GM To Cut Jobs, Eliminate Pontiac Division
RENEE MONTAGNE, host:
General Motors is eliminating the Pontiac brand, cutting another 21,000 blue collar jobs and closing more factories. That's the news from Detroit this morning, as the company's leaders outline yet another restructuring plan in an attempt to avoid bankruptcy and save GM. As a part of the restructuring plan, nearly 90 percent of the company would be owned by the United Autoworkers and the US government. NPR's Frank Langfitt covers the auto industry, and he's here with us in the studio. Good morning.
FRANK LANGFITT: Good morning, Renee.
MONTAGNE: Let's get first to the union and the government ending up owning most of GM. I mean, to an outsider, that sounds quite stunning. Walk us through that.
LANGFITT: Well, here's the - the basic problem is this: The company just has way too much debt. It doesn't have the money to pay it off. So it's going to have to offer stock in the company to pay off the people that it owes. And right now, it owes the union about $20 billion for retiree health care. It owes the United States government about $15 billion in loans that have kept it running. And so GM's now going to launch what's called a bond exchange, and that could end leaving the union and the government owning about 89 percent of the company.
MONTAGNE: And the other 10 percent?
LANGFITT: The other 10 percent might be the bondholders, the people who have also lent a lot of money to the company, but it's not clear yet. And also, this is a bond exchange, so we don't know 100 percent exactly how it's going to work out.
MONTAGNE: Now President Obama has said the government doesn't want to run a car company, but does this mean the union and the government would actually be in charge of GM?
LANGFITT: Well, Fritz Henderson - he's the new GM CEO. He was on a press call today, and he said that, you know, people who are major shareholders can always ask for seats on a board. Of course, that's what normally goes on. But he seemed to suggest that the direct controlled Treasury Department, which has been running a lot of this, would not have direct control. That said, you know, let's be realistic about this. We've already seen the government have a lot more influence on GM than at any time anyone can think of.
I mean, it wasn't just a few weeks ago that President Obama essentially fired GM's former CEO Rick Wagoner, and that's normally what a board does. They've also put a new chairman of the board in place. So we're already seeing a really strong government hand in GM's, you know, running. One of the things that's a little concerning here is car companies are really hard to run, even for those who actually know how to run them. And now, clearly, union and the government are certainly going to have a bigger role.
MONTAGNE: Well, let's get, in the few moments we have left, to Pontiac. What is going to happen to that brand?
LANGFITT: They're going to stop building Pontiacs next year, and the reason's really simple: The company, GM, just has too many brands. There's not enough marketing dollars to support this division, and it's a painful, inevitable move. Fritz Henderson, the company's CEO, he described the decision like this.
Mr. FRITZ HENDERSON (CEO, General Motors): A very tough decision for many of us because this is a brand that has considerable heritage within our company. It's an intensely personal decision in many ways, but one that needed to be taken in light of the circumstances.
MONTAGNE: And why did it need to be taken, exactly?
LANGFITT: Well, this is a - this was a division that really wasn't working. It had lost its way. It didn't really have a clear brand image. If you go back to the '60s and the '70s, these were really high horsepower cars. You remember "Smokey and the Bandit," the Burt Reynolds movie? That featured the Trans Am. There was a rock song, "Little GTO." But I think if you ask most people today on the street, you know, if they could name a Pontiac model, they'd probably really struggle. And in many ways, it just became another car division, a blurry - with a blurry image. And in a competitive global marketplace today, you just can't compete with a brand like that.
MONTAGNE: Well, let me ask you: Pontiac, Hummer, Saab, Saturn, all on the way out for GM. What's left?
LANGFITT: The core brands: Chevy, Buick, Cadillac and GMC, the truck division. And what they're really trying to do is get down to their core brands to compete, and many critics have been saying that for years, this is really what they had to do.
MONTAGNE: Frank, thanks.
LANGFITT: Happy to do it, Renee.
MONTAGNE: NPR's Frank Langfitt.