After Bankruptcy Filing, Focus Turns to the ‘New GM’

GWEN IFILL:

General Motors went into federal bankruptcy protection today after months of trying to avoid it. The filing triggered a process that will make the federal government the majority owner in the automaker.

NewsHour correspondent Kwame Holman has our lead story report.

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KWAME HOLMAN:

It was the end of an era for the century-old automaker, once a juggernaut of American industry. G.M. made it official this morning, filing for Chapter 11 bankruptcy protection in New York.

The automaker reported nearly $173 billion in debt against assets of $82 billion.

A short time later at the White House, President Obama said it's a new opportunity to build a successful, competitive company. And he said the planning is well underway.

BARACK OBAMA, President of the United States: Working with my auto task force, G.M. and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again.

It's a plan tailored to the realities of today's auto market, a plan that positions G.M. to move toward profitability, even if it takes longer than expected for our economy to fully recover, and it's a plan that builds on G.M.'s recent progress in making better cars.

As this plan takes effect, G.M. will start building a larger share of its cars here at home, including fuel-efficient cars. In fact, if all goes according to plan, the share of G.M. cars sold in the United States that are made here will actually grow for the first time in three decades.

KWAME HOLMAN:

As part of that strategy, G.M. will close permanently nine more plants across four states, from Michigan to Virginia. Three other plants will be idled, but remain on standby for a possible return to work in the future.

Still, some 21,000 employees are expected to lose their jobs, one-third of G.M.'s entire U.S. workforce. And the number of G.M. dealers will be reduced by 2,600 nationwide.

The government will end up owning most of the reorganized G.M., assuming a 60 percent ownership stake. The remaining stake will be divided among the United Auto Workers, the Canadian and Ontario governments, and bondholders.

Still, the president said today the government will act as a reluctant shareholder.

BARACK OBAMA:

What I have no interest in doing is running G.M. G.M. will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They — and not the government — will call the shots and make the decisions about how to turn this company around.

The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new G.M., not the United States government, will make that decision.

In short, our goal is to get G.M. back on its feet, take a hands-off approach, and get out quickly.