Bankrupt - General Motors

one claims it's the company's only chance for survival [Music] Atari has mild for chapter 11 bankruptcy protection 31 GWA presents the difference kodak is filing for chapter 11 bankruptcy at [Music] what's up guys my name is Jake and welcome to the fifth episode of bankrupts on this show and in my videos the corporation's I talked about which have declared bankruptcy usually simply just vanish but today I wanted to talk about something a little different a corporation so big that if they did shut down all operations it would have changed the economy the industry and the culture of America forever and in some cases it did so today let's talk about the incredible events during the 2008 recession that led to one of the world's largest auto manufacturers General Motors to declare chapter 11 bankruptcy since GM has been so widely talked about across various media I'll just briefly touch on our history the company was founded in 1908 by men who came from the already established Buick Motor Company the now newly formed General Motors had begun to acquire other brands like Oldsmobile and Cadillac through the early 20th century the automobile corporation became a leader in the markets becoming well known across the world by the time of the Great Depression General Motors actually came out of the economic downfall pretty unscathed in large part due to their strong presence in other countries with the growth of another GM brand Chevrolet the company was growing exponentially year-over-year and generating great profits to show for him over the following decades General Motors and their subsidiary brands produced some of the most iconic vehicles ever brought to markets like the Corvettes Malibu the GTO Bel Air Camaro and many many more after World War two GM was the largest corporation in the United States and the largest employer in the world it had earned the title in 1965 as the most profitable private entity in the country by the 1970s General Motors brands like Oldsmobile and Chevy were booming in the United States as they began to focus more on performance oriented vehicles across their line and directly competed with Ford General Motors growth since the early 1900s was astounding and while GM can continue to remain number one in auto manufacturing just a few years later the company's good fortune began to be plagued by controversial and defective vehicles causing a downturn and consumer trust and this was only the beginning of the company's rough couple of decades ahead by the early 1980s Roger Smith took over the CEO position at GM guiding the company through the early eighties recession and as the company successfully rebounded from their financial trouble under the leadership of Smith they began a highly controversial change to their manufacturing process first with investing in more automation in their factories then slowly shutting down plants and laying off thousands of people the company had almost completely abandoned the town of Flint's where it all originated from and caused an enormous local recession all while the company grew stronger and more profitable Michael Moorer made a fantastic documentary about this back in 1989 it perfectly encapsulates the situation at the time and what GM and their CEO did to Flint Michigan a town which is still not recovered from the company leaving Roger had also consolidated GM's lineup to better fit the market needs and nothing more which many customers saw is them taking the heart and uniqueness out of the company and as GM drastically changed their pickup truck lineup the early 1990s automobile plateau hit the company pretty hard sparking more enthusiasm within the board of directors to allow Roger Smith to change things as the market fluctuated and as GM appealed to the then booming SUV markets the corporation gained back some of their losses and had a stock price at an all-time high of over $90 a share however from this point on it was all downhill General Motors went through a huge cash issue in the early 2000s as they adjusted for increased interest rates and their employees benefit fund by 2003 the company fully funded their pension plans of around 15 billion dollars along with a 2005 massive loss of over 10 billion dollars in that year the company had quickly found itself in a financially dangerous situation the company then decided to purchase a 20% stake in Fiat for a little over two billion dollars by this time GM had stopped putting their logo on all new cars and the company was looking to make some money back by selling at stakes and companies like Suzuki and cutting its annual dividends to just $1 a share however even with all of this literal billions of dollars had been thrown around the company with investments coming into the corporation and out of its Wall Street saw GM as an unsafe investment with the beginning signs of a lot of turmoil ahead and by 2006 their stock price was now down to just $19 a share GM continued to sell up brands like their military based company Allison Transmission for around 5 billion dollars this gave the automaker a nice cushion of liquidity however despite this longtime investors who held huge stakes in the company began selling millions of their shares quickly and dramatically devaluating their stock by early 2008 the company reported a two billion dollar operating loss which quickly escalated to a staggering 15 billion dollar quarterly loss the 2008 recession had already begun and despite General Motors selling all non-essential investments the quickly deteriorating economic climate was crushing the company America and even the global economy was in a massive recession and suddenly millions of Americans couldn't afford a new car along with raising gas prices jobs being lost left and right and houses foreclosed the luxury of buying a new car or even an economy one became an enormous obstacle for most Americans GM was already in a rocky financial state from the former decade and now General Motors had to deal with the worst economic situation since the Great Depression in November of 2008 GM claimed that they would run out of money by mid 2009 if nothing had changed and that set their stock price on a plummet by late 2008 their stock price had now dropped to under $5 a share without help General Motors one of the world's largest automakers was close to shutting down completely Ford and Chrysler were right there with them in financial trouble though not as dire as GM so they decided to turn to the only entity with enough money to help them the United States government's the corporation submitted a business plan with a high probability of a sustained future - the Senate Banking Committee but was soon rejected by the end of 2008 GM was desperate for money as they claimed cash was quickly running out and they had posted an almost unbelievable 30 billion dollar loss by the end of the year as a new administration came into the