Exiting bankruptcy, GM promises transformation
CEO Fritz Henderson says the new GM will be lean and consumer-friendly.
In its first day out of bankruptcy Friday, General Motors said it plans to change its stripes.
The new company, according to GM chief executive Frederick "Fritz" Henderson, will be leaner, produce more competitive vehicles, and act faster to respond to a changing marketplace. With much of its debt and legacy healthcare costs now reduced, Mr. Henderson said he expects the company will be profitable in 2010.
Quick journey through bankruptcy
The automaker's emergence from bankruptcy came much sooner than even the company expected. Henderson said he wants to use the momentum to improve the Detroit company.
"Starting today, we want to take that intensity, the decisiveness, and the speed of the last several weeks and then transfer it from the battlefield triage of the bankruptcy process to the day-to-day operations of the new company," he said.
As an example of how the company intends to be more adaptable, Henderson said it will begin an experiment in California to allow potential customers to buy vehicles through eBay, the online auction service. Consumers will be able to bid for vehicles and even choose a "pre-determined buy-it-now price."
However, in an indication of the unplanned nature of the new adaptability, Henderson could give reporters no additional details of the experiment. "We'll see if it works," he said.
A 'new' emphasis?
In its marketing, GM has tried to portray its bankruptcy as a way to reinvent itself. Henderson said the company's "new" emphasis will be on its customers, its cars, and its culture.
"Our customers will be our top and only priority," he said.
Customers will be able to share their concerns directly with senior management, he said, through monthly meetings and online websites, such as one to be launched next week called "Tell Fritz."
"Starting in August, thank goodness, I'll go on the road every month to meet with consumers, dealers, suppliers, employees, and others in the US and abroad," he said.
GM will have to be nimble; it has been losing market share steadily. To lure customers back to its reduced showrooms, Henderson said the company plans to launch 10 new vehicles in the US and 17 outside the US in the next 18 months. One will be a new small car to be produced in Michigan by 1,400 new workers.
The new vehicles will be part of its four brands: Chevrolet, Buick, Cadillac, and GMC. Pre-bankruptcy, the company had eight brands, including Pontiac and Saturn, which are now terminated or for sale.
GM is also continuing to cut its overhead. The company will no longer have a president for its North American division and will cut white-collar jobs by about 35 percent and overall salary costs by 20 percent.
By the time the company gets through this streamlining, it will break even if total US vehicle sales equal 10 million units – about the volume it has now.
Henderson also aspires to change GM's corporate culture. He acknowledges that in the past GM was too slow to change. Now, he says, a leaner executive corps will meet weekly, mainly outside Detroit, spending more time at proving grounds and design centers. His goal: Cut the top level of decisionmakers in half.
"The bottom line is that business as usual is over at General Motors," he said.
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