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GM CEO: Early exit from bankruptcy possible

GM CEO Fritz Henderson said Wednesday the company is moving swiftly on restructuring under bankruptcy protection and the watchful eye of the president’s auto task force.
/ Source: The Associated Press

General Motors CEO Fritz Henderson said Wednesday the company is moving swiftly on restructuring under bankruptcy protection and the watchful eye of the president’s auto task force.

The automaker may be able to exit bankruptcy protection in less than the 60 to 90 days timeline GM gave prior to its June 1 bankruptcy filing.

“It could be sooner,” said Henderson, speaking to reporters at The National Summit. “We’re moving aggressively according to plan.”

He said the task force is heavily involved with restructuring GM, as the government is expected to hold a 60 percent stake in the company when it emerges from bankruptcy protection.

In addition to being a leaner, more productive company going forward, GM is planning future vehicle designs around higher oil prices. In a summit discussion on energy, Henderson said GM is betting crude oil prices could eventually revisit the $100 to $130 per barrel cost reached last year.

“Even with extremely weak economic activity, we’re still seeing very high levels of volatility in price of gas,” he said during a discussion on the future of energy. “We think the volatility will be permanent.”

He said consumers will eventually drive alternative fuel innovation, and said the company is working on a variety of different ways to power engines, specifically by producing battery electric, and clean diesel engines.

He also said vehicle sales in China will likely surpass U.S. sales this year, making it the largest automotive market in the world.

Henderson said a decision on which of three plants GM will build a small car will be made by the end of the month. GM plants in Orion Township, Mich., Spring Hill, Tenn., and Janesville, Wis., are vying for the production.

“At this point we haven’t narrowed down anything,” he said.

The future of a plant in Fremont, Calif. which makes the Pontiac Vibe and Toyota Matrix has yet to be decided, as GM phases out the Pontiac brand. GM and Toyota have jointly owned the plant since 1984

Henderson said he recently met with Ed Whitacre, the former AT&T chief, named chairman of GM’s board of directors last week. Whitacre is currently tasked with naming a few more board members, Henderson said.  

Henderson’s remarks come on the heels of Ford CEO Alan Mulally’s appearance at the summit Wednesday morning. Mulally said Ford is moving in a different direction than GM, but would not say how much market share it has captured from GM and Chrysler Group.

“People want to be with a company they know is viable and is going to be here for the long-term,” Mulally told reporters following a discussion on innovation at the summit.

Mulally said that Ford, the only major U.S. automaker which has not sought government assistance, is working toward profitability and increased market share, particularly with the rollout of new cars such as the 2010 Fusion and Taurus. He wouldn’t say if the market share was coming at the expense of GM and Chrysler sales.

While GM has had daily interaction with the president’s auto task force, Ford’s communication has been less frequent and generally focused on parts suppliers, many of them struggling as low sales volume has halted production at many Chrysler and GM plants.

“The supply base is the most important thing in our industry right now,” Mulally said.

With a goal to reach profitability or break even in 2011, Ford has modified its contract with the United Auto Workers union, cut debt by nearly $10 billion and retooled some plants to expand their vehicle production abilities.

Mulally said those efforts would continue, adding that the company will seek to improve its balance sheet even further when it reaches profitability.

Mulally said Ford would likely seek further concessions from the UAW on top of the modified contract ratified in March. GM and Chrysler workers have also modified their contracts, but some of the modifications go deeper than Ford’s.

“We continually talk to the UAW and the CAW (Canadian Auto Workers union),” he said, adding that a no-strike clause until 2015 is “just one piece of the conversation we’re having with them.”

GM and Chrysler workers agreed to place a no-strike clause in their modified agreements. Mulally said government regulation in many ways has hurt innovation among businesses and manufacturers in the United States.

“We’ve become so stymied with regulation,” Mulally said during a discussion on innovation in manufacturing at The National Summit in Detroit. “We have to say enough is enough and get back to freeing people up.”

Pulling on his experience as the head of Boeing and now Ford, Mulally said U.S. businesses need to be at the forefront of innovation again. Corporate scandals, government bailouts and bankruptcy filings have put a blemish on the business sector.

“We’ve got to make it cool to be in business again,” he said. “We really have to re-polish the value of what business brings to mankind.”

Nonetheless, Mulally said the recent fuel efficiency and emission standards set by the Obama administration brings a “tremendous benefit” to companies such as Ford when designing new vehicles because it unifies standards set by several states under a federal umbrella.