Well, I spent another morning on the elliptical machine, putting in time until I see the doc tomorrow and learn for sure what I’ve done to my leg and foot. My self-diagnosis: nerve inflammation in the left foot and inflammation of the iliotibial band in the left leg/hip. We’ll see. In nearly 30 years of relatively high mileage long-distance running this is the first time I’ve really ever been injured. New territory.
As I was gliding along, I watched the local TV Talking Heads try to explain in 90 seconds or less what is happening with GM. LOL. And I saw LeBron James give his explanation for the Cavs’ season-ending debacle — while proudly wearing a New York Yankees hat. WTF. I guess he can wear whatever he wants — and LeBron appears to be OK fueling the speculation that he’ll jump ship after next season. But couldn’t he at least get a hat that fits. He looks like a dork. Wonder what the Chinese investors who now hold a minority interest in the Cleveland Cavaliers think of that photo image? I digress.
Back to GM. Government Motors heads into bankruptcy this morning. And Mom and Pop Taxpayer are going to dole out another $30 billion to keep the company afloat on top of the nearly $20 billion that we’ve “invested” to date. Saying that, we had no choice. Too many jobs, too many communities, too much yet-to-be-determined risk to our economy to just walk away.
The Akron Beacon Journal reported Saturday that 160,000 jobs in Ohio alone could be at risk if GM and Chrysler get mired in an extended — and I guess, failed bankruptcy. That’s more jobs — by 10,000 — than the Obama administration says have been created or “saved” during the first 100 days of the economic stimulus. Think about it.
The reality: GM wasn’t going to restructure itself. The feds had to do it. It’s just too complicated — economically, politically and I expect for many, emotionally.
This GM story will dominate the news today — and in the weeks to come. And it’s a story that has a lot of unanswered questions. Let’s see if we gain any better understanding about the following:
- What’s going to happen to the pensions and health-care benefits of white-collar employees and retirees. No UAW protection here. Not much, if any, political clout.
- How many manufacturing plants will GM close? And when and where? Let’s hope they deal with this more honestly than Chrysler management did.
- When will we know the extent of the closings involving GM dealers? Doesn’t appear to be all that much interest in this. Why?
- Will GM consider moving its headquarters out of Detroit? Impossible? Nah. Check out this Business Week story.
- At a time when manufacturing jobs are disappearing and the struggle for a middle-class lifestyle depends in many cases on two incomes, how should we feel about the bankruptcy lawyers (many at Jones Day in Cleveland) who are making close to a $1,000 an hour? An estimate for legal fees connected to a GM bankruptcy: $400 million.
- How will GM management — and its owners the U.S. government, the UAW and bond holders essentially — resolve the inevitable conflicts that exist with their differing goals and stakeholders?
For instance, suppose GM management wants to outsource jobs to China or other low-wage countries? Good for profitability (maybe). But good for all-collar jobs in the U.S.? This will be interesting. From the WSJ (by subscription):
Another clear area of tension is the issue of jobs. GM next week is expected to announce a round of plant closings as part of its bankruptcy filing. Similar closings could be necessary down the road if auto sales don’t rebound.
But neither the administration nor Congress may be keen to see a government-owned GM slashing jobs in the battered Midwest. Similarly, while it might be in GM’s interest to shift more production to China or buy more goods from low-cost countries, such a move would provoke stiff resistance in Washington.
And let’s hope we don’t see GM employees on the news tonight wearing Ford hats.