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Written by Custmguru
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Monday, 12 April 2004 |
THE ASSOCIATED PRESS
10/20/2005
DETROIT
General Motors Corp. isn't considering bankruptcy as a way to solve its financial woes, the automaker's chairman and chief executive says.
"As we look at the responsibilities we have to a broad range of constituents, as we look at what we need to do to make the business successful, as we look at our businesses ... we think there are significant costs to bankruptcy," Rick Wagoner said Wednesday in an interview with The Associated Press. "We don't think it's a good option."
Wagoner said also that he and other top executives will see their compensation cut by 40 percent or more, deflecting criticism from United Auto Workers President Ron Gettelfinger and others that executives aren't sacrificing enough.
Wagoner spoke two days after the automaker reported a $1.6 billion third-quarter loss and announced a tentative deal with the UAW to cut health care benefits for its U.S. hourly workers and retirees.
GM has lost more than $3 billion in the year's first nine months because of falling U.S. market share, production cuts, labor costs and other factors.
The bankruptcy question has been swirling around GM since a major parts supplier, Delphi Corp., filed for bankruptcy protection on Oct. 8. GM could be liable for up to $12 billion in benefits for Delphi employees. GM has about $19 billion in cash.
While bankruptcy would allow GM to close plants and reduce union wages in court, Wagoner said a turnaround will require far more than reduced labor costs.
GM is trying to cut the cost of materials and vehicle development, halt heavy spending on incentives and build more appealing cars and trucks.
"The good news is, we know what we need to do to be successful in the business," Wagoner said. "What we need to do is get products that people are excited about and price them the right way, supported by the right kind of cost structure, and I think in that sense it's moving pretty good."
Wagoner said unlike the airline industry, where some bankruptcy filings haven't had a big effect on business, even speculating about bankruptcy hurts the auto business.
"When you're buying a car it's a very different thing," Wagoner said. "It's a massive financial commitment. You expect to own it for a long time, and (bankruptcy) is something that's going to have an impact in the consumer's mind."
Wagoner wouldn't disclose more details about the tentative agreement with the UAW, which he called historic. The agreement, which must be ratified by UAW members, would cut GM's health care costs by $3 billion a year before taxes. The agreement also would cut GM's liability for retiree health care by $15 billion, or 25 percent. More details are expected to be released today after the UAW presents the agreement to local union leaders.
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Last Updated ( Thursday, 23 March 2006 )
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