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by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 07 June 2009
zoomGM will look to reorganise its business; it has $82.3bn in listed assets and $172.8bn in debts.
In the Middle East since the 1920s, the regional office in Dubai covers GM's operations in Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, UAE and Yemen.
In 2008, GM sold 144,485 vehicles in the Middle East, a 6% increase over 2007.
Investment in GM Middle East's Jebel Ali spare parts and services facility will continue this year, while the division is also looking to expand its technician training centre in Manila. Devereux adds that no further redundancies are on the cards after the company slashed 10 percent of its 170 UAE workers in February.
Back in the US, applying for Chapter 11 is the best thing that GM's management could have done, according to Jose Paul, an automotive analyst at business research and consulting firm Frost & Sullivan. Indeed, he insists that going bankrupt might prove a blessing in disguise for the beleaguered automaker.
"Ownership will be transferred to the government and the company will probably be able to renegotiate contracts and have the upper hand in reducing the debts that they owe," he explains.
"They will definitely be able to prevent investors from law suits, which might come from various people like the dealers, union workers or other stake holders in the company. They will also be able to sell off certain parts of their company, non-performing divisions, in a quicker fashion."
Paul says bad management has contributed to the auto giant's demise and insists the company should have filed for bankruptcy four years ago when it was clear GM was struggling.
Pointing to GM's finances in 2005, Paul reckons the company was losing some $2bn a quarter as car production outstripped sales. Underperforming brands and divisions have also played their part in GM's downfall, according to the industry analyst.
"There have been management issues," he says. "They did do some things right, but they diversified too much into other areas and we can probably count key brands like Hummer, Opel, Saab and Saturn, which are not really performing.
"Of the total 10 brands there were about five or six that were not doing very well," he adds. "But moving forward, there is going to be a leaner company which is going to be much more focused and clear with non-performing assets reduced."
Getting the company in shape is the main priority for GM executives and the government, Paul says. But he insists it will be a long time before the iconic automotive business rakes in a profit.
"Getting $20bn in grants from the government was vital, but I don't think GM is in a position to get into a profitable situation," he says.
Last September, on the occasion of the firm's centenary celebrations, then-CEO Rick Wagoner claimed GM was "a company that's ready to lead for 100 years to come". Eight months later, and despite the best efforts of the US government, it's looking less and less likely that prophecy will come true.
Trading places
A corporation that took a century to build was shattered last week when US automotive giant General Motors went bankrupt. The first cracks in GM's globally dominant reign first appeared in April 2007 when Japanese automaker Toyota registered better Q1 sales.
General Motors flexed its corporate muscle and reclaimed the world's number one car manufacturer crown later that year by selling more cars, but the damage was already done.
Saddled with huge employee numbers and mounting debts, the company slowly relinquished market control. Its power was further diminished by several underperforming divisions, such as Opel, Saturn and Saab, that management seemed reluctant to offload. By July that year, the company announced plans to cut costs by $10bn and raise $5bn through borrowings and asset sales.
But worse was to come. In December, GM secured a $17.4bn government loan to cover a liquidity shortfall. It then revealed plans to slash the global workforce by 47,000 and cut five US plants by 2012 in February 2009. That same month, the company posted $30.9bn losses as the economic downturn worsened.
The writing was on the wall when an offer to exchange bonds for company equity, thus cutting $27bn in debt by about 90 percent of bondholders, was rejected on May 27. With no where else to turn, GM filed for bankruptcy days later.
Unsurprisingly, GM's financial crash has allowed Toyota to speed past. But even before GM filed for bankruptcy, the Japanese automaker was ahead of its rival, selling 8.97 million cars in 2008 compared to GM's 8.35 million.
A corporation that took a century to build was shattered last week when US automotive giant General Motors went bankrupt. The first cracks in GM's globally dominant reign first appeared in April 2007 when Japanese automaker Toyota registered better Q1 sales.
General Motors flexed its corporate muscle and reclaimed the world's number one car manufacturer crown later that year by selling more cars, but the damage was already done.
Saddled with huge employee numbers and mounting debts, the company slowly relinquished market control. Its power was further diminished by several underperforming divisions, such as Opel, Saturn and Saab, that management seemed reluctant to offload. By July that year, the company announced plans to cut costs by $10bn and raise $5bn through borrowings and asset sales.
But worse was to come. In December, GM secured a $17.4bn government loan to cover a liquidity shortfall. It then revealed plans to slash the global workforce by 47,000 and cut five US plants by 2012 in February 2009. That same month, the company posted $30.9bn losses as the economic downturn worsened.
The writing was on the wall when an offer to exchange bonds for company equity, thus cutting $27bn in debt by about 90 percent of bondholders, was rejected on May 27. With no where else to turn, GM filed for bankruptcy days later.
Unsurprisingly, GM's financial crash has allowed Toyota to speed past. But even before GM filed for bankruptcy, the Japanese automaker was ahead of its rival, selling 8.97 million cars in 2008 compared to GM's 8.35 million.
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