Bailout Blues: Despite $400M Bailout From GM, French Automaker Announces Mass Layoffs
Let’s see if you’re familiar with the following:
1) The Obama administration invests more than $50 billion taxpayer dollars in General Motors
3) The Obama administration’s “car czar” Steve Rattner forces out GM CEO Rick Wagoner and replaces him with Frederick “Fritz” Henderson
4) GM goes public in 2010
5) GM bails out French automaker PSA Peugeot-Citroen
6) GM scores itself a sweetheart tax deal
7) Shareholders claim they aren’t seeing any return on investment
Wait, what? What was that bit about Peugeot?
That’s right, GM, which still owes about $25 billion in TARP [Troubled Assets Relief Program] repayments, invested more than $400 million in a French car company that’s “drowning in red ink,” The Blaze reported in March.
And by “invested,” we kinda’-sorta’ mean “bailed out.”
In fact, Peugeot was is such poor shape when GM announced the bailout, er, “investment” that even ABC News accused General Motors of essential dumping “more than $400 million of taxpayer assets on junk bonds.”
And it gets worse. Check out this report from Associated Press:
Struggling French carmaker PSA Peugeot-Citroen, facing diving sales in crisis-hit southern Europe, announced a drastic cost-cutting plan Thursday to slash 8,000 jobs in France and close a major factory north of Paris, shocking workers and startling the government.
Saddest part: that report was released this morning.
“Company management announced the job cuts and closure plan during a meeting Thursday with its worker representatives,” the AP reports.
“The company, which warns it faces a first-half loss of €700 million ($858.2 million) this year, is trying to save €1 billion as it struggles to compete in Europe’s stagnant car market,” the report adds.
The AP puts on a brave face and looks for a silver lining:
Peugeot is hoping a new alliance with General Motors Corp. will allow it to return to long-term profitability. GM has been working hard to return its lossmaking European operations to profitability. It’s European Opel and Vauxhall units have been a drag on the company’s earnings for a dozen years, including a $256 million loss in the first quarter and $700 million last year.
Under the alliance with GM, the American company became the French automaker’s second-largest shareholder with a 7-percent stake, behind the Peugeot family, whose stake dropped from 31 percent to around 25 percent.
What’s truly amazing about this report is the fact that there’s no mention of GM’s $400 million bailout to the company.
Wouldn’t that seem like an important detail? (But let’s not get bogged down in who didn’t report what!)
Here’s a recap just in case you missed anything: The feds own one-third of GM, GM still owes taxpayers $25 billion, GM bails out Peugeot with $400 million, Peugeot is then downgraded by Moody’s and lays off 8,000 employees.
Huh. Along with some of our money, it looks like the people at GM also gave the French some of our unemployment.
Front page photo source.
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