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GM emerges from bankruptcy; CEO promises reforms

CEO Fritz Henderson talks about GM’s emergence from bankruptcy Friday at the automaker’s headquarters in Detroit. “It is a new era, and everyone associated with the company must realize this and be prepared to change, and fast,” he said.

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CEO Fritz Henderson talks about GM’s emergence from bankruptcy Friday at the automaker’s headquarters in Detroit. “It is a new era, and everyone associated with the company must realize this and be prepared to change, and fast,” he said.

WASHINGTON — General Motors emerged from bankruptcy Friday, with chief executive Fritz Henderson promising that the fallen corporate giant will be reformed and that "business as usual is over."

The announcement signaled the substantial completion of one of the largest bankruptcies in U.S. history and the next step in what has become a landmark government bailout.

The new GM will have fewer brands, fewer plants and fewer workers. The number of U.S. executives will be cut by 35 percent. But as important as this shrinking, Henderson said, is the need to revive the automaker's culture, long criticized as insular and slow-moving. Once the world's largest automaker, General Motors has been losing market share for decades.

"It is a new era, and everyone associated with the company must realize this and be prepared to change, and fast," Henderson said.

Formed by the sale of most of the old company's assets out of bankruptcy, the new GM will be an anomaly among American businesses because most of it will be owned by the U.S. and Canadian governments. The U.S. Treasury owns 60.8 percent of the new company's common stock, the UAW retiree health trust has 17.5 percent, and the governments of Canada and Ontario have 11.7 percent.

Henderson said the company will seek to repay the U.S. investment, but he stopped short of promising that taxpayers will recover all of the $50 billion they have put into the company.

Company officials instead seized on the company's emergence from 40 days in bankruptcy to advertise their intention to reorient the failed automaker.

To shrink the bureaucracy, GM has trimmed its key executive committee to eight people. It has lured former executive Bob Lutz, a well-regarded industry veteran, out of retirement to lead design, brands and advertising. It is experimenting with a way of auctioning cars on eBay, with a trial to begin in August in California. And it is launching a Web site, "Tell Fritz," that will allow consumers to send their comments to company executives.

Even so, the business challenges facing GM are vast. To turn the company around, Henderson and his team must reverse the corporate leviathan's decades-long slide.

Company skeptics have noted that, for the most part, the team of executives leading the new GM were also at the helm of the failed GM of old. While President Barack Obama's auto task force called for the resignation of former chief executive Rick Wagoner, he was replaced by Henderson, who has spent nearly his entire career at the company, as have many executives at the company.

In response, Henderson said he has pointed out to his leadership team that one definition of insanity is doing the same thing over and over again and expecting different results.

"In the end, we simply have to prove ourselves," he said.

After he was chosen by the government this spring, it was not clear how long Henderson would remain as the company's chief executive. But Thursday, Edward Whitacre, the former AT&T executive who was chosen by the government's auto task force to be the company's new chairman, showed his clear support.

"I'm a big believer in strong leadership," Whitacre said. "We have that in Fritz and in this top management team."

The new GM

Some facts about the future of the once-dominant U.S. automaker, which emerged from bankruptcy Friday:

• It will have only four core brands: Chevrolet, Cadillac, Buick and GMAC.

• By the end of 2011, the company plans to operate 34 plants, down from 47 in 2008.

• U.S. employment is slated to shrink from about 91,000 to about 64,000 by the end of this year.

• The number of dealers is shrinking from 6,000 to 3,600 by the end of the year.

GM emerges from bankruptcy; CEO promises reforms 07/10/09 [Last modified: Friday, July 10, 2009 10:08pm]
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