GM workers trusted investment in product

Ted Dobski knew firsthand how solid General Motors Corp.’s cars were. He was a raw-materials buyer for the auto giant for three decades and believed in its future. So when he retired in 2001, he bought GM bonds to help fund his leisure years.

That turned out to be a serious mistake. Like so many other disappointed GM bondholders, Mr. Dobski is now struggling to keep his retirement intact. The value of his bonds collapsed when the American icon sought bankruptcy protection this month.

But Mr. Dobski is not your average cranky creditor. He, like thousands of other bondholders, invested his retirement dreams in the industry he knew best — his own — yet still came out a loser.

• THE BONDHOLDERS: Click here to view vignettes of eight GM bondholders.

GM returns were once thought to be as reliable as its pickup trucks, and many of its retirees maintained their financial ties to the company. It was natural, financial analysts said, for those who kept the assembly lines running to rely on the same company to fuel their retirements.

“Any time people know what’s going on in their companies, they do feel what you call a patriotic responsibility to invest there,” said Paul Palazzo, a managing director for Altfest Personal Wealth Management in New York.

GM’s fallen fortunes, therefore, were doubly painful to the company’s employees who doubled as bondholders.

Mr. Dobski is angry and surprised at the failure of a company he knew well.

“I knew them, and I knew what they were accomplishing,” he said. “I kept in contact with people. They were doing everything they were supposed to be doing.”

In the end, that was not enough.

Mark Modica is a generation younger than Mr. Dobski and, as manager of a Saturn dealership, has watched the decline of the auto industry with even more alarm. He hoped his GM bonds would fund his children’s education and never expected the investments to falter.

“I was still optimistic due to the fact the company and administration said bankruptcy was not an option,” he said.

That faith may seem naive now, especially for those who worked in the long-suffering U.S. auto industry.

What follows is a look at current and former auto insiders who are GM bondholders and are vexed not just at their industry but at their government as well:

Dennis Buchholtz

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