It is not just an American icon that has foundered, but an age that has too long emphasized the wrong values, and sometimes no values at all.
And so the unthinkable has finally happened. The company that was once the marvel of the world, its largest industrial corporation and the first stock listed on the NYSE, has become the biggest industrial bankruptcy in history. Its shares, long the most coveted among blue chip portfolios, have seen their value slide into the pennies and are about to be removed from the fabled Dow 30 index. It is a business equivalent both as dramatic and unthinkable as the sacking of ancient Rome (by the Vandal King Geiseric in 455 AD) or the sinking of the Titanic (1912). Perhaps things will someday turn around for the once mighty automaker. But, for now, General Motors is just another company making its way through the court of losing enterprises. Whatever happens, the symbol GM will never mean the same when measured by industrial size, labor force or customer trust. (more…)
It was a week that illustrated how not to be a leader.
The CEOs of the big three auto makers appeared before the United States Congress, and showed a level of ill preparedness on even rudimentary questions about their bailout pleas that would have incurred the ire of a fifth grade teacher. Their separate arrivals in three luxury private jets reminded us of when Robert Nardelli, then head of Home Depot, cut off shareholder questions at the company’s annual meeting after 60 seconds. (more…)
Another uncanny resemblance to an era that seems determined to hold our attention, if not repeat itself in more troubling ways.
More than a year ago, we noted with some trepidation a significant milestone that had been reached in the early 21st century that mirrored events in the 1920s. The U.S. government had reported that income concentration among the top one percent of earners had reached a point unseen since 1929. That news gave us a bit of a chill, as we said then. Another unsettling augury of what seems to be an inexorably unfolding future was seen yesterday when the market capitalization of General Motors Corporation dropped to its 1929 level. GM stock yesterday fell below $5 for the first time since the 1950s.
Once the largest corporation in the world, GM is more explicit today for its shrinking shadow than it is for its once dazzling self. It is just one of many previously reliable talismans of stability and confidence that today seem to be crumbling in front of our eyes, calling us back to the indelible memory of economic turmoil whose reality we are at present struggling to avoid.
GM’s stock lost close to one-third of its value yesterday. Today, the stock is up slightly to $4.98. The company remains optimistic about its survival. The ghost of Alfred P. Sloan may be less sanguine.
The stock of General Motors, once the most valued company in the world, slumped to a 53-year low today. The company is worth seven billion dollars in market capitalization. You would have to go down Forbes’s 2008 list of billionaires to its 136th ranking (Harold Simmons) before you would find someone worth less than GM.
Congratulations Mr. Simmons, whoever you are. GM needs you.
It is not just an American icon that has foundered, but an age that has too long emphasized the wrong values, and sometimes no values at all.