“GM going through bankruptcy is a very positive thing for the auto industry: They should emerge as a reasonable competitor,” said Len Blum, managing director at investment- banking firm Westwood Capital LLC in New York. “The only thing that’s been holding GM back is labor contracts and relationships with debtors and franchisees. All that should be cleansed in a bankruptcy.”
Also, from Bloomberg:
The filing was a “defining moment in the reinvention of GM,” said Fritz Henderson, president and chief executive officer of the carmaker. “The economic crisis has caused enormous disruption in the auto industry.”
GM listed in its petition as top creditors Wilmington Trust Co., representing bondholders owed $22.8 billion; United Auto Workers, owed $20.6 billion; and Deutsche Bank AG, representing bondholders owed $4.44 billion. The Unofficial GM Dealers Committee, which said it represents more than 6,000 GM dealers in the U.S., filed a notice that it will take part in the bankruptcy litigation.
“This is a step they should have taken more than a year ago, which could have put them in much better shape,” said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
The automaker was founded in 1908 by William “Billy” Durant, who bought more than 20 car companies before being ousted in a 1920 bailout by Pierre Du Pont and J.P. Morgan.
By the 1960s, GM controlled more than half the U.S. vehicle market. In 2008, it sold only 8.35 million cars worldwide, losing its place as the world’s biggest automaker to Toyota Motor Corp. as customers opted for the Japanese carmaker’s fuel- efficient Corolla and Camry brands instead of GM’s light trucks and Hummers.
America's manufacturing base will be further eroded, as GM pursues its Grand China Strategy -- increasing manufacturing outside of the United States, and increasingly from China, for import back into the United States. Unanswered questions persist about how GM's valuable operations in China, and unrepatriated profits, will be treated in bankruptcy, or excluded from bankruptcy.
With the company entering bankruptcy, the next challenge will be to ensure that the government exercises its ownership rights to undo and mitigate, to the extent possible, these damages. Among other measures, this should involve revisiting the serious drag-down, concessionary wage terms imposed on the United Auto Workers; demanding a moratorium on GM's outsourcing of production of cars for sale in the United States; and establishing successorship liability for the new GM, so that victims of dangerous and defective GM cars can have their day in court.
***May 31 was the date of the Air France 447 disaster
Yahoo News presents a bit of possibly relevant history of Qantas Flight 72 (recall Dustin Hoffman's line in RainMan?):
Following an investigation of the A330's uncommanded dive, Australian aviation officials, assisted by U.S. and French authorities, blamed a pair of simultaneous failures for the near disaster. The plane has three air data inertial reference units (ADIRUs), which are designed to help the plane's flight-control computer fly the plane safely. The system is intended to eliminate the possibility of electronic error: the flight computer, which is always monitoring the trio, can disregard one ADIRU if it begins relaying information that conflicts with the other two.
But that's not what happened when one of them went awry on October 7 and began sending erroneous data spikes on the plane's angle of attack (AOA) - the angle between its wings and the air flowing over them - to the flight control computer. "For some reason the damn computer disregarded the healthy channels," says Hans Weber, an aviation expert who heads Tecop International, an aviation consulting firm in San Diego. "Instead, it acted upon the information from the rogue channel." The computer, responding to the faulty data, put the plane into a dive. (Read "Is There a Cause for Fear of Flying?")
In its preliminary investigative report, released March 6, the Australian Transport Safety Bureau said Airbus had initially said that it didn't know of any other similar events. But when the same thing happened again, involving a different aircraft on December 27, Airbus combed its computerized flight files and found data fingerprints suggesting similar ADIRU problems had occurred on a total of four flights. One of the earlier instances, in fact, included a September 2006 event on the same plane that entered the uncommanded dive in October (the other three flights had continued safely on). The same VCR-sized ADIRU was to blame in both those cases, although it had supposedly undergone a needed "re-alignment" following the 2006 event. All three planes carried the same brand and model of ADIRU, as do 397 of the 900 330s and 340s in the Airbus fleet.
The Australians' March report concluded that the October dive was due to a series of events that, when combined, was as "close to the worst possible scenario that could arise from the design limitation in the AOA processing algorithm." Airbus also told investigators that this particular mathematical formula for flying the plane is found only on its A330 and A340 models. "Different algorithms were in use on other Airbus types, which were reported to be more robust to AOA spikes," the report said. "The manufacturer advised that AOA spikes matching the above scenario would not have caused a pitch-down event on Airbus aircraft other than an A330 or A340."
IPBiz asks: where's Ralph Nader and unsafe at any speed?