Email List Sign Up

Henderson says GM will meet Obama mandate, even if it means bankruptcy

Henderson says GM will meet Obama mandate, even if it means bankruptcy

Jamie LaReau

Automotive News | March 31, 2009 – 3:34 pm EST


DETROIT — General Motors CEO Fritz Henderson said today that he is ready to meet the Obama administration’s mandate to restructure the company — even if it means going into bankruptcy.

But Henderson said he believes he can secure concessions from GM bondholders and the UAW without seeking Chapter 11 reorganization. He declared his determination to meet administration’s 60-day deadline — with no excuses.

“The objectives are clear,” he said in his first press conference since succeeding Rick Wagoner on Monday. “So if we can’t do it out of court, we’ll do it in court.”

Henderson faces an uphill battle. Bondholders are reluctant to reduce $27 billion in debt down to $9 billion. And the UAW has refused to accept GM stock in lieu of cash to cover half of its $20 billion retiree health care plan.

So Henderson is trying to convince those stakeholders that bankruptcy is more than an empty threat. And the Obama administration has given him some tools to work with.

On Monday, the government announced it will guarantee warranties for all cars and trucks sold by GM and Chrysler. In March, the government earmarked $5 billion for loans to distressed suppliers.

Henderson said GM has a team of advisers studying bankruptcy options. If GM does file, Henderson wants the company to exit quickly, he said.

“We could not contemplate bankruptcy if we didn’t have the government there to provide the finances and the protection,” Henderson said. He added that the support of the Treasury Department gives GM the best chance to survive a bankruptcy filing.

Focused on a turnaround

But right now, Henderson said, he is focused on the turnaround plan rather than bankruptcy. President Obama’s task force delivered a clear message: “Go deeper, go harder and go faster,” Henderson told reporters. “We got it. We understand exactly what that means.”

Henderson also laid out the steps he is taking to restructure GM. The company will:

• Sell Saab, spin off Saturn and sell or close the Hummer brand. Hummer has several interested buyers, and GM will announce if it has a deal or will close the brand in a few weeks, Henderson said.

• Resume negotiations with bondholders and the UAW to reduce debt.

• Likely close more than the 14 factories outlined in the company’s Feb. 17 viability plan. That’s in addition to the 12 plants GM shut down from 2000 to 2008.

Meanwhile, Henderson said GM already has shaved operations significantly. GM has reduced its total hourly work force by 60,500 since 2006, and plans to trim its global white-collar work force by 10,000 by year-end.

But the company will have to speed up its plans to downsize operations. Formulating the plan to eliminate plants will “take weeks, not months,” Henderson said.

Henderson also said GM is ahead of plan to cut its structural costs to $26.3 billion this year, down from $30.4 billion in 2008.

“The expectation is we need to go deeper than that. We have to pull forward our outlook of $25 billion in 2010 and $24 billion in 2011 … and make it happen this year.”

GM will restructure for a smaller market and needs a business model to reflect that.

However, Henderson said he recognizes that cost cutting is not enough to turn around GM. “We can only win if we get the job done through improving our revenue — selling great cars and products today and selling great products in the future.”

GM has relied too heavily on pickups and SUVs in the past. In the United States, sales of light trucks plummeted to 6.2 million in 2008, from 8.3 million in 2007.

“Now everything’s got to pay rent,” Henderson said. “The need for profitability is paramount.”

Seniority Lists
Recent Posts!
Bargaining Committee

Mike Herron
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

Tim Stannard
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts

GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Katherine McGaw
Retiree Chair
Mike Martinez

Get Text Alerts


*Standard text messaging rates may apply from your carrier