Will GM move to China?
May 11th 2009 5:45PM
Updated Dec 4th 2009 11:50AM
It used to be that what's good for General Motors (GM) was good for America. But that was in the 1950s and a few things have changed since then. Instead of dominating the North American vehicle market with 50 percent share, GM now controls a mere 19 percent. And then there are the little matters of losing $74 billion, slashing its stock 98 percent and being two weeks away from a bankruptcy filing.
Meanwhile, GM is proposing a new structure in bankruptcy that would give the U.S. government 50 percent of the company for its loans. After getting $15.4 billion in loans from the U.S., GM has said it will need another $2.6 billion in May and $9 billion more for the remainder of 2009.
Now it turns out that GM's CEO is headquarters shopping. More specifically, it's talking about moving out of Detroit. and maybe opening its headquarters somewhere else. I think GM may be considering moving to other countries like Brazil, China, or perhaps over the border into Canada. From GM's perspective, it should relocate to whichever country will enable it to be most competitive globally.
In the last few years, it's turned out that what's bad for GM is even worse for America. Maybe it's time for GM to take its corporate jets and fly to Beijing.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in GM securities.