Finally, "General" Motors Once Again

Thursday, November 18, 2010, was a big day for the entity formally known as “Government Motors.” GM went public. It is again being traded on Wall Street and it made history once again. This IPO offering was the biggest in our nation’s history. The initial price offering of $33 dollar per share went up immediately upon the opening of the stock market to $35 dollars per share. The federal government was the biggest seller, selling off 358 million shares and netting a tidy profit of $11.8 billion dollars, a little over 20% of the $50 billion that was given to GM to prevent the bankruptcy that happened anyway. The government plans to sell its remaining 500 million shares over the next two years. This opening offering also reduced the federal government’s share in GM from 61% to 36%, effectively taking away its power over GM, at least on paper.

This doesn’t mean that the power in GM left the U.S. Over 90%of the stocks were purchased by American investors. But not by “the little guy.” Many personal investors attempted to purchase GM stock through brokers on an individual basis and were shut out by larger backers and banks. GM also reserved 5% of the offered stock for purchase by employees but required a minimum purchase of $1000. Apparently, the company did not plan to be traded by small time investors. But that didn’t affect the success of the sale. GM stock may have netted a total of $23 billion, when the preferred stock figures are added to the volume traded on the stock market Thursday.

This is great news for current GM employees but means little for the thousands that lost their jobs with GM. The end of the year also marks a closing for the former employees of the Moraine Assembly plant. Their benefits received from GM will end at the end of the year, including medical insurance. The Dayton area unemployment is still well above the national average and, as many of these former GM workers move to find jobs that will support their families, it is expected that this area will see an increase in financial troubles. While former Moraine Assembly workers will not see the benefit of this new page in GM’s history, hopefully it will mean good things for one of the largest employers in America.

The Future Plans for the Moraine Assembly Plant

After the completion of the GM Bankruptcy, the Obama administration set up $773 million dollar environmental trust fund to help the Motors Liquidation Company (MLC) clean up dozens of closed plants on Michigan, Ohio, Indiana and 11 other states. The Moraine Assembly Plant will be one beneficiary of these funds, which are expected to be approved in early 2011. What exactly does that mean for the Moraine Assembly Plant?

            Before the closing of the plant in 2008, the value of the property owned by GM was listed at $91.3 million. That value dropped to $69 million at the end of 2008, when Montgomery County Auditor Karl Keith assessed the closing plant as production was winding down. In October of 2009, GM was pushing to have the value placed at $22 million based on the fact that there would be any manufacturers that would be interested in the plant in its current condition. The allowance of the environmental fund has changed that.

            On November 11, 2010, the Dayton Daily News reported that GM had found a company to refurbish the plant. California-based Industrial Realty Group (IRG) invited representatives of Moraine and MLC to tour some of its current projects around Ohio. Moraine City Manager Dave Hicks seemed positive that a deal to clean up the plant is imminent and hope to have confirmation within a week or two. If the deal is settled and IRG takes the property it could be sold to one of the three companies who have confirmed an interest in buying the plant for use by mid-February.

            The announcement of these plans seems to be a positive step for the City of Moraine and the Dayton area in general. It is the hope of all that this deal will come to fruition and this will be the beginning of a strong economic recovery for Daytonians. While this is great news for the City of Moraine, many of the displaced workers of the Moraine Plant have nothing to be pleased about. As 2010 is quickly coming to a close, many former workers of the plant have not found new employment and their benefits will end with the year. Hopefully there is hope for them as well.

General Motors Post-Bankruptcy Timeline

7/10/09: GM emerges from bankruptcy 6 weeks after filing as a private company with the U.S. Government the largest shareholder.

9/30/09: Announces that GM will drop the Saturn brand.

11/2/09: U.S. Government announces that GM and Chrysler will not realize enough value for the Treasury Department to break even on the $80 billion dollars that has been sunk into the companies.

11/3/09: GM will keep Opal, its European car company.

11/16/09: GM reports a $1.2 billion in losses for the third quarter of 2009.

12/1/09: CEO Fritz Henderson resigns after just 8 months. Whitacre takes over as CEO.

1/25/10: GM sells Saab brand for $74 million.

2/24/10: Announces the elimination of the Hummer brand.

4/7/10: Reports a $3.4 billion dollar loss for the fourth quarter of 2009.

4/21/10: Finds $8.1 billion for payment on U.S. Government loans.

5/17/10: Reports $865 million dollar profit for first quarter of 2010.

6/17/10: Cancels the normal 2 week July shut-down for most American plants.

7/22/10: Announces it will buy AmeriCredit Corp. for $3.5 billion. This move is to open credit to buyers with poor credit scores.

7/27/10: Sets the price of the Chevy Volt, an American car company’s first fully electric car, at $41,000.

7/31/10: GM announces a 14.3 percent rise in sales for the first 6 months of 2010. However, GM’s market share fell to 19.2 percent from 19.6 percent.

8/5/10: Settles arbitration with dealers that opposed being cut free from GM. GM dealers number 4500.

8/12/10: GM reports a $1.3 billion dollar profit for the second quarter of 2010. Whitacre steps down as CEO and is replaced by Daniel Akerson.

8/18/10: Files initial paperwork to take the company public.

9/16/10: Akerson announces it will take a couple of years to completely payback the government.

9/20/10: Treasury Department confirms that GM will allow foreign investors into stock sales. There are rumors that GM’s partner in China, SAIC, wants to buy a stake in the company.

10/5/10: GM offers stock to employees, retirees, and dealers with a minimum purchase of $1000 worth of stock.

10/12/10: Akerson meets with Timothy Geithner, Treasury Secretary, to discuss the IPO.

10/28/10: GM announces plans to reduce its debt by $11 million to attract more investors. It will buy back $2.1 billion of the government’s preferred shares, invest $6 billion toward its pension obligations, and put $2.8 billion into a health care fund.

While some of the moves that GM has made since emerging from bankruptcy last year have been positive, it is disturbing to find it is making decisions like purchasing credit companies to finance bad credit purchasers. There is also the issue of the rapid “changing of the guard” at the highest level of management. Why can’t GM keep a CEO for very long? Again, how does all this affect the GM workers in the Dayton area? Only time will tell.