GM Treasurer to the Congressional Oversight Panel on Federal Government Assistance to the Auto Industry: We Are Accountable. Now. Ish.

Good morning, Chairwoman Warren and distinguished members of the Oversight Panel.

Thank you for the opportunity to testify about how GM is reinventing our company and how a new GM will repay our nation’s investment.

Emerging from bankruptcy, we are a new company with less debt, a stronger balance sheet, with the right-sized manufacturing, product and dealer network to match today’s market realities. GM can now direct its full energy and resources to where it should be: on customers, cars and a culture to succeed.

We are grateful for our nation’s support. Without it, we would not have this second chance. Equally important, are the many who have been called to sacrifice in order to create a new GM.

We recognize the unprecedented level of government support and the pain caused by the bankruptcy process. For this reason, both the Obama and Bush Administrations made it quite clear that they were reluctant investors. We were equally reluctant recipients. I can assure you as GM Corporate Treasurer that we pursued every possible alternative to raise funding and liquidity for General Motors and every possible alternative to restructure the GM balance sheet out of court.

However, a government-funded chapter 11 bankruptcy was the last, best option to avoid the devastating economic consequences to our country if GM collapsed.

Although GM was out of time and money, to protect the taxpayers’ interests, we had to deliver a plan to ensure we would never find ourselves in this position again. The direction we received from the President’s Automotive Task was clear and to the point. To receive government funding and remain viable, GM had to complete a dramatic, fast restructuring, across all parts of our business. We agreed.

Over the last several months, we worked closely with the Task Force to revise our operating plan and indentify and agree to the broad targets and overall components needed to create a viable GM. The Automotive Task Force did not tell us how to run or business or dictate the specific details of our plan. Rather, they exercised the due diligence as any purchaser of a business would. They questioned us and challenged us to ensure that we had a robust and viable plan for GM.

Created from the old GM’s strongest operations, in an asset sale approved by the U.S. bankruptcy court, the new GM will:

• Focus on four core brands in the U.S. – Chevrolet, Cadillac, Buick and GMC – with fewer nameplates and a more competitive level of marketing support per brand. By reducing brands and reducing nameplates to 34 from 48, we can concentrate all of our talent and resources on vehicles that do not merely compete, but lead their respective segments;
• Effectively close the competitive gap in active worker labor costs compared with transplant auto manufacturers;
• More efficiently utilize U.S. capacity, while increasing over time the percentage of U.S. sales manufactured domestically;
• Feature lower structural costs, enabling our North American region to break even (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007;
• Achieve lower structural costs in part by further reducing 2009 salaried employment in North America from its year-end total of 35,100 to approximately 27,200, cutting executive ranks by 35% and continuing to improve GM’s balance sheet by reducing retiree benefits for salaried retirees and non-UAW hourly retirees;
• Provide a higher level of customer service through a more focused U.S. network of approximately 3,600 dealers;
• Continue and increase GM’s investment and leadership in fuel economy and advanced propulsion technologies. For example, GM will launch the Chevy Volt extended range electric vehicle in 2010 and will assemble its advanced batteries in the U.S. We also expect to have 14 hybrid models in production by 2012 and, by 2014, 65 percent of GM vehicles will be alternative fuel-capable.

As a new company, we expect the regular interaction between the Auto Task Force to now shift to a world class Board of Directors under the leadership of Ed Whitacre. Mr. Whitacre and the Board are committed to setting a standard of excellence for corporate governance and we expect them to hold us fully accountable to deliver results. We want to be the best “public” private company and will regularly report our results, issue 8Ks, and provide information to the government and the public to measure our progress.

In closing, as Fritz Henderson, our President and CEO has indicated, business as usual at GM is over. The last 100 days or so has shown everyone – including ourselves – that a company not known for quick action can, in fact, move very fast.

We want to take the intensity, the decisiveness and the speed of these last few weeks and transfer it to the day-to-day operation of the new company. This will be the new norm at General Motors.

We must be accountable to perform and deliver winning results. Again from this point on, our efforts are dedicated to customers, cars, culture, and paying back the taxpayers–both the loans and in creating real value for shareholders.

Through the taxpayers’ support and the sacrifice of many, GM will be great once again. We owe it to them to go forward with our new company as we constructed it. We owe it to them to succeed.

Thank you very much and I look forward to answering your questions.

In case you were wondering, yes! Wally’s a GM lifer. In fact, he graduated from General Motors Institute. Here’s the Treasurer’s official resume:

Walter G. Borst became General Motors treasurer in February 2003.

Borst leads the GM Treasurer’s Office, based in New York, with additional operations in Detroit, Zurich, and Shanghai. The global treasury operations include capital planning, business development, risk management, worldwide pension funding, worldwide banking, and overseas and domestic finance.

He also serves on the board of directors of GMAC.

Borst was chief financial officer of Adam Opel, based in Rüsselsheim, Germany, from October 2000 until January 2003. Prior to that, he served as assistant treasurer in the GM Treasurer’s Office from 1997 to 2000.

During his GM career, he has served as resident controller for Adam Opel’s Rüsselsheim manufacturing plant and director of financial analysis and planning for GM Europe in Zurich. He held a variety of early assignments in the Treasurer’s Office in New York and the Controller’s Staff in Detroit. Borst joined GM in 1980 as a cooperative student.

Borst earned a bachelor’s degree in finance from General Motors Institute (now Kettering University) in Flint, Michigan, in 1985 and a master’s degree in business administration from Stanford University in 1987.