GM bankruptcy no threat to Holden

GM-Holden's 6000 workers in Melbourne and Adelaide awoke this morning to hear that GM-Holden has survived the chapter 11 bankruptcy of its parent General Motors.

It will continue normal operations in Australia and New Zealand and does not expect changes to its business after GM announced it has taken court action in the US to launch a competitive New GM, citing debts of $215.8 billion. However, the company has not come out of the GM crisis unscathed.

It has cut Commodore production in half and lost a lucrative export deal to the United States when GM axed the Pontiac brand.

GM-Holden chairman and managing director, Mark Reuss, said "operations are unchanged in Australia and New Zealand and we expect it to remain that way".

"GM has clearly stated that all of its businesses in the Asia Pacific region, and that includes Holden, continue normal operations and are not directly impacted by this process in the US. No operations outside the US are included in the court filing or court supervised process.

"Holden is a subsidiary of GM but we are a corporate entity in our own right, an independent company under Australian law.

"Beyond that, GM has indicated that Holden will be an important part of the New GM. We intend to maintain our focus on Holden product programs and activities.

"That means technology improvements to our best selling Commodore range, launching the all-new Holden Cruze this month, and the introduction of our locally-built fuel efficient, four cylinder small car next year.

"We continue to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network. We don't anticipate this decision will have any direct impact on Holdens workforce, dealers, or suppliers. Holden customer warranties are not affected and we continue to deliver the sales and service experience that our customers expect.

"We wouldn't normally issue statements to highlight nothing has changed, but we appreciate that customers will naturally ask questions about this sort of announcement from the US."

GM president and CEO, Fritz Henderson, said early this morning that the bankruptcy protection filings in the US would have "no impact" on GM-Holden's operations. He said the New GM plan was "an exceptional opportunity to reinvent the company".

In a globally televised speech early this morning Henderson said his promise, and that of GM, was to "to deliver a business that can create value and create a future … Do it once and do it permanently," he said.

GM-Holden's Reuss said Holden would remain informed of developments in the US, a process which had been determined to reinvent the company.

"The process being used in the US is unlike Australian and New Zealand law. It is a fast, court supervised process that permits the sale of selected assets to a new entity," Reuss said.

"Unlike court-controlled processes in many other countries, US chapter 11 allows GM to deal with the financial issues that have built up over many years and for New GM to emerge as a healthier business, better able to deal with the challenges of today and tomorrow. It does not mean ceasing to trade."

The New GM is expected to emerge from bankruptcy protection within 60 to 90 days. GM-Holden is consider the jewel in the crown of the GM empire but it has suffered speculation that it, along with other assets like Hummer, Saturn, Pontiac, Saab and Opel, would be sold off. The decision to build the Cruise small car is believed to have been instrumental in saving the local operations.

GM has previously indicated it is negotiating with prospective buyers for the Saab and Hummer brands. GM is working closely with dealers, including those in Australia and New Zealand, to continue delivering vehicles and maintaining aftersales and servicing requirements.

GM Group vice president and president of GM Asia Pacific, Nick Reilly, said: "We believe this step which was taken with the support of the US Government is the most efficient and effective means for New GM to emerge with substantially less debt and lower operating costs, and with our operations positioned for long-term success."