By Bob Blandeburgo
General Motors Corp.'s (OTC: GMGMQ) emergence from bankruptcy Friday marks the beginning of the "new GM," which will try to stay out of the ashes from which it emerged to become a leaner, customer-centric and modern company.
The official ownership of the new GM is divided as follows:
- 60.8%: U.S. Department of the Treasury, after a $50 billion taxpayer-funded investment.
- 17.5%: United Auto Workers (UAW) Retiree Medical Benefits Trust.
- 11.7%: Canada and Ontario governments.
- 10%: The "old" GM.
By the end of next year, the new GM will operate 34 assembly, powertrain and stamping plants, down from 47 in 2008. In the United States, its headcount will decline from roughly 91,000 at the end of last year to about 64,000 by the end of this year, which GM said will create "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."
Those left behind after the dust clears will be expected to perform with fewer human resources. GM will reduce the number of U.S. executives by 35% and its salaried employment by 20% by the end of the year-"flattening the organization and speeding decision making," the company said.
Among the executive cuts will be the elimination of the GM North America president position. Taking those responsibilities will be newly announced Chairman Edward E. Whitacre, Jr., who oversaw the creation of the new AT&T Inc. (NYSE: T).
GM's balance sheet will include a debt of approximately $11 billion, excluding preferred stock of $9 billion, and could change under its fresh-start accounting, it said. Overall, the company's total debt has been reduced by more than $40 billion, representing mostly unsecured debt and the Voluntary Employee Beneficiary Association Trust fund that provides medical benefits to UAW retirees.
Those looking to invest in the new GM will have to wait until at least next year.
Though not a public company, "[GM] will be transparent in our financial and other reporting to further strengthen trust and confidence," President and Chief Executive Officer Fritz Henderson said in a prepared statement. "We expect to take the company public again as soon as practical, starting next year, and to repay our government loans as soon as possible."
The company's emergence from bankruptcy comes roughly three weeks earlier than the U.S. government expected, and three days faster than Motown rival Chrysler LLC. GM is shooting to beat the clock on its deadline to repay the $50 billion in Troubled Asset Relief Program (TARP) bailout funds.
"We are required to pay off the loans by 2015, but our goal is to repay them much sooner," Henderson said.
A slimmer catalog will be the face of the new GM, which now has four primary brands: Cadillac, Chevrolet, Buick and GMC. Gone are Saab, Saturn, Hummer and this fall, Pontiac.
Winning Back America
As Money Morning reported last month, the consumer backlash against GM's bankruptcy likely won't be as damaging as had been initially feared. In fact, as rival U.S. carmaker Chrysler already discovered in its own bankruptcy process, potential defections and severed relationships can be avoided with aggressive discounts and strong marketing efforts.
The image of the new GM will rest largely on the shoulders of 77-year-old Bob Lutz, whom the company coaxed out of retirement to sign on as its vice chairman and senior advisor. "Maximum Bob," the auto industry veteran who originally joined GM in 2001 and , will be responsible for "all creative elements of products," as well as customer relationships.
Translation: Lutz is tasked with winning back the droves of customers who fled from GM in the last 40 years-primarily to foreign automakers-to reduce the company's domestic market share to less than 20%, down from more than 50% in GM's heyday in the late 1960s and 1970s.
"[Lutz] 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," Henderson said. "In August, we'll begin regular visits with customers, dealers, suppliers, employees and others-in the U.S. and abroad-who impact our relationships with customers. We'll be listening to their ideas, and acting on the ones that will improve our ability to serve our customers."
A Fresh Coat of Paint for an Old Classic
Parts of GM's transparency and customer bond-forming attempts will come online. Henderson will hold live chats with customers and respond to some ideas, concerns and suggestions through a "Tell Fritz" website to be launched next week.
Other GM online initiatives include:
- A Twitter page, containing "as it happens" updates on the company.
- A Facebook page, which includes company news, behind-the-scenes videos of things like the production of the Volt, or a as seen in the new Transformers movie, which is filled with GM vehicles.
- GM FastLane, a blog from company executives and other employees.
- , a website devoted to dispelling myths about the carmaker.
Of course, when the rubber hits the road, modern means environmentally friendly vehicles. The Volt, which GM said can go 40 miles on one charge before using gasoline to continue, gets the most press. That vehicle is currently being road tested and scheduled to launch next year, with prices starting at $32,500 after tax credit incentives.
While President Barack Obama said he doesn't want the U.S. government to be involved in the day-to-day operations of its bailout beneficiaries, there's no doubt the pressure is on both GM and Chrysler to produce more fuel-efficient vehicles. To that effect, GM said it has moved "aggressively" to develop a range of energy-saving technologies, including advanced internal combustion engines, biofuels, fuel cells and hybrids.
"The new GM is also taking steps to make advanced battery development a core competency, and expects to make additional announcements on this matter late this summer," the company said in what will likely be an attempt to address consumer concerns over battery life in hybrid and electric cars.
News and Related Story Links:
GM Media Online:
The New General Motors Company Launches Today
The Five Factors That Could Save "Government Motors"
Maximum Bob Lutz: Born from Jets
Videos Posted by General Motors
Senate Passes Plug-in Tax Credits in Wall Street Bailout Bill
Obama: "I Don't Want to Run Auto Companies"