Automakers rev to beat deadline

New Chevy Camaros in Oshawa, Ontario, wait to be shipped to dealers. General Motors faces bankruptcy and court supervision if it fails to fix its debt-ridden balance sheet in 60 days. (Mike Cassese/Reuters)

DETROIT - He doesn't know exactly what the Obama administration wants him to cut, but Fritz Henderson, the new chief executive of General Motors Corp., isn't waiting around to find out.

He outlined how the ailing automaker plans to meet a June 1 deadline to fix its debt-ridden balance sheet, cut billions in costs, and take other steps to transform itself into a profitable entity.

It's the same government-imposed race that Chrysler LLC is running, only GM's smaller neighbor has to cover more distance in half the time.

The Auburn Hills, Mich., automaker must make the same cuts as GM, and sign up Fiat Group SpA as a partner, all in 30 days. Fiat's CEO jetted to Detroit for intense negotiations, but if Chrysler doesn't meet the deadline, it's almost certainly destined for the auction house.

For GM, failing to take quick action means surrendering to court supervision in bankruptcy, something the company has resisted but Henderson said is now "certainly more probable."

The companies have yet to receive specifics from the task force on how much more they must cut and where, but Henderson is proceeding with deeper cuts and pushing forward on previously revealed measures.

"We need to reinvent General Motors, and we need to do it in a very, very abbreviated time frame here in 2009 so that we're not spending our time careening from crisis to crisis in the future," he told reporters at GM's headquarters in Detroit.

There are formidable obstacles, though. Even with less demanding hurdles in the government's original loan terms, GM's bondholders have been reluctant to release their $28 billion for what may be pennies on the dollar. The company still hasn't reached a deal with the United Auto Workers on funding a union-run trust that will take over retiree healthcare costs.

It's uncertain whether they can work together to compromise on their competing interests, even though failure means they stand to lose a lot more.

It was clear, though, that every scenario will include more pain for just about anyone connected with the companies.

GM said in its February plan it would cut 47,000 jobs worldwide by year-end. Presumably those cuts will come sooner.

Henderson said GM also must slash its staggering liabilities - not just the $49 billion in bond debt and secured loans, but also pension obligations and retiree healthcare costs.