President Obama marked the lowest point in General Motors 100-year history its bankruptcy filing on Monday by barely mentioning it instead focusing his remarks on the second chance G.M. will have to become a viable company with more government aid.
Im confident that the steps Im announcing today will mark the end of an old G.M. and the beginning of a new G.M." Mr. Obama said.
While the moment had been anticipated for weeks the bankruptcy filing nevertheless included more crushing news to G.M.s home state Michigan which is already reeling from waves of layoffs and plant closings.
Shortly after filing for Chapter 11 in Federal Bankruptcy Court in Manhattan G.M. said it would close 14 more United States factories including seven plants in Michigan and cut as many as 21000 more jobs.
This is a ton of bricks hitting us" said Senator Carl Levin Democrat of Michigan. These are real jobs real families and real communities with real names of real factories that are going to be closed."
Among the Michigan plants facing shutdown are its Willow Run transmission factory in Ypsilanti which was built in 1943 to assemble B-24 bombers during World War II.
I was angry at first then I cried then I got angry again" said Don Skidmore the president of United Automobile Workers Local 735 which represents the plants 1100 workers. Im hurt for the people. The looks on their faces are horrible."
After the factory closings which will leave 12 in Michigan G.M. will have fewer than 40000 workers building cars in the United States one-tenth of a work force that in the 1970s numbered 395000 people.
Mr. Obama acknowledged the pain associated with G.M.s drastic downsizing but said that he saw no option other than bankruptcy to fix the companys bloated cost structure.
I will not pretend that the bad times are over" he said. Difficult days are ahead."
The White House and G.M. hope a speedy trip through bankruptcy in 90 days or fewer will limit further damage to the company its employees dealers and suppliers.
A quick restructuring appears possible because of new agreements with the U.A.W. and a majority of G.M.s bondholders who agreed to swap their debt for equity in what is being referred to as the new G.M." The expectations for an accelerated court process were buoyed late Sunday by the approval of the sale of assets for rival Chrysler.
Chrysler which entered bankruptcy on April 30 could now emerge shortly as a new corporate entity owned by a U.A.W. health care trust the Italian automaker Fiat and the American and Canadian governments. On Monday however lawyers representing a group of Indiana pension funds filed an appeal seeking to halt the sale to Fiat.
Fritz Henderson who will stay on as G.M.s chief executive at least until a new board is formed later this summer said he was eager to exit bankruptcy.
Were confident we will move fast" Mr. Henderson said at a news conference in New York. Not with a sense of urgency but with pure unadulterated speed."
The company is hoping to spread a sense of optimism. It created a new Web site GMReinvention.com where it posted the first ad in a new campaign.
The company filed first-day motions in court Monday to allow it to keep paying employees and suppliers while in bankruptcy. Like Chrysler G.M. said in affidavits that it had no viable alternative" to bankruptcy other than a liquidation.
The plan from the presidents auto task force calls for G.M. to receive $30.1 billion in federal aid in addition to the $19.4 billion it has already received. The governments of Canada and Ontario will contribute $9.5 billion more.
A reconstituted G.M. is expected to emerge from bankruptcy with its best assets including its Chevrolet Cadillac Buick and GMC brands and with 60 percent government ownership. The remaining stock will be split among a U.A.W. health care trust bondholders and the Canadian governments.
But closed plants and discontinued brands Saturn Pontiac Saab and Hummer will be among the assets that will not remain with the company.
Mr. Henderson said the bankruptcy represented a defining moment" for the automaker that would allow it to permanently" unshackle itself from the cost of supporting hundreds of thousands of retirees and the $27 billion in debt held by investors.
Still it will take more than financial restructuring to stem G.M.s decades-long slide in market share from more than 50 percent in the 1960s to about 20 percent now.
Fixing the balance sheet is only the beginning said Joseph Phillippi an industry consultant. The second half is going to be cultural" he said. G.M. was No. 1 for so long and now its going to be another carmaker in the middle of the pack."
Mr. Henderson promised a renewed commitment to its customers and even offered an apology of sorts for the poor quality of past G.M. products. The G.M. which let too many of you down is history" he said.
The fall of G.M. was also marked by its removal from the group of 30 blue-chip companies that comprise the Dow Jones industrial average.
Mr. Obama said the government would take a hands-off approach to managing G.M. and would divest its stock in the company as soon as it could. But that is likely years away.
Meanwhile the Ford Motor Company the only member of Detroits Big Three to not require federal assistance expressed concern Monday that it could be hurt by the extraordinary level of aid given to G.M.
We look forward to working with the Obama administration to ensure that the governments majority ownership of G.M. will not change the industrys competitive dynamics and that a level playing field will be maintained" Ford said in a statement.
Once G.M. has finished cutting jobs brands and models it could fall behind Ford in terms of sales and revenues.
The cuts at G.M. include two assembly plants in Michigan and two in Delaware and Tennessee. Other large plants that stamp metal parts or build engines will be shut in Indiana Ohio Virginia and New York.
Workers at the Willow Run plant in Michigan learned their factory was closing when they arrived at the union hall at 7:30 a.m. They were told that some production would stop immediately and all but 300 of 1100 workers would be laid off within months.
Its like being at a funeral" said Mr. Skidmore the plants union leader.
Michael J. de la Merced contributed reporting.
