GM’s NEW CEO ADDRESSES THE RAMPANT SPECULATION, BUT MAYBE ALSO ADDS TO IT
By Alex Kurkin
“It is just speculation,” said Fritz Henderson during GM’s Friday, April 17, conference call, intending to quell the rumors and create greater transparency. Henderson was addressing various issues with this comment – the dealer network, brand planning strategies, government funding and the status of discussions with bond holders.
Unfortunately, in his brief statement, Henderson did not do much to say what GM’s plan is other than that it “will be robust across the business cycle.” With respect to GM brands, Henderson said “we are looking at all elements of our brand strategy,” and when asked about Pontiac in particular, he stressed “ALL of our brands.” When pushed to discuss Buick and GMC, he only indicated that both “brands are highly profitable” and reiterated that GM is “developing a plan around a 4 car brand.”
With respect to bond holders, he only advised that dialogue continues, but admitted that there has been no material meeting with bond holders since March. With respect to employees, both salaried and hourly, he advised that there will be many layoffs and a lot of activity in this area over the next 6 weeks. Lastly, as to a possible merger with Chrysler, he indicated that it was ruled out last year and that GM’s current focus is limited to its own viability plan.
He also addressed the bankruptcy speculation. He repeated a few times that a bankruptcy was not GM’s preference and that, as of today, GM had “not made that determination yet.” However, he acknowledged that “the clock is ticking . . . and we need to be ready” in the event GM has to file. When asked for a numeric probability of a bankruptcy filing, he cleverly avoided giving a direct answer. He was similarly diplomatic when asked about the pressure and control that the Federal Government is or is not exerting over GM.
On the all important front of the reduction in the dealer network, he confirmed that the Task Force believes that the reduction of dealers to 4,100 by 2013 was not fast enough. As in other areas, he gave little insight here other than to advise that GM is studying “how do we accelerate that,” and he further advised that GM is “in dialogue with our dealers” to move forward with the “the action that we already identified.” Clearly, GM has already determined which dealers it wants to keep and those it does not.
The one certainty for which Henderson left no speculation is GM’s “need for speed. It is all about speed,” he stated. GM needs to accomplish its plan either outside of a bankruptcy by June 1, and if it cannot do it by then, it will have to do it in bankruptcy.
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