National Summit: Government's GM help comes with strings

Facing increasing skepticism over the government's involvement in General Motors, CEO Fritz Henderson admitted Wednesday the automaker is dealing with the government on a daily basis, but says that will likely ease once the company emerges from bankruptcy court protection.

The government, which is investing $30 billion in GM while it wends its way through bankruptcy court, will own about 60% of the "new GM," to be created through the sale of the company's good assets to a new holding company. That could happen as soon as June 30. The government has said that after that happens and it becomes a shareholder, it will only intervene at GM in exceptional cases.

But until then, Henderson says, the government's level of involvement will be quite intense.

"They want GM to have a world-class board ... and they are going to be actively involved throughout the bankruptcy process," Henderson told reporters after speaking at the National Summit, a three-day event where business and public leaders talked about economic and manufacturing issues.

On Wednesday, Henderson met with Edward Whitacre, who will become chairman of the new GM. Whitacre, former CEO of AT&T, also met with Steve Rattner and Ron Bloom, the heads of President Obama's automotive task force.

"There was a fair amount of discussion about what's going on in the automotive business, and what's going on at General Motors," Henderson said. "He's diving right in."

Whitacre was handpicked by the task force.

The government has said it plans to sell off its shares in GM eventually after the new entity is a public company and has returned to profitability.

But government ownership can be nettlesome. This month, Rep. Barney Frank, D-Mass., said that at his request, GM canceled plans to close a Norton, Mass., service and parts warehouse. And Michigan, Tennessee and Wisconsin officials are lobbying for GM to use idle plants in their states for a new small car, Henderson said. GM's deal for United Auto Workers contract concessions includes a promise to make a small car in a UAW plant in the U.S.

"No industry has been hit harder by the global credit crisis and economic downturn than the automobile industry, and no state has suffered as much as Michigan has," reads a letter from Michigan politicians to GM. "We believe that a new GM can emerge from this painful restructuring process stronger, more competitive. ... Investing in the facility at Orion Assembly (north of Detroit) is an important part of that restructuring process."

Henderson said the automaker is reading all the letters, but the decision will be based on criteria it has laid out to plant and local officials.

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