One on One with GM, CFO Fritz Henderson
Wednesday, March 14, 2007
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SUSIE GHARIB: Earlier today, I talked with GM's chief financial officer, Fritz Henderson, and asked him if the worst is over for the auto maker.
FRITZ HENDERSON, CFO, GENERAL MOTORS: It's impossible to predict the future with certainty, obviously, but I would say yes. You know, certainly if you look at what was done in terms of reducing our costs in '06, that put us in a much better position to be able to weather storms to the extent that we face them in the market because you do face them in the market from time to time. But we lowered our risk. We lowered our cost, improved our liquidity, improved our product line, and we have done the sort of things that I think do make us confident that we have a good future and that we put the worst behind us.
GHARIB: Mr. Henderson, as you reported today, earnings were impacted by losses related to the sub-prime mortgages. To what extent will these sub-prime loans be a factor for 2007 earnings?
HENDERSON: We do think that it will be a constraining factor on the profitability of the GMAC level in '07, but we're committed to working for example with our partner, the consortium led by Cerberus to do what's necessary to take the actions in the business to repair it and to build a profitable future for (INAUDIBLE) and for GMAC.
GHARIB: GM said today that it's shifting the majority of its pension assets into bonds and away from stocks. Are you suggesting that the stock market has just become too volatile and too risky?
HENDERSON: We took we think a prudent step with not only in terms of - as we looked at it, presented it to the board, we felt it was the right thing to do to reduce volatility. We then reduced our investment return assumption. But we still have - we still will aggressively invest our pension fund for the benefit of the beneficiaries, but we do view this 20 percent reallocation as a way for is to lower risk profile associated with future contributions.
GHARIB: We know that you are outperforming Chrysler and Ford when it comes to selling cars and trucks here in the U.S., but what does GM have to do to be more competitive with international rivals like Toyota?
HENDERSON: Our game is a global one. Competition is global. And it's the basics. One, making sure you have these fantastic cars and trucks. That's our job one. Behind that though, just because you build a great product, doesn't mean they will always buy it. So it's also about great marketing, great brand building, working with our dealers who are fantastic partners to make sure we're coming into the market in the right way.
GHARIB: Mr. Henderson, there have been rumors that GM is talking about possibly buying Chrysler. What is the thinking there?
HENDERSON: We're just not able to comment on that today.
GHARIB: Would -- do you think, though, that GM would be more competitive internationally if it were to link up with another major auto maker?
HENDERSON: Our industry is one where you see fairly frequently cooperation amongst auto makers. We've done so, done so quite successfully. For example, in hybrid technologies, automatic transmissions, we worked with other auto makers. I think, you know, we're not the only ones who have done it. Many of our competitors have done it as well and I think you'll continue to see that. These broad link-ups, they're much tougher to do. So again, I'm not going to get into what our strategy might be, but I do think you're going to continue to see what I'll call either tactical or in some cases evem small strategic projects to work together to lower risk and/or achieve greater economies of scale.
GHARIB: All right, Mr. Henderson, thank you so much for your time.
HENDERSON: Thank you and take care.
