For Your Amusement: General Motors' Restructuring Plan

The only thing more amusing than the deranged ramblings of an insane lunatic, are the deranged ramblings of a whole lot of insane lunatics (i.e. the executive committee of General Motors) and their numerous legal and financial advisors. For whose "efforts" it is of course taxpayers who end up footing the bill.

Well, after going through the GM plan briefly and suffering cardiac arrest from laughter-induced hyperventilation, it only makes sense to share this. The full GM revitalization plan is presented below for your amusement. And if any incipient entrepreneurs are curious, in case you want to get $30 billion of taxpayer money, you have to put together 117 pages of illogical text with the occasional chart and a lot of contradictory statements, such as the table below which lists GM's key assumptions (and the change of these relative to the plan proposed on December 2). Key among these are:

• 2009 US GDP of -2%. This is a "little" aggressive when the consensus number is now south of -4%. Maybe the 2% difference will be made up when consumers blow their $16 extra per paycheck from the stimulus plan on Pontiac Sunfires?
• Downside auto SAAR (Seasonally Adjusted Annual Rate): 9.5 million. This number will likely become the upside estimate when GM demands another $30 billion next month.
• 2012 U.S. and global market share of 20% and 13%. Where is the more realistic 0% and 0%?

click to enlarge

Another hilarious chart pops up on page 12 which shows the traditional "first year analyst" rookie mistake of overcompensating on the back end for an ugly front end. Somehow between December 2 and February 17, GM has realized that although 2009 will be horrendous and only 10.5 million cars will be sold relative to prior estimates of 12 million (dream on), in 2012, the company will more than make up for it when SAAR is now somehow expected to be 16 million, versus a 15 million number merely two months ago.

Yes, the situation is truly fluid. And if anyone is buying these BS assumptions, they should be summarily disTARPed.

Anyway, here's 117 more pages of this kind of nonsense. Feel free to peruse. After all, this is the garbage that gets you $30 billion these days.

Comments

[Oyaveh:]

Am thinking that the $12-$16.00 extra on my paycheck may afford me to by some (non-salmonella) peanut butter to go with my crackers for lunch... Mmm

Feb 18 08:56 AM

[CLH:]

This is what happens when you let the govt. run the auto companies. Total stupidity.

Let them go bankrupt!!

Feb 18 09:12 AM

[User 359274:]

You know I just love this stuff... I was a pushed out " Designer " automotive worker ..... I have a great idea for all of the big 3. Why don't you go to the countries where you throw all the work and ask their presidents from there countries for money to support us. How dare you CEO's stand in front of American auto workers and do what you have done out of greed and then want us to bail you out .....

Feb 18 09:35 AM

[Donald Johnson:]

While I don't like the tone of the article, I also came away wondering about the economic, auto sales and market share assumptions in the GM and Chrysler plans.

And I'm not sold on the companies' claims that it will cost taxpayers much more if they file for Chapter 11 than if the car czar, President Obama, bails them out.

bloomberg.com has a good article that quotes people who think bankruptcy makes more sense.

I don't think irrational anger at the executives who inherited this mess and are the victims of the housing bubble and financial crisis created by Barney Frank, et al, makes sense.

And this isn't about product quality, this is about dysfunctional corporate cultures and union rules running into a 50% drop in sales that few companies could survive.

Feb 18 10:02 AM

[elcopone:]

Thanks for the much needed reality check. I only hope Congress can see through this terrible "plan". I have been saying all along that any GM plan the includes Wagoner is not viable. If Wagoner was a real man, he would admit that he has failed miserably and should remove himslelf as step one to the plan.

Well, at least Chrysler's isn't trying to fool anyone into thinking their plan is "viable." It looks like their plan was written by a 20 year old college intern!

Feb 18 11:06 AM

[3 degrees o...:]

Very funny title Tyler! Everyone knows that GM is the walking dead, lets bury this zombie once and or all. By the way, this is the same problem all organizations with large union workforces will have. Unsustainable forward obligations from retirement benefits. In particular those state and local government entities with high concentrations of public employee unions. Oh and don't forget Social Security and Medicare, same deal as GM.

