General Motors today faces the humiliation of collapsing into bankruptcy. It marks the 1 June deadline imposed by US president Barack Obama for the General to sort out its business – or seek protection from creditors in the bankruptcy courts. As we’re all too painfully aware, GM has been unable to perform miracles, triggering one of the greatest industrial collapses seen in American corporate history.
To give an indication of the scale of the problems at GM, just look at the way it’s valued by shareholders. At its peak in 2000, the car maker was worth $56 billion. But as the markets closed last week, General Motors was valued at just 87 cents per share, putting the group’s market value at an astonishing $550 million. That's an astonishing fall from grace by anyone’s standards.
CAR will be charting today’s developments minute by minute and hour by hour. Come back to this story throughout the day as we report live on the developments in Detroit, Washington and Brussels.
GM IN BANKRUPTCY: THE BREAKING NEWS
All times BST
Tuesday 2 June 2009
• 6.58am: Arch rial Ford speaks
Crosstown neighbour Ford issues a statement hoping for a level playing field, which may prove difficult when the state has already pumped in tens of billions of dollars which may never be repaid. 'We look forward to working with the Obama administration to ensure that the government's majority ownership of GM will not change the industry's competitive dynamics and that a level playing field will be maintained' (Ford)
Monday 1 June 2009
• 3.08pm: Latest on GM Europe – Opel and Vauxhall 'unaffected'
GM confirms a memorandum of understanding with Magna International over the sale of its European operations, Opel and Vauxhall. The German government has approved €1.5 billion of bridge financing (GM press release)
3.04pm: GM's European boss speaks
GM Europe president Carl-Peter Forster issues a statement: 'The process for a future partnership in Adam Opel GmbH has moved a critical step forward with the MOU reached with Magna International, whose leadership has shown strong commitment to this project. With the financing, even with the GM actions in the US, we can now confidently say to our employees, customers, suppliers and dealers that it’s business as usual as we go through the process of creating a new, more independent Opel/Vauxhall' (GM press release)
• 2.07pm: Reaction to GM's bankruptcy from analysts
Sid Hopper, automotive partner at BDO Stoy Hayward, has his say on GM's bankruptcy. 'The bigger issue at stake here is that GM’s position is not unique. All car manufacturers are going to have to make difficult decisions in the next few months. They will need to address the over-capacity in the industry and the changes in vehicle purchasing habits. As production stalls and car manufacturers downsize, we could see a number of failures in the supply chain impacting organisations in the UK, Europe and the US. For example, the GM filing is expected to trigger a number of filings by large tier 1 suppliers in the US. Car manufacturers will be looking very carefully at their supply chain and, as Chrysler recently admitted, picking their “winners and losers”. The economy as we know it is changing and this move by GM is just another domino falling as we move towards a new way of doing business. It will no doubt be a very painful transition but ultimately the car industry will emerge stronger and leaner.'
• 1.15pm: General Motors finally files for bankruptcy
It's official: GM has entered fast-track bankruptcy proceedings. More will be known after a midday (US time) news conference by president Obama followed by GM chief exec Fritz Henderson (Automotive News, subscription required)
• 12.10pm: GM: an opportunity cost
'Unknown is how the cost of restructuring both GM and Chrysler LLC would have compared with the cost of letting both companies fail in terms of lost wages, disruptions among car-parts makers and the broader economic fallout' (Wall Street Journal)
• 11.39am: Shaking off the legacy of 20th century practices
'Bankruptcy should allow GM to pull off one of the most expedient downsizings in the industry's 100-year history. Long hampered by laws, union strife and management practices that kept it from fast action to fix problems, GM plans to eliminate almost all of its debt, halve its US brands, shutter 2600 dealers and rewrite labour contracts almost overnight' (Wall Street Journal)
• 10.10am: New leaner GM planned
The White House claims the new streamlined GM will be able to breakeven even when the total US vehicle market falls to 10 million annually. GM's previous breakeven point was 16 million (Automotive News, subscription required)
• 10.01am: GM to be bankrupt for 'two to three months'
GM likely to be in court-supervised restructuring for 60-90 days, will close 11 plants and idle three more during bankruptcy proceedings. The company employs 230,000 people globally building more than 20,000 vehicles a day (Financial Times)
• 9.50am: 'End of an era' - White House
'Today will rank as another historic day for the company - the end of an old General Motors, and the beginning of a new one' (White House statement)
• 9.40am: Obama prepares enormous cash injection
President Obama is planning a news conference to announce an expected $30bn cash injection for GM (BBC News)
• 9.25am: GM to be drastically downsized
The US government plans to nationalise GM temporarily, by taking a 60% ownership stake in the company during its restructuring (New York Times)