White House GM had over 90 billion dollars in debt and finally declared chapter 11 bankruptcy protection this allowed the company to clear some debts and submit a new proposal to the US government however even in the company's most dire financial times General Motors executives had flown to Washington DC to plead their case in private jets when will General Motors run out of money relatively in the near future and what amounting amount of money would you need now to prevent that insolvency so that we can take the three months necessary to really go into the depth of what conditions and how this agreement or this bridge loan should be made I can't tell you that for certain because a lot depends on the people that whether our suppliers will continue to ship us with that advantage you have to accounting wise you have to be tells of everybody acted against your best interest so what what amount of money would you need to take you to March 30 we have talked about this 25 billion bridge loan and why Wow 25 billion dollar bridge loan is for three auto companies I'm asking about General Motors we have we have talked about an allocation of the 25 billion that would be approximately based on our US market share which suggests relative US market share which suggests a total availability against that facility to GM of 10 to 12 billion maybe I'm denser so mister wagon I don't quite understand what the hell you just told me can you just tell me in absolute terms how much money do you need to survive Karsen it's going to pend on what happens with suppliers and mark I understand it give me your worst-case scenario worst-case scenario the amount of money would be significant I mean we have we have supplier what is significant work/live billion dollars every month so you so what you're telling us that since you anticipate borrowing fifteen to eighteen billion dollars under this authorization you'll be if the market doesn't turn around and the economy doesn't recover by that time and I think you have to be your wishful thinkers I think it will by March 30th you're out of money is that correct the analysis that we've done is based on an assumption that the US market continues that about the current rate which is weak level we don't assume a lot of recovery we don't we hope it won't get worse I want that basis we would with the amount of funding that proportionally would presumably be allocated to us we think we have a good shot to make it through next year the US government finally sent a proposal for a loan which after a refinements GM had accepted their chairman and CEO Rick Wagner was forced to resign and the automaker began its long road of restructuring the enormous company's stock which remember had soared to over $90 a share back in the mid 1990s now fell to under $1 by mid 2009 the United States government had granted General Motors almost 50 billion dollars in taxpayer money GM was now essentially under the ownership of the government as they began to fulfill their plan to completely reinvent the company killing off or selling huge brands like Saturn Pontiac and Hummer General Motors also closed around 900 car dealers across the country and was forced to scale down production and closed 13 manufacturing plants over 22,000 500 employees had lost their jobs and the restructuring and by the way if you're worried about Rick Wagner well don't worry despite his role in the catastrophic decline of the company eventually bailed out by taxpayer money he left his CEO position with a nice golden parachute of over 10 million dollars and a lifetime pension of 74 thousand dollars a year that makes a lot of sense the new General Motors was now technically a separate entity than the original automaker now called the General Motors company LLC focused on a much more refined business plan down to just four major brands cadillac buick GMC and chevrolet the company now focused on developing more fuel-efficient vehicles for the masses after the controversy and huge misstep of the ev1 which was a really innovative attempt at an electric car that they quickly killed off back in 1999 the company attempted to do what they did in the 90s with the Chevy Volt a new hybrid electric vehicle though now they have lost their early progress and had other brands like Nissan and most notably Tesla out with new and in some cases superior electric vehicles that's just an example of how GM had an innovative and forward-thinking product yet killed it off for other motivations and are now playing catch-up to the market they essentially spearheaded by 2010 GM had finally emerged from their long losing streak and made four point seven billion dollars in revenue their first profit since 2004 over the next few years GM continued to invest in their main brands turning out some popular vehicles and doing a pretty good job on changing the public's perception at the end of all of this after all the dust had settled it's truly hard to wrap your head around how enormous this brand was and how it's possible that the company was losing that much money quarter after quarter I mean it's telling that the only entity large enough to save the company was literally the US government but also demonstrates how dire of a situation it was back in 2008 and while billions of dollars were wasted and loaned and dissolved tens of thousands of jobs were saved and that genuinely is one thing that was really good about this whole mess now as they introduce more forward-thinking vehicles solid attempts at mass-market sedans and continue to evolve their popular sports cars I think General Motors has finally completed their long and arduous road of solving their financial problems under their new leadership the company has done a great job in avoiding the horrible and controversial mistakes they had made in the 80s and 90s and as they continue to sell millions of cars each year the future of General Motors might be a bright one after all thank you all so much for watching this episode if you like this video please consider subscribing to the channel and if you want to support these types of videos further you can go to my patreon page patreon.com/lenguin of course I'll leave a link in the description below anyway guys my name is Jake follow us on Twitter Instagram and snapchat and thank you very much for watching [Music] [Music] you [Music]

Channel: Bright Sun Films

Views: 1,503,891

Keywords: general motors, family sedan, GM, roger and me, abandoned, detroit, bankrupt, bright sun films, jake williams, 2008, 2009, financial crisis, documentary, pg, clean, oldsmobile, saturn, hummer, pontiac, saab, factories, downfall, largest, huge company, EV1, Tesla, toyota, government bailout, buick, chevy, history, chevy volt, bolt, 2019, 2020, classic car, bail out, ford, new cars, electric cars, bankruptcy, rick wagnor, how GM went bankrupt, new

Id: xHnPD3ttBlA

Length: 14min 43sec (883 seconds)

Published: Fri Aug 30 2019