President Barack Obama’s administration will not get involved in GM’s sale of its European Opel unit or any other aspect of the automaker’s daily operations, a top advisor said Wednesday.
“We are not directly involved in the negotiations,” said Ron Bloom, who heads the president’s automotive task force.
“This is General Motors’ decision,” he told reporters. “We’re not there to tell them what to do with Opel or to dictate the terms of the deal.”
GM’s chief negotiator said last week that a bid by the Belgian investment group RHJ International would be easier to implement than one by the Canadian group Magna.
However, the government of Germany — which is offering up to 4.5 billion euros (6.4 billion dollars) in cheap loans and loan guarantees as part of a rescue deal for Opel — backs Magna’s bid because it fears RHJ would slash jobs.
The US government holds a 61 percent stake in General Motors and a 10 percent in Chrysler after extending tens of billions of dollars in emergency loans.
The task force helped both GM and Chrysler restructure under bankruptcy protection in just a few weeks.
Bloom said the government will let the newly appointment boards of directors run the companies and will not use its ownership stake to further social policies such as reducing emissions or improving fuel economy.
Nor will it allow the government’s financial stake in the automakers influence social policy, he added.
“We haven’t said ‘Gee, we’d better go easy on CAFE (Corporate Average Fuel Economy regulations) because we’ve got a bunch of money in GM’,” Bloom told reporters on the sidelines on the CAR Management Briefing Seminars.
The government hopes to reduce its ownership stakes as soon as is practical in both automakers, Bloom said.
“We have no intention of any further engagement in terms of providing capital to either of these two companies,” he told the conference.
“We are a passive investor. We want to get our money back.”
General Motors ought to be ready for an initial public stock offering (IPO) some time next year, but Chrysler will likely need more time, Bloom said.
“I don’t think the IPO will be a 2010 event,” he told reporters, noting that while “there’s a lot of wood to chop at Chrysler” the government believes the automaker is “on the path to viability.”
Both automakers will file regular updates on a voluntary basis with the Securities and Exchange Commission to prepare for the stock offerings, he added.
Bloom said General Motors has the potential to earn “substantial profits” once markets recover from their current depressed levels.
“The company has done an excellent job of restructuring and dramatically lowering its breakeven” point, Bloom said.
“Exactly when it returns to profitability is not something we will speculate on. We’re very hopeful that it is soon,” he said, adding that “the return to profitability does not require the market to recover a lot.”
In wide-ranging remarks, Bloom also cautioned that a contraction and rationalization of the US auto supplier base is both necessary and inevitable given the dramatic decline in demand for vehicles.
While the government is “deeply mindful of the importance of the supply base” and will be monitoring the situation carefully, it does not anticipate extending more aid to the troubled industry, he said.
Nor will it step in to prevent further bankruptcies, he said.
“We’re not going to try to stop the rationalization because preserving capacity above the demand does nobody any favors,” Bloom told the conference.
“It would be better if it happened in an orderly way. It would be better if it happened in a way that did not involve shut downs of car manufacturing,” he added.
“But we can’t get in, and the government will not get in and decide which steering wheel manufacturer ought to be the winner or exactly how many steering wheels General Motors, Ford and Chrysler need.”
