General Motors (GM) stock returned to trading on Wall Street yesterday for the first time since the company collapsed, declared bankruptcy, and was rescued by an infusion of fifty billion taxpayer dollars.
While Michigan has been focusing on diversifying its economy to make up for the loss of jobs in the auto industry, GM's return to public trading suggests that the auto industry in Michigan will continue to be a major economic player in the region.
Senior Editor of the Changing Gears public radio project, Micki Maynard, says GM's success is crucial not only to Michigan, but to the Midwest more generally.
"General Motors is very important to the state of Michigan, to Ohio, Wisconsin, Indiana, all the states in the region, really," says Maynard, "And now, the fact that General Motors has gone through bankruptcy, come out the other side, and is back on the stock market is a very important moment for the state and for our region."
But the return to Wall Street does not mean General Motors is protected from another economic downturn. While many hope General Motors' return to trading marks a revival of the company, Maynard says GM's success is still fragile, especially considering the current economic landscape. She says, "One of the things that's most important about this is that the economy, in general, is pretty awful still It could almost take one little thing to knock all of that back again. So, I think General Motors is not hanging a Mission Accomplished' sign on the General Motors Building. If anything, they're just checking this day off of a big checklist of things they have to do."
Going forward, many will be watching General Motors for signs that it has returned to some semblance of its former strength and stability. Maynard says there are a few signs people should be watching for as indications that GM is truly back.
"First of all is how much money General Motors makes, because, over the last couple of quarters, it's done pretty well," says Maynard, "It's earned what you would expect a company its size to earn. General Motors, someday, will have to pay dividends again to shareholders, and that will be a big indication. The problem with that is that they owe the government tens of billions of dollars." Maynard says taxpayers would prefer see General Motors pay back the government before paying dividends to shareholders.
In addition to watching the money General Motors makes and the money it pays back to the government and to shareholders, Ms. Maynard says that, with its return to public trading, people are anxious to get a glimpse inside the company. "General Motors will have to give the government the documents that a public company has to give it," says Maynard, "We will learn a lot about General Motors that we haven't been able to see over the last couple of years. So, I think people will be watching extremely closely to see what this new information reveals about the state of General Motors, and, sort of by extension, the state of the Michigan economy."
With a new administration set to take over in Lansing next January, it remains uncertain when and if Michigan will place as much trust in General Motors as it once did to create jobs and fund community projects. Maynard says, "General Motors, over the years, had the reputation of Generous Motors' or Mother Motors.' You went to General Motors to get funding for things. You went to General Motors to create jobs. It wasn't the other way around. And I think it will be very interesting to see what Michigan's new governor does in relation to General Motors."
Maynard says she's curious to see how both Rick Snyder and General Motors choose to handle their relationship with each other. She says, "Will there be a warm relationship between the two? I'm not sure, based on his (Snyder's) politics, whether he wants something like that. I'm not sure whether the head of General Motors wants to be too close to the governor of the state of Michigan. They may prefer to have sort of an arms-length relationship going forward."
- By Eliot Johnson
You can hear Micki Maynard's full interviw with Michigan Radio's All Things Considered host Jenn White here.