The Detroit News reports GM’s good assets exited bankruptcy at 6:30 a.m. Friday morning. The new company, which emerged after a 41-day stay in court, vowed to end “business as usual” and immediately announced a shake-up of its management team, eliminating its North American president position and some other top jobs. GM President and CEO Fritz Henderson will take responsibility for GM’s operations in North America, eliminating the separate GM North America president position.
“There are no third chances,” Henderson said, adding that the company does not plan to seek additional government assistance.
Henderson ducked a question on whether current North American president Troy Clarke or Mark LaNeve, GM’s VP/Sales, service and marketing, will remain with the company. Despite the changes announced this morning, GM will make the bulk of its management changes, which includes cuts of its top management ranks by 35%, by the end of the month.
“To speed day-to-day decision-making, two senior leadership forums, the Automotive Strategy Board and Automotive Product Board, will be replaced by a single, smaller executive committee, which will meet more frequently and focus on business results, products, brands and customers,” GM said.
GM will also end its regional operating structure. This eliminates the regional president positions and the regional strategy boards. Nick Reilly will be named executive vice president of GM International Operations, which will be based in Shanghai.
GM vowed to change its culture and focus on customers.
“It’s an exciting day for General Motors,” Henderson said. “We will work hard to repay the trust and the money that so many have invested in GM.”
GM and Treasury Department officials signed the documents at the company’s primary bankruptcy law firm in New York.
The Detroit automaker has shed billions in debt, cutting four of its eight brands and trimming its work force significantly, among other measures. Its good assets had been approved for sale to a group headed by the U.S. Treasury, though the Obama administration insists it will not “micromanage” the company. The government, in exchange for agreeing to invest $50 billion in GM, will hold a 60.8% stake in the company.
Henderson disclosed that GM has received all of the $50 billion, though he said some of the government money is held in escrow. GM will outline more details later this month.
The new GM will begin with a much stronger balance sheet, including U.S. debt of about $11 billion, which excludes preferred stock of $9 billion, and could change under fresh-start accounting. In total, obligations have been reduced by more than $40 billion, GM said. GM will still make public financial filings, even though it will remain a privately held company until at least early 2010.
GM said the company is launching a “Tell Fritz” Web site to improve customer communications. Starting in August, Henderson will be on the road every month and around the world to meet with customers and others. “We need to listen … to the people who matter most — the people who own and drive General Motors cars and trucks,” he said.
“We know we have to change,” Henderson said, noting that Albert Einstein’s “definition of insanity is doing the same thing over and over.”
GM confirmed it won’t change its iconic blue square logo to a green-colored logo, as had been incorrectly reported by some other media.
Henderson wouldn’t commit to saying that taxpayers would be repaid in full for their investment, saying GM would do its best to create shareholder value to improve the return to taxpayers. GM’s compensation practices must be approved by the Treasury Department’s special master.
GM noted that by the end of 2010, the company will operate 34 assembly, powertrain and stamping plants, down from 47 in 2008, and capacity utilization is expected to reach 100% during 2011. Overall U.S. employment will decline from about 91,000 at the end of 2008 to about 64,000 at the end of this year, “creating a company sized to respond quickly to changes in the market, while still retaining the global scope necessary to develop world-class products and technologies,” GM said.
GM will launch 10 vehicles in the United States; 17 outside in the next 10 months. GM vowed to try an experimental program in California to sell vehicles via auction on eBay.
A new board of directors will be in place by the end of the month, and some executive management changes are expected to be announced this morning. GM’s vice chairman Bob Lutz is staying with the company in a new role heading the company’s marketing and communications department. He will remain as a vice chairman “responsible for all creative elements of products and customer relationships.”
Lutz and Tom Stephens, vice chairman of product development, will work together, partnering with Ed Welburn, vice president of design, to guide all creative aspects of design. GM’s brands, marketing, advertising and communications will report to Lutz for consistent messaging and results. He will report to Henderson, and be part of the newly formed executive committee.