GM closer to bankruptcy

After more than a century in business, this could be the end for General Motors as we know it. The United Auto Workers ratified an agreement on Friday, bringing the corporation one step closer to bankruptcy. GM has gone from an automotive giant to a sputtering American icon with financial woes that are expected to put yet more strain on the US economy.

General Motors is expected to file for bankruptcy by Monday, June 1. The company turned 100 years old in September 2008, just as the US economy was trapped by the credit crisis.

Despite all the recent bad news for automakers, GM once dominated the industry. With a successful blend of innovation and marketing, GM created iconic brands like Chevrolet and Cadillac. Rising above competitors Ford and Chrysler, it built massive plants and provided hundreds of thousands of jobs.

During both World Wars, GM built defense products for the US government.The company hit full stride in the 1950s, capturing over 50% of US sales and was front and center in the American psyche.

In the 1970s and 1980s, GM made some attempts at cutting edge technology, including its first electric cars. But its inability to keep up with more innovative foreign automakers like Toyota set the stage for plunging sales in the eighties.

But the firm bounced right back. In 1999 it sold 8.6 million vehicles more than any other automaker.

William Holstein, Author of " Why GM Matters", said, "Imagine this, they took the Toyota lean manufacturing system and incorporated it and absorbed it and improved on it. So they almost eliminated the gap in terms of productivity, quality, reliability."

Despite its financial woes, GM and its ties to thousands of suppliers, still represents 1% of the entire US economy. The old saying "as GM goes, so goes the nation" still seems to ring true today.

William Holstein said, "It is true there is a huge overlap in American economic interest and the survival of General Motors. It's not at all as I hear it characterized, just let them fail, just let them go down the great toilet bowl of history and it doesn't make any difference. We'll all feel this if we let GM fail."

General Motors may not be the powerhouse it once was but its demise would affect the US economy from Silicon Valley to Madison Avenue. Analysts say the best case scenario now is an orderly bankruptcy that causes limited damage, and a re-emergence as a leaner, more flexible carmaker.