What is coming is a leaner "New GM" and an "Old GM" consisting of parts of the company that will eventually be liquidated. GM said the sale would occur as a "Section 363" sale, which is a type of auction for which the bankruptcy court approves the bidding procedures.
The president justified government action on GM as the auto maker enters Chapter 11 bankruptcy, saying the actions are part of a "viable, achievable plan that will give this iconic company a chance to rise again."
"I am absolutely confident that if well-managed, a new GM will emerge that can ... out-compete automakers around the world and that can once again be an integral part of America's economic future," Obama continued.
Under the plan, the government would own 60% of the new GM, but Obama said auto executives "will call the shots and make the decisions about turning this company around." He said the government would refrain from playing a management role in all but the most critical areas. "Our goal is to help GM get back on its feet ... and get out quickly," the president said.
GM CEO Fritz Henderson said the new GM will be a leaner and quicker company that's more focused on its customers and its products. GM plans to close 11 U.S. facilities and idle another three plants. GM employees worldwide will become part of the new GM.
GM has been looking to cut 21,000 factory jobs from the 54,000 UAW workers it now employs in the United States. Henderson said GM’s employment level will be 23,000 salaried workers next year, after cutting 3,400 earlier this year. GM currently has around 26,000 U.S. white collar workers and will end the year with a total 7,900 fewer white-collar workers in North America.
The U.S. Treasury will provide about $30.1 billion to support GM through its Chapter 11 bankruptcy, bringing the total "investment" in GM to about $50 billion.
Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, said, “Our biggest concern with the restructuring plan ... is the potential for governments and unions to influence production, product, workforce, and management decisions in ways that could jeopardize the automakers’ chances for survival, put politics and special interests above sound business strategy, and disrupt our nation’s trading relationships across the world."