GM is Dead; Long Live New GM

(MoneyWatch)  General Motors officially launched the "New GM" today, having secured permission in U.S. Bankruptcy Court earlier this week to drop its "bad" assets, and go forward with its "good" assets.

The net effect is a much smaller company with only four brands -- Buick, Cadillac, Chevrolet and GMC -- that theoretically can be profitable at a much lower sales volume. Fritz Henderson, GM president and CEO, today reiterated that GM is aiming for a much lower breakeven point at the equivalent of a total annual U.S. industry sales volume of only 10 million units.

He also promised a new corporate culture with fewer layers of bureaucracy that can move faster. "Most people would say our culture has been an impediment and I would agree with that. And that needs to change," Henderson said in a press conference today.

GM is dismantling its "regional" operating structure, which in GM-speak means global regions like Europe, Latin America or Australia. GM's regional subsidiaries have a long tradition of being semi-autonomous and developing cars and trucks independently from the U.S. headquarters.

That tradition produced products that were tailored to their markets, but also made it difficult if not impossible to achieve economies of scale.

GM will reduce the number of U.S. executives by 35 percent and overall U.S. salaried employment by 20 percent by the end of this year, the company said.

"Business as usual is over at GM," Henderson said in a written statement. That's been true ever since GM went to the U.S. government for financial support. It will be up to Henderson and to new GM Chairman Edward E. Whitacre, Jr. to make sure the new culture takes root.