- The Washington Times - Saturday, July 11, 2009

General Motors emerged from a speedy, 41-day bankruptcy Friday with Chief Executive Officer Frederick A. “Fritz” Henderson promising more restructuring down the road that will enable the auto giant to repay its $11 billion in loans from the federal government.

The now-leaner company wiped $40 billion in debt from its balance sheet through the bankruptcy proceedings. GM plans to close another 10 plants by the end of 2010 and trim an additional 4,000 salaried employees, eventually lowering its total U.S. work force from 35,100 last year to 27,200.

“One thing we have learned from the last 100 days is that GM can move quickly and decisively,” Mr. Henderson said at GM headquarters in Detroit. “We know we have to change.”

The company has received $39 billion in capital from the federal government, $9 billion in the form of preferred stock and $30 billion in common shares. Neither sum can be recouped by taxpayers until GM completes a stock offering sometime in the future when the company finds firmer financial footing.

Mr. Henderson said he hoped to repay the $11 billion in loans before the government-imposed 2015 deadline.

GM also promised to reduce the number of executives on its payroll by 35 percent.

Some auto industry experts doubt the automaker will achieve that goal, but were encouraged by GM’s overall restructuring plan Friday.

“This is enough to allow them to compete against Toyota and Honda at the spot where the market is today,” said George Magliano, director of automotive industry research in North America for IHS Global Insight.

The Obama administration, which helped to orchestrate GM’s rapid emergence from bankruptcy, praised the new plan for the automaker.

“While this restructuring required difficult and painful sacrifices from all of the company’s stakeholders - and the American taxpayer - it has saved tens of thousands of American jobs and positioned GM to reclaim its position as a competitive and sustainable global company,” theTreasury Department said in a statement. “The hard work of charting a path to viability now rests with GM’s board and management, but we are confident that we remain on track to ultimately see returns on these taxpayer investments.”

GM has already trimmed the number of brands it will offer to Chevrolet, Cadillac, Buick and GMC. It is in the process of shedding Hummer, Opel, Saab and Saturn, and will discontinue its Pontiac brand.

The four brands it is keeping accounted for 83 percent of GM’s market share last year. GM said it plans to introduce 10 new models in the United States and 17 overseas in the next 18 months.

GM plans to slash the number of dealerships from 6,224 to 3,600. That’s a long way from the 18,500 dealerships the company had in 1956.

Dealers are trying to persuade Congress to block those cuts. A narrow majority of the 435-member House of Representatives backs legislation that would prevent GM from closing their businesses.

Mr. Magliano said the surprise addition of Robert A. Lutz as vice chairman would be good for the company. Mr. Lutz, who guided GM through the 1990s, had planned to retire at the end of the year after more than four decades in the auto business. He will join new Chairman Edward Whitacre, formerly of AT&T;, at the helm of GM.

“I think he’ll have a lot of clout and a lot of responsibility,” Mr. Magliano said. “At the end of the day, it’s all about the product, and Lutz is the ultimate car guy. He’s a big surprise.”

“He has a proven track record of unleashing creativity in the design and development of GM cars and trucks,” Mr. Henderson said. “This new role allows him to take that passion a step further, applying it to other parts of GM that connect directly with customers.”

LOAD COMMENTS ()

 

Click to Read More

Click to Hide