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GM CEO Henderson Says New GM Must Succeed

General Motors CEO Fritz Henderson told CNBC Friday that the new GM must succeed and he said that he believes that the company will do just that.

"The tough part is in front of us," Henderson said. "But it's also the fun part. We think we can change the culture of GM. The company has to succeed. I'm excited about getting back into the car business."

Fritz Henderson
CNBC.com
Fritz Henderson

Henderson said he was surprised but not shocked that in only took 40 days to emerge from the bankruptcy proceedings. "Without taxpayer and the government's support, we wouldn't be here," said Henderson. "We had tremendous help in getting out of bankruptcy. It's been tough on a lot of people."

Henderson said that the new board for the new GM will be in place in August. "We have the balance and the operating structure to win," Henderson said.

Asked about having current company vice president Bob Lutz become head of marketing and communications, Henderson said it was the right move. "Bob is passionate. He cares about the company. He's a change agent and we need to have people like Bob," said Henderson

Separately, Lutz told CNBC Friday that he plans on a straightforward approach when it comes to exercising leadership and reinventing GM's image.

"I've always believed in a very clear and honest communnication. I never hide my motives or my objections," said Lutz. "I believe in the frontal assault. And yes it does ruffle some feathers, but I think we're at a stage in the company where we really need to do that."

The number one problem for GM right now is a "perceptional problem," which has been spurred by the media and distrust of GM among American consumers, Lutz said.

“The reason so many people don’t trust GM right now is because so many people don’t trust GM right now. It feeds on itself,” said Lutz.

Henderson said that GM will pay back the government loans as soon as possible.

Henderson spoke as a leaner General Motors arose on Friday, making an unusually quick exit from bankruptcy with ambitions of making money and building cars people are eager to buy.

Once the world's largest and most powerful automaker, new GM is now cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. The U.S. government owns a majority stake although the Obama administration says it has no plans to run the automaker.

The new GM also emerges amid the worst sales slump in a quarter-century.

At a news conference earlier in the day on Friday, Henderson said the new GM will be faster and more responsive to customers than the old one and it will make money and repay government loans faster than required.

Henderson said GM completed its 40-day stay under court supervision far faster than anyone thought it could. He said it would repay about $50 billion in government loans ahead of a 2015 deadline.

He said the company now will focus more on customers, including a partnership with eBay to test auctioning vehicles online. The new GM will also build more cars and trucks that consumers want and launch them faster than in the past, the CEO said.

"We recognize that we've been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done," he said.

The new company arose Friday as the bulk of General Motors' assets were transferred to a company controlled by the U.S. government.

Henderson said the company would reduce its overall U.S. salaried employment by 20 percent by the end of 2009. He said management ranks will be cut by 35 percent, or 450 executives, including the elimination of its North American president position. Henderson said he will take responsibility for North American operations.

He said Bob Lutz, a legendary industry executive, was "unretiring" to become a vice chairman responsible for all creative elements of products, marketing and customer relationships. Lutz had previously planned to retire at the end of the year after more than four decades in the auto business.

The automaker is launching a "Tell Fritz" Web site to allow owners and the public to share their concerns with senior management and he planned to go out on the road every month, Henderson said.

"We need to listen to the questions, ideas and the concerns of the people who matter the most," Henderson said. The new company will focus on three top priorities, customers, cars and culture, Henderson said.

"If we don't get this right, nothing else is going to work," he said during a morning news conference at GM's Downtown Detroit headquarters. "Business as usual is over at General Motors."

New Chairman Edward Whitacre Jr. said the 40-day period had been extremely challenging. "There have been a lot of long hours, there have been a shuttering of plants, there have been painful layoffs," he said. Whitacre cited the "strong leadership" of Henderson and the management team, giving the CEO who replaced Rick Wagoner a vote of confidence.

"We all want to win and we are going to win," Whitacre said.

The company's logo will emain blue with white underlined GM letters. Henderson said GM has no plans to change the background color to green. "It's not in my plans actually," he said.

GM has considered the change to represent its new environmental focus.

Concessions made by the United Auto Workers union just before the company entered bankruptcy protection have brought GM's labor costs down to where they are fully competitive with Toyota, Henderson said.

Henderson also said the U.S. government has urged them to form a "world-class board" and has vowed that it would not get involved in day-to-day decisions. Steve Rattner, the head of the Obama administration's auto task force, "wants the company to perform," Henderson said.

GM ranked as the top global automaker in terms of sales for 77 years before Japan's Toyota snatched its crown in 2008. The company sold nearly 8.4 million cars and trucks around the world in 2008, falling short of Toyota's nearly 9 million.

Once the largest corporation in America, GM held the top spot in the Fortune 500 ranking for 20 years before being pushed out of the top spot in 1973 by Exxon Mobil . It reclaimed No. 1 status in 1985 and held it for another 15 years.

Turning a profit will not be easy. GM has piled up losses and survives only because it expects to receive $50 billion in U.S. government loans. Without the loans, its executives have said the company would have been sold off in pieces.

In addition to the U.S. government's 61 percent controlling interest, the United Auto Workers union gets a 17.5 percent stake of the company through its retiree health care trust, and the Canadian government will control 11.7 percent. The remaining shares went to bondholders of the old company.

The parts of GM not moving to the new company will become part of "old GM," a collection of assets and liabilities that will be sold to pay creditors.

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