GM Shares Jump In Return To Market
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block.
Today, for the first time in nearly 18 months, shares were trading on the New York Stock Exchange under a familiar symbol: GM. General Motors' stock finished the day better than it started: up more than 3 percent.
SIEGEL: Two years ago, GM had to be rescued by the federal government. Six months later, it filed for bankruptcy. And today, taxpayers still own a big chunk of the company.
As NPR's Jim Zarroli reports, GM is trying hard to persuade investors and everyone else that its comeback is for real.
JIM ZARROLI: These days, the floor of the New York Stock Exchange can seem like a pretty subdued place. Electronic trading has shifted a lot of activity to other locations, but this morning, some of the frenzy was back, as people crowded onto the floor to witness history. Among them was GM's vice chairman for corporate development Stephen Girsky.
Mr. STEPHEN GIRSKY (Vice Chairman for Corporate Development, GM): It's a very emotional day. It's an emotional day for many of the people, not just in Detroit or Michigan, but across the country. And our employees, our dealers, our suppliers should all be proud of what's going on here.
ZARROLI: The decision by the White House to rescue GM turned the government into the major shareholder of the failing American automaker. At the time, a lot of people were skeptical that the government would get any money back, but the bankruptcy process made it easier for GM to shut down plants, get rid of debt and reorganize its huge pension obligations to workers. And the IPO has come a lot sooner than anyone expected.
Mr. GIRSKY: Two years ago, nobody thought we would be here. And I think that just kept people excited. As we went on this road show, the enthusiasm built. The story resonated with investors, and people were rooting for us. And I think the American public is rooting for us.
ZARROLI: Today, GM is turning a profit again, and it's got some important things going for it.
Kirk Ludtke, senior vice president of CRT Capital, says because GM racked up huge losses, it is now reaping huge tax benefits. Ludtke says the company has also been able to make impressive gains in fast-growing markets, like Brazil and China.
Mr. KIRK LUDTKE (Senior Vice President, CRT Capital): What's interesting is GM is number one in both China and North America. You know, that's a big reason why we think GM will outperform its peers over the next five years.
ZARROLI: Still, GM is a company that has struggled for years to survive in an industry that only becomes more competitive each year, and a lot of people are deeply skeptical about its prospects.
Casey Thormahlen is an analyst for the research firm IBISWorld.
Mr. CASEY THORMAHLEN (Analyst, IBISWorld): Clearly, GM has made significant improvements over the last two years, and I applaud them for that, but, personally, I'm just not completely convinced yet.
ZARROLI: Thormahlen says GM has made progress but so have other companies, like Hyundai and Ford, and it's not clear GM can catch up with them.
GM's Stephen Girsky says the challenges facing GM are steep.
Mr. GIRSKY: We still have a ways to go. No one is in denial here. There's a lot of work to do, but we have the ability to do it, and we have the resources to execute the play now.
ZARROLI: Then there is another problem. The IPO will reduce the government's ownership of GM by nearly half, but taxpayers will still own a sizable part of the company for the foreseeable future. Outside the stock exchange today, GM parked a new Camaro to show passersby one of its flashy new models. One of those who stopped to admire it was Justin Arrington(ph), who was visiting from Alabama. Arrington liked the car, but he says he would never buy GM stock.
Mr. JUSTIN ARRINGTON: Ethically, I guess I, you know, thought the government shouldn't have bail them out. Probably would have been a lot worse off, if they hadn't, but I think it's going to be a lot worse later on.
ZARROLI: It's a view shared by others who worry that forcing taxpayers to bail out troubled companies sets a dangerous precedent. GM acknowledges that a lot of people feel that way, and that has had an effect on sales. That's a big reason why the company is anxious for the government to pull up stakes and leave. But for now, U.S. taxpayers own more than a quarter of GM, and depending on how the stock fares, it could take a few more years to sell it off.
Jim Zarroli, NPR News.