General Motors is prepared for bankruptcy if necessary but will still emerge “reinvented” from its current crisis, new chief Fritz Henderson said at the weekend.
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“Our preference is to do it outside of a bankruptcy process,” Henderson said on NBC Sunday morning TV programme ‘Meet the Press’.
“But it would only be prudent to make sure that we’re planning (for court-supervised bankruptcy), if we need to resort to that – that we can move and we can move fast,” the company veteran said, according to Agence France-Presse.
Henderson, who replaced Rick Wagoner as chief executive just over a week ago at the request of US president Barack Obama’s autos task force, indicated that even deeper job cuts and plant closures were likley as sprawling GM battles to survive, anticipating a future group built around just “four core brands.”
He acknowledged the group would likely have to launch an even bigger restructuring as part of a chapter 11 bankruptcy, amid speculation GM would have to hive off premium brands such as Buick and Cadillac.
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By GlobalDataBoth Obama and his White House task force have indicated that bankruptcy “may very well be the best solution for the company to achieve these goals,” Henderson said in another interview on CNN.
“I’m quite certain – because I think whether we do it outside the bankruptcy process or inside – we will change, we will be fundamentally different going forward,” he said. “And the company’s going to be reinvented.”
“There’s a range of options that could work,” US treasury secretary Timothy Geithner told CBS television, asked if bankruptcy was now the government’s preferred option for GM.
“We’re open to what’s going to work. We’re prepared to be helpful and to help that,” he said, according to AFP.
“And it’s going to take more. These guys have made some progress in putting together a restructuring plan, but they’re not there yet. We wanted to give them the time to try to get it right.”
Geithner added: “The automobile industry is a central part of the American dream, of the basic fabric of the American experience. We want them to be part of our future.”
But talk of bankruptcy for GM was angrily rejected by Michigan Democratic senator Debbie Stabenow, the news agency added.
“I do not support bankruptcy, certainly as the first, second, or third options,” she said on CNN, noting that GM has pension obligations to 600,000 retirees who could lose their benefits without government intervention.
“We have retiree health care. People who gave up wage increases multiple times in order to make sure they had a pension and had health care,” Stabenow said.
The US government would be on the hook for up to US$80bn if GM goes under, she said. “So it certainly is not my first option. And I know that it’s not the first option of the administration.”
Henderson reportedly said the slow road to recovery came with changing customer perceptions of the desirability and reliability of GM cars.
“There’s no magic to this,” he said on NBC. “You’ve just got to get the job done every day.”
