The new, downsized General Motors Company emerged from bankruptcy Friday morning. Created from the old GM’s strongest operations in an asset sale approved by the Federal bankruptcy court on 5 July (earlier post), the new GM is built on four core brands: Chevrolet, Cadillac, Buick and GMC. The four brands will offer a total of 34 nameplates by 2010, compared to old GM’s total of 48 in 2008 and 63 in 2004.
The new General Motors Company is primarily owned by the governments of the United States, Canada and Ontario, and by a trust fund providing medical benefits to UAW retirees. Specifically, common stock will be owned by:
- US Department of the Treasury: 60.8%
- UAW Retiree Medical Benefits Trust: 17.5%
- Canada and Ontario governments: 11.7%
- The old GM: 10%
In the US, the new GM will be a far leaner company. 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 US employment will decline from about 91,000 at the end of 2008 to about 64,000 at the end of this year.
In May, the company accelerated its dealer consolidation efforts, with the goal of reducing the number of GM dealers in the US from 6,000 earlier this spring to approximately 3,600 by the end of next year. Even so, GM will still have the largest dealer network in the US.
The balance sheet of the new GM will carry US debt of approximately $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, representing mostly unsecured debt and the VEBA trust fund that provides medical benefits to UAW retirees.
GM’s subsidiaries outside the United States were acquired by the new company and are expected to continue to operate normally without any interruption.
Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers. We are deeply appreciative for the support we have received during this historic transformation, and we will work hard to repay this trust by building a successful new General Motors.
One thing we have learned from the last 100 days is that GM can move quickly and decisively. Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors.
Business as usual is over at GM. Today starts a new era for General Motors and everyone associated with the company. Going forward, the new General Motors is fully committed to listening to customers, responding to consumer and market trends, and empowering the people closest to the customer to make the decisions. Our goal is to build more of the cars, trucks, and crossovers that customers want, and to get them to market faster than ever before.—Fritz Henderson, president and CEO
The new General Motors Company will not initially be publicly traded. Henderson said he expects to take the company public again as soon as practical, starting next year, and to repay the government loans much sooner than the 2015 deadline.
Edward E. Whitacre, Jr., who oversaw the creation of the new AT&T, will serve as chairman of a GM board with a number of new directors. Henderson will continue as president and chief executive officer, working closely with Whitacre. He also will take responsibility for GM’s operations in North America, eliminating the GM North America president position.
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.
Bob Lutz has agreed to join the new GM as vice chairman responsible for all creative elements of products and customer relationships. Lutz, who had been GM Vice Chairman – Global Product Development until 1 April 2009, was due to retire at the end of 2009. (Earlier post.)
Lutz and Tom Stephens, vice chairman, product development, will work together as a team, 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.
I am pleased to announce that we are ‘unretiring’ Bob Lutz so he can fill this important position in the new GM. He has a proven track record of unleashing creativity in the design and development of GM cars and trucks. This new role allows him to take that passion a step further, applying it to other parts of GM that connect directly with customers.—Fritz Henderson
General Motors will also end its regional operating structure, moving decisions closer to the customer. This eliminates the regional president positions and the regional strategy boards. Nick Reilly will be named executive vice president of GM International Operations (GMIO) which will be based in Shanghai.
GM is also removing layers of management—reducing the number of US executives by 35% and overall US salaried employment by 20% by the end of this year—flattening the organization and speeding decision making.
Today we launch the new General Motors, and our promise is simple. We will be profitable, we will repay our loans as soon as possible, and our cars and trucks will be among the best in the world. We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done.—Fritz Henderson