It's been said that what was good for General Motors was good for America. Unfortunately, the flip-side has been proven woefully true: the recession, which was unkind to GM, was even more so to the American public. But what was good for GM was also good for southern Ontario's manufacturing sector, which is why the Canadian government has now infused nearly US$10 billion into the ailing auto manufacturer.
Prime Minister Stephen Harper stated that the cash infusion was intended to prevent catastrophic job loss in already recession-stricken southern Ontario. If the Canadian government didn't help bail out GM, the company would have closed all their plants in the region. Harper was quoted in the June 1 issue of the Financial Post saying this would have "meant the loss of hundreds of thousands of jobs."
The US$30 billion loan from the American government, as well as the bank-breaking US$9.5 billion from the Canadian government, mean they each get an ownership stake in the company through stocks. The American government will control about 60 per cent of GM, with Ottawa commanding roughly 12 per cent.
So pop the champagne- each Canadian taxpayer owns a tiny bit of GM, approximately 4 millionths of a per cent each. And as owners, we deserve to have our voice heard in helping them shape up their act. The 100-year-old car manufacturing behemoth is reinventing itself as a "new" GM that will tackle the 21st century's problems. They even have television ads right now explaining their reinvention.
The major problem with the "old" General Motors was their awful business model. As gas prices rose and energy efficient vehicles became more popular, they stuck to their guns and created wave after wave of gas-guzzling SUVs and trucks. They sat on the lots while smarter, leaner and more intelligent car manufacturers- Honda and Toyota, for example- responded to market pressures with more fuel-efficient cars, as well as diesel
and hybridized vehicles.
GM's cars weren't bought because they weren't what the public wanted. As owners, the Canadian and American governments should help the company reinvent itself with mass transit, light rail and greener/electrical engine technology.
Companies like Tesla Motors, which is producing all-electric cars like their sports car, the Roadster, and the more economical Model S, have the same on-paper worth as GM. They don't need to be bailed out by governments because they're reaching a market that is ill-served by the Big Three car manufacturers. Cars like GM's EV-1, featured somewhat erroneously in the film Who Killed the Electric Car?, are also in demand, partly due to the greening of technology as well as the increasing affordability of electric cars.
If GM truly wants to change and become a 21st century company, this recession has given them the opportunity. In the business world, there is one great truism: adapt or die. Without the government's intervention, General Motors was clinically dead. Hopefully with a jolt of electricity right to its heart, the newly-minted Government Motors will thrive.