I’ve had my own personal history in the automotive industry – graphic design and programmer work for first and second tier suppliers – there was a post I’ve been meaning to make for a while was about how GM responded why bankruptcy was not really an option. It’s best answered in just one paragraph:

Bankruptcy reorganization takes cash – lots of it. For a company like General Motors to operate in Chapter 11, it would need massive debtor-in-possession loans. With credit markets frozen, there is realistically only one source of such loans – the federal government. We estimate loans needed to reorganize GM in Chapter 11 could top $100 billion, far more than the out-of-court fix envisioned in our restructuring plan.

Emphasis mine. You can read the rest of how GM had responded publicly about “Why Not Bankruptcy?” over at the GM Fastlane Blog right here.

Well today, CEO Rick Wagoner steps down – read about it here at Autoblog – and I can honestly say that part of me stands behind that basically Rick was “the man” while at GM and this incident will only start to decline the favor that’s been afforded to President Barack Obama because it will seriously look like the DC folks are just singling out the Detroit Big 3 and setting them on a path to utterly fail.

But what do you do when the prior management doesn’t make decisions that help your bottom line? What do you do when the solution to your pending problem is “ask for more money” all while you’ve flown in your private jet. Or if you’re seen as the CEO of a company that can’t deliver an electric vehicle meanwhile upstarts like Tesla are announcing and showing off a roadster and a coupe. Not that Tesla is quite yet there or their solution is “perfect”… but after over 100 years of being in existence, there has been ample amount of time to turn things around in regards to new technology.

But what do I know? Just that I wonder what will happen next. Bankruptcy might be the answer afterall for General Motors. But that will create a lot of problems for a lot of businesses and people. Don’t forget that the automotive industry is one of America’s highest employers.

[ GM Fastlane Blog ] [ Autoblog ]