JIM LEHRER: General Motors entered a new era today. The reorganized automaker officially ended its journey through bankruptcy.
Judy Woodruff has our lead story report.
JUDY WOODRUFF: General Motors emerged from the Chapter 11 bankruptcy process after just 40 days and after leaving behind billions of dollars in debt.
Lawyers labored through the night with a stack of legal documents two feet high. They cleared the way to sell the Cadillac, Chevrolet, Buick and GMC brands, and other assets, to a new G.M. with the government as majority owner.
The company is shedding Hummer, Saturn, Saab, and Pontiac, which are being sold or closed down.
In Detroit, G.M. Chief Executive Fritz Henderson said it’s a more streamlined company with a “rare second chance”.
FRITZ HENDERSON, CEO, General Motors: G.M. has what it takes to excel, but with no interest whatsoever today in making excuses nor in debating the past. We need to be accountable for this.
From this point on, our efforts are dedicated to customers, cars, culture, and paying back the taxpayers. It’s about creating value so that sacrifices that are being made, which are immense, are worth it, and people get the maximum recoveries, and General Motors can be great again.
JUDY WOODRUFF: Henderson said the new G.M. plans to make a profit by making better vehicles, and he voiced hopes of repaying $50 billion in federal loans ahead of a 2015 deadline.
To help reach that goal, the reorganization will cut more than 6,000 white-collar jobs this year. Overall, G.M. will employ 64,000 American workers by year’s end; that’s down from 91,000 at the end of last year. And those left have agreed to major concessions to cut labor costs.
G.M. has also cut ties to 2,400 dealerships across the country.
I spoke with the company’s CEO, Fritz Henderson, this afternoon.
Timeline for change
JUDY WOODRUFF: Fritz Henderson, thank you for talking with us. I guess congratulations are in order for coming out of bankruptcy so quickly. You laid out a very optimistic timeline today, that you're going to become profitable again quickly, you're going to pay back the government quickly. What do you base that optimism on?
FRITZ HENDERSON: Well, Judy, thanks, first of all. When we developed our projections and our plans, even in mid- to late April, what I talked about today were, you know, what our indicators, what our operating indicators suggested profitability and cash flow back then. We haven't seen anything to suggest that those should change today.
I think -- and so how does that happen? We've significantly improved our cost structure. We have a fully competitive cost structure. Our fixed costs, if you will, are significantly down through this process. Our capital structure, our level of indebtedness has been significantly reduced such that we can have a competitive and a healthy balance sheet.
And the intent of this was so that we could operate the business on a breakeven level -- earnings before interest and taxes -- so think of it as the operations, if you will, that we could generate a breakeven, if you will, in a 10 million-unit industry, about 18 percent to 18.5 percent market share. That is about where it is today, which is the lowest level of demand we've seen since post-World War II in the U.S.
I think -- and so, if you say, well, are you optimistic about the market? I think you've got to be realistic about the market today. It's very tough.
But what I am optimistic about is, if we get our cost structure the way we think we can, we can focus our attention on delivering great cars, focusing on the consumer, getting our culture right, doing all the things we need to do to win in the marketplace, but at the same time we've done what we need to do in the operations and the capital structure to make sure we're not bleeding.
Improving products for consumers
JUDY WOODRUFF: As you said yourself today, Mr. Henderson, you're being given something, frankly, a gift that many people never get, and that is a second chance. But how do you get consumers to take a second look at G.M.?
FRITZ HENDERSON: Well, we are getting a second chance. Second chances are precious. There are no third chances. And so, how do we take maximum advantage of that?
It does begin with great products. We have shown, you know, whether it's a vehicle like the Chevrolet Camaro, the new Chevrolet Equinox we have coming, the Cadillac SRX, we can do fantastic new vehicles.
And so for the traditional customer, the loyal G.M. customer, we have great products coming into our showroom that people are excited about. You know, the Camaro, for example, last month, 9,300 units of sale, just, as we would say, smoking hot.
On the other hand, for those customers who haven't considered us for some time, come look at us. We have some fantastic vehicles, great opportunities, great alternatives, and choices that you may not have considered us in the past. I think we have a number of products that consumers can really get excited about, and that's where we're going to be spending our time.
JUDY WOODRUFF: You also have serious competition. You've been losing share for many years to foreign cars during your recent struggles. You've been losing share to Ford. How do you turn that around?
FRITZ HENDERSON: Well, as I said, it starts with great products. It starts with -- then the second part of it is making sure that the leadership team, from myself on down, focusing on customers, making sure that we're touching customers, getting out in the market, thinking about things externally, getting out and visiting with dealers, suppliers, customers, getting out of our offices, getting out where people are actually designing and building cars.
The process of going through bankruptcy basically is one that requires a massive amount of time and effort. We now have that done. And so now the focus shifts to customers, cars, and getting a culture that can really win, and it's invigorating in many ways.
JUDY WOODRUFF: The United States government, as we know, owns 60 percent of your company. They forced a number of changes on management and other aspects of the new G.M. What does that mean you are now obligated, you feel obligated you have to do? And does that include, for example, keeping open a parts company in a particular congressional district?
FRITZ HENDERSON: First of all, the issue of, you know, what the government forced, if you will, what the automotive task force indicated is they wanted to have a viable company. They wanted us to go deeper. They wanted us to go faster in the restructuring plan. That's exactly what we did.
They didn't tell us exactly what they wanted us to do, but they said this is what you need to do overall in terms of producing results and have a company that can actually win. That's what we've done. And I think we've designed a company to do that.
Through the process, by the way, we've also tried to recognize that we need to be listening to constituencies, whether dealers who have asked us to reconsider their decisions or, you know, or in the case of the number of our plants or our operations, should we be reconsidering the timing of when we would actually shut plants down or make adjustments, we've done that because we don't claim to be perfect.
But I think, when you step back and look at the overall business, whether you look at the operating side of the business, the structural costs, or the capital structure side of the business, the balance sheet, we accomplished a massive amount through this process, and we think we can be highly competitive and focus 100 percent of our attention on winning with customers.
Repaying the taxpayers
JUDY WOODRUFF: Speaking of the federal government, American taxpayers have put $50 billion into G.M. How much of that are they going to get back, do you think, and when?
FRITZ HENDERSON: If you look at how much has been put in -- first of all, $59 billion, including the Canadian government, $50 billion from the U.S. government. The U.S. government has 60.8 percent of our shares, so a large portion of the government's financing has been converted into equity.
So how do we pay the Treasury back? One, we have about $8 billion of loans to both the U.S. and Canada. Those loans are due in 2015. We would very much like to pay those loans back sooner, and so there's going to be a huge effort on the part of the management team to get that done.
Second, it's about creating real value for shareholders, because, in fact, the government will be our largest shareholder, the U.S. Treasury. We have 330 million shareholders, if you will, between the U.S. and Canadian taxpayer.
So it's about creating real value in the business. That's how the ultimate taxpayer gets paid back, is creating value in the shares. That's where the lion's share of the value is for the U.S. Treasury, and that's -- you know, I think, we're very much in alignment in that regard.
JUDY WOODRUFF: Fritz Henderson, CEO of General Motors, thank you very much.
FRITZ HENDERSON: Thank you.