General Motors will close more US plants and cut more jobs yet still faces a higher probability of bankruptcy to shed debt, new chief executive Fritz Henderson has said.
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“The expectation is that we need to go deeper,” Henderson said in describing GM’s restructuring after its previous plan was rejected as insufficient by US officials.
“We need to go deeper and we need to go faster,” he said in a news conference at GM’s Detroit headquarters, according to Reuters.
The appearance was the first since Henderson took over as chief executive on Monday.
Henderson said GM could decide to file for bankruptcy within its 60-day deadline if it became “quite clear” that it would be unable to reach the deals it is seeking.
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By GlobalData“By no later than 1 June, if we’re not able to accomplish this outside bankruptcy, we’ll be in bankruptcy. It’s pretty clear. The government was unequivocal,” he said.
Henderson said the autos task force headed by former investment banker Steve Rattner had not given GM new targets for slashing debt from its balance sheet.
But officials made it clear that GM would have to bring its structural costs below US$26.3bn in 2009 and cut its unsecured debt by more than $28bn, he said.
Both of those targets had been established by the GM plan that US officials said did not go far enough to restoring the automaker to a strong financial footing.
“What they said was that they want us to have a clean balance sheet, a healthy balance sheet and one that allows us to be competitive going forward,” Henderson told Reuters.
Ge said GM would revise its restructuring plan to account for the risk of lower sales.
The White House-appointed autos panel said the automaker had been overly optimistic in projecting that it could hold market share steady near 22% after decades of declines.
As a result, GM would need to close more than the five plants it had identified in February and would have to return to the UAW to offer another round of factory worker buyouts.
“I would expect that we would need to take further measures,” Henderson said.
Last week, GM announced that 7,500 UAW workers – or about 12% of its US factory workforce – had accepted early retirement or buyout offers.
GM has cut 60,500 jobs – or more than half of its factory staff – over the past three years as sales have slowed and its financial position has weakened.
