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FIRST ON CNBC: CNBC TRANSCRIPT: CNBC'S PHIL LEBEAU SPEAKS WITH FRITZ HENDERSON, GENERAL MOTORS CEO, TODAY ON CNBC'S "POWER LUNCH"

LEBEAU: WE ARE JOINED BY FRITZ HENDERSON THE CEO OF GENERAL MOTORS A FIRST ON CNBC INTERVIEW. FRITZ HENDERSON, THIS HAS BEEN ONE OF THOSE WHIRLWIND HISTORIC DAYS. YOU JUST FINISHED THE PRESS CONFERENCE IN THERE. I THINK WHAT YOU SAID AT THE ENDPERHAPS SUMMARIZES THE THOUGHTS FOR A LOT OF PEOPLE BOTH INSIDE AND OUTSIDE OF GENERAL MOTORS. THIS IS YOUR LAST CHANCE. YOU'RE NOT GOING TO ASK FOR ANOTHER ONE. RIGHT?

HENDERSON: CORRECT. THAT'S ABSOLUTELY CORRECT.

LEBEAU: WHEN YOU MADE THE DECISION YOU WERE FINALLY GOING TO GO INTO INTERRUPTCY, EVERYBODY KNEW IT WAS COMING. WAS THERE ANY DISCUSSION ABOUT HOW DO YOU MAKE SURE IT'S GOING TO WORK THIS TIME?

HENDERSON: WELL, THERE WAS CONSIDERABLE DISCUSSION ABOUT HOW TO MAKE IT WORK.IF WE'RE GOING TO GO THROUGH A BANKRUPTCY PROCESS, THE OBJECTIVE WAS TO RESOLVE ISSUES PERMANENTLY. AND IN THE END ARRIVING AT THE 360 DEGREE PROCESS THE ACQUISITIONS OF THE GOOD PARTS OF GENERAL MOTORS BY INVESTORS GROUP THAT WAS PROPERLY CAPITALIZED, IN THIS CASE, THE TREASURY. I THINK IT WAS THE RIGHT TOOL TO ACCOMPLISH THIS IN TERMS OF REALLY BEING ABLE TO ADDRESS BOTH THE OPERATING STRUCTURE BUT ALSO THE CAPITAL STRUCTURE OF THE COMPANY SO A CONSIDERABLE AMOUNT OF TIME AND CARE IS TO MAKE SURE WE GO THROUGH THIS PROCESS, WE WOULD SUCCEED, GO FAST AND ADDRESS ISSUES THAT HAVE BEEN PLAGUING US FOR YEARS IF NOT DECADES.

LEBEAU: IN YOUR FILING, YOU BASICALLY SUMMARIZED YOUR DEBTS TOTALLING $172 BILLION. YOU HAVE ASSETS OF $82 BILLION, BUT DEBTS TOTALLING $172 BILLION. I THINK MOST PEOPLE WOULD FIND IT HARD TO WRAP THEIR MINDS AROUND THE CONCEPT OF ANY COMPANY HAVING THOSE KINDS OF DEBTS. DID GM WAIT TOO LONG AS IT WAS SLIDING FURTHER AND FURTHER INTO DEBT BEFORE YOU FINALLY SAID OKAY, WE SHOULD BE -- WE NEED TO TAKE DRASTIC ACTION?

HENERSON: FIRST, LET ME TAKE APART THE $172 BILLION.BECAUSE SOME PORTION OF THOSE LIABILITIES ARE IN THE ORDINARY COURSE OF BUSINESS. WHETHER ITS WARRANTY LIABILITIES, LIABILITIES TO DEALERS FOR SALES INCENTIVES. THERE'S A VERY LARGE THE ACCOUNTS PAYABLE, PAYROLLS. THERE'S A WHOLE SERIES OF LIABILITIES WHICH COME FROM THE ORDINARY COURSE OF BUSINESS. THE LEVEL OF INDEBTEDNESS WE LOOK AT IS FOR DEBT, BOTH SECURED AND UNSECURED, LIABILITIES FOR PENSIONS, WHICH WHILE LONGER TERM ARE REAL LIABILITIES. LIABILITIES FOR HEALTH CARE, FOR OTHER BENEFIT PLANS. THE TOTAL OF THOSE WAS CERTAINLY NOT TENABLE, GIVEN CERTAINLY THE LEVEL OF DEMAND WE'RE SEEING TODAY AND THE ABILITY OF THE BUSINESS TO GENERATE CASH.OR IN THIS CASE WE'VE BEEN BURNING CASH SO WE HAD TO ADDRESS IT.

