How GM's IPO Affected Detroit, New York, And Washington
NEW YORK (AP) — General Motors returned to Wall Street with the satisfying roar of a muscle car's engine, embraced by traders at the New York Stock Exchange who stood in a crowd eight deep for the chance to buy a piece of a resurrected American icon.
Elsewhere, the moment was more complex.
The White House walked a fine line, stressing that the government was eager to get out of the automotive business while also taking credit for a taxpayer bailout that helped save the industry, not to mention tens of thousands of jobs.
And while the day allowed Detroit a moment of pride — one man spoke of the new GM as if it were a sturdy, righted ship — many of its residents were quick to point out that the damage caused by the auto industry's collapse had long since been done.
Here is how the day played out in the three American cities most closely tied to the fortunes of General Motors.
At the New York Stock Exchange, it was clear before the sun even rose that this was no ordinary day. The famous facade, so often covered since the Sept. 11, 2001, attacks by an enormous American flag, was decked out in a chrome-colored GM logo.
The stock exchange opens at 9:30 a.m., and by 9:15 the floor post for General Motors — back under its old symbol, "GM" — was packed with a crowd almost unseen in these days of electronic trading.
Densely packed traders surrounded a man known as the market-maker whose job is to match buyers and sellers.
At 9:30, the opening bell was followed by the sound effect of the roar of a Chevrolet Camaro. Executives crowded around CEO Dan Akerson and applauded, and cheers normally reserved for a big stock rally went up from the floor.
And then a big stock rally happened. Almost immediately, GM stock shot from $33 per share, the price set by the company ahead of the offering, to nearly $36. The broader stock market joined in the fun, with the Dow Jones industrials soaring nearly 200 points.
As the stock rose, so did spirits on the floor of the exchange.
"What's the last sale?," DME Securities trader Alan Valdez shouted to his assistant staring at a screen a few feet away. "$35.50," came the reply — apparently not high enough for Valdez.
"I think it's a buy," he said. "Just a year ago the company was in bankruptcy. People thought they'd never sell cars again. So this is huge. What is great for GM is great for the country. It's great for Main Street."
For the White House, which has faced relentless attacks from tea party Republicans upset that it owns part of General Motors, the stock offering was a chance to point out to voters that the majority control of the company was only temporary.
At the same time, the Obama administration took credit for rescuing a company "at the heart of America's manufacturing sector" and saving American jobs. GM employs 209,000 people globally, about 115,000 fewer than it did in 2004.
The night before the stock offering, Treasury Secretary Timothy Geithner called Akerson to thank him and other GM executives for the work they had done putting it together.
And Thursday afternoon President Barack Obama took to the White House briefing room to declare that "an industry that helped to build our middle class is once again on the rise."
"These last two years haven't been easy on anybody," the president said. "They haven't been without pain or sacrifice, as the tough restructuring of GM reminds us."
"We are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off," he said, apparently speaking not just of the GM bailout but of other bailout and stimulus measures adopted during the worst of the economic meltdown.
Obama pointed out that the stock offering had cut the government stake by nearly half, to 33 percent from 61 percent. For the taxpayers to break even on the $50 billion federal bailout of GM, the government needs to sell the rest of its shares at an average of about $53.
In downtown Detroit's main square, within sight of GM's 73-story headquarters, workers were putting the finishing touches on the city's Christmas tree and ice rink. Passers-by expressed indifference about the stock offering.
It may be a moment of pride for Detroit, but the city was hammered by the downfall of the U.S. auto industry in the late 2000s. Michigan's unemployment rate only recently fell beneath 13 percent, compared with a national rate under 10 percent.
"They've already been affected by the plant closings, the layoffs. It's been devastating," said Tim Jenkins, a mortgage banker who lives in the suburb of Grosse Pointe. He said he was too close to retirement to invest in GM stock, which he worried would be volatile for a while.
A half-dozen people watched the trading begin on a small TV in an upstairs, cafeteria-style dining room at Local 652 of the United Auto Workers union in Lansing, which represents workers at a factory for Cadillac, a GM brand.
"That's great news — the biggest IPO ever," said Mike Green, the local union president, whose family includes four generations of GM workers. "It's good to see her on the ticker tape again, isn't it?"
He said he already had an order in to buy GM stock.
And at GM headquarters in Detroit, several hundred workers cheered and welcomed Akerson at a catered party with a jazz band. It got going about the time the stock market closed — with GM finishing the day at $34.19, up $1.19 from the offering price.
"Sixteen months ago, we were pretty much flat on our backs," the CEO said, "but we picked ourselves back up and got back in the game. We need to work hard to repay that confidence and trust that has been placed in us."
Krisher reported from Detroit. Also contributing were Associated Press writers Martin Crutsinger, Dee-Ann Durbin, Mike Householder, Tim Martin, Darlene Superville and Corey Williams.