General Motors


With much of its success beginning early in its existence, General Motors’ later years were just as dynamic.

When things began to go downhill for GM, it had been a long time coming. Its downfall can be traced back to as early as 1908 and 1920, when Billy Durant bought 39 companies and ran them as separate entities. GM was nearly bankrupt in 1923, but Alfred P. Sloan as its president and CEO from 1923 to 1937, prevented that.

Though there are multiple opinions on this matter, for a number of reasons, GM found itself heading toward debt. Its next inklings of possible distress can go back to 1962, when GM’s marketshare was at about 50 percent due to a common opinion that its product was of “mediocre quality” and an “unimpressive design.”

More objectively, this was also around the time that providing healthcare and pensions for the company’s retired workers cost millions of dollars every year. During the War Years, GM agreed to annual cost-of-living pay increases (1948) and free health-care coverage for life and generous pensions (1950). The employee pension plan was fully funded in 1990, but GM eventually stopped putting money into it.

Another significant change was the fuel economy standards set forth by Congress in 1975 with the Energy Policy Conservation Act. Though slow to begin developing fuel efficient vehicles, to comply with this Act, GM produced smaller cars at a loss to balance out larger and more profitable cars, like trucks and SUVs. With this change, it dragged down GM’s share of the market to about 44 percent, which was the lowest point since the 1930s.

Another issue was that instead of looking at the company for growth in the long-term, GM decided to satisfy its shareholders by delivering more than $20 billion to the shareholders, $13 billion in multiple repurchases, and $7 billion in dividends from 1996 to 2000.

With labor issues, one strike in 1970 took 400,000 workers off the job for 67 days. By 1953, about one in every 200 working people in America were employed by GM; the company’s revenues equaled about 3 percent of the country’s gross domestic product. In 1998, its 608,000 employees and $166 billion in sales were very influential.

Until 2008, GM was the world’s largest car maker, producing over 9 million cars and trucks a year in 34 different countries. By 2010, GM had only a 20 percent marketshare, along with 463 subsidiaries and employing 234,500 people; 91,000 of them in America, where the company also had to provide healthcare and pension benefits for 493,000 retired workers.

As ranked by total assets, GM’s insolvency marks one of the largest corporate Chapter 11 bankruptcies in U.S. history. Its assets were $82.2 billion, with liabilities of $172 billion.


1937 – After a strike, GM recognizes the United Auto Workers (UAW) for its hourly workers.

1955 – Number of employees reaches 576,667

1971 – GM buys 34.2 percent of Isuzu Motors Ltd. GM raises stake to 49 percent in 1998 and later sells it.

1978 – (until June 1998), GM has built more than 50 parts factories in Mexico, employing 72,000 workers. Its first plant was in Juarez in 1978.

1981 – GM buys about 5 percent of Suzuki Motor Corp., raising the stake to 20 percent in 2000 and later sells all but 3 percent.

1981 – GM and Toyota Motor Corp. form NUMMI to build cars in Fremont, CA.

1986 – GM acquires British sports car maker, Lotus. Sold in 1993.

1986 – GM closes 11 older plants.

1990 – GM launches Saturn.

Oct 1990 – GM closes 8 more assembly plants.

Dec 18, 1991: GM closes 21 of its 125 assembly and parts-making plants in North America over the next few years and eliminates more than 70,000 (18%) of its employees in U.S. and Canada.

1998 – A 56-day strike at GM’s Flint operations shuts down all of GM’s North American Assembly plants.

1999 – GM buys 20 percent of Subaru-maker Fuji Heavy Industries Ltd. GM later sells all the stock.

1999 – GM spins off parts maker Delphi Corp. Delphi’s U.S. operations enter Chapter 11 reorganization in 2005.

2000 – GM kills Oldsmobile brand.

2007 – GM signs deal with the United Auto Workers (UAW).

July 2008 – GM announces plans to cut costs by $10 billion and raise $5 billion through borrowing and asset sales.

Nov 2008 – GM warns its liquidity will fall short of the minimum needed to run its business by the first half of 2009.

Dec 2, 2008 – GM seeks U.S. government aid of up to $18 billion.

Dec 19, 2008 – GM and Chrysler granted $17.4 billion in government loans.

Feb 5, 2009 – GM announces plan to slash its global salaried workforce by about 10,000 (14%) and cut the pay of most remaining white collar U.S. workers.

Feb 17, 2009 – GM raises U.S. funding request to a total of $30 billion, announces plans to cut global workforce by 47,000 and close five U.S. plants by 2012.

Feb 26, 2009 – GM posts 2008 losses of $30.9 billion.

March 5, 2009 – GM’s auditors raise “substantial doubt” about its ability to survive outside bankruptcy.

April 17, 2009 – GM says readying detailed plans for bankruptcy filing as it races to complete a
business plan under federal oversight.

April 22, 2009 – GM says unlikely to make a $1 billion debt payment due June 1.

April 27, 2009 – GM offers final plan to reorganize outside bankruptcy by slashing bond debt, cutting over 21,000 more U.S. jobs and emerging as a nationalized automaker. GM warns it would file for bankruptcy if an offer to exchange bonds for company equity failed to cut $27 billion in debt by about 90
percent of bondholders.

May 5, 2009 – GM details plans to all but wipe out the holdings of remaining shareholders by issuing up to 60 billion new shares in a bid to pay off debt to the U.S. government, bondholders and the UAW.

May 7, 2009 – GM posts a first-quarter net loss of $6 billion and a cash burn of $10.2 billion.

June 1, 2009 – GM filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court. This date was the deadline to supply an acceptable viability plan to the U.S. Treasury. The filing reported $82.29 billion in assets and $172.81 billion in debt.

June 8, 2009 – GM was removed from the Dow Jones Industrial Average and replaced by Cisco Systems.

July 10, 2009 – A new entity completed the purchase of continuing operations, assets and trademarks of GM as part of the “pre-packaged” Chapter 11 reorganization. GM reported 88,000 U.S. employees, and announced plans to reduce its U.S. workforce to 68,000 by the end of 2009 after filing for bankruptcy.


1.“What Killed GM?” Daily News. Catey Hill. May 31, 2010

2.“GM: What led to the downfall of a corporate giant?” UCLA Newsroom. Sanford Jacoby. October 15, 2008

3.“The rise and fall of General Motors.” The Week. June 11, 2009.

4.“The Decline of General Motors: An Economist’s Perspective.” My City Magazine. Dr. Christopher Douglas. October 3, 2016

5.“General Motors Chapter 11 Reorganization.” Wikipedia

6.“The bankruptcy of General Motors: A giant falls.” Economist. June 4, 2009

7.“The decline and fall of General Motors.” Economist. October 8, 1998

8.“How a Trump Tariff Could Sideswipe US Auto Industry.” ABC News. Dee-Ann Durbin. January 24, 2017

9.“General Motors to Cut 70,000 Jobs; 21 Plants to Shut.” The New York Times. Doron P. Levin. December 19, 1991

10.“International Business: A 20-Year G.M. Parts Migration to Mexico.” The New York Times. Sam Dillon. June 24, 1998

11.“America’s Biggest Companies, Then and Now (1955 to 2010).” 24/7 Wall Street. September 21, 2010

12.“GM to double Mexico production capacity, invest $3.6 billion in plants.” Automotive News. December 11, 2014

13.“Timeline: Key dates in General Motors’ history.” Reuters. Soyoung Kim and Poornima Gupta. May 29, 2009

Next month … Part 3: The Future of GM


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