GM Pontiac: End of the Road

It seems that no news about General Motors is now good news. The company has suffered a lot of set backs in the past 1 year because of economic recession. At times, we heard about its possible bankruptcy and some how, it stayed alive until now. Well, Pontiac is one of its car models and although the company is going to survive for the time being, this brand wont. It is going to die on Monday. If it happens then it will be the end of a glorious chapter for GM. Pontiac has a long tradition and history. It is long running car that has entertained many people in the USA over the years. It seems that in order to survive GM needs to shed some more plants and some more brands like this one.

It has happened at a time, when GM is going to get $2 billion from US government in order to ensure the survival of the company. In fact, there is some speculation that General Motors may receive $5 billion in short-term aid. So, you may wonder why the company is shedding off its Pontiac brand model car. The reason is simple. GM is in deep crisis and under huge debt.

GM and Toyota Planning to Cut Jobs in Thailand to Reduce Production Cost

Global economic slump is now well-documented across the world. In fact, the ongoing credit crunch has already affected many a sectors in several countries. Many people lost their jobs, many business organizations shut down and different business have been badly affected. Amidst world wide economic recession, two giants of automotive industry, General Motors and Toyota, are now planning to production in Thailand due to drop in demand.

IHT reported:

GM Thailand said that its factory at Rayong, which has a capacity of 130,000 units a year, would close for two months starting in mid-December and that it planned to cut 258 jobs there.

"We plan to close the plant to help control costs, and our 2,000 workers will be paid 75 percent of their monthly salary during the shutdown," Chartchai Suwanasevok, the director of public relations, said, without giving details on the production impact.

Besides General Motors, Toyota is also planning to cut production costs in Thailand. 340 of 1,850 temporary workers at Toyota’s Gateway plant in Thailand might be imposed early retirement. Toyota is leading the auto market in Thailand. However, Toyota saw 21 percent drop in sales in October, compared with the same period of last year. Political instability also played a role behind the sales drop.

Should or Should not General Motors file for bankruptcy?

The economic slow down severely hit the US economy and the US automobile is one of the worst affected sectors. Before the economic slowdown, the top US automakers were already under huge pressure due to rising fuel cost. The sudden rise in fuel prices forced American people look for small Japanese cars. Now, the financial crisis made the situation far worse. General Motors Corporation (NYSE:GM), one of the “Detroit three” is now in a critical condition. Financial firms are predicting that the automaker might have to liquidate. According to Nariman Behravesh, Chief Economist, IHS Global Insight, Inc. such an incident could translate into more financial aid for Michigan, Ohio and Indiana and more money for unemployment and extended benefits. Bloomberg reports:

Behravesh's projection of $100 billion to $200 billion in costs dwarfs the $25 billion industry bailout plan that will be debated in Congress next week to prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC. The drain on taxpayers from a rescue or a GM failure is a central issue for U.S. lawmakers.

Included in the Global Insight estimate, which Behravesh supplied to Bloomberg News, are the anticipated costs for existing programs, such as unemployment insurance, and new measures that the economist said would be needed to revive economic growth after millions of auto-related job losses.

The shut down of GM means further increase of the unemployment rate. By the end of June, GM had $21 billion which went down to $16.2 billion on September 30, 2008. The company requires $11 billion to clear its monthly bills. On November 7, 2008, GM said that it might run out of cash by the end of 2008. People are divided over whether GM should file for bankruptcy or not. According to some people, filing for bankruptcy would make the situation all the more complicated.

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Bloomberg