LEBEAU: WERE THOSE TOTALS MORE THAN $100 BILLION

HENERSON: YES

LEBEAU: SO YOU HAD MORE THAN $100 BILLION IN DEBT NOW IT BRINGS UP THE QUESTION YOU'RE GOING TO CLEAN UP THE BALANCE SHEET. NOBODY DOUBTS THAT IS GOING TO HAPPEN IN BANKRUPTCY COURT THE REAL QUESTION BY THE AMERICAN PUBLIC IS WHETHER OR NOT GENERAL MOTORS IS NOT ONLY GOING TO BE LEANER BUT CAN IT BE MEANER? CAN YOU COME UP WITH A PLAN AND THE LEADERSHIP TO SELL VEHICLES AND SUSTAIN MARKET SHARE?

HENDERSON: FIRST IN TERMS OF WINNING IN THE MARKET I AM NOT SURE I WOULD SAY BEING MEANER MEANS THAT'S HOW WE ARE GOING TO WIN THE MARKET

LEBEAU: YOU KNOW THE OLD EXPRESSION, LEANER AND MEANER.

HENDERSON: I KNOW EXACTLY THE OLD EXPRESSION. I THINK ITS ABOUT FOCUSING OUR ATTENTION AROUND CUSTOMERS AND PRODUCTS. WE WILL HAVE THE TIME TO DO IT WE'VE GOT FANTASTIC PRODUCTS. BOB LUTZ IN OUR PRODUCT DEVELOPMENT LEADERSHIP TEAM HAS A PIPELINE OF PRODUCTS COMING AT US THAT WE'LL BE ABLE TO LAUNCH. GETTING BEHIND FOUR CORE BRANDS GETTING OUR DISTRIBUTION SYSTEM RIGHT SIZED.WE'RE EXCITED TO GETTING BACK TO SELLING, TAKING CARE OF CUSTOMERS, DOING GREAT PRODUCTS.

LEBEAU: IF SALES REMAIN UNDER 10 MILLION, CAN YOU MAKE A PROFIT AND GET BACK IN THE BLACK?

HENDERSON: WHAT WE'RE DOING IS STRUCTURING THE BUSINESS SO THAT OUR BREAK-EVEN POINT ON AN EBIT BASIS WOULD BE ABOUT 10 MILLION UNITS. BY DEFINITION WE WOULDN'T BE MAKING A PROFIT BELOW 10 MILLION UNITS. THE LEVEL OF LOSSES WOULD BE GREATLY ATENUANUATED. THIS IS ALL ABOUT REDUCING THE RISK OF THE BUSINESS SUCH THAT WE CAN ACTUALLY ADDRESS AND OPERATE IN THIS EXCEOPTIONALLY CHALLENGING ENVIRONMENT AND THEN GIVE US AN ENORMOUS UPSIDE EVEN WHEN YOU GET A SMALL UPTICK IN VOLUME.

LEBEAU: IF THERE IS A SMALL UPTICK IN VOLUME PEOPLE ARE LOOKING AT THIS TODAY OKAY WHEN DOES GENERAL MOTORS START TO MAKE MONEY AGAIN AND I KNOW YOU HAVE FACTORED AT 10 MILLION HAVE YOU PUT TOGETHER A FORECAST WHERE YOU SAY, WE THINKBY THE SECOND HALF OF NEXT YEAR OR BY 2011, WE SHOULD BE BACK IN THE BLACK?

