GM about to reinvent itself

DETROIT – The new General Motors is about to roll off the assembly line as a leaner, greener model, maybe even a profitable one, too.

Once the world’s largest and most powerful automaker, the troubled company was expected to emerge from bankruptcy protection by early today cleansed of massive debt and burdensome contracts that would have sunk it without federal loans.

The new company, 61 percent owned by the U.S. government, will clear bankruptcy in record time to face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.

Yet despite massive cost reductions, experts say GM must produce vehicles that people want to buy, and change its image from a lumbering bureaucracy that makes gas guzzlers to one on the cutting edge of efficiency and quality.

“It is the smaller, leaner, tougher, better cost-focused GM,” said George Magliano, an automotive analyst with the consulting firm IHS Global Insight. “But they still have to deal with the problems that they faced longer-term.”

Rep. Gary Peters, whose Michigan district is home to three GM factories, said the company’s emergence signals a new era for the domestic auto industry and the thousands of people it employs.

“With bankruptcy in the rearview mirror, U.S. auto companies will even more aggressively pursue new technologies, become more globally competitive,” he said. “Decades from now, our nation will be glad we did not let a global credit crisis put an end to the American automobile.”

On Thursday, a bankruptcy court order went into effect that allows GM to sell most of its assets to a new company.

Under plans that CEO Fritz Henderson will announce today, GM will cut another 4,000 white-collar jobs, including 450 top executives. The company still employs 88,000 people in the U.S. and 235,000 worldwide.

Henderson also is expected to describe how GM will streamline its bureaucratic management structure to become profitable again. GM has said it will be able to make money even if the U.S. auto market stays at a depressed level of 10 million to 10.5 million vehicles sold.

For the first half of this year, sales have remained at a pace that would make it a 10-million sales year, after hitting more than 16 million as recently as 2007. Analysts expect a slight recovery in the second half.

“I’m very much looking forward to a point where we’re operating in clear air, and the name of the company not being associated with bankruptcy and loans and these things,” said Mark LaNeve, GM’s North American marketing chief.

GM ranked as the top global automaker in terms of sales for 77 years before Japan’s Toyota Motor Corp. 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 Corp. It reclaimed No. 1 status in 1985 and held it for another 15 years.

The Obama administration has said it does not plan to interfere with day-to-day operations, though it ousted ex-CEO Rick Wagoner and has been involved in picking the new company’s board.

In addition to the U.S. government’s 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 to bondholders from the old company.