General Motors (GM) automobile manufacturing company was founded in 1908 by William C. Durant, and rose to become the world's leading auto manufacturers from the 1920s to 2008, with plants in the United States, Canada and Europe. In 2006, over 9 million GM cars and trucks were sold. Since then a series of massive losses have brought GM into bankruptcy. Where once it had a 50% share of the market for new vehicles in the United States, the company hopes at best to at least hang on to its current 18% share in the face of fierce competition from Asian makers, and a recession that has forced millions of people to postpone major purchases. GM in July 2009 emerged from bankruptcy after 40 days having shed many debts, dealer, employees, and plants, kept alive with government loans and the hope that it will have electric cars on the road and find its niche market. From 2010-2013, it was owned and operated by the U.S. government as a "bail-out," but the government sold the last of its shares in the company in 2013.
General Motors was originally formed by joining several independent companies: the Olds Motor Vehicle Company, owned by Ransom E. Olds, (maker of the Oldsmobile); Cadillac Automobile Company owned by Henry M. Leland; Buick Motor Company, founded by David Dunbar Buick, and the Oakland Motor Car Co, the original maker of the Pontiac.
Some of the popular brands of autos designed, produced and marketed by GM include:
Brands that are slated to be sold or closed:
GM headquarters is located in Detroit, and the company manufactures cars and trucks in 33 countries, employing about 284,000 people globally in 2006, but far fewer in 2009.
Crisis of 2008-9
GM went into crisis mode in 2008 as sales fell in half, with dealers' lots jammed with unsold cars, and the lack of revenue couldn't continue to pay for bloated union contracts and costly pensions. Losses mounted and only emergency loans from the federal government, approved by President George W. Bush, staved off bankruptcy for a few months. In late April 2009, GM announced further downsizing that would reduce its American workforce to 38,000 union employees in 34 plants, compared with 395,000 at 150 plants at its peak in 1970. Nearly half the dealerships would close, striking hard at the economy of many small cities. To keep GM from going into bankruptcy, which would have allowed the company to restructure union contracts, the federal government bailed out GM in a move that has cost US taxpayers more than $50 billion. Even that was not enough. The Obama Administration took full control, forced GM in and out of bankruptcy in 40 days, loaned it billions more, and remains in charge of the company. The plan is to re-privatize GM as soon as the economy recovers.
2010 Public Offering
On November 17, 2010, GM sold itself to the public through an initial public offering of its stock. The deal came 16 months after GM emerged from bankruptcy, the fourth-largest Chapter 11 filing in United States history. Since then, the U.S. government has been the largest stakeholder; Labor Unions, Asian and Middle Eastern sovereign funds and other Foreign Governments also hold significant shares. The United Auto Workers obtained a generous share of GM stock in the company's 2009 bankruptcy settlement, when the Obama administration pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors. "Priority one was serving the interests of the UAW," when the White House's auto task force engineered the bankruptcy.
Since January 2014, over 28 million GM cars worldwide have been recalled for a variety of issues, ranging from faulty ignition switches to airbags that can suddenly deploy. GM came under criticism for knowing about these issues for years, but covered them up the whole time. The government fined General Motors $35 million, but GM will have to pay over a billion dollars for new parts, lawsuits, and continuing investigations.
- Dunstan Prial. Stakes Are High as GM Shares Get Set for Debut, FOXBusiness (FoxBusiness.com), November 17, 2010.
- Edward Helmore. General Motors increases IPO as demand surges from Asia, guardian.co.uk, November 17, 2010.
- Taxpayers and investors not as fortunate as UAW. GM's union recovering after stock sale, By Patrice Hill, The Washington Times, November 25, 2010.