The idea that General Motors would be bankrupt and taxpayers would own a majority stake in the company would have been unfathomable even a year or two ago. But as President Barack Obama acknowledged Monday in describing the federal government as a "reluctant shareholder,'' there were no better alternatives to prevent a complete collapse and more economic shock waves. Now the challenge will be to transform GM into a viable company, save as many jobs as possible and quickly get taxpayers out of the car business.
GM cannot remain Government Motors for long. While the president pledged Monday that the government will not interfere in the company's daily operations, the White House has set the company's direction by forcing out the former CEO, denying it more tax money in March and demanding a more viable business plan. But Washington cannot decide which plants or dealerships will close, or what to name the next Chevrolet model.
Yet the government has an obligation to taxpayers to continue to help set the broad policies for the future. With a 60 percent stake in the company and an additional investment of $30 billion, it is in the public interest to ensure that GM emerges from bankruptcy with a reasonable shot at profitability. One projection suggests a new GM could be successful if Americans bought 10 million cars a year; the current company model loses money unless Americans buy 16 million cars annually. The company has to be leaner, and it has to make more fuel-efficient cars that are attractive to consumers. Walking the line between pursuing the overall objective and providing the latitude for GM executives to run the company will test Congress and the White House.
It always has been difficult to see how declaring bankruptcy could benefit the automakers, given consumers' anticipated skepticism about buying from a dealer who might be closed next week and about maintaining vehicle warranties. But Obama pointed out that Chrysler is emerging from a two-month bankruptcy reorganization with a better business plan and an opportunity to remain viable. A bankruptcy judge over the weekend approved a plan to sell most of Chrysler's assets to Fiat, and Chrysler sold more cars in May than in April. It will take longer to overhaul GM, which is a much larger company with more problems.
Even with the infusion of billions in public money, the downsizing of the auto industry is painful to workers and communities across the country — including Tampa Bay. Chrysler plans to close nearly 800 dealerships. GM expects to close about 2,600 and cut a third of its work force. It announced on Monday it will permanently close nine plants and stop production for now at three others. For those families who are directly affected, even $50 billion in public money came too late to save a GM that had too much debt, too much overhead — and not enough cars that consumers wanted to buy when easy credit and good times ran out.
General Motors was an American icon. After all, the television ads sold "baseball, hot dogs, apple pie and Chevrolet.'' Many suburban families marked their rise to prosperity by parking a Chevy Impala, Pontiac Bonne-ville or Olds 98 in the driveway. And for decades, many believed the expression, "What's good for General Motors is good for the country.''
That era passed a while ago, but it officially ended Monday. Now what's good for the country will have to be good enough for General Motors.