GM - "Government Motors"

My first car in 1955 was a Pontiac, my second car was a Chevy, my third car was a Dodge, and my fourth car was the classic 1957 Chevy convertible - arguably the most beautiful car ever to come out of Detroit. I now drive a Dodge truck and have owned at least one American made car most of my adult life. Those days may be over.

Last November I wrote a blog entitled "Let them die". Here is an excerpt from that blog:

"If I were President, I would tell the CEO's of the auto companies to pack their briefcases, go back to Detroit and solve these problems by themselves; or go bankrupt. If all three US auto companies went out of business it would be a dramatic event in the history of this country, but out of the ashes of their destruction would come a better, stronger auto industry that would be competitive with the rest of the world. Detroit's problems are all of their own making primarily as a result of ridiculous union agreements and lack of long term research.

Automakers are trying to renegotiate union agreements but the damage is done. If any of the big three go bankrupt many of those union employee pension and lifetime health benefits will be gone. Or maybe the government will give these auto workers a "bailout" too. "

Well, the government gave the auto workers more than a "bailout". In the "restructuring" that was announced today the United Auto Workers could own 55% of Chrysler and 39% of General motors. With the government owning the majority of the remaining stock in both companies, the UAW will have control of Chrysler and GM will essentially be nationalized. Incredibly, in the case of GM, common shareholders who owned 100% of the company a year ago, will now own about 1% of the company.

These plans will most likely happen whether or not the companies go through a restructuring bankruptcy. So we could have a "government owned" (nationalized) auto company and a "union owned" auto company; which raises some interesting questions:

1/ If GM (Government Motors) continues to fail and lose money, will the government subsidize their own company to keep it in business?

2/ Will the government come up with new rules like "Card Check" that could penalize the non-union companies that compete with them?

3/ With the UAW owning 55% controlling interest in Chrysler, how will they negotiate union contracts? Will the UAW majority owners decide what salaries and benefits their own union workers will get?

One has to wonder if this bailout and reorganization was not the plan all along by the Obama Administration - "Nationalize" GM (Americas largest auto manufacturer), and allow the UAW to get control of Chrysler.

I predict both of these companies will now eventually fail unless the government continues to subsidize them. They simply will not be able to compete with a private business (e.g. Post Office vs UPS or FedX).

As for me, I have bought my last GM or Chrysler automobile.