President Obama marked the lowest point in General Motors 100-year history its bankruptcy filing on Monday by barely mentioning it instead focusing his remarks on the second chance G.M. will have to become a viable company with more government aid.
Im confident that the steps Im announcing today will mark the end of an old G.M. and the beginning of a new G.M." Mr. Obama said.
While the moment had been anticipated for weeks the bankruptcy filing nevertheless included more crushing news to G.M.s home state Michigan which is already reeling from waves of layoffs and plant closings.
Shortly after filing for Chapter 11 in Federal Bankruptcy Court in Manhattan G.M. said it would close 14 more United States factories including seven plants in Michigan and cut as many as 21000 more jobs.
This is a ton of bricks hitting us" said Senator Carl Levin Democrat of Michigan. These are real jobs real families and real communities with real names of real factories that are going to be closed."
Among the Michigan plants facing shutdown are its Willow Run transmission factory in Ypsilanti which was built in 1943 to assemble B-24 bombers during World War II.
I was angry at first then I cried then I got angry again" said Don Skidmore the president of United Automobile Workers Local 735 which represents the plants 1100 workers. Im hurt for the people. The looks on their faces are horrible."
After the factory closings which will leave 12 in Michigan G.M. will have fewer than 40000 workers building cars in the United States one-tenth of a work force that in the 1970s numbered 395000 people.
Mr. Obama acknowledged the pain associated with G.M.s drastic downsizing but said that he saw no option other than bankruptcy to fix the companys bloated cost structure.
I will not pretend that the bad times are over" he said. Difficult days are ahead."
The White House and G.M. hope a speedy trip through bankruptcy in 90 days or fewer will limit further damage to the company its employees dealers and suppliers.
A quick restructuring appears possible because of new agreements with the U.A.W. and a majority of G.M.s bondholders who agreed to swap their debt for equity in what is being referred to as the new G.M." The expectations for an accelerated court process were buoyed late Sunday by the approval of the sale of assets for rival Chrysler.
Chrysler which entered bankruptcy on April 30 could now emerge shortly as a new corporate entity owned by a U.A.W. health care trust the Italian automaker Fiat and the American and Canadian governments. On Monday however lawyers representing a group of Indiana pension funds filed an appeal seeking to halt the sale to Fiat.
Fritz Henderson who will stay on as G.M.s chief executive at least until a new board is formed later this summer said he was eager to exit bankruptcy.
Were confident we will move fast" Mr. Henderson said at a news conference in New York. Not with a sense of urgency but with pure unadulterated speed."
The company is hoping to spread a sense of optimism. It created a new Web site GMReinvention.com where it posted the first ad in a new campaign.
The company filed first-day motions in court Monday to allow it to keep paying employees and suppliers while in bankruptcy. Like Chrysler G.M. said in affidavits that it had no viable alternative" to bankruptcy other than a liquidation.
The plan from the presidents auto task force calls for G.M. to receive $30.1 billion in federal aid in addition to the $19.4 billion it has already received. The governments of Canada and Ontario will contribute $9.5 billion more.
A reconstituted G.M. is expected to emerge from bankruptcy with its best assets including its Chevrolet Cadillac Buick and GMC brands and with 60 percent government ownership. The remaining stock will be split among a U.A.W. health care trust bondholders and the Canadian governments.
But closed plants and discontinued brands Saturn Pontiac Saab and Hummer will be among the assets that will not remain with the company.
Mr. Henderson said the bankruptcy represented a defining moment" for the automaker that would allow it to permanently" unshackle itself from the cost of supporting hundreds of thousands of retirees and the $27 billion in debt held by investors.
Still it will take more than financial restructuring to stem G.M.s decades-long slide in market share from more than 50 percent in the 1960s to about 20 percent now.
Fixing the balance sheet is only the beginning said Joseph Phillippi an industry consultant. The second half is going to be cultural" he said. G.M. was No. 1 for so long and now its going to be another carmaker in the middle of the pack."
Mr. Henderson promised a renewed commitment to its customers and even offered an apology of sorts for the poor quality of past G.M. products. The G.M. which let too many of you down is history" he said.
The fall of G.M. was also marked by its removal from the group of 30 blue-chip companies that comprise the Dow Jones industrial average.
Mr. Obama said the government would take a hands-off approach to managing G.M. and would divest its stock in the company as soon as it could. But that is likely years away.
Meanwhile the Ford Motor Company the only member of Detroits Big Three to not require federal assistance expressed concern Monday that it could be hurt by the extraordinary level of aid given to G.M.
We look forward to working with the Obama administration to ensure that the governments majority ownership of G.M. will not change the industrys competitive dynamics and that a level playing field will be maintained" Ford said in a statement.
Once G.M. has finished cutting jobs brands and models it could fall behind Ford in terms of sales and revenues.
The cuts at G.M. include two assembly plants in Michigan and two in Delaware and Tennessee. Other large plants that stamp metal parts or build engines will be shut in Indiana Ohio Virginia and New York.
Workers at the Willow Run plant in Michigan learned their factory was closing when they arrived at the union hall at 7:30 a.m. They were told that some production would stop immediately and all but 300 of 1100 workers would be laid off within months.
Its like being at a funeral" said Mr. Skidmore the plants union leader.
Michael J. de la Merced contributed reporting.
