GM chief promises to repay bailout
Wednesday, December 16, 2009
DETROIT -- Fourteen days after taking the helm as chief executive of General Motors, Edward E. Whitacre Jr. said the giant automaker, which went through a major bankruptcy restructuring earlier this year, plans to repay loans from the U.S. and Canadian governments by the end of June.
In one of his first meetings with reporters at the company's headquarters in downtown Detroit, Whitacre talked for an hour about a range of topics, including his visit to an auto plant in Flint; shuffling the company's top managers; and the strategy for improving its vehicles, sales and brand image.
"We have to sell more cars," he said. "We have to produce a good car, which we do. You have to have a good relationship with your dealers. . . . We have to have marketing that's really good. . . . I believe we have a perception problem.
"We have to convince the consumer of North America that what we have is the best, and we're going to set out to do that," he said. "When you lose your reputation, it's hard to get it back."
The company has been losing market share and went through a rapid bankruptcy restructuring and government bailout. It owes the U.S. government about $6.7 billion out of $50 billion in assistance it received from the U.S. government and the governments of Canada and Ontario. The loans had a scheduled maturity date of July 2015, and as part of its deal, the U.S. government has a 61 percent stake in the automaker. Whitacre said he doesn't have a timetable for when GM might once again go public.
The retired AT&T chairman and chief executive said he got a call from officials at the Treasury Department about being chairman of GM as it came out of bankruptcy, and his initial reaction was to say no. But he said he changed his mind, thinking, "If I can help, I'll come do it, and that's why I'm here."
Earlier this month, Whitacre took over the chief executive role after Fritz Henderson abruptly resigned. Henderson, a longtime GM executive, had been in the job for only eight months, steering the company through the bankruptcy process.
Whitacre described Henderson as a "terrific guy" but said he and the GM board had different views on how to move forward.
"The board wanted to change more things, do things a little bit differently, go in a different direction than Fritz," Whitacre said. "It was a common agreement that maybe what you wanted to do is not what I wanted to do, so we'll just part ways."
Whitacre, who met with reporters on the 38th floor of the Renaissance Center, said the new chief executive needed to be someone who had a "desire to lead a big company that has a lot of potential out in the future." It has to be someone, he said, who wants to do the job for "more than the compensation."
The Obama administration, Whitacre said, has stayed out of helping run the company's operations. "They've been true to their word," Whitacre said. "I give them an A-plus for being hands off. They've let the board run this company."
Whitacre said that Ray G. Young, the company's chief financial officer, was being promoted to vice president of international operations, and North America President Mark Reuss, who was in charge of the business plan for the Pontiac Aztek sport-utility vehicle, will be the public face of the automaker in the Detroit area.
Whitacre said GM will decide the future of its Saab unit, based in Sweden, by the end of this month. The company is in talks with one bidder -- Spyker Cars, a Dutch firm that makes a small number of very expensive sports cars. If those discussions fail, GM's board will close Saab by Dec. 31, Whitacre said at the roundtable discussion. GM had reached an earlier deal sell Saab to Koenigsegg Group, but the buyers backed out in November.
As to when the company, which has lost $88 billion since 2004, expects to be profitable?
"I didn't say," Whitacre responded. "It was a nice question, but I have no answer for you," he said. "Sorry."