Every year retired workers’ health care and pension cost GM billions of dollars

Every year retired workers’ health care and pension cost GM billions of dollars. Developing new models of cars and trucks added $1,400 to the cost of each car. GM had little choice but to generate cash in an attempt to resolve its apparent money issues. This meant doing whatever it took to keep up production and sustain sales. The best way to accomplish this would be with costly dealer incentives, heavily discounted sales, and cheap credit. These moves terribly damaged GM’s brands. CEO, Mr. Wagoner could have done more to prevent this. A more engaged CEO may have sparked discussions with the union sooner, reduced manning and manufacturing more quickly or tried to throttle back on a dealership network protected by franchise agreements. It is believed more than not that Mr Wagoner attempted to make many of the right moves, but time was not on his side.
With the support of The car-industry task-force, Barack Obama had to save GM and Chrysler. The threat of bankruptcy was used to force shareholders to renounce most of their investments. The fact that a long period in Chapter 11 may create permanent damage had to be considered by all. After all, who would want to buy something this expensive from a car from a company that may go under within a year or two. The task-force had to forcing through a “quick rinse” or “pre-packaged” bankruptcy to separate the good assets from bad assets. The purpose of all this was to allow a new, reinvigorated company to surface in just a matter of days with Chrysler or at most weeks with GM.