Mon Feb 13 2012
A business losing $1.2 billion in the span of three months might seem rather grim were the business not General Motors, whose loss is so much better than experts predicted that it is beginning to seem possible to envision a resurgent auto giant ready to compete once more on the world's business stage.
In announcing its loss, GM also said it will start paying back the $6.7 billion it took out in federal loans, although that optimistic development must be tempered by its coming from a cash contingency account of $16.4 billion that was set up by the government in the event of worsening sales or other unforeseen problems.
Nevertheless, the picture at the beleaguered auto giant is starting to brighten. In the recently completed quarter, GM reports it took in $3.3 billion more in cash than it spent. That is quite a contrast with the first quarter of 2009 when GM burned through $10 billion in cash.
Selling off operations such as the Hummer, purchased by a Chinese company, and closing Saturn, which never found a big enough fan base, has slimmed down the company. GM's European operation, which manufactures the Opel, is also on the block. The upshot is a more focused General Motors, easier to manage and implement cost controls.
We the taxpayers still own 61 percent of General Motors, because it has been federal dollars that kept it afloat. GM's leadership believes a new public stock offering will raise enough cash to buy back the company from the taxpayers next year. That will get the federal government out of the auto business, which, it has repeatedly said, is the goal.
If GM can return to the private sector and rejuvenate itself, the federal intervention, so controversial when initiated, will have been a success.
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