With Bankruptcy Behind It, GM Focuses on a Culture Change

Chairman Edward Whitacre Jr., left, with company adviser Bob Lutz, were all smiles in Detroit yesterday after GM emerged from bankruptcy.
Chairman Edward Whitacre Jr., left, with company adviser Bob Lutz, were all smiles in Detroit yesterday after GM emerged from bankruptcy. (By Carlos Osorio -- Associated Press)

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By Peter Whoriskey
Washington Post Staff Writer
Saturday, July 11, 2009

General Motors emerged from bankruptcy yesterday, with chief executive Fritz Henderson promising that the fallen corporate giant will be revived and that "business as usual is over."

The announcement signaled the substantial completion of one of the largest bankruptcies in U.S. history and the next step in what has become a landmark government bailout.

The new GM will have fewer brands, fewer plants and fewer workers. The number of U.S. executives will be cut by 35 percent. But as important as this shrinking, Henderson said, is the need to transform the automaker's culture, long criticized as insular and sluggish. Once the world's largest automaker, GM has been losing market share for decades.

"It is a new era, and everyone associated with the company must realize this and be prepared to change, and fast," Henderson said.

Formed by the sale of most of the old company's assets, the new GM is an anomaly among American businesses because most of it is owned by the U.S. and Canadian governments. The U.S. Treasury owns 60.8 percent of the new company's common stock, the UAW retiree health trust has 17.5 percent and the governments of Canada and Ontario own 11.7 percent.

Henderson said the company would seek to repay the U.S. investment, but he stopped short of promising that taxpayers would recover all of the $50 billion they put into the company. The company's stock value would have to rise to unprecedented levels for the United States to break even on its investment.

Company officials yesterday seized on the company's emergence from 40 days in bankruptcy to advertise efforts to restart the failed automaker.

GM will limit its key executive committee to eight people to speed decision-making. It has lured former executive Bob Lutz, a well-regarded industry veteran, out of retirement to lead design, brands and advertising. It hopes to experiment with auctioning cars on eBay. And it is launching a Web site, "Tell Fritz," that will allow consumers to send their comments to company executives.

Moreover, Henderson said he would seek to shake the company free of its complacency, vowing to aim for being more than just competitive with rivals.

"Going forward, our objective . . . is to create products that consumers can judge as best in class," he said.

Even so, the business challenges facing GM are vast. To turn the company around, Henderson and his team must reverse the momentum of a decades-long slide.

GM once had a dominant share in the U.S. auto market of more than 50 percent, but that eroded over the years to below 20 percent as the company's reputation for quality declined. Today, many people, particularly on the nation's coasts, are reluctant to buy a GM or any American car.


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