GM exec: Bankruptcy not an option

December 3, 2008 10:05:18 AM PST
General Motors Corp. President Fritz Henderson said Wednesday bankruptcy isn't a viable option for struggling U.S. automakers, maintaining that a new retooling plan can save the industry. Henderson said that General Motors is ready to undertake a host of steps needed to resize, but said that "to win, you've got to win with product and technology. ... And we do not want to give consumers a reason not to buy our cars and trucks."

General Motors is ready to undertake a host of steps needed to resize, Henderson asserted in an interview on NBC's "Today" show as the automakers outline a revised plan for Congress on how they'll preserve their industry.

But Henderson also said that "to win, you've got to win with product and technology. ... And we do not want to give consumers a reason not to buy our cars and trucks."

The interview came as leaders of the United Auto Workers were still discussing further concessions at an emergency meeting in Detroit. Under consideration were the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay and postponing the automakers' payments into a multibillion-dollar union-administered health care fund.

Chrysler LLC and Ford Motor Co. - as well as GM - have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as $34 billion in their second crack at persuading Congress to throw them a lifeline.

Henderson acknowledged Wednesday that the initial appearances by the heads of the car makers was a public relations failure.

"Yeah, it certainly was not our finest hour," he told NBC. "We were not as clear about what we wanted to do." He also conceded that the decision by the executives to travel to Washington by private jet "was a problem" for lawmakers.

Congressional leaders now are reviewing three separate survival plans from the three automakers as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.

In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said they needed an immediate infusion of government cash to last until New Year's, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion "standby line of credit" that it says it doesn't expect to use unless one of the other Big Three goes belly up.

But Chrysler said it needed $7 billion by year's end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date - including the prospects of shuttered factories and massive job losses - of what could happen if Congress doesn't quickly step in.

Democratic leaders voiced concern and a desire to do something to avert an automaker collapse, but they made no commitments about helping an industry that's made few friends lately on Capitol Hill.

"It is my hope that we would" pass legislation to help the automakers, House Speaker Nancy Pelosi, D-Calif., said. Senate Majority Leader Harry Reid, D-Nev., said he would lay the groundwork Monday for a possible vote on an auto bailout measure.

In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said they failed to take responsibility for their companies' troubles or justify a federal bailout.

"I think we learned a lot from that experience," Ford CEO Alan Mulally said.

He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all road-tripping the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.

Mulally and Wagoner both said they'd work for $1 a year - something Chrysler's plan said Nardelli already does - if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.

All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.

Nevertheless, Sen. Arlen Specter, R-Pa., said the mood in Congress "candidly is not supportive" of the automakers, although he called the consequences of just one of them failing "cataclysmic."

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement.

His panel is to hear testimony Thursday from the auto executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans.

The House Financial Services Committee is to hold a similar session on Friday.

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Associated Press writer Deborah Yao in Philadelphia contributed to this report.

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