Some good news from the smokestack industries – US car giant GM is today expected to file its registration for IPO (that’s what they call a flotation over there) with regulators. The move clears the way for the firm to rejoin the New York Stock Exchange only just over a year after it emerged from bankruptcy protection as a taxpayer owned basketcase, at the end of July 2009.
That’s pretty swift progress by any standards, and certainly by those of a manufacturing business whose product cycles are measured in decades. If all goes well, the IPO should be one of the biggest ever, raising an estimated $15bn - $20bn and going a long way towards paying back the $50bn bailout GM received from the US government last year.
So what’s happened to turn the firm which became one of the highest profile victims of the downturn from zero to hero so quickly? Well, for one the new management team has not let the grass grown under its feet, having rationalised GM’s bloated brand portfolio, begun the process of revamping its tired product range and most critically of all, cut production costs by way of a long-overdue deal with the powerful US auto unions.
So there are now only four core US brands – Chevrolet, Cadillac, Buick and GMC. In Europe Vauxhall Opel remains a subsidiary after plans to sell it off were hastily shelved. It has sold Saab however, which now resides in the rather unlikely hands of Dutch supercar outfit Spyker.
As a result of all this – and too of restocking after 18 months of spending freezes – GM posted revenues of $1.3bn in Q2, its best showing for six years. A pretty strong performance from GM CEO Ed Whitacre, who having delivered the turnaround announced last week that he is stepping down, to be replaced by board member Dan Akerson. A new leader for GM’s new start as a public company seems to be the rationale behind this.
GM’s problems are far from over – the dealership networks still need sorting out and the model range and quality, while improving, has a way to go yet. But given where the firm only last July it’s an amazing result - an impressive demonstration of how a crisis can catalyse changes which everyone knew were needed but that no-one could push through.
There’s nothing like peering into the abyss to make you realise how much better life is with your feet on terra firma.
In today's bulletin:
Inflation slips back toward 2% target
Unite calls off BAA strikes
General Motors to float, one year after bankruptcy
Small firms need cash incentives to go green, says FSB
Time to turf out boring meetings?