HENDERSON: CERTAINLY IF YOU LOOK AT THE PROJECTIONS WE HAD IN OUR S4, THE BOND EXCHANGE, WHICH REALLY REPRESENTED OUR VIABILITY PLANT AT THE END OF APRIL BASED UPON A CERTAIN SET OF MARKET ASSUMPTIONS, THE VIEW IS THAT WE COULD TURN EBIT POSITIVE BY 2010. AND ACTUALLY GET TO PROFIT BEFORE TAX POSITIVE IN 2011 A LOT OF IT DEPENDS ON ASSUMPTIONS MOST IMPORTANT WHICH IS WHAT'S OUR ASSUMPTION ABOUT THE U.S. MARKET BUT I THINK EVEN BASED UPON A REASONABLE MARKET ENVIRONMENT WE THINK WE HAVE ENORMOUS OPPORTUNITY, PHIL.

LEBEAU: THE GOVERNMENT INVOLVEMENT IS ONE THAT BOTHERS A LOT OF PEOPLE.THEY HAVE TOLD YOU GUYS YOU CAN'T HAVE RICK WAGONER AS CEO. YOU CAN ONLY HAVE CERTAIN DIRECTORS ON THE BOARD OF DIRECTORS WE'RE GOING TO HELP YOU PICK THE OTHER ONES AND YET THE PRESIDENT SAYS I DON'T WANT TO RUN GENERAL MOTORS. THOSE TWO THINGS SEEM TO RUB THEWRONG WAY. THEY DON'T SEEM TO MATCH UP A LOT OF PEOPLE LOOK AT IT AND THEY WAIT A SECOND YOU ARE NOT RUNNING THE COMPANY BUT YOU'RE SAYING WHO IS IN CHARGE OF THE LEADERSHIP THERE

HENDERSON: WHAT THE TASK FORCE IS CERTAINLY BEEN INDICATING THROUGH THE PROCESS AND WHAT THE PRESIDENT REINFORCED TODAY WAS THE DESIRE FOR GENERAL MOTORS TO BE PROFESSIONALLY RUN AS A COMPANY TO GET A RETURN ON THE INVESTMENT OF THE TAXPAYER WHO'SNOW A MAJOR SHAREHOLDER. WHETHER IT'S THE U.S. TAXPAYER OR THE CANADIAN TAXPAYER OR THE TAXPAYER OF ONTARIO.HOW DO WE DELIVER THE BUSINESS TO DELIVER THOSE RESULTS. I THINK IT IS ABOUT HAVING A WORLD CLASS BOARD KEN KRESSA THE INTERIM CHAIRMAN IS GOING ABOUT THE PROCESS TO SELECT NEW CANDIDATES TO REPOPULATE THE MAJORITY OF OUR BOARD. WE WILL HAVE A WORLD CLASS BOARD. AND I'M CONVINCED WE HAVE HAD A WORLD CLASS BOARD ACTUALLY OUR BOARD HAS WORKED HARD. WE WILL HAVE A NEW WORLD CLASS BOARD AND THAT BOARD IS GOING TO HOLD MANAGEMENT ACCOUNTABLE FOR DELIVERING RESULTS..

LEBEAU: BUT WHEN WILL THAT BOARD NOT BE ANSWERING TO THE AUTO TASK FORCE?

HENDERSON: WE'LL HAVE A NEW BOARD OF DIRECTORS IN THE NEW COMPANY WHEN WE EMERGE. THAT NEW COMPANY WILL BE OVERSEEN BY THE BOARD OF DIRECTORS, IF YOU WILL, AND I THINK THAT THAT -- WHEN WE EXIT AND WHEN THE TRANSACTION CLOSES FOR THE 363 PROCESS, IT WILL BE A VERY IMPORTANT DATE BECAUSE THAT'S THE POINT AT WHICH THE NEW GENERAL MOTORS IS GOING TO MARKET.

LEBEAU: I AM NOT TRYING TO BELABOUR THIS POINT A LOT OF PEOPLE ARE THINKING THAT THIS AUTO TASK FORCE FOR YEARS TO COME IS GOING TO LOOK OVER YOUR SHOULDER SAYING I'M NOT TOO CRAZY ABOUT THESE MOVES. MAYBE YOU SHOULD DO THIS. CAN YOU SAY UNEQUIVOCALLY, WE GET OUT OF THE BANKRUPTCY, WE'RENO LONGER ANSWERING TO THE AUTO TASK FORCE.