Feb 18 11:15 AM

[PROXIMO:]

GM's toast.

Feb 18 11:47 AM

[Captain Cav...:]

The people who say let GM die need a nice clean answer to this huge mess created by greedy bankers and Wall St. wizards. They simply can't accept that this problem is much more complicated than "let the market flush it out". Stop for a minute and think about what will happen to the State of Michigan (not to mention Ohio, Indiana) if GM and Chrysler go away. Job losses in the tens of thousand that won't be replaced, housing and commercial property loan defaults in the tens of billions (that won't recover), tax base erosion that will be impossible to regain. The losses to people who have nothing to do with automotive will be staggering. Local and state government will no doubt file bankruptcy and dump all of their pensions on the feds. The banks left holding the worthless mortgages on homes and buildings will no doubt need more federal help and tons of people who did nothing wrong will be permanently screwed and moving to your state where they will drive down your wages and stress your systems. There is no doubt these things will happen. The idea that these companies are a black hole that can't be saved is stupid. Sure they have been badly managed and the unions have hurt them. The unions are now doing everything they can to help and replacing a management team is easier than replacing the worlds biggest manufacturing industry. Give them a chance. 35 Billion is way less than it will ultimately cost to shut them down. This mess will make New Orleans looks like a light rain shower. If we have money to fix up places where people know hurricanes are coming then we have money to save the Midwest from financial ruin.

Feb 18 11:59 AM

[TomF75:]

Is it really any surprise to anyone, that both of these zombies have their hands out already for more money. The govt should create one large company, call it Zombie Automotive & Finance, and throw C, GM, and Chrysler in it.

Then the govt can throw the finance wing TARP money, which can then be used to finance the cars sales, and the inventory that doesn't sell can be bought back by the government, and sent overseas as "Economic Aid" to some underpoverished 3rd world countries, or used as fleet vehicles for the Feds, then everyones happy...Best of all the taxpayer gets stiffed coming and going, its amazing no one on Capitol Hill has thought of this one already.

Feb 18 12:22 PM

[old boat guy:]

You see this and we see this but (come on) the gov't guys are so stupid they never will. General Motors is where it is because of dopes running it and, mainly, BAD, CRUMMY cars.

Feb 18 12:38 PM

[Scorp1us:]

"overcompensating on the back end for an ugly front end."

Nice pun. But BMW proves that the only way to succeed aside from having nice front AND back ends is an nice front end and an ugly back end. The justification is that more cars see your front end than your back end while driving. (Only the car behind you sees it) Everyone else going the other way sees the front.

Feb 18 03:36 PM

[31October:]

Re:
old boat guy "...General Motors is where it is because of dopes running it and, mainly, BAD, CRUMMY cars."

Congress may be making worse decisions than I would have imagined possible, but the pernicious attacks on GM product are incorrect: Posters keep missing the last DECADE of continual product improvement.

Statistically, GM registrations are longer than almost any make, meaning they last longer. Their new dual-mode hybrids are heavier-duty and have higher % gains than Toyota hybrids. The new models surpass Honda, Nissan, BMW, Mercedes, and Toyota in quality. They beat BMW to market with direct-injected turbo engines, make higher power with better economy than many competitors, and the interiors no longer fall out when you open the door. My father's van went trouble-free 350K & my used Chevette 120K before I totalled it, and my Saturn went 250K before I sold it - trouble free.

I do not drive a GM. I do not defend their marketing or financial stupidity. But I am sick of stereotypes left over from 1979. GMs are no longer "bad, crummy cars."

Many of us did embarrassing things in the 70's. But this is the 21st century, and product is the only good thing about GM. Adjust perceptions.

