DETROIT (AP) -- He doesn't know exactly what the Obama administration wants him to cut, but Fritz Henderson, the new CEO of General Motors Corp., isn't waiting around to find out. Cut deeper. Work harder. Move faster. That's how he described the ailing automaker's urgent effort to meet a June 1 deadline to fix its debt-ridden balance sheet, cut billions in costs and take other steps to transform itself into a profitable entity.
It's the same government-imposed race that Chrysler LLC is running, only GM's smaller neighbor has to cover more distance in half the time.
The Auburn Hills, Mich., automaker must make the same cuts as GM, and sign up Fiat Group SpA as a partner, all in 30 days. Fiat's CEO jetted to Detroit for intense negotiations, but if Chrysler doesn't meet the deadline, it's almost certainly destined for the auction house.
For GM, failing to take quick action means surrendering to court supervision in bankruptcy. The company has resisted bankruptcy talk in the past, but Henderson said Tuesday it is now "certainly more probable."
The companies have yet to receive specifics from the task force on how much more they must cut and where, but Henderson is proceeding with deeper cuts and pulling previously announced measures forward.
"We need to reinvent General Motors, and we need to do it in a very, very abbreviated time frame here in 2009 so that we're not spending our time careening from crisis to crisis in the future," he told reporters at GM's headquarters complex in downtown Detroit.
There are formidable obstacles, though. Even with less demanding hurdles in the government's original loan terms, GM's bondholders have been reluctant to settle their $28 billion for what may be pennies on the dollar. The company still hasn't reached a deal with the United Auto Workers on funding a union-run trust that will take over retiree health care costs.
It's uncertain whether they can work together to compromise on their competing interests, even though failure means they stand to lose a lot more.
It was clear, though, that every scenario will include more pain for just about anyone connected with the companies.
GM said in its February plan it would cut 47,000 jobs worldwide by the end of the year. Presumably those cuts will come sooner.
Henderson said GM also must slash its staggering liabilities - not just the $49 billion in bond debt and secured loans, but also pension obligations and retiree health care costs.
"We need to basically address all of our level of indebtedness, because in fact, what they want is a healthy balance sheet, and that healthy balance sheet needs to address each of these constituencies," he said.
Henderson wouldn't say specifically if pensions or health care would change, but it's likely that GM's 400,000 U.S. retirees and spouses will see benefit cuts, along with its 244,000 active workers.
He said the company probably will close more than the five factories it promised to shutter in its February restructuring plan filed with the government. More buyout and early retirement offers are likely.
If GM doesn't satisfy the government in time, a short bankruptcy would allow the company to wipe out its debt, change contracts and emerge as a healthy business. The government is backing automakers' warranties and has pledged financing for GM.
For Chrysler, however, Obama's auto task force has decided it has no chance to survive alone, and it would be left to get sold off in pieces. There were signs of progress, however, that a partnership could be arranged.
Fiat CEO Sergio Marchionne flew to Detroit late Monday for talks, and the Italian automaker agreed to reduce its stake in Chrysler from 35 percent to 20 percent in exchange for providing small-car technology, according to a person briefed on the negotiations who was not authorized to speak publicly. Under the new terms, Fiat's share would increase in 5 percent increments every time certain milestones are met, the person said.
At GM, Henderson said the 60 days should be enough time to accomplish its work, but bankruptcy could come before then if GM management and the government determine it won't be able to meet the deadline.
"If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment," Henderson said.
Besides slashing costs, GM must start selling more cars, and the company announced Tuesday its own version of a plan that will make car payments for customers who lose their jobs through no fault of their own. It's called "Total Confidence," and its designed to pull in timid buyers who fear the economy will claim their employment.
The company, Henderson said, counted on revenue for too long from trucks and sport utility vehicles. Now, every vehicle has to turn a profit. That means unprofitable cars and trucks could get the ax, and soon.
"The view is everything's got to pay rent in our product portfolio," he said.
GM also has to jettison unprofitable brands, including iconic Hummer. A decision on closing or selling was supposed to be revealed Tuesday, but GM is still talking with potential buyers. Henderson said an announcement will come within weeks.
GM is alive today only because of $13.4 billion in government loans, and Henderson wouldn't reveal how much more money the century-old company will need to get through the 60 days. The Treasury Department has not told the company how much money it will get to sustain itself, but Henderson said he doesn't expect a dollar more than necessary.
"We submit reports to them weekly in terms of our cash, both in the U.S. and on a global basis," he said. "They know exactly where we are and exactly what we are doing."
Henderson, officially named CEO by the GM board on Sunday, said he isn't worried that the government will fire him like it did his predecessor, longtime CEO Rick Wagoner.
"They've asked me to do the job. I'm not going to really worry about how long that's going to be," he said. "I figure if we get our job done, which is where I'm going to focus my attention, it's going to be OK. And if they want to replace me they can do it."
