Monday, June 1, 2009

GM Bankruptcy: Toughest Challenge for Barack Obama

The expected thing happened today- General Motors filed for bankruptcy. The company had no other option but to do so. I know that many people are wondering what went wrong for the company that has been for many years the largest employer in USA. The emergence of the company 101 years ago perhaps took place at the same time of America’s entrance in the global scene as the largest economy. The company has already received nearly $20 billion from the government and another $30 billion is supposed to come. In return, the US government will get roughly 60% of share. So, Obama government will be at the helm of this company for sometimes.

The plan is very simple- to cut cost, to shed off many workers, close some manufacturing plants and thus the company will become much smaller than it is now. Obama and his team think that a smaller but more efficient company will emerge and it will become profitable soon. If it happens then no problem. Obama will get all the praise and people will remember him as a great president for many years. However, many people are skeptical about the turn around of the fortune of this company and to be honest with you, I am one of them.

That is perhaps why, I feel some sympathy for President Obama. After all, economic recession did not start during his reign and the same goes for GM problems. He just inherited them from George Bush. It is a bit unfair that he Obama has to deal with both these two huge problems that have affected US economy in a very negative way. So, if the condition of GM worsens in the next few years then it may have serious political implication for his reelection bid in 2012. That is why, I feel that it is very important for Obama and his team to give this message to the people that the condition of General Motors is very bad and if it goes worse then they should not blamed unfairly. Instead, I would advise his PR team to focus on the fact that he did not try to avoid the issue. Rather, he accepted the challenge and tried to do something about it.