GM’s Re-listing Reflects Japan and America’s Difference

America’s General Motors (GM) is listing stock on the New York Stock Exchange once again. On the 18th of this month, GM applied to the U.S. Securities and Exchange Commission (SEC). Last June, GM filed for Chapter 11 bankruptcy and progressed in the restructuring of its management under the supervision of the government; however, after only one year, it has applied for re-listing.

GM’s management has not yet fully recovered, but it posted final results in the black for the second straight quarter this year (from January to March and April to June). The new GM has been separated from the old GM, which had fallen into extreme debt. Traditional expenses such as personnel cuts and pension fund and health care costs have been drastically cut, thus making management leaner. Additionally, demand from developing nations has drastically increased.

The leading figure of the quick revival is the Obama administration. Last year, from the beginning of the administration in January, management experts specializing in quick revivals gathered and drafted a plan to revitalize GM in a short period of time.

After the Lehman Shock, GM and Chrysler’s management crisis worsened. On the one hand, the American government sold Chrysler to Italy’s Fiat, but on the other, the government separated new GM management from old and owns 60 percent of the newly revived GM’s stock.

The public funds including loans and investments allocated to GM amounts to 4.3 trillion yen (approximately 50 billion dollars). The government exercised influence on the board of directors and made drastic decisions, for example, replacing passive asset sales. The fruits of those labors are finally visible.

Rushing re-listing against these circumstances is probably also aimed at producing results in time for November’s midterm congressional elections. GM published for the occasion of stock listing that investment firms had priority on dividends and received preferred shares. The costs of dividends are higher compared to common shares. The intentions behind the swift collection of public funds are seen transparently in that agreement and in the technique of gathering investors.

Of course, in business revivals, the decisive battle on the short-term has strict rules. In Japan, Japan Airlines’ (JAL) revitalization is progressing using GM’s technique; however, negotiations with financial institutions over new loans are becoming entangled. In January of this year, even after filing for protection through the Industrial Revitalization Corporation Act and even after more than half a year has passed, a revival plan has not yet been agreed upon. Although there is a need to reduce costs such as landing fees, the government remains neglectful.

America has entered the period of public fund recovery, and Japan is one lap behind. JAL will submit a revitalization plan to the courts again next week, but time is money. It can be said that the conditions of both companies are different, but officials must think deeply about the differences developing between the U.S. and Japan.