Ask YC: To save GM or not?

#1

Post by jdavid » Thu, Nov 13, 2008, 4:36 PM UTC

I wonder which is better the government has already approved 25billion to save GM but GM wants more.

GM is a company that has been struggling for a decade vs. global competition because it refused to innovate. Pumping in 25-50 Billion might save 3 million jobs, but are there other options.

Would putting $100 Billion into auto company startups be better? The companies that come out of that would most likely get most of GMs assets on the cheap.

what do you think is better, give GM another chance or let bankruptcy create a fertile ground for a new kind of car company to come in and do better.

or maybe, there are a ton of problems like warranty enforcement and replacement parts that would be VERY disruptive. I just don't like the idea of us having Government owned companies.

Re: Ask YC: To save GM or not?

#2

Post by noodle » Thu, Nov 13, 2008, 4:43 PM UTC

let them die, imo. keeping them on life support will just be a drain on everyone. bailing them out will just allow them to continue to be a terrible company.

instead, use that money to fund grants and initiatives and prizes to incentivize new companies or GM itself, provided results are produced. that way, the industry will move forward. a bailout would almost definitely result in stagnation for many years. imo, ofc.

the bad companies will go away and other companies will take their place, providing new jobs.

Re: Ask YC: To save GM or not?

#3

Post by vaksel » Thu, Nov 13, 2008, 5:07 PM UTC

it can't be a blank check, if they are going to bail them out that better come with a huge list of demands...forget golden parachutes, demand complete reorganization, huge cuts, new focus. i.e. I'd sell/cut Buick, Hummer, Saab and then go through the brands cutting models. GM makes 89 vehicles and many of them are pretty much copies of each other and compete with each other. Notice how honda only has 10 models, 1 for each class. This lets them make 1 good car for each space, instead of 4 half-assed ones.

Startup idea wouldn't really work, it costs way too much money to bring a car to market, and there aren't that many startups in the automotive space, Tesla is pretty much it.

Personally I'd want GM/Chrysler and Ford to go into a joint venture for a new brand to sell a full line of electric/hybrid vehicles. The space is too costly of an investment to take on by one company. This way they can spread the risk and work together on the same technology. And people looking for electric vehicles wouldn't be locked down into funky looking hatchbacks as their only choices.

Re: Ask YC: To save GM or not?

#4

Post by swombat » Thu, Nov 13, 2008, 5:11 PM UTC

Where financial organisations were concerned, letting them go bust was not an option because of the impact on the rest of the world... The Lehman bankruptcy fucked everyone up big time, and should have been avoided.

However, when it comes to "normal" companies like GM, I say let'em go bust.

Obama sees them as a key part of gearing up the US to becoming a leader in green cars, but tbh, I think the $50bn would be better spent buying Toyota or something...

Re: Ask YC: To save GM or not?

#5

Post by unalone » Thu, Nov 13, 2008, 5:11 PM UTC

vaksel wrote: post #3

it can't be a blank check, if they are going to bail them out that better come with a huge list of demands...forget golden parachutes, demand complete reorganization, huge cuts, new focus. i.e. I'd sell/cut Buick, Hummer, Saab and then go through the brands cutting models. GM makes 89 vehicles and many of them are pretty much copies of each other and compete with each other. Notice how honda only has 10 models, 1 for…

Problem is, if we do bail GM out we most likely would not attach any strings. So I think bailing out would have to be a no for now.

Re: Ask YC: To save GM or not?

#6

Post by thrill » Thu, Nov 13, 2008, 5:21 PM UTC

Some (self described) smart people believe that "it'll all just work" if we put the just-right smart person in charge of such a bailout to decide what the just-right thing to do is. We instead need to put 200 million smart people in charge of deciding what to do - and they can each decide with their own hard-earned money. Give your money to government - or just the same, give government the power to take your money - and all you get is a handful of not-really-that-smart people deciding what is best for you.

Re: Ask YC: To save GM or not?

#7

Post by ovi256 » Thu, Nov 13, 2008, 5:33 PM UTC

thrill wrote: post #6

Some (self described) smart people believe that "it'll all just work" if we put the just-right smart person in charge of such a bailout to decide what the just-right thing to do is. We instead need to put 200 million smart people in charge of deciding what to do - and they can each decide with their own hard-earned money. Give your money to government - or just the same, give government the power to take your money -…

If only there were 200 million smart people in the US! By definition, 50% are below average.

Re: Ask YC: To save GM or not?

#8

Post by aidenn0 » Thu, Nov 13, 2008, 5:38 PM UTC

If GM goes bankrupt, there will be massive unemployment and closed factories. This sucks. On the other hand, this is a good environment in which to be a manufacturing company with cash on hand. If GM can't turn a profit, they need to make room for someone who can.

Re: Ask YC: To save GM or not?

#9

Post by antiismist » Thu, Nov 13, 2008, 5:46 PM UTC

There is a middle ground between bailout and a liquidation - a bankruptcy reorganization. It would probably wipe out the shareholders and the debt holders, and some jobs and factories, but a lot of GM and its brands and factories would live on.

Re: Ask YC: To save GM or not?

#10

Post by justindz » Thu, Nov 13, 2008, 5:49 PM UTC

One idea I heard on C-SPAN this morning was to chop them up and take the bailout money to instead build something like 12 hardcore engineering outfits to build cars of the future, then get startup people to pitch for an opportunity to run those outfits and/or commercialize them down the road.

I don't have any capacity for analyzing the pros and cons to this, but the idea of focusing on starting from innovation rather than trying to steer a big, unwieldy ship towards innovation sounds attractive.