How Does GM Fritz Henderson Handle The Bankruptcy?
Even though General Motors had been experiencing some difficult times during the last few years, including mismanagement with regards to executives, the recent announcement of bankruptcy still sent shock waves through the country. After all, General Motors had been a symbol of American innovation for decades.
In March of this year, shortly after the U.S. president ordered CEO Rick Wagoner to be fired from his position in General Motors, GM Fritz Henderson assumed his position at the helm. Unfortunately for Wagoner, his attempts at restructuring the company after receiving numerous loans and bailouts didn’t work, and as a result, the task was handed over to GM Fritz Henderson, not to mention that he was also unable to save the company from collapse. Quite understandably, many people are wondering why the task was handed to Henderson in the first place, considering he had been vice president at that time when General Motors applied for bankruptcy.
What Events Led Up To General Motors Filing For Bankruptcy? In order to try and stimulate the market for new cars, General Motors implemented a concept known as “planned obsolescence”, which in effect meant they would manufacture cars specifically designed not to last very long. However, when one considers that foreign cars being imported into the United States had a reputation of lasting upwards of 200,000 miles, planned obsolescence was at best a poor concept. In fact, one can hardly argue that the concept of planned obsolescence was perhaps the single most influential factor regarding General Motors losing a phenomenal amount of money during the last decade.
Another significant contributor to their demise was the issue concerning fuel consumption. The bottom line is; General Motors simply did not make cars with fuel consumption in mind. In fact, the vast majority of GM cars were either large vehicles such as SUV’s, or gas guzzling sports cars. Of course, there was a time when motorists simply love those cars but as oil prices have steadily risen, their popularity has waned considerably. With time, General Motors simply couldn’t manage to sell as many cars as they should have been.
There were additional problems GM faced and GM Fritz Henderson, Wagoner, and other executives were simply ineffectual in terms of their ability to handle these problems. The company was losing money from collapsing sales. Losses started to rise into the double digit billions. The company was quickly heading to insolvency.
There were also some other extremely poorer managerial decisions such as the joint venture with Nissan and Renault, which by all accounts was a disaster. Furthermore, General Motors also negotiated various union contracts which they couldn’t afford, and which only served to deplete their resources to such an extent that a turnaround was virtually impossible.
While many people still wonder what GM Fritz Henderson, Wagoner and the others did in order to cope with the problems, an answer remains elusive because the truth is, no fixed plan was ever implemented. Even attempts to sell the European wing were a failure which resulted in further losses. In the end the company arrived at a decision to accept a Federal government bailout in order to avoid the bankruptcy court. However, this also failed to work and General Motors simply couldn’t avoid filing for bankruptcy. In essence, this spelt the end for General Motors and ironically, it ties in perfectly with the start of GM Fritz Henderson as CEO.
Essentially, the General Motors bankruptcy still allows the company to exist, although of course, it is significantly different from what it was in the past. Also, it has now been dubbed “Government Motors”, rather than General Motors, but irrespective of how you see it; the name change also spells the end of an era.
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