As a sure sign that GM has successfully restructured their worldwide corporation, the company reported a record $7.6 billion dollars in profits for 2011. Further, a profit sharing program with UAW GM workers also promises many employees a $7,000 bonus check as well. All of this is very good news for a company that in recent years came within a hair of economic collapse. GM was a beneficiary of the federal Troubled Asset Relief Program(TARP), signed into law by President Bush and continued by the Obama Administration which offered some emergency financial help to a few select industries considered vital to the American economy such as banks or large employers or military contractors like GM. TARP offered some help to ailing companies, but also has produced some handsome interest rate returns for the U.S. Treasury as well, making the program largely a win-win situation for business and the federal government as well.
The new GM is a smaller company than before, no longer including Hummer, Saturn or Pontiac. A few years ago, the Oldsmobile brand was discontinued as well. GM also divested of Saab, which attempted to operate as an independent brand for a short time. But, when Saab sought to sell to a Chinese company, GM helped to nix the deal, because a large part of Saab’s revenues came from the sale of military hardware such as advanced aircraft. GM apparently not only supplied this military technology, but was concerned for national security reasons with a large sale of military technology to China, which could benefit their military in a shortcut manner.
On national nightly news programs last night, the CEO of GM spoke how the government TARP program was essential to the survival of not only GM, but also the American economy as a whole. Campaigning in Michigan, presidential candidate Mitt Romney continues to oppose the TARP program that rescued GM, instead preferring that troubled American companies instead work through bankruptcy proceedings to either restructure or else liquidate their assets. The CEO of GM believes the company would have disappeared without TARP and disagrees with the position of Romney, the son of George Romney, the former top CEO of the now defunct American Motors Corporation which was absorbed by Chrysler 1n 1987 in their buyout bid to acquire the Jeep assets of AMC.
Part of the turn-around success of GM is the huge sales of GM Shanghai, China company. Buicks are wildly popular among the wealthy Chinese, and are selling in numbers far larger than in the U.S.
The stock value of GM should gain value as well, as the company appears to be in sound economic health, posting their new record profits.
All of this should be good news for fans of Chevrolets, Cadillacs and Buicks. Not only will new models continue to be produced, but parts for existing models will also continue to be available as well. GM isn’t going anywhere, but up.
GM also narrowly took back their crown as the largest auto producer in the world in 2011, putting them narrowly ahead of Toyota and Volkswagen. But, Volkswagen has undertaken an ambitious five year plan to become the world’s number one auto producer, and Toyota has shaken off some of their image problems after having some troubled automobile models a few years ago that were far below normal Toyota standards. You can expect all three car-makers to work hard for the top position for some years to come.