GM is filing for bankruptcy and guess what? They owe a ton of money to the ad industry and are probably responsible for tons of Detroit ad folk losing their jobs. Way to go, gas-guzzlers. Maybe the Hummer brand should have seemed like a bad idea sooner?
Here's B|Net's breakdown;
- Starcom MediaVest Group: $121 million
- Publicis Groupe: $25 million.
- Interpublic: $16 million
- McCann Erickson: $4.6 million
Total: $167 million
Source: http://industry.bnet.com/advertising/10002410/publicis-interpublic-owed-167-million-in-gm-bankruptcy/
Why GM Failed
Why do you think GM collapsed? A company which was started in 1909 went on to stay well ahead in the automobile industry for 100 years collapsed. I understand it is not all of sudden. What happened to their financial management?
GM is a very interesting case. Yes, it is certainly one of the great titans of U.S. industry and it's not any fun to see them go into bankruptcy.
There have been several opinions put forward at to why this all happened:
- GM makes cars people don't want
- GM is too slow to innovate because of its size
- GM is too bureaucratic and unable to adjust to changing markets
- GM's dealer network is too large
- GM sold off its formerly profitable financing business GMAC
GM stopped making profit in 2005. Since that time GM lost more than $90 billion through the 1st quarter of 2009.
"why did those losses happen?" the key to GM's losses has to do with sales and fixed costs..
The problem for GM was that when the sales slowed down, they had trouble cutting costs because most of their costs were fixed. In other words, a lot of their costs did not go down as their sales went down. In most manufacturing companies, when sales go down, some of the bigger costs go down as well ,GM has tremendous fixed costs related to their union contract. Closing a plant, for example, did not necessarily mean the workers lost their jobs. Company pensions and legacy health care costs were fixed as well. So when sales went down, many costs stayed fairly constant. And that led to losses.
As the losses mounted and the economy struggled, these losses became so significant that GM could not survive as a viable business. In spite of billions of dollars of government support, the only solution for GM is to declare bankruptcy and try to lower those fixed costs through a court process.