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An Inside Look At The Collapse Of General Motors And The Detroit Auto Industry

Cormac McCarthy

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Published in Sixty To Zero: An Inside Look At The Collapse Of General Motors And The Detroit Auto Industry

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The collapse of General Motors (GM) in 2009 was a watershed moment in the history of the American auto industry. The company, once the world's largest automaker, had been struggling for years with declining sales, rising costs, and a shrinking market share. In the end, GM was forced to file for bankruptcy protection, and the U.S. government stepped in to provide a $50 billion bailout.

The collapse of GM had a ripple effect throughout the Detroit auto industry. Suppliers, dealers, and workers all felt the pain, and the city of Detroit itself was plunged into a deep recession. But the collapse of GM also exposed deep-seated problems in the American auto industry, problems that had been festering for decades.

Sixty to Zero: An Inside Look at the Collapse of General Motors--and the Detroit Auto Industry

by Alex Taylor

4 out of 5

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The Roots of the Collapse

The roots of GM's collapse can be traced back to the 1970s, when the company began to lose market share to foreign automakers. Japanese automakers, in particular, were able to produce smaller, more fuel-efficient cars that were better suited to the changing needs of American consumers.

GM, on the other hand, continued to produce large, gas-guzzling cars that were increasingly unpopular with consumers. The company also failed to invest in new technologies, such as fuel injection and electronic engine controls, which gave foreign automakers a competitive advantage.

In the 1980s, GM's financial problems began to mount. The company lost money on its core car and truck business, and it was forced to sell off assets to raise cash. GM also began to rely heavily on debt to finance its operations.

By the late 1990s, GM was in a precarious financial position. The company was losing money, it was heavily indebted, and it was facing increasing competition from foreign automakers. In 2005, GM was forced to sell its Hummer brand to Chinese automaker Sichuan Tengzhong Heavy Industrial Machinery.

The sale of Hummer was a sign that GM was in trouble. The company was shedding assets to raise cash, and it was no longer able to compete with foreign automakers on its own.

The Collapse of Lehman Brothers

The collapse of Lehman Brothers in September 2008 was the trigger that finally sent GM over the edge. Lehman Brothers was a major lender to GM, and its collapse caused GM's credit rating to be downgraded. This made it more difficult for GM to borrow money, and it pushed the company closer to bankruptcy.

In December 2008, GM announced that it would cut 47,000 jobs and close 11 plants. The company also said that it would sell its Saturn brand to Penske Automotive Group.

These measures were not enough to save GM. In June 2009, the company filed for bankruptcy protection. The U.S. government stepped in to provide a $50 billion bailout, and GM emerged from bankruptcy in July 2009.

The Impact of the Collapse

The collapse of GM had a ripple effect throughout the Detroit auto industry. Suppliers, dealers, and workers all felt the pain, and the city of Detroit itself was plunged into a deep recession.

Suppliers to GM were particularly hard hit. Many of these companies depended on GM for a large portion of their business, and the collapse of GM caused them to lose significant revenue. Some suppliers were forced to close their doors, while others were forced to lay off workers.

Dealers also suffered as a result of GM's collapse. Many dealers had invested heavily in their businesses, and the collapse of GM left them with unsold inventory and unpaid loans. Some dealers were forced to close their doors, while others were forced to sell their businesses to larger dealers.

Workers were also affected by the collapse of GM. Many workers lost their jobs, and those who kept their jobs saw their wages and benefits cut. The collapse of GM also had a negative impact on the city of Detroit. The city's tax base was decimated, and the city's population declined. Detroit became a symbol of the decline of the American auto industry.

The Lessons of the Collapse

The collapse of GM provides a number of lessons for the American auto industry. First, it shows that the industry is vulnerable to economic downturns. When the economy slows down, consumers are less likely to buy new cars, and automakers are forced to cut production. This can lead to a downward spiral, as automakers lose money and are forced to lay off workers.

Second, the collapse of GM shows that the industry is too reliant on foreign automakers. Foreign automakers have been able to produce smaller, more fuel-efficient cars that are better suited to the changing needs of American consumers. American automakers need to invest in new technologies and new products in order to compete with foreign automakers.

Third, the collapse of GM shows that the industry needs to be more efficient. American automakers have a long history of overspending and mismanagement. They need to learn to operate more efficiently and to be more responsive to the needs of consumers.

The collapse of GM was a wake-up call for the American auto industry. The industry needs to learn from the mistakes of the past and make changes in order to remain competitive in the future.

The collapse of General Motors was a watershed moment in the history of the American auto industry. The company, once the world's largest automaker, was forced to file for bankruptcy protection in 2009. The collapse of GM had a ripple effect throughout the Detroit auto industry. Suppliers, dealers, and workers all felt the pain, and the city of Detroit itself was plunged into a deep recession.

The collapse of GM provides a number of lessons for the American auto industry. First, it shows that the industry is vulnerable to economic downturns. Second, it shows that the industry is too reliant on foreign automakers. Third, it shows that the industry needs to be more efficient.

Sixty to Zero: An Inside Look at the Collapse of General Motors--and the Detroit Auto Industry

by Alex Taylor

4 out of 5