Tuesday, June 02, 2009


General Motors Corp. once mattered so much to the U.S. economy that a two-month strike (uma greve de dois meses) in 1970 helped trigger (desencadear) a 4.2 percent drop in gross domestic product (uma queda de 4.2% no produto interno bruto) for the fourth quarter, as national auto production fell 82 percent.

Then, GM accounted for (respondia por) about half the cars and light trucks sold in the country. Now, GM controls just 20 percent of the market, and analysts say its bankruptcy filing (encaminhamento/pedido de falência)will barely register in the broader economy.

GM’s drawn-out restructuring (o restruturamento demorado da GM), an increase in U.S. manufacturing by foreign carmakers and the recession-induced decline in auto sales all have meant more to the economy than today’s legal filing (do que o pedido de falência de hoje).

GM has been reducing payrolls (a GM tem reduzido as folhas de pagamento) for three decades. Its U.S. employment peaked in 1979 at 618,365, when it was the nation’s largest private employer and auto manufacturing accounted for 4.1 percent of GDP. At the end of this year’s first quarter, autos were 1.5 percent of the economy, and GM had 88,000 U.S. workers.
Michael McKee's Bloomberg story


Michael said...

Brazilian government just let VARIG bankrupt...US government is trying to save not only GM, but several companies. Is it correct? I mean, is it correct to use public money to save some companies which do not exist to the benefit of citizens?

Borré said...

In my opinion, for sure it is correct. Incorrect is to let important national companies fall down, with hidden interests, in benefit of other companies, e.g. Gol and Tam (continuing Michael’s example). In that case, I totally agree that the bankrupt is not government fault. But there are more important interests: consumers’ choice freedom, service quality, maybe country’s economy, etc. In GM’s case I believe the national welfare is the government concern. GM’s labor force is not close to what it was before as well its economic importance. But it’s in part consequence of world economy evolution: there is much more companies and competition is much harder (globalization). Politicians are trying to protect a national symbol, citizens proud… It was always part of American way of thinking. So I think it is worthy.

Michael said...

Well, I agree in part with Borré... But I'd really like to hear from minimal state advocates what they think about this issue.

Daniel said...

I don't think the state should save great corporations. Not in this case at least. The US government is in debt and this massive amount of money to save GM and Chrysler comes from the individual taxpayer.
Large corporations should pay for their past mistakes as much as they reap the fruit of their success when things go fine. The state's bailout plan means further state regulation and control. Actually, this present tragedy American economy is going through is a result of both, bad policy makers and poor corporate management. Rescuing these big car makers can have one or two relevant points as Rodrigo brought up but it'll end up putting the free market more and more subjugated by a larger and more powerful government.

Augusto said...

The fear of that General Motors (GM) enter in failure has scared many people in all world, especially their workers and their shareholders (the mostly are the people of the U.S.A.). In fact, the situation is complicated. But, I believe that GM will never entering in failure. Your size and tradition are very large, and U.S.A. government would buy more and more capital´s GM before your failure. In fact, this is being done now.