Speaking at a White House press conference, President Obama laid out the rationale behind GM’s Chapter 11 bankruptcy protection filing. Obama described the sacrifices ahead as necessary to secure, for future generations, an America which ‘still makes things, still builds cars’.
Go deeper with GlobalData
He also said that if all goes to plan more GM cars sold in the US would be made in the US.
“Working with my Auto Task Force, GM 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 GM 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 GM’s recent progress in making better cars.
“As this plan takes effect, GM 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 GM cars sold in the United States that are made here will actually grow for the first time in three decades.”
Obama said that the deal that has been worked out is tough, but it is also fair.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“It will require the United Auto Workers to make further cuts in compensation and retiree health care benefits — painful sacrifices on top of all that they have already done.
“It will require GM shareholders to give up the remaining value of their shares — just as they would have had to do in any private restructuring of this kind.
“But of course GM is an American company with tens of thousands of employees in this country, and responsibility for its future ultimately rests with us. That’s why our government will be making a significant additional investment of about $30 billion in GM — an investment that will entitle American taxpayers to ownership of about 60 percent of the new GM.”
He also said that the government does not want to be involved with GM for any longer than necessary.
“I recognize that this may give some Americans pause. So let me explain as clearly as possible why we are making this investment. We inherited a financial crisis unlike any that we’ve seen in our time. This crisis crippled private capital markets and forced us to take steps in our financial system — and with our auto companies — that we would not have otherwise even considered. These steps have put our government in the unwelcome position of owning large stakes in private companies for the simple and compelling reason that their survival and the success of our overall economy depend on it.
“Understand we’re making these investments not because I want to spend the American people’s tax dollars, but because I want to protect them. Instead of taking so much stock in GM, we could have simply offered the company more loans. But for years, GM has been buried under an unsustainable mountain of debt. And piling an irresponsibly large debt on top of the new GM would mean simply repeating the mistakes of the past. So we are acting as reluctant shareholders — because that is the only way to help GM succeed.
“What we are not doing — what I have no interest in doing — is running GM. GM 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 GM, not the United States government, will make that decision.
“In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly.”
Obama also painted a picture of further hard times ahead for US industry.
“I will not pretend the hard times are over. Difficult days lie ahead. More jobs will be lost. More plants will close. More dealerships will shut their doors, and so will many parts suppliers.
“But I want you to know that what you’re doing is making a sacrifice for the next generation — a sacrifice you may not have chose to make, but a sacrifice you were nevertheless called to make so that your children and all of our children can grow up in an America that still makes things; that still builds cars; that still strives for a better future.
“I recognize that today’s news carries a particular importance because it’s not just any company we’re talking about — it’s GM. It’s a company that’s not only been a source of income, but a source of pride for generations of autoworkers and generations of Americans. But while the GM of the future will be different from the GM of the past, I am absolutely confident that if well managed, a new GM will emerge that can provide a new generation of Americans with a chance to live out their dreams, that can out-compete automakers around the world, and that can once again be an integral part of America’s economic future. And when that happens, we can truly say that what is good for General Motors and all who work there is good for the United States of America.”
