Requoted from classicman
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It supports more retirees than current workers. ... It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month.
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None of these commitments drain cash IF GM did what once was required. A responsible company has those employee costs funded before an employee retires. When an employee retires, the company pays nothing more - no legacy costs.
Since GM cars were so crappy, GM used pension funds to claim profits. This was acceptable with so many new spread sheet deregulations. New standards that even assumed a pension fund would always have a 10% ROI (even though history says it is always less than 8%). A solution that also assumed GMs pensions would be picked up by the government - see my warnings years ago about PBGC. This meltdown and lying was known so long ago that even I knew about it.
Had GM been required by responsible accounting to fund those pensions, et al, then GM would have faced bankruptcy earlier and solved this with little pain. GM would have fixed their only problem - top management. 85% of all problems are directly traceable to ... Instead Enron accounting was alive and well. No regulations did so much good - right.
GM's problems have been entrenched for 30 years. Since we are foolishly discussing bailouts, then those MBAs are making no plans to restructure. Rick Wagoner said last week that GM has no restructuring plans. Of course not. Government welfare will save GM. Why should they do what is necessary? They are MBAs - ostriches.
Ross Perot defined GM's problem 25 years ago. GM throws money at problems like a grenade. That means solutions are impossible.
Restructuring - eliminate many GM models. Start retooling now for only a few base models, as Toyota, Honda, and VW have long done. for example, only one intermediate frame - not three. IOW, GM must innovate - do what everyone else did more than 20 years ago. It cannot happen until everyone admits GM's only problem - Rick Wagoner and an entrench cadre of MBAs who routinely stifle innovation.
Rick Wagoner has no restructuring plans. $50billion thown into a company now only worth $1.8billion? Only a fool would even consider that. What happens when bean counters were replaced by car guys in 1979/1981? Restructuring was conducted ASAP. GM has no such plans because Rick Wagoner is an MBA waiting for government rescue.
How many of these divisions must be eliminated now - Buick, Saturn, Hummer, Pontiac, or Saab. At least two must go immediately if GM has any hope of being saved.