Interview with GM CEO Fritz Henderson

Interview with GM CEO Fritz Henderson

Lou Dobbs Tonight - April 1, 2009

DOBBS: Joining me now here on the broadcast, the new CEO of General Motors, Fritz Henderson who replaced Rick Wagoner, who was removed from his post by the president last week. Well, first, good to have you with us here on the broadcast. You -- I can't think of a CEO, fritz, who has ever faced a more daunting task within days of having assumed a post. Can you?


DOBBS: We apparently lost our audio to Mr. Henderson...


DOBBS: Can you hear me now?


DOBBS: Fritz Henderson...

HENDERSON: I can hear you now, Lou.

DOBBS: Well first, let me say welcome. I apologize for the technical problems there. But my question is within just days -- I guess, really hours of taking your new responsibilities on, I couldn't think of a CEO who's ever faced such daunting challenges as you upon just stepping into the post.

HENDERSON: First, Lou, good evening. It's good to be here with you. The challenges are immense. But, you know, let's bring it on. The way I look at the situation, we have been, within General Motors, dealing with a series of tough challenges for a number of years. Obviously, the situation today is one of -- there's plenty of business challenges here, certainly in our home market, but on a global basis, so yes, the challenges are there.

We have -- we have a good team of people. We have great dealers. We have very loyal customers who are standing behind us and want us to get the job done. So we need to get the job done, Lou. It's that simple.

DOBBS: You have great, great brands at General Motors. Yet there is a marketplace that is seemingly constricting by the month. You say yourself that more plant closings are likely, that bankruptcy becomes an increasing -- increasing likelihood with the intransigence of both creditors and the United Autoworkers Union. Where would you say you are right now?

HENDERSON: Lou, we have 60 days, as was discussed earlier this week, to accomplish frankly deeper, faster restructuring the business, both on the operating side of the business, as well as the capital structure. At this point, I wouldn't use the term intransigence with either the UAW or the bond holders. I think it's painful.

We have to make sacrifices everywhere in the business from leadership to our people to our dealers to bond holders and other constituencies that have a role to play in General Motors. So we have time in front of us, a short period of time, in order to try to get this accomplished outside of a bankruptcy. That's our preference. But if we have to do it within a bankruptcy, that's exactly what we'll do because in the end we got to get the job done. We got to get General Motors restructured so that we can be part of the automotive industry going forward for the next 100 years of our existence.

DOBBS: Fritz, the idea of a bankruptcy employed by the airlines seemingly on a regular basis for a decade, what is the downside to that at this point for General Motors in your view, and to what degree is it a benefit?

HENDERSON: Lou, I'd say a couple things. First, bankruptcy has not been our preferred approach. We've been clear on that. We remain clear on that because bankruptcy brings with it both time, risk, costs and most importantly for our business, the consumer. We sell cars and trucks one at a time. And we have quite good competition. I guess -- I'd say a couple things.

So we know what the risks are. I think the key though is that we need to get the job done in terms of getting our business restructured. We've got a lot of operational challenges, a lot of challenges on the balance sheet and so the conclusion today is we need to get the job done outside or if we have to go inside -- inside (INAUDIBLE) in a bankruptcy process, we need to move fast.

That's not normally done in a bankruptcy. I think a couple of things that occurred this week that were very important for us. First, I mean the president basically saying that the warranties for GM cars and trucks both service as well as warranty that customers don't need to worry, that the (INAUDIBLE) believes we can be viable...

DOBBS: Did you ever...

HENDERSON: ... and prepared to frankly stand by us. I mean there are a lot of positive things in that.

DOBBS: Fritz, did you ever think you would have the president of the United States standing in -- basically giving you a warranty commercial, General Motors? That's pretty powerful stuff, isn't it?

HENDERSON: Lou, I watched the president's speech. It was unprecedented. Spent a half an hour -- the tasks force has been intimately involved in our business for the last six or seven weeks, but to have the president of the United States make those sorts of comments and frankly indicate what needs to get done in his judgment but also what the government's prepared to do is remarkable.

DOBBS: And is -- amongst the things the government is prepared to do reports tonight that you will be getting more money in the next 60 days up to the May 1st deadline. Can you share with us how much money you're looking for, for that period?

HENDERSON: Actually, Lou, June 1st deadline so we have 60 days.

DOBBS: I'm sorry, June 1st.

HENDERSON: A couple of things -- no problem. We had originally requested, by the way, a $2 billion draw in the month of March through, frankly, aggressive implementation of our plans. We have pushed that draw forward. We didn't need it in the month of March. And what we're trying to do is everything in our power to reduce costs, to implement our plan quickly so that we minimize whatever the funding is as we -- as we get through the 60-day period.

At this point, I can't give you a specific forecast as to what might be necessary. We identified, for example, two billion in March, another 2.6 billion in April, but again, we didn't take the two billion in March and we're going to do whatever we can to minimize the amount that's necessary as we work through the restructuring process.

DOBBS: This has been a bloody period for the workers at General Motors, your employees, for everyone associated. And this period, I'm referring back to 2000 forward. To talk -- the CEOs with whom I've spoken, not a one in any industry can offer me a sense of what we used to call visibility.

Do you have any instinct, any remotely clear insight into what the future of General Motors is, how quickly you can turn a corner, actually begin to talk about rising sales and perhaps profitability?

HENDERSON: Well, I'd say a couple of things. First, Lou, let me talk about the restructuring process. What do we have to go through? Lowering break-even points, reducing costs, making sure we streamline how we go to market with brands, distribution systems. It's all about, frankly, creating a leaner, tougher, more resilient General Motors. Second, restructuring the balance sheet because the level of indebtedness we have, whether it's bond debt or whether it's obligations for pension and health care needs to be restructured. We need to significantly reduce the level of indebtedness. Once we do those two things the interesting thing about this business, Lou is when things are bad, they can be really bad really fast. That's the way it works.

On the other hand, and I've seen this when I worked in Brazil, when I worked in Latin America, when I worked in many other countries around the world, when things turn, they turn fast as well. And so it can be a wonderful business when it's on the upside particularly when you get your business properly structured. Our problem is, you know, getting the operations structured, but also the capital structured. We just had too much indebtedness.

We needed to deal with it, so I would say in terms of primary demand, the consumer, there's a lot of things that can and must be done to bring the consumer back in the game. But I do know this, we're selling well below scrappage rates in the U.S. We're selling well below what we should be selling at in any sort of normal environment. We need to bring the consumer back in the game.

We need to improve consumer confidence. We need to get credit restored. That's going to happen overtime. Things are going to get better. We need to pull together and make sure we're part of that.

DOBBS: All right. Fritz Henderson, thank you very much -- a man with -- well enough challenges to satisfy anyone. We wish you the best (INAUDIBLE). Fritz Henderson, the CEO of GM.

HENDERSON: Thank you.

Lou Dobbs Tonight


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