DETROIT – The new General Motors Co. (GM) began operations today.
According to President and CEO Fritz Henderson, the company emerges with a new corporate structure, a stronger balance sheet and a renewed commitment to make the customer the center of everything the new GM does.
"Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers," said Henderson. "We are deeply appreciative for the support we have received during this historic transformation, and we will work hard to repay this trust by building a successful new General Motors."
The new company will focus on four core brands in the U.S. — Chevrolet, Cadillac, Buick and GMC — and says it now has the largest, strongest dealer network in the country.
"One thing we have learned from the last 100 days is that GM can move quickly and decisively," said Henderson. "Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors.
"Business as usual is over at GM," said Henderson. "Today starts a new era for General Motors and everyone associated with the company. Going forward, the new General Motors is fully committed to listening to customers, responding to consumer and market trends and empowering the people closest to the customer to make the decisions. Our goal is to build more of the cars, trucks and crossovers that customers want, and to get them to market faster than ever before."
Despite the recent downturn, GM has continued to introduce new products. In the U.S., for example, the Chevy Camaro has surged past its rivals to lead its segment, while the new Chevy Equinox, Cadillac SRX, and Buick LaCrosse are earning strong initial reviews. Later this year, the Cadillac CTS Sport Wagon and GMC Terrain debut, followed next year by the Chevy Volt, Chevy Cruze and Cadillac CTS Coupe.
GM said it also has moved aggressively to develop a full range of energy-saving technologies, including advanced internal combustion engines, biofuels, fuel cells and hybrids. The company is also a leader in the development of extended-range electric vehicles, with its first model, the Chevy Volt, currently undergoing road testing and scheduled to launch in 2010. The new GM is also taking steps to make advanced battery development a core competency, and expects to make additional announcements on this matter late this summer.
Just last month, GM announced its intention to build a new small car at a plant in Orion Township, Mich., which will add to GM’s growing portfolio of fuel-efficient cars and restore approximately 1,400 jobs.
"The success of our recent launches and the exciting new vehicles and technologies we have in the pipeline are evidence of our ongoing commitment to excel at everything we do," said Henderson. "Our goal is to make each and every General Motors car, truck and crossover the best-in-class."
The General Motors is primarily owned by the governments of the United States, Canada and Ontario, and by a trust fund providing medical benefits to UAW retirees.
In the U.S., the new GM will be a far leaner company. By the end of 2010, the company will operate 34 assembly, powertrain and stamping plants, down from 47 in 2008, and capacity utilization is expected to reach 100 percent during 2011. Overall U.S. employment will decline from about 91,000 at the end of 2008 to about 64,000 at the end of this year, creating a company sized to respond quickly to changes in the market, while still retaining the global scope necessary to develop world-class products and technologies.
The new GM will begin with a much stronger balance sheet, including U.S. debt of approximately $11 billion, which excludes preferred stock of $9 billion, and could change under fresh-start accounting. In total, obligations have been reduced by more than $40 billion, representing mostly unsecured debt and the VEBA trust fund that provides medical benefits to UAW retirees. The stronger balance sheet and lower break-even point will allow the new GM to reduce its risk, operate profitably at much lower volume levels, and reinvest in the business in the key areas of advanced technology and product development.
GM’s subsidiaries outside the United States were acquired by the new company and are expected to continue to operate normally without any interruption.
New leadership structure
Edward E. Whitacre, Jr., who oversaw the creation of the new AT&T, will serve as chairman of a GM board with a number of new directors. Henderson will continue as president and chief executive officer, working closely with Whitacre. He also will take responsibility for GM’s operations in North America, eliminating the GM North America president position.
To speed day-to-day decision-making, two senior leadership forums, the Automotive Strategy Board and Automotive Product Board, will be replaced by a single, smaller executive committee, which will meet more frequently and focus on business results, products, brands, and customers.
Bob Lutz has agreed to join the new GM as vice chairman responsible for all creative elements of products and customer relationships. Lutz and Tom Stephens, vice chairman, product development, will work together as a team, partnering with Ed Welburn, vice president of design, to guide all creative aspects of design. GM’s brands, marketing, advertising, and communications will report to Lutz for consistent messaging and results. He will report to Henderson, and be part of the newly formed executive committee.
"I am pleased to announce that we are ‘unretiring’ Bob Lutz so he can fill this important position in the new GM," said Henderson. "He has a proven track record of unleashing creativity in the design and development of GM cars and trucks. This new role allows him to take that passion a step further, applying it to other parts of GM that connect directly with customers."
General Motors will also end its regional operating structure, moving decisions closer to the customer. This eliminates the regional president positions and the regional strategy boards. Nick Reilly will be named executive vice president of GM International Operations (GMIO) which will be based in Shanghai.
GM is also removing layers of management – reducing the number of U.S. executives by 35 percent and overall U.S. salaried employment by 20 percent by the end of this year – flattening the organization and speeding decision-making.
Additional details of the new structure and leadership moves will be communicated later this month, said Henderson. "These and other actions will simplify our organizational structure and reduce the level of bureaucracy that, in the past, has prevented GM from moving faster."
More direct communications
Henderson also announced initiatives to open more direct communications between customers and GM employees at every level. "Beginning next week, we will launch a ‘Tell Fritz’ website where customers, or anyone else, can share ideas, concerns, and suggestions directly with senior management. I will personally review and respond to some of these communications every day."
Henderson said he and other General Motors leaders will go on the road regularly to meet with consumers and others with a stake in the new GM. "In August, we’ll begin regular visits with customers, dealers, suppliers, employees and others – in the U.S. and abroad – who impact our relationships with customers. We’ll be listening to their ideas, and acting on the ones that will improve our ability to serve our customers better. And of course, other executives and I will continue to reach out to customers through our ongoing web and Twitter chats.
"Today we launch the new General Motors, and our promise is simple. We will be profitable, we will repay our loans as soon as possible, and our cars and trucks will be among the best in the world," said Henderson. "We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done.