---
AP Business Writer Colleen Barry in Milan, Italy, contributed to this report.
© 2009 The
It's the same government-imposed race that Chrysler LLC is running, only GM's smaller neighbor has to cover more distance in half the time.
The Auburn Hills, Mich., automaker must make the same cuts as GM, and sign up Fiat Group SpA as a partner, all in 30 days. Fiat's CEO jetted to Detroit for intense negotiations, but if Chrysler doesn't meet the deadline, it's almost certainly destined for the auction house.
For GM, failing to take quick action means surrendering to court supervision in bankruptcy. The company has resisted bankruptcy talk in the past, but Henderson said Tuesday it is now "certainly more probable."
The companies have yet to receive specifics from the task force on how much more they must cut and where, but Henderson is proceeding with deeper cuts and pulling previously announced measures forward.
"We need to reinvent General Motors, and we need to do it in a very, very abbreviated time frame here in 2009 so that we're not spending our time careening from crisis to crisis in the future," he told reporters at GM's headquarters complex in downtown Detroit.
There are formidable obstacles, though. Even with less demanding hurdles in the government's original loan terms, GM's bondholders have been reluctant to settle their $28 billion for what may be pennies on the dollar. The company still hasn't reached a deal with the United Auto Workers on funding a union-run trust that will take over retiree health care costs.
It's uncertain whether they can work together to compromise on their competing interests, even though failure means they stand to lose a lot more.
It was clear, though, that every scenario will include more pain for just about anyone connected with the companies.
GM said in its February plan it would cut 47,000 jobs worldwide by the end of the year. Presumably those cuts will come sooner.
Henderson said GM also must slash its staggering liabilities - not just the $49 billion in bond debt and secured loans, but also pension obligations and retiree health care costs.
"We need to basically address all of our level of indebtedness, because in fact, what they want is a healthy balance sheet, and that healthy balance sheet needs to address each of these constituencies," he said.
Henderson wouldn't say specifically if pensions or health care would change, but it's likely that GM's 400,000 U.S. retirees and spouses will see benefit cuts, along with its 244,000 active workers.
He said the company probably will close more than the five factories it promised to shutter in its February restructuring plan filed with the government. More buyout and early retirement offers are likely.
If GM doesn't satisfy the government in time, a short bankruptcy would allow the company to wipe out its debt, change contracts and emerge as a healthy business. The government is backing automakers' warranties and has pledged financing for GM.
For Chrysler, however, Obama's auto task force has decided it has no chance to survive alone, and it would be left to get sold off in pieces. There were signs of progress, however, that a partnership could be arranged.
Fiat CEO Sergio Marchionne flew to Detroit late Monday for talks, and the Italian automaker agreed to reduce its stake in Chrysler from 35 percent to 20 percent in exchange for providing small-car technology, according to a person briefed on the negotiations who was not authorized to speak publicly. Under the new terms, Fiat's share would increase in 5 percent increments every time certain milestones are met, the person said.
At GM, Henderson said the 60 days should be enough time to accomplish its work, but bankruptcy could come before then if GM management and the government determine it won't be able to meet the deadline.
"If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment," Henderson said.
Besides slashing costs, GM must start selling more cars, and the company announced Tuesday its own version of a plan that will make car payments for customers who lose their jobs through no fault of their own. It's called "Total Confidence," and its designed to pull in timid buyers who fear the economy will claim their employment.
The company, Henderson said, counted on revenue for too long from trucks and sport utility vehicles. Now, every vehicle has to turn a profit. That means unprofitable cars and trucks could get the ax, and soon.
"The view is everything's got to pay rent in our product portfolio," he said.
GM also has to jettison unprofitable brands, including iconic Hummer. A decision on closing or selling was supposed to be revealed Tuesday, but GM is still talking with potential buyers. Henderson said an announcement will come within weeks.
GM is alive today only because of $13.4 billion in government loans, and Henderson wouldn't reveal how much more money the century-old company will need to get through the 60 days. The Treasury Department has not told the company how much money it will get to sustain itself, but Henderson said he doesn't expect a dollar more than necessary.
"We submit reports to them weekly in terms of our cash, both in the U.S. and on a global basis," he said. "They know exactly where we are and exactly what we are doing."
Henderson, officially named CEO by the GM board on Sunday, said he isn't worried that the government will fire him like it did his predecessor, longtime CEO Rick Wagoner.
"They've asked me to do the job. I'm not going to really worry about how long that's going to be," he said. "I figure if we get our job done, which is where I'm going to focus my attention, it's going to be OK. And if they want to replace me they can do it."
---
AP Business Writer Colleen Barry in Milan, Italy, contributed to this report.
© 2009 The
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