Embattled General Motors (GM) is girding for bankruptcy if necessary but will still emerge “reinvented” from its wrenching crisis, GM’s new government-backed boss, Fritz Henderson, said on Sunday.
Treasury Secretary Timothy Geithner said US President Barack Obama’s administration was looking at all options for GM, after former CEO Rick Wagoner was replaced by Henderson last week on White House orders.
“Our preference is to do it outside of a bankruptcy process,” Henderson said on NBC program Meet the Press, as the US’ largest automaker undergoes a painful restructuring with the emergency backing of government cash.
“But it would only be prudent to make sure that we’re planning [for court-supervised bankruptcy], if we need to resort to that — that we can move and we can move fast,” the company veteran said. The new chief executive indicated that even deeper job cuts and plant closures were in the offing as sprawling GM battles to survive, anticipating a future group built around just “four core brands.”
He acknowledged the group would likely have to launch an even bigger restructuring as part of a ‘Chapter 11’ bankruptcy, amid speculation GM would have to hive off premium brands such as Buick and Cadillac.
Saab, a historic marque already dumped by GM, could find its days numbered if any creditors object to its restructuring at a Swedish court hearing to be held yesterday.
Both Obama and his White House task force have indicated that bankruptcy “may very well be the best solution for the company to achieve these goals,” Henderson told CNN.
“I’m quite certain — because I think whether we do it outside the bankruptcy process or inside — we will change, we will be fundamentally different going forward,” the new boss said.
“And the company’s going to be reinvented,” he said.
Wagoner was forced out last week as Obama’s auto task force rejected new restructuring proposals put forward by the bailed-out carmaker, and issued a 60-day deadline for Henderson’s new team to present another plan.
“There’s a range of options that could work,” Geithner told CBS television, asked if bankruptcy was now the government’s preferred option for GM.
“We’re open to what’s going to work. We’re prepared to be helpful and to help that,” the Treasury chief said. “And it’s going to take more. These guys have made some progress in putting together a restructuring plan, but they’re not there yet. We wanted to give them the time to try to get it right.”
“The automobile industry is a central part of the American dream, of the basic fabric of the American experience. We want them to be part of our future,” Geithner said.
Talk of bankruptcy for GM was angrily rejected by Democratic Senator Debbie Stabenow, whose state of Michigan is ground zero of the US auto industry’s crisis.
“I do not support bankruptcy, certainly as the first, second, or third options,” she said on CNN, noting that GM has pension obligations to 600,000 retirees who could lose their benefits without government intervention.
“We have retiree health care. People who gave up wage increases multiple times in order to make sure they had a pension and had health care,” Stabenow said.
The US government would be on the hook for up to US$80 billion if GM goes under, she said.
“So it certainly is not my first option. And I know that it’s not the first option of the administration,” Stabenow said.