We have 10 days to sell or die: GM boss
BY RON HAMMERTON | 1st Jul 2009
Lawyers representing bondholders and other parties objecting to the sale queued up to grill Mr Henderson – the first witness in a hearing in which GM is seeking court approval for the sale.
An unflustered Mr Henderson told them that the US government would withdraw access to funding for GM’s restructuring if it did not emerge from Chapter 11 bankruptcy by the deadline.
Under the plan, “good” assets such as the Chevrolet, Cadillac and Buick brands will be sold to New GM – a new company 60 per cent owned by the US treasury, 17.5 per cent by the United Auto Workers union, 12 per cent to the Canadian government and the remaining 10 per cent by GM bondholders.
Among the assets to be left in the “old GM” to be liquidated is GM’s share in the New United Motor Manufacturing (NUMMI) assembly plant, which it has operated as a joint venture with Toyota since 1984.
GM announced on Monday that it was walking away from the Californian plant, leaving Toyota with a difficult choice between coming up with a revised manufacturing plan for the factory or simply shutting it.
Mr Henderson admitted to the bankruptcy hearing that the cost of winding down the remains of the GM could reach $US1.2 billion ($A1.5b), although only $US950 million ($A1.17b) would be left to cover the costs.
He also said there were signs of renewed confidence in the US car market – a situation he partly attributed to the recent successful emergence of Chrysler from similar Chapter 11 bankruptcy reorganisation.
GM’s sale application has the support of President Obama’s auto industry task force, which also drove the Chrysler sale to a new company led by Italy’s Fiat SpA.
The hearing is expected to last at least another day.
Meanwhile, GM’s withdrawal from its NUMMI arrangement with Toyota might end up being another drain on US treasury coffers, as the Japanese company is reported to be considering asking for US government aid to keep the plant open.
A local congressman for San Francisco’s Bay Area, Pete Stark, was quoted in the Silicon Valley MercuryNews as saying government assistance was a possibility to keep the plant open and save the jobs of its 5000 workers.
The plant makes the Toyota Corolla and GM’s Corolla-based Pontiac Vibe, which is going out of production with the imminent demise of the Pontiac brand in the US.
Bloomberg newsagency reported that Toyota had offered to build a version of its Prius hybrid for GM at the plant in an effort to keep the joint venture open.
However, with GM’s Chevrolet Volt extended-range plug-in hybrid about to go into production, such an offer was unlikely to woo GM into staying.
NUMMI – one of the largest manufacturing operations in the San Francisco area – was Toyota’s first foot in US manufacturing, and as such holds a special place in Toyota lore. New Toyota president Akio Toyoda once worked at the plant.
The Japanese company will be mindful of the social repercussions of shutting the factory, but it is also under pressure to streamline its operations in the wake of its recent ¥461 billion ($A6b) loss for the financial year ending March 31.
Mr Toyoda has pledged to give Toyota’s North American operations more autonomy, but he has also pledged to cut Toyota’s worldwide costs by ¥800 billion ($A10.34b).
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