Fritz Henderson, CEO of GM, held a news conference at 9:00 AM EST, and outlined the "new" GM. A massive number of white collar jobs will be eliminated and Henderson declared an end to the business as usual paradigm. We shall see whether or not GM is to be believed.
From The Wall Street Journal:
The new General Motors exited bankruptcy protection early Friday after its faster-than-expected stint in court, pledging to "get back to the business of building great cars and trucks" and better serving customers.
he auto maker completed the split of good and bad assets that will see General Motors Co. emerge as the operating entity, a slimmed-down company mostly owned by the U.S. government with a much-reduced debt burden and fewer brands.
Mr. Henderson on Friday unveiled sweeping management changes and pledged to repay loans from the U.S. government "much sooner" than 2015
"Business as usual is over at General Motors," Chief Executive Fritz Henderson said at a press conference at GM's downtown Detroit headquarters, emphasizing the redoubled focus on listening to customers and on making faster decisions at the corporate level.
The company's new Chairman, former AT&T Corp. chief Edward Whitacre, said, "We all want to win, we are going to win."
GM's exit marks a surprisingly quick end to one of the largest industrial U.S. bankruptcies. GM, battered by a sharp decline in sales and high cost structure, received billions of dollars of government aid before filing for bankruptcy protection on June 1.
The new GM will be dramatically smaller, leaner and less encumbered by debt than the 100-year-old auto giant being left behind. As part of the sale, GM's toxic assets will be left behind as a separate company to be liquidated in a sale expected to last several years.
The revamped GM is eliminating much of its regional structure and realigning sales and marketing functions.
Nick Reilly, current head of GM Asia, will oversee all international operations from the unit's base in Shanghai. More than half of group sales come from outside North America.
Regional presidents are being eliminated. Mr. Henderson didn't comment on what role North American chief Troy Clark might assume, but noted 35% of its executive ranks are being cut, with an emphasis on senior staff.
GM also confirmed that Robert Lutz, who had been slated to retire at the end of this year, has decided to join the new GM as vice chairman responsible for all creative elements of new products and customer relationships. With the 77-year-old Mr. Lutz staying on, there would also be a realignment of the North American sales function, now headed by Mark LaNeve.
In an email Friday, Mr. Lutz said the move will allow him to focus more intently on his roots in the auto business. Although educated with a focus on marketing, he had been overseeing GM's efforts in product development since 2001.
"It's the other half of the business that I didn't have before, and I found that somewhat frustrating," Mr. Lutz said. "My entire academic and professional background is in marketing; I was practicing without a license in product development."
Mr. Henderson said GM's ability to repay U.S. government in full rested on its performance, but pledged to make repayments "much sooner" than the existing 2015 schedule.
Earlier this year, the auto maker had said a bankruptcy process would take months, if not years. The U.S. government, keeping GM afloat since December with billions in federal funds, will be majority owner of the newly restructured company, with a 60.8% stake. The Canadian federal government, Ontario provincial government, the United Auto Workers and bondholders in the old GM will hold the remaining stake.
Though the new GM will not be a publicly traded company initially, Mr. Henderson stressed that GM will remain transparent in its financial reporting.
"We expect to take the company public again as soon as practical, starting next year, and to repay our government loans as soon as possible," he said. "We are required to pay off the loans by 2015, but our goal is to pay them much sooner." The government has committed $50 billion in funds to GM.
The restructuring is expected to wipe out nearly 70% of GM's crushing debt load. GM entered Chapter 11 with $176 billion in liabilities to retirees, warranties and a legion of lenders including the U.S. government. A bankruptcy judge said Wednesday the company will exit with $48 billion in debt.
GM's U.S. work force will shrink dramatically as well, to about 64,000 employees by the end of 2009 from 91,000 heading into the year. Also going away are four of GM's eight U.S. brands, nearly one-third of its nameplates and hundreds of dealerships.
Some critics have described GM's product line-up as uncompetitive in some segments. Mr. Henderson said the company would launch 10 new products in the U.S. over the next 18 months, as well another 17 overseas. After trimming its dealer network, GM is also testing a new online auction buying system with eBay Inc.
Mr. Henderson said Friday that "true customer service" represented a "new frontier" for the industry.
Hourly labor costs, including obligations to active and retired workers, also will drop, from $6.4 billion in 2008 to between $4 billion and $5 billion annually over the next several years. By 2014, GM estimates its hourly costs at $4.1 billion, a two-thirds reduction from 2006.
GM is counting on the reductions to stem losses despite depressed auto sales. The auto maker estimates its post-bankruptcy break-even point will fall to 10 million annual U.S. vehicle sales, down from 12.5 to 13 million. The U.S. annualized selling rate has come in below 10 million for much of 2009.
GM will also end its regional operating structure, eliminating its regional president positions, as part of a broader effort to remove layers of management and to speed decision-making. In total, GM will reduce the number of U.S. executives by 35% by the end of this year. Overall salaried employment will decline by 20%.
Mr. Henderson said more details on the new structure and leadership moves will come later this month.
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