ewanick, GM global marketing chief.

But wait, there's even more!  The next day, Ewanick left, or was forced out.  GM spokesman Greg Martin said of Ewanick: "He failed to meet the expectations the company has of an employee."

All of this from Dan Akerson, a man who was paid $7.7 million in 2011, who said in a USA Today interview, "I think people will go,  'Wow, I'm glad we invested in GM.'  I'm talking about the American taxpayer."

GM declared bankruptcy in 2009.  It was subsequently bailed out by President Barack Hussein "kill list" Obama and his administration.  Since then, Obama and GM executives have publicly set business benchmarks, such as market share.  GM has failed to reach many of them.  Contrary to what he told GM board members in 2009, Akerson said that his plan was to lose market share.  Akerson said, "I like profitability more than I do market share."  GM's North American market share is now 16.4 percent.  GM's worldwide market share is about 11.9 percent.

And all of this from Obama, who bailed out GM to the tune of over $50 billion.  The GM stock price in 2009 was $33 per share, the price that we taxpayers paid.  Today the price is $19.86.  So, in terms of stock price alone, we taxpayers are out $6.57 billion.  The US Treasury says it has no plans to sell GM stock at a loss.

Obama, while speaking to a United Auto Workers convention on February 28, 2012, in Washington D.C., said, "General Motors is back on top."  But, as RTT News said in May, 2012, GM reported a decrease in first-quarter net income.  Back on top, huh?  The way GM has been and is being managed reflects negatively on Obama and his administration, and it raises questions about Obama's ability to manage the American economy.

Don't think any of the above affects us taxpayers?  Well, think again.  We taxpayers own 500 million shares, or 26.5 percent of GM.  And every 1¢ movement in the GM stock price means $5 million to us taxpayers.  We are not just bystanders, we have some "skin in the game."

Dr. Beatty earned a Ph.D. in quantitative management and statistics from Florida State University.  He was a (very conservative) professor of quantitative management specializing in using statistics to assist/support decision making. He has been a consultant to many small businesses and is now retired.  Dr. Beatty is a veteran who served in the U.S. Army for 22 years.  He blogs at: rwno.limewebs.com.

In February, 2012, General Motors (GM, a.k.a. Government Motors) bought seven percent of PSA Peugeot Citroën, both of which suffered huge losses last year.  The purchase was made ostensibly to gain manufacturing synergy.  GM became the second-largest shareholder in PSA Peugeot Citroën.  Dan Akerson, GM CEO, said:

"There are tremendous opportunities and synergies to be realized in this alliance.  We expect unmatched purchasing power on a global scale and capital expenditures on future product programs that are much less than each of us going it alone."

The purchase is supposed to help unprofitable Adam Opel A.G., GM's wholly owned German subsidiary.  GM and PSA Peugeot Citroën are looking to attain about $2 billion in cost savings annually within five years, which will come in part from joint development of new vehicles.  Vauxhall in Great Britain, by the way, is the same as the Opel.

All of this from Akerson at a time when there is an over-capacity of auto manufacturing capability worldwide.  Unused factory capacity costs auto manufacturers money to maintain and unproductive workers must be paid, so unused capacity is not good.  "You can't keep that up for long.  You'll go bankrupt," said Sergio Marchionne, the chief executive of Chrysler and Fiat.  In fact, that is what happened to Chrysler and General Motors.

That is all well and good, but now there is real trouble at Opel.  Karl-Friedrich Stracke, Opel CEO, presented the profit/loss numbers to Akerson.  Stracke then stepped down from his position as CEO of Opel to take on "special assignments," where he will report to the Chairman of parent GM.  In other words, Akerson fired him.

But wait, as they shout on TV, there's more!  Dave Lyon, vice president of design for GM Europe, was appointed as the new head of Opel.  Guess how long Lyon lasted.  Not even one day!  Lyon's "departure is the latest blow to Opel/Vauxhall, which have endured management and labor turmoil as Europe's economy totters," wrote the Detroit Free Press.  Lyon was escorted from the Opel headquarters building to a waiting car by GM's head of personnel.  He was replaced by Joel Ewanick, GM global marketing chief.

But wait, there's even more!  The next day, Ewanick left, or was forced out.  GM spokesman Greg Martin said of Ewanick: "He failed to meet the expectations the company has of an employee."

All of this from Dan Akerson, a man who was paid $7.7 million in 2011, who said in a USA Today interview, "I think people will go,  'Wow, I'm glad we invested in GM.'  I'm talking about the American taxpayer."

GM declared bankruptcy in 2009.  It was subsequently bailed out by President Barack Hussein "kill list" Obama and his administration.  Since then, Obama and GM executives have publicly set business benchmarks, such as market share.  GM has failed to reach many of them.  Contrary to what he told GM board members in 2009, Akerson said that his plan was to lose market share.  Akerson said, "I like profitability more than I do market share."  GM's North American market share is now 16.4 percent.  GM's worldwide market share is about 11.9 percent.

And all of this from Obama, who bailed out GM to the tune of over $50 billion.  The GM stock price in 2009 was $33 per share, the price that we taxpayers paid.  Today the price is $19.86.  So, in terms of stock price alone, we taxpayers are out $6.57 billion.  The US Treasury says it has no plans to sell GM stock at a loss.

Obama, while speaking to a United Auto Workers convention on February 28, 2012, in Washington D.C., said, "General Motors is back on top."  But, as RTT News said in May, 2012, GM reported a decrease in first-quarter net income.  Back on top, huh?  The way GM has been and is being managed reflects negatively on Obama and his administration, and it raises questions about Obama's ability to manage the American economy.

Don't think any of the above affects us taxpayers?  Well, think again.  We taxpayers own 500 million shares, or 26.5 percent of GM.  And every 1¢ movement in the GM stock price means $5 million to us taxpayers.  We are not just bystanders, we have some "skin in the game."

Dr. Beatty earned a Ph.D. in quantitative management and statistics from Florida State University.  He was a (very conservative) professor of quantitative management specializing in using statistics to assist/support decision making. He has been a consultant to many small businesses and is now retired.  Dr. Beatty is a veteran who served in the U.S. Army for 22 years.  He blogs at: rwno.limewebs.com.