"New GM" Exits Bankruptcy

DETROIT — A new and dramatically stripped-down General Motors Company emerged Friday from the ashes of the old, bankrupt and largely moribund GM, propped up by $50 billion in government financing and released from nearly $130 billion in debt.

"Business as usual is over," declared GM President and CEO Fritz Henderson in a Friday morning press conference.

While announcing that GM will sharply thin its executive ranks, Henderson said the company is "unretiring" 77-year-old Bob Lutz, who will return as vice chairman in charge of brands, marketing, advertising and communications, reporting to Henderson as a member of the newly formed executive committee. Tom Stephens will remain vice chairman for product development, the job held by Lutz before he announced his retirement earlier this year.

Henderson said Lutz "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."

Henderson said GM will reduce the number of executives by 35 percent to flatten the organization and speed decision-making. Salaried employment, already greatly reduced from previous years, will be trimmed by another 20 percent.

Among the layers of management that are being removed, GM is eliminating the position of North America president, currently held by Troy Clarke. Henderson will assume those responsibilities.

GM also is eliminating its regional operating structure, promoting Nick Reilly to executive vice president of GM International Operations, based in Shanghai.

The new GM was created in an asset sale approved July 5 in federal bankruptcy court. The U.S. Department of the Treasury holds 60.8 percent of the new company; the UAW Retiree Medical Benefits Trust, 17.5 percent; the Canada and Ontario governments, 11.7 percent, and the old GM, 10 percent. Most of the so-called "toxic" assets that remain in the old GM — among them, the Saturn and Hummer brands — will be sold or liquidated over the next two to three years.

The new entity will retain four U.S. brands — Chevrolet, Cadillac, Buick and GMC — but will market only 34 nameplates next year, including such new and redesigned vehicles as the Chevrolet Camaro and Equinox, Cadillac SRX, Buick LaCrosse, Cadillac CTS Sport Wagon and CTS Coupe, GMC Terrain and the Chevrolet Volt and Cruze.

Henderson said the company will build not a single model, as previously reported, but a new family of small cars at its Orion Township plant in Michigan.

He said GM is exploring new ways of marketing its vehicles, including a test partnership in California with eBay, the online auction service.

Henderson said: "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. 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."

He added: "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."

Inside Line says: Despite the full makeover and massive government intervention, there are no guarantees that the new GM — still under old management — will be any more successful. — Anita Lienert and Paul Lienert, Correspondents