Feb 18 03:52 PM

[ume2:]

Tyler, great work, OMG did you just leave the CAT out of the bag,, Yikes , I have always been puzzled by how foreign manuf can come to this country without ZIP, buy land , build a state fo the art gazillion SQ ft Building including all new manuf equip. and still make a profit. whereas GM & chrysler who have been here forever can't make it a GO. As I am an old stupid man I do not understand the GOVT Bailout either. How will giving the car co money help them sell more cars? LEts think about this for a moment,,,,, cars are not selling because { ? ? ? } So how can we {Govt} make it possible for people to buy cars ? Oh , I just had a revelation, they can make more money by selling us the car TWICE: once from the Bailout and again IF you become inclined or ABLE to secure one thru outright purchase. Well my FEllow Americans contact your Lobbiest in the Golden City to see if you can ALSO get paid TWICE for providing your services only once... After all it is not the car CO. fault for their own predicament anyway, even Bernie Madoff can"t make a go of it in this economy and he was in business for over 50 YEARS. GOD Bless

Feb 18 08:19 PM

[jackooo:]

Give me some bailout $$$ and I will buy a car. It has to be cheaper than what the idiots in Washington are doing.

Feb 19 10:11 AM

[jackinga:]

You don't see people collecting Foreign Vehicles-

ONLY AMERICAN CARS-

Look at the Car Auctions------->

Think about it " The Value and Last-ability of American cars"-

Feb 19 11:31 AM

[Steve Funk:]

Mr. Durden's Bio states that he wants a return to capital markets, and I certainly agree with him. His bio does not have any auto analyst background (I think the only true auto analyst left is Phil LeBeau) so it is understandable that it will take Mr. Durden time to digest the impact of this industry.

I have followed the auto industry for 25 years as a hobby and as an investor. For quite a few years I was able to make money trading the cycles. Hopefully all "retail" investors have gotten the message to get out of all auto stocks and bonds.

That said, there are so many social implications beyond the fact that the auto companies are now wards of the state and will behave like a state organization. To pin that on the executives is misplaced and I dare say dangerous. The reason it is dangerous is because government meddling for 50 years has brought the auto industry to where it is today. As much as I hate to say it, since this was to a large extent a government induced problem (think big picture here) they probably need to be involved in the fix. There are no good choices left.

What I do know is that operationally the auto companies are not dysfunctional as many have suggested. The Big 3 sold more cars than any other three companies so the product is certainly viable. The problem is financial and not on the operations side. Not enough room here, but close inspection of GM's balance sheet and cash flows will tell you that the problem is not knowing how to build cars efficiently.

Feb 19 12:28 PM

[Howard_T:]

The auto makers claim thousands of jobs at their suppliers and thousands more at their dealers, service shops, and accessory dealers will be lost if any of the Big 3 goes under. May I beg to differ? There is a certain finite demand for new vehicles in the United States. This demand will not go away if, for example, GM goes under. It will be made up by increased production at the remaining car companies. GM's suppliers will thus have the opportunity to become suppliers for Ford, Chrysler, Toyota, and so on. I see some job loss there, but not of catastrophic proportions. Car repairs will still be needed. People will still need tires, batteries, and other consumables. As for the dealers, how many single-brand dealers are left in the US? Most of the larger ones sell multiple makes, many of them European or Asian, but made in the US. Again, perhaps some job losses, more because of resource concentration rather than lost demand, but not catastrophic. Can those who make our laws not understand the fundamental law of supply and demand?

Feb 19 01:03 PM

[33Nick:]

What we are worried about at this stage is the lack of long term plans, or even second stage plans. Throwing money at companies that were mismanaged is puzzling but the fact that we are cutting funds for education, when we need more engineers for tomorrow is downright frightening.

Nick
Electricnick.com

Feb 20 11:55 AM

[Tony C:]

<<<You don't see people collecting Foreign Vehicles-

ONLY AMERICAN CARS-

Look at the Car Auctions------->
>>>jacking

You need to get out more.
Pick any foreign car brand. Google a car club for that brand. You will find people enthusiastically collecting them.

Feb 22 01:56 PM