HENDERSON: I CAN'T SAY UNEQUIVOCALLY BECAUSE THE WORK HAS YET TO BE COMPLETED. I HAVE NOT ONLY SEEN OR HEARD WHAT THEY SAID, BUT SEEN THEIR BEHAVIOR. THIS IS ABOUT A FRANETTIC LEVEL OF ACTIVITY IN A VERY SHORT PERIOD OF TIME TO ADDRESS AND ACCOMPLISH SPECIFIC OBJECTIVES. THEY WANT TO MOVE ON. THIS IS NOT ABOUT A PERMANENT UNDERSECRETARY OF AUTOMOTIVE TASK FORCE.THIS IS REALLY ABOUT HOW DO WE CREATE AN ENVIRONMENT FOR GENERAL MOTORS AND CHRYSLER TO GET THROUGH THIS PROCESS. I DO THINK THERE'S GOING TO BE A DESIRE TO MAKE SURE IT STICKS OR TAKES HOLD. BUT I THINK WHAT THEY REALLY WANT IS A WORLD CLASS BOARD APPOINTED AND THE COMPANIES MOVING FORWARD.

LEBEAU: YOU'VE GOT 11 PLANTS AROUND THE COUNTRY THAT YOU HAVE NAMED TODAY THAT ARE CLOSING DOWN FOR THOSE PEOPLE IN THOSE TOWNS THEY'VE BEEN LIVING THROUGH THIS SEEMINGLY EVERY SIX MONTHS OR EVERY YEAR, GENERAL MOTOR SAYS WE'RE CLOSINGMORE PLANTS. THOSE PLANTS REMAINING DO YOU HAVE IT RIGHT SIZED? IS THE BUSINESS RIGHT SIZED? OR ARE WE LOOKING AT IT TWO YEARS FROM NOW YOU'RE GOING TO COME BACK AND SAY WE STILL HAVE TOO MANY PLANTS.

HENDERSON: WE'VE RIGHT SIZED TO THE LEVEL OF DEMAND TODAY TO SHIFT CAPACITY WHICH MEANS WE HAVE THE ABILITY TO GO TO THREE SHIFTS. WE DO HAVE UPSIDE. WE DID IDENTIFY SEVERAL PLANTS THAT STAND BY CAPACITY, BUTWHAT WE TRIED TO DO AS MUCH AS POSSIBLE IS PROVIDE FINALITY TO THE SITUATION. WHETHER IT'S ASSEMBLY PLANTS, POWER TRAIN PLANTS, TRANSMISSION PLANTS. COMPONENT PLANTS, AFTER SALES WAREHOUSES. WE TOOK A COMPREHENSIVE APPROACH AND WE DID SO BASED UPON QUITE CONSERVATIVE VIEWS OF THE VOLUMES THAT WE SAW. THE OBJECTIVE WAS TO MAKE THIS DECISION, COMMUNICATE TO THE COMMUNITIES AND MOVE ON SO WE CAN FOCUS ON THE FUTURE AND NOT HAVE THE SAME SITUATION SIX MONTHS OR A YEAR FROM NOW.

LEBEAU: GIVEN EVERYTHING YOU HAVE GONE THROUGH IN THE LAST SIX MONTHS PARTICULARLY THE LAST 60 DAYS DO YOU THINK YOU CONVINCED THE PUBLIC THEY CAN STILL BELIEVE IN GENERAL MOTORS?

HENDERSON: I THINK IT'S OUR JOB TO CONVINCE THE PUBLIC THEY CAN BELIEVE IN GENERAL MOTORS.

LEBEAU: HAVE YOU DONE THAT?

HENDERSON: I'M A BELIEVER THAT RESULTS ARE WHAT REALLY COUNT AND WE NEED TO POST RESULTS. AND I WANT THE AMERICAN TAX PAYER TO CONSIDER OUR PRODUCTS, TO GIVE IT THE BENEFIT OF THE DOUBT AND IT'S OUR JOB TO DELIVER RESULTS AND SO THAT THEIR CONFIDENCE IS PROVEN AND RESTORED.

LEBEAU: FRITZ HENDERSON CEO GENERAL MOTORS HISTORIC DAYS FOR GENERAL MOTORS AS IT FILES FOR BANKRUPTCY PROTECTION HERE IN NEW YORK. BACK TO YOU.




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