GM CEO softens company's opposition to bankruptcy
Photo 
General Motors Corp.'s new CEO Fritz Henderson addresses the media during a news conference in Detroit, Wednesday, March 31, 2009. Henderson said Tuesday that more of the automaker's plants could close as part of GM's effort to meet new, tougher requirements for government aid.
DETROIT — General Motors Corp. is softening its opposition to bankruptcy reorganization a little more.
"If it's required, that's what we'll do," new Chief Executive Fritz Henderson said in an interview broadcast Sunday, but noted that GM still would prefer to avoid bankruptcy protection while restructuring.
President Barack Obama and his auto industry task force have indicated that bankruptcy protection "may very well be the best solution for the company to achieve these goals," Henderson told CNN's "State of the Union."
That is why, he said, "when you look at the situation, we said, 'OK, we'll spend the time to try to complete the work, more aggressive work, outside of the court process, but if it's required, that's what we'll do.'"
Obama had said GM's initial plans to become viable didn't go far enough. Last week, he told the company it had 60 days to make more cuts and get more concessions from bondholders and unions, or it won't get any more government help.
The administration also forced out Rick Wagoner as chief executive; Henderson took over on March 29.
Henderson said the government's guarantee of GM warranties and its indication that it would lend money to the automaker while it reorganized under bankruptcy protection are both "strong signals which say even if we have to go through bankruptcy, the company's going to be there."
He told NBC's "Meet the Press" that GM needs to "go deeper and we need to go faster" in its restructuring.
"We either accomplish this job outside of bankruptcy in the short term, or alternatively, if it's necessary, we'll go into bankruptcy in order to get this job done," he said.
Treasury Secretary Timothy Geithner, asked on CBS' "Face the Nation" Sunday if he agreed with Henderson that bankruptcy is a possibility, said several options "could work."
"Our test is, what's going to work," he said. "What's going to help bring about the kind of restructuring, allow them to emerge stronger and be part of this American economy. We want them to be part of our future."
Henderson also said he does not believe the administration should encourage Americans to buy U.S.-made cars.
"I think the consumer should buy exactly what kind of car they think meets their needs and that excites them," he said on "Meet the Press." ''And it's our job to make sure we provide that and as I look at it, not necessarily have it mandated or otherwise encouraged."
Also, Henderson said that unlike Wagoner, he will not work for $1 a year. He is paid $1.3 million, a salary which was cut 30 percent as part of what he called shared sacrifices at the auto maker.
The Detroit automaker said in February it was aiming to shrink U.S. employment to 72,000 by 2012, down from 92,000 hourly and salaried employees at the end of last year. Henderson said the auto task force concluded the company needed to cut more, and faster.
That conclusion is "certainly going to require us to be leaner than we had even foreseen in February," he said. The numbers haven't been finalized, but they would amount to a "significant additional change for the company," he said.
Henderson is aiming to minimize the amount of time GM relies on taxpayer money.
"One of the saddest days of my career was when we needed to borrow money from the U.S. taxpayer," he said. "And I'm quite convinced that one of the happiest days of my career is when we repay it."
Apr 7, 2009 at 7:14 a.m.
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The wage difference is comparable without the new hires. In fact, Toyota workers in Kentucky have the highest wage in the industry. Most of the thousands who are being forced out now will not be eligible for medicare for many years, they have 30 years seniority, and could be as young as 48. Estimates of government costs for a GM bankruptcy range from $46-100 billion.
Apr 7, 2009 at 7:02 a.m.
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The wage difference between GM and Toyota is comparable when one is looking at the new hires at GM......Possibly those that have been there for a while, and are making significantly more than the new hires, which is probably a huge part of their workforce, should agree to a wage reduction. As far as shying away from bankruptcy due to the fact that the pensions are guaranteed through the government, so taxpayers would have to cover that expense regardless is laughable. We could put the $14 billion in there along with the $20 billion they are saking for now and still be way ahead of the game. Not to mention that through bankruptcy, we could shed subsidizing the massive amount of heath care expense attributed to these people. Many would be eligible for Medicaid so they would still have coverage.....
Apr 6, 2009 at 10:44 p.m.
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Anybody else notice that the CEO of Chrysler wasn't asked to step down?
Apr 6, 2009 at 10:33 p.m.
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pharm, Chrysler is already done. There are no facts to support the idea that Ford will completely fail if GM does. That scare tactic is coming out of Detroit. With sales down about 45%, some suppliers are going to fail anyway. I would rather my tax dollars pay for a retired persons pension than to prop up a company that has failed through mismanagement.
Apr 6, 2009 at 10:32 p.m.
