Comment: Latest GM bailout might save jobs now - but for how long?

So, US President Barack Obama yesterday announced that American car-making giant GM had filed for chapter 11 bankruptcy. No massive surprise there - the company has been on the rocks for the best part of three years, so this latest episode is hardly coming out of the blue.

What is slightly worrying though is the degree to which President Obama has pledged to financially support the company with further government aid. Set to recieve an additional $30 billion (on top of the $20 bn it has already had), the automaker will emerge within three months with 60% government ownership. But for many (including myself) the move seems to pose all sorts of awkward questions…

For example, while there can be no doubt that Obama’s decision will save many thousands of jobs - surely averting nothing short of local-scale catastrophes in the communities where GM runs plants - the question remains for how long will the temporary fix hold up?

After all, on the same day as Obama made his announcement, Swedish auto firm Volvo pledged to deliver a 50g/km CO2 car by 2012: a plug-in hybrid model based on the current popular V70. Meanwhile GM’s supposed saving grace as regards suitability for future markets is the Chevy Volt - originally projected for 2010 US launch date and late 2011 for Europe. However with CEO Rick Wagoner having described the actual date as being ’still fluid’ on numerous occasions - and GM Vice-chair Bob Lutz saying last year that global warming was ‘a crock of shit’ - it’s no wonder many expect the car to meet with further delays.

Not to mention the numerous massively successful new technologies now coming from Asia and providing further stiff competition - including the Indian built G-Wiz and the battery powered BYD model from China. In short the market is changing rapidly with many total newcomers having already established themselves as serious players in terms of meeting the new demands and conditions of the industry.

This is all not to say the GM is bound to fail in its attempts to re-structure into a competitive and successful player in this market, but just that the state of play demands such a degree of astute decision making and policy directing that Obama’s move represents an understandable - but nonetheless considerable - gamble. GM is already far, far behind practically every single one of its competitors - any further slip ups will prove massively costly for the US taxpayer, not to mention the temporarily reprieved GM employee…

Dejan Levi

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