GM not considering filing for bankruptcy, CEO says

DETROIT — General Motors Corp. isn’t considering bankruptcy protection as a way to solve its financial troubles, the automaker’s chairman and CEO said Wednesday.

“As we look at the responsibilities we have to a broad range of constituents, as we look at what we need to do to make the business successful, as we look at our businesses around the world, we think there are significant costs to bankruptcy,” Rick Wagoner said. “We don’t think it’s a good option.”

Wagoner also said he and other top executives will see their compensation cut by 40 percent or more this year, deflecting criticism from UAW President Ron Gettelfinger and others that executives aren’t making enough sacrifices.

Wagoner spoke two days after the automaker reported a $1.6 billion third-quarter loss and announced a tentative agreement with the United Auto Workers to cut health care benefits for its U.S. hourly workers and retirees. GM has lost more than $3 billion in the first nine months of this year because of falling U.S. market share, production cuts, high labor costs and other factors.

The bankruptcy question has been swirling around GM since its former parts supplier, Delphi Corp., filed for bankruptcy protection this month. GM could be liable for up to $12 billion in benefits for Delphi employees. The automaker has around $19 billion in cash.

While bankruptcy would allow GM to close plants and reduce union wages in court, Wagoner said GM’s turnaround requires far more than reduced labor costs. The company is trying to cut the cost of materials and vehicle development, move away from heavy incentive spending and build more enticing cars and trucks.

Wagoner said unlike the airline industry, where some bankruptcy filings haven’t had a big effect on business, even speculating about bankruptcy hurts the auto business.

Wagoner wouldn’t reveal more details about the tentative agreement with the UAW, which he called “historic.” The agreement, which must be ratified by UAW members, would cut GM’s health care costs by $3 billion annually before taxes. The agreement also would cut GM’s liability for retiree health care by $15 billion, or 25 percent. More details are expected to be released today after the UAW presents the agreement to local union leaders from around the country.

Wagoner said he knows some GM hourly workers and retirees are upset about benefit cuts and may think executives aren’t doing their part, but he said that’s not the case. GM’s top five executives will probably see 40 percent cuts in their compensation this year, he said. Executives’ base salaries are determined at the end of the year.