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UAW has not agreed to the VEBA proposal because the bondholders have not agreed to take a cut. Both happened at Ford. When the UAW pattern bargains, they settle at one manufacturer first, then move to another. By agreeing at Ford they have shown they will do it, if the bondholders go along. The "above average" wages are the same as Toyota`s.
Apr 6, 2009 at 10:26 p.m.
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darwin1, I'm not advocating minimum wage. And I would agree that wages alone are not really the largest problem. However, all the transplant manufacturers have managed to make more reliable vehicles in the past with lower wages (and so will GM in the future, hopefully), so wages really don't have much to do with reliability. Design does. German cars are actually the least reliable of all brands, whether manufactured in North America or Germany. Labor and benefit costs in Germany are huge. German engineering is only as good as the warranty.
pharm, freezing above average wages is hardly a concession. The UAW have yet to agree with GM to take equity in lieu of cash to partially fund the next $20.4 billion VEBA payment, due January 1, 2010. At this point only a VEBA concession would be significant. It's interesting that Ford has managed to get a VEBA funding agreement with the UAW, but GM and Chrysler have not.
gonefishin, Toyota MAY ask for a whopping $2 billion in loans from Japan. GM and Chrysler have already received $17.4 billion, and are asking for $21.6 billion more. Yes, all manufacturers are struggling right now, but GM has been failing for years.
Apr 6, 2009 at 9:59 p.m.
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If they go through a bankruptcy, a quick one, the pension costs will be gone. If they are involved to the point they have to shut down, they will be done, so will Chrysler, and Ford. They all use the same suppliers, the transplants use 60% of them too, so they will be hurt. The pensions will go to the PBGC and our tax dollars will be paying them, after they get their(PBGC) bailout because they are severely underfunded.
Apr 6, 2009 at 8:43 p.m.
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The difference is that Toyota and Honda would actually make good on the debt they incur. Let's be honest with ourselves--with foreign competition taking more and more of the market share combined with the massive amount of legacy costs that GM is responsible for, GM would never be able to pay back the billions they have borrowed.
Apr 6, 2009 at 6:44 p.m.
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So we have a company of middle managers who can't manage people and its not their fault. Labor costs are high because your building something that travels down the road at 70mph. Do you want some minimum wage earner putting on your steering system or brakes? Not me. Germany seems quite able to handle these issues. Maybe its because their smart?
Apr 6, 2009 at 6:27 p.m.
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They could work for nothing and GM would still be where they are because of the economy. So 4,or 3, or2%, it won`t make a difference if you can`t sell cars.
Apr 6, 2009 at 4:19 p.m.
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So the company should try and get the labor costs down to 4%......Every little bit will help....
Apr 6, 2009 at 3:12 p.m.
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Labor costs at GM last year, 5.5%. The health care will be on the union`s shoulder next year, if GM comes up with the money. The only thing left is to cut pensions for people who planned their retirement for 30,40, 50 years based on that pension.
Apr 6, 2009 at 3 p.m.
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Yes, a wage freeze is nothing. To keep the company viable the union should be receptive of a wage reduction......
Apr 6, 2009 at 2:53 p.m.
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Zoom, a wage freeze for 5 years is nothing?
Apr 6, 2009 at 1 p.m.
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pharm, I never said the UAW didn't agree to concessions. I said the concessions they have agreed to so far have not really cost them anything.
Apr 6, 2009 at 12:04 p.m.
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Zoom, not quite right, the UAW has agreed to every concession but one. That is taking half of the money owed to them by GM in stock instead of cash to run the health care and take that burden off GM`s back. The reason they haven`t agreed to that yet is that the bondholders think they can get more than GM is offering them now,33%, in a bankruptcy. If the bondholders make a deal, the UAW will, they already did at Ford.
Apr 6, 2009 at 11:11 a.m.
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The government didn't have to offer ANY help. If not for government help, multiple times, GM would have officially went bankrupt last year.
By the way, the UAW hasn't really experienced much in the way of concessions yet. The two tier wage system for new hires doesn't help if GM doesn't have enough business to hire new workers. Few people were in the jobs bank when it was canceled. So far, the only concessions the UAW has agreed to are those that won't really hurt the UAW.
Apr 6, 2009 at 9:27 a.m.
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So for the union folks that voted for Obama but don't feel they should give in to more concessions, i'm curios as to your feelings about something. please see the following.
Obama had said GM's initial plans to become viable didn't go far enough. Last week, he told the company it had 60 days to make more cuts and get more concessions from bondholders and unions, or it won't get any more government help.
Anyone notice he wants MORE concessions from the Union.
Apr 6, 2009 at 5:21 a.m.
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I feel sorry for Henderson. He ONLY gets
1.3 million a year.
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