President Obama, CEO Henderson: Paving the Way for a New GM
June 01, 2009
By Michelle Krebs and Bill Visnic
DETROIT -- President Obama, in a White House press conference Monday, said General Motors' filing for Chapter 11 bankruptcy "marks the end of an old GM and the beginning of a new GM."
The president, recalling the famous quote of former GM CEO and U.S. Defense Secretary Charlie Wilson in the 1950s, that "we'll be able to say again what's good for General Motors is good for America."
And in a statement less than an hour later, GM president and CEO Fritz Henderson called the action a "defining moment in the history of GM."
GM, which only last year celebrated its centennial, made history Monday by filing Chapter 11 bankruptcy protection from its creditors in the Southern District of New York in Manhattan. Henderson said the company expects the bankruptcy to be complete in 60 to 90 days.
Are We Sure About This "Government Control" Thing?
Both President Obama and Henderson repeatedly took pains to assure the U.S. government does not want to manage GM -- despite the fact the "new" GM will be about 60 percent owned by the U.S. Department of Treasury, which Obama said proposes to loan another $30 billion in debtor-in-possession financing to see GM through its bankruptcy and transition into its new business model. That is in addition to nearly $20 billion already loaned to GM.
Regarding the president's and Henderson's admonitions there will be no substantive government meddling, doubt already abounds.
Following initial liquidity injections, President Obama's Auto Industry Task Force effectively dictated the metrics for GM's restructuring actions and saw to it that former CEO Rick Wagoner -- a vocal opponent of bankruptcy as an option -- was fired. The Task Force also will name the majority of GM's new board of directors.
Obama nonetheless reiterated an oft-repeated position that the government is not interested in running GM. And Henderson insisted no government entity -- even its representatives on the company's new board -- will be involved with strategic or tactical decisions such as what kind of vehicles to produce or the handling of the company's manufacturing empire.
The government might be expected to weigh in on only "the most core of governance issues," Henderson said.
"We are acting as reluctant shareholders because that is the only way for GM to succeed," said the President.
Product-Focused to a Fare-Thee-Well
Forget all the boring business metrics. Henderson said the new GM will be a "completely product-focused company," insinuating, then, that the "old" GM hadn't enjoyed that quality.
He added that where the now-bankrupt GM might have accepted if three or five vehicles out of 15 new models was truly successful, "We need to make sure every single one of our vehicle launches is an outstanding car or truck."
President Obama also evidently believes GM must find a way to more consistently click with customers, saying American taxpayers are being asked to yet again dig into their collective pockets to bolster GM because "the survival and success of our overall economy depends on it," he said, adding that doing so might enable GM to be "once more a symbol of American success."
Photo:
President Barack Obama at a White House economic briefing (Photo courtesy of The White House)
Posted by Michelle Krebs at 9:12 AM under Featured , GM , News , Personalities | Comments (0) | digg this | Seed Newsvine
Leave a comment