General Motors was today preparing to exit bankruptcy with the message that a leaner and meaner automaker ready to win back American consumers and pay back taxpayers has emerged from its failure.
A whirlwind 40-day bankruptcy for GM was expected to conclude with the closing of a deal to sell key operations and core brands, including Chevrolet and Cadillac, to a new company that will be majority owned by the US Treasury.
Chief executive Fritz Henderson and Ed Whitacre, a veteran telecommunications executive and incoming chairman, were set to appear at a news conference 9am ET (4pm Irish time) at the automaker's Detroit headquarters to mark the launch of that “new GM”.
The automaker's US sales dropped 36 per cent during June when it was mired in bankruptcy and executives said the relaunch of the company offered a chance to try and break that negative association for consumers.
“I'm very much looking forward to the point where we're operating in the clean air and the name of the company not being associated with bankruptcy,” GM sales chief Mark LaNeve said last night.
Mr Henderson, who took over as CEO when his predecessor Rick Wagoner was ousted by the Obama administration at the end of March, has already detailed plans for a faster-moving and less-bureaucratic company with thinner executive ranks.
GM is cutting its white-collar work force by more than 20 per cent by eliminating 6,000 jobs by October. The reduction in executive ranks will slice deeper, with 35 per cent planned.
That bid to shake up GM's long-criticized corporate culture will be a key issue for Henderson as the 100-year-old automaker seeks to relaunch itself.
Steve Rattner, the head of the Obama administration's autos task force, said earlier this week that it would be “natural” for Henderson to cut layers of management to make the company "a bit closer to the ground, leaner and meaner.”
Another pillar of the plan is GM's commitment to launch more fuel-efficient cars and to focus its resources on fewer brands, models and dealerships.
GM has burned through $40 billion over the past four years and posted losses of more than $80 billion.
The close of the court-approved sale would mark the completion of an unprecedented effort by the US administration to save GM and Chrysler from liquidation by slashing debt, labour costs and dealerships.
The White House has also disbursed almost $80 billion to shore up the auto industry, including $5 billion in support for auto parts suppliers.
Of that total, $50-billion has been earmarked for GM, emergency financing that will give the US government a more than 60-per cent stake in the new